A Little Walmart Gift Card for You, a Big Payout for Lawyers

The New York Times discusses Center for Class Action Fairness's objection to the Walmart and Netflix class-action settlement with Ted Frank. 

Appeals court delays held up the distribution of the booty, which is why Mr. Frizell doesn’t recall opting for the gift card, which he did in 2011. But the long wait aside, the settlement raises questions about the appropriate way to resolve such matters. For some insights, the Haggler called Ted Frank, a regular and vocal critic of the terms of class-action deals and a lawyer at the Competitive Enterprise Institute, a Washington nonprofit organization.

Mr. Frank filed a legal objection to this settlement, arguing that the plaintiffs’ lawyers enriched themselves to the detriment of consumers. To begin with, he said that claimants were steered toward the gift card because they could request it online. To get a check, they had to send a snail mail letter.

So how many of those gift cards have been cashed in? We don’t know. That information has not been publicly revealed, Mr. Frank said. And the lead lawyers’ firm for the plaintiffs in the case, BakerHostetler — a firm that apparently can’t afford a space between its names — declined the Haggler’s request for an interview.

And this case is positively pro-consumer compared with others. Mr. Frank pointed to a Duracell case, filed in 2012, that ended with these terms: $6 million for charity, $5.7 million for plaintiffs’ lawyers and a mere $345,000 for consumers. (The case is under appeal, so no one has been paid yet.) The reason the consumer side is so meager is that less than 1 percent of the 7.2 million class members actually submitted for reimbursement. But the lawyers’ fees were calculated based on the $43 million that could have been disbursed if all eligible consumers had asked for a $6 check.

Read the full article at The New York Times.