This Factor Is Drawing Increasing Scrutiny in Class Action Settlements
National Law Journal discusses poor claims rates in class action lawsuits with CEI’s Center for Class Action Fairness founder Ted Frank.
Dismal claims rates, which are the percentage of potential class members who actually make claims to get compensated under a settlement, have long been an accepted outcome in many class actions. Few judges or lawyers have addressed the issue in the courtroom, and data on claims rates remains sparse.
But that might be changing. In November, the U.S. Federal Trade Commission subpoenaed eight claims administrators for information on notice procedures and response rates of class action settlements. The FTC said the subpoenas are part of its Class Action Fairness Project, which aims to improve class action settlements for consumers while making sure lawyers and defendants aren’t benefiting at their expense. This month, the U.S. House of Representatives passed a class action reform bill that, among many other things, would require lawyers in a class action settlement to turn over claims data to the Administrative Office of the U.S. Courts and the Federal Judicial Center. Even judges, like Smith, are starting to ask more questions about why more class members aren’t participating.
“It’s taken years for it to bubble up,” said Ted Frank, who has been pushing judges to look at claims rates since 2009, when he founded the Center for Class Action Fairness, now part of the Competitive Enterprise Institute. “And as more and more of these examples happen, people are going to recognize that this is a standard that class action settlements should be held to.”
Read the full article at National Law Journal.