Supreme Court Mulls Case That Would Trim Fees In Class Actions

Forbes writer Daniel Fisher discusses CEI’s Supreme Court petition in Blackman v. Gascho:

Blackman v. Gascho reprepresents a split between the Sixth Circuit and the Seventh, which adopted a stricter test of fairness penned by Judge Richard Posner in a typically acerbic opinion, Pearson v. NBTY. In that decision (which quotes FORBES at page 7), Posner rejected a settlement that would have yielded lawyers $1.9 million in fees based on the plaintiff lawyers’ estimated value of $20.2 million, when less than $1 million was actually paid out to class members.

The “Posner Rule” is to “judge settlements by what they actually deliver to the class,” said Ted Frank, a lawyer with the Competitive Enterprise Institute’s Center for Class Action Fairness who represents the objectors in Global Fitness. “It’s a problem when the attorneys compromise the class to take more fees for themselves.”

“This isn’t a case where it was hard to get money to the class,” said Frank. “They knew the addresses. They knew what every class member was owed. They could have mailed checks.”