Supreme Court to Decide on Reining in Class-Action Deals that Only Pay Lawyers and their Favored Institutions

The Los Angeles Times reviews Frank v. Gaos, CEI’s Supreme Court case that examines cy pres settlements.

The Supreme Court agreed Monday to consider reining in deals in class-action cases that yield millions of dollars in fees for lawyers, millions more in awards for their favored universities and little or nothing for the plaintiffs who were allegedly injured.

Critics of these settlements described them as a form of suspect collusion between plaintiffs’ lawyers and corporate defendants, since both benefit by arranging a settlement. Leading the challenge to these deals is Ted Frank, a Washington lawyer who regularly objects to class-action settlements.

In an unusual move, the Supreme Court voted to hear his appeal over the objections of both Google and the plaintiffs, the two parties to the case. In Frank vs. Gaos, he urged the court to “correct a serious abuse of the class-action mechanism that puts the interests of those it is intended to protect — class members — dead last.”

Frank, director of the Center for Class Action Fairness, says he intervenes in cases where he believes the lawyers “are operating in their own self-interest.” In the Google case, he said the lawyers could have established a settlement fund and waited to see how many people would file a claim.

Increasingly, he said, lawyers opt for a cy pres award because it allows them to settle the case with a minimal effort and a healthy fee. His appeal contends these settlements are quite common. They are “typical in the current wave of data-breach class-action settlements,” he said. Rather than compensate large numbers of people for injuries or losses, these settlements “transform the class action … into a fundraising opportunity for the class counsel’s favorite charities.”

The high court said it will hear a challenge to such arrangements in the fall.

“We are hopeful that the Supreme Court’s review will result in a standard forbidding attorneys from misusing class-action settlements to selfishly put themselves and third parties ahead of their clients​,” Frank said Monday in response to the court’s action.

Read the full article here.