Class-action lawsuits all too often benefit only the lawyers, not the allegedly victimized consumers they claim to represent. The Center for Class Action Fairness takes aim at such abuses.
Today, it filed a brief with the Ninth Circuit Court of Appeals “appealing a district court’s controversial approval of a class action settlement where attorneys recovered a $850,000 fee for themselves despite failing to provide any benefit to the class.” The lawsuit, “In re Bluetooth Product Liability Litigation, No. 07-ML-1822, alleged that three manufacturers of Bluetooth headsets for cell phones committed consumer fraud because consumers might not be aware that extensive use of headsets at high volume could cause hearing loss. Before the district court could rule on a pending motion to dismiss, the parties settled, with $100,000 going to charity, minor changes to defendants manuals and websites, and $850,000 to the attorneys — an 850% contingency fee. The purportedly injured class members received nothing.” Despite objections, “the district court approved the settlement and the entirety of the fees.”
In short, the lawyers ripped off their clients, with the trial judge’s blessing.
Earlier, I wrote in the Washington Post about how class-action lawsuit “settlements intended to benefit consumers get paid instead to groups that lobby for affirmative action, hate-crimes laws, undocumented immigrants, and public funding for abortions.” (See Hans Bader, “Not Their Money to Give Away,” Washington Post, December 22, 2007, at A16).
The Washington Post similarly lamented how federal judges use such settlements for purposes unrelated to the underlying lawsuit, giving the money to “religious organizations,” “law schools,” and other organizations that “hire lobbyists” to influence judges (See Editorial, “When Judges Get Generous,” Washington Post, December 17, 2007, at A20).
The practice seems to be even worse in state court than federal court. As I noted in 2007, “In California state court, leftover money from a consumer class action settlement is commonly given not to consumer groups, but to groups that have nothing to do with consumers, like the left-wing La Raza Legal Center; the politically correct Employment Law Center of the San Francisco Legal Aid Society (which seeks to curb employers’ First Amendment rights); the ever-litigious Lawyers’ Committee; and groups that specialize in advocating affirmative action, broader definitions of ‘hate crimes’ (at the expense of civil liberties), or expanded access to welfare programs for illegal aliens. This ripoff of consumers is magnified as a result of practices like ‘fluid recovery.'”