Ninth Circuit rejects class action settlement

Legal Newsline quotes Ted Frank's commentary on the class action over Apple Ipods which was dismissed in 2008.

The Center for Class Action Fairness, which argued on behalf of the objecting class members, applauded the appeals court for objecting to a "valueless class action settlement." Ted Frank, who founded the center in 2009 and argued the appeal, called the ruling a "landmark decision." It is the first time the Ninth Circuit has vacated approval of a class action settlement since 2003, according to the center.

"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," he said. "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." He added, "The decision further emphasizes that any fee request based on 'lodestar' rates has to be cross-checked against benefits actually received by the class."

Frank, one of the leaders in the cy pres reform movement, said 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.