WASHINGTON, DC – The Center for Class Action Fairness LLC announced today its victory in the U.S. Court of Appeals for the Ninth Circuit objecting to a valueless class action settlement. On Friday, the appellate court vacated a district court’s 2009 approval of a settlement of a lawsuit alleging that Bluetooth headset manufacturers committed fraud when they failed to give more prominent warnings that listening to headsets continually at loud volumes might cause hearing damage. (A similar class action over Apple iPods was dismissed.) The settlement would have provided no cash to the class, but $850,000 to the attorneys. The Center believes that this is the first time the Ninth Circuit has vacated approval of a class action settlement since 2003.
“This is a landmark decision,” said Ted Frank, the founder of CCAF who argued the appeal. “The Court explicitly upheld the principle that the absence of explicit collusion is not enough for a court to approve a settlement when the attorneys have negotiated a self-serving settlement at the expense of their clients. It is important because the Court identified as problematic several tactics attorneys use to protect proposed fee awards from scrutiny such as ‘clear sailing’ clauses that prohibit defendants from challenging proposed fee awards and ‘kickers’ that preclude the class from receiving any reduction in the fee award. The decision further emphasizes that any fee request based on ‘lodestar’ rates has to be cross-checked against benefits actually received by the class. It will now be much more difficult for attorneys to abuse the class action system to negotiate low-value settlements that provide handsome compensation for themselves.”
The case is In re Bluetooth Headset Products Liability Litigation, No. 09-56683.
The Center for Class Action Fairness, founded in 2009, is a not-for-profit program that provides pro bono representation to consumers and shareholders aggrieved by class action attorneys who negotiate settlements that benefit themselves at the expense of their putative clients. It has won millions of dollars for class members over the last two years.