September 7, 2018The Competitive Enterprise Institute, the 60 Plus Association, and the State National Bank of Big Spring, Texas brought a lawsuit in 2012 challenging the constitutionality of the Consumer Financial Protection Bureau (CFPB). The CFPB is a regulatory agency that has used its enormous, unchecked power to restrict and drive up the cost of financial products like mortgages and credit.
December 4, 2017
The Center for Class Action Fairness (CCAF) at CEI filed an appeal brief in the Transpacific Passenger Air Transportation Antitrust Litigation on November 4, 2015, in the U.S. Court of Appeals for the Ninth Circuit.
The underlying class action litigation alleged a conspiracy of numerous international air carrier defendants to fix prices in violation of the Sherman Act and sought recovery for passengers who had purchased transpacific air travel from the defendants and their alleged co-conspirators. Eight of the thirteen defendants have settled. This appeal relates to the district court’s approval of five of these settlements.
The case settlement contained excessive attorney fee requests of over $16 million and improper settlement class certification. Though class members had claims of wildly differing values, there was only one settlement class that treated all class members the same, leaving a settlement that was not proportional to the harm. The district court approved the settlements, but reduced class counsel's request for attorneys' fees and expenses by over $5.1 million, for the benefit of the class.
CCAF argues that the settlements inappropriately treat all class members identically despite facing materially different affirmative defenses, creating intraclass conflicts that preclude a finding of adequate representation.
Oral argument before the Ninth Circuit was held on April 21, 2017. The court ruled against CCAF's objection on June 26, 2017. CCAF subsequently filed for en banc review before the Ninth Circuit on July 10, 2017.
On August 10, 2017 the court denied CCAF’s request for en banc review.
On October 31, 2017, CEI filed a petition for writ of certiorari before the U.S. Supreme Court.
On December 4, 2017 the U.S. Supreme Court denied CEI's cert petition.
October 26, 2017
On behalf of Jonathan M. Crist, CEI’s Center for Class Action Fairness objected to plaintiff's renewed motion for attorneys' fees and expenses in a shareholder suit arising out of Verizon’s acquisition of Vodafone’s interest in Verizon Wireless.
As in the overwhelming majority of strike suits, the settlement in Gordon v. Verizon did not provide any monetary relief to shareholders. Instead, it provided immaterial supplemental disclosures and corporate governance change. For example, among the four disclosures class counsel identified as the “greatest hits” was one that simply put previously provided information into tabular form. In the renewed motion, plaintiff's attorneys sought $2 million in fees and expenses for their role in recovering this insignificant relief for the shareholder class.
The motion was filed on remand from the Appellate Division: The New York Supreme Court initially denied approval of the settlement. While, on appeal, the Appellate Division found there were minimal settlement benefits sufficient to approve the settlement and remanded for a determination of fees, the Appellate Division did not find that the benefit warranted the excessive $2 million sought by the attorneys and instead noted that fees should be commensurate with the benefit achieved, with minimal benefit resulting in minimal fees.
This objection is in a similar vein as CEI's victory in Walgreen, as we seek to expand to other jurisdictions the steps taken by the Seventh Circuit and Delaware to limit rent-seeking by plaintiffs' lawyers in deal litigation.
At a hearing on October 26, 2017, the court awarded a reduced amount of $1.5 million in fees and expenses.
Read more about CEI’s Center for Class Action Fairness here.
September 6, 2017
CEI’s Center for Class Action Fairness appealed the approval of several settlements in multi-district litigation concerning the sale of motor fuel, which has been ongoing for many years. In 2006-07, plaintiffs sued retailers for selling gasoline by volume, alleging that such sales failed to account for fuel expansion and contraction with temperature and constitute consumer fraud for failure to disclose the laws of physics. The cases were consolidated in the U.S. District Court for the District of Kansas.
Collectively, the settlements provide plaintiffs’ attorneys with nearly $19 million in attorneys’ fees, while absent class members receive nothing.
Costco was the first defendant to settle, offering zero dollars to the class, but millions of dollars in attorneys’ fees, and injunctive relief—a promise to install automatic temperature correction (ATC) pumps in certain states if it is legal. Currently, no state expressly allows fuel to be sold by anything except volume, and sales using ATC would actually harm consumers. A cost benefit analysis by the California Energy Commission concluded in 2009 that non-volumetric sales would result in a “negative or a net cost to society under all the options examined.” For these reasons, CEI successfully objected on behalf of class members to the Costco settlement in 2010, but the parties secured approval of a revised settlement in 2013. The district court would not decide fees until 2016.
August 25, 2017
In a victory for consumers, CEI’s Center for Class Action Fairness successfully objected to an abusive class action settlement in a case about the length of Subway’s “footlong” sandwiches. The proposed settlement benefitted only nine people in the class but awarded more than half a million dollars to the class attorneys. CEI argued this gross disparity was a flagrant violation of rules meant to protect class members.
The original class action lawsuit alleged that sandwiches sold by the Subway restaurant franchise sometimes fell short of the chain’s "footlong” marketing claims. But there was no dispute that the actual weight of the dough and the amount of ingredients was, in fact, uniform for each sandwich; and even the named plaintiffs in the lawsuit conceded that the exact length of the sandwiches didn’t affect their purchases or change their future plans to eat at Subway. In addition, prior to the litigation, the company had already taken steps to reduce the minor disparities that occasionally occurred in the length of its bread rolls during baking.
The U.S. District Court for the Eastern District of Wisconsin approved the settlement in February 2016, and CCAF appealed the decision to the U.S. Court of Appeals for the Seventh Circuit. CCAF argued the lower court’s approval of the award was contrary to case law, which establishes that class actions should not be allowed to proceed when their only effect is to enrich the lawyers for the class while producing no relief for the class members themselves. Oral argument was heard on September 8, 2016, and Judge Diane Sykes suggested that the underlying lawsuit “was opportunistic entirely.”
On August 25, 2017, the Seventh Circuit's ruling agreed with CCAF and rejected the settlement in the Subway case that would have paid plaintiffs’ attorneys $525,000 and left the class with nothing.
July 25, 2017
The Center of Class Action Fairness (CCAF) was appointed as a special amicus curiae to defend the judgement of the U.S. District Court for the Western District of Arkansas, which reprimanded five plaintiffs’ attorneys for acting in bad faith for the improper purpose of forum selection.
Instead of protecting the interests of their clients, plaintiffs’ attorneys signed a settlement to dismiss the case from federal court, where it had been removed, and immediately refiled in Arkansas state court, which was more likely to approve their questionable fee request. The settlement provided plaintiffs’ attorneys $1.85 million in fees, but only provided class members at most $300,000. After learning about this agreement from the Arkansas Business newspaper, the district court judge ordered that the attorneys show cause why they should not be sanctioned. After two rounds of briefing and hearings, the district court issued reprimands to five of the fifteen attorneys that had appeared, finding that these counsel abused the judicial process in bad faith. CCAF filed the brief following appointment as amicus by the Eighth Circuit because there was no appellee to defend the district court's decision.
On July 25, 2017, the U.S. Court of Appeals for the Eighth Circuit reversed the judgement of the district court ruling the plaintiffs attorneys did not violate the law.
June 16, 2017
Class member and CCAF attorney Anna St. John objected to settlement approval, class certification, and the request for attorneys' fees in Saska v. Metropolitan Museum of Art. The case involved the Museum's "pay what you wish" admission policy, in particular claims that the policy deceived the public in violation of state law. The proposed settlement provides class members with near-worthless injunctive relief, primarily in the form of changes to the wording of the admission price: "suggested" and "the amount you pay is up to you" will be substituted for "recommended."
At the same time, and in a clear signal of who the settlement was structured to primarily benefit, the class attorneys are seeking fees of $350,000. The proposed settlement suffered from the further defect that the proposed relief benefits only future museum visitors, while the class is defined to include only past visitors—many of whom will not visit the museum in the future and therefore will not recover even nominal value from the proposed policy changes.
The fairness hearing was held on May 5, 2017, at the Supreme Court of the State of New York, New York County.
On June 15, 2017, the court approved the settlement and requested attorneys' fee award in Saska v. Metropolitan Museum of Art. The court denied an incentive award for the named plaintiffs on the grounds it lacked authority to make such awards.
March 30, 2017
The CEI’s Center for Class Action Fairness (CCAF) represents an objector to a settlement over allegedly mislabeled food that proposes to pay class counsel over half the settlement fund, $1.35 million ($2593/hour), while ensuring that the class receives virtually no benefit. The proposed settlement resolves claims that Quorn Foods, Inc. mislabeled Quorn meat substitute by failing to disclose that the ingredient mycoprotein derives from mold rather than another type of fungus. CCAF filed the objection on March 30, 2017 in the Central District of California.
According the class counsel, the settlement should be treated as a $120 million constructive common fund because class members could receive full refunds if they provided itemized grocery receipts since 2012. In fact, this will not occur because documentation is required to receive even five dollars from the settlement, and class counsel failed to provide direct notice to any class member, instead relying exclusively on internet banner ads. Settlements without direct notice typically have a claims rate less below 0.25 percent.
Under Ninth Circuit law, the appropriate benchmark for fees is 25 percent, but class counsel requested $1.35 million, which is 54 percent of the $2.5 million settlement fund. The class likely receives ten percent of the fund or less. If class claims are low, nearly $1 million of the $2.5 million fund will be diverted to an unrelated cy pres beneficiary rather than the class, which further exacerbates the imbalance between attorneys’ fees and class recovery.
March 13, 2017
October 2013: CEI filed a FOIA request for work-related emails that John Holdren, Director of the White House Office of Science and Technology Policy (OSTP), kept on his private email account at his former employer, the environmental-pressure group Woods Hole Research Center. OSTP turned down the request, claiming that Holdren’s private account was outside its control and therefore wasn’t subject to FOIA.
May 2014: CEI filed a lawsuit to force OSTP to produce the emails as the use of non-official accounts for agency business frustrates federal open-government laws, undermines government accountability, and evades congressional oversight efforts.
March 3, 2015: U.S. District Court Judge Gladys Kessler upheld the agency’s position. She ruled that FOIA applied only to agency records controlled by the agency, and that Holdren’s private email account was off-limits. CEI appealed this decision arguing that personal email accounts of the White House top science advisor, John Holdren, should not be off-limits from the Freedom of Information Act.
August 10, 2015: CEI filed its opening brief before the U.S. Court of Appeals for the District of Columbia Circuit. In the brief, CEI argued that FOIA applies to the work-related records of agency employees regardless of where they are stored, and that agencies routinely instruct their staff to preserve any such documents that they have on their personal email accounts. The brief also argued that given the growing scandals over other top officials’ private emails, a reversal of the lower court’s ruling would be essential to putting teeth into FOIA, especially in light of President Obama’s claim that his administration is the most transparent in history.
February 21, 2017
In Blackman v. Gascho, the Competitive Enterprise Institute (CEI) sought Supreme Court review for a challenge to a lopsided class action settlement agreement that left over 90 percent of the class with nothing while the lawyers got an outsized, 60 percent share of the settlement fund.
In challenging the settlement agreement, CEI's Center for Class Action Fairness sought to protect the interests of the individuals who came together to form the class action suit against self-dealing class counsel and to deter other settlements rigged to benefit attorneys at the expense of their clients.
This case was formerly known as Gascho v. Global Fitness Holdings LLC. The original dispute involved allegations of consumer fraud over gym membership contracts with fitness club company Global Fitness Holdings, LLC. CEI challenged the 2013 settlement agreement over provisions such as:
- A $2.4 million pay-out for the class attorneys, compared to $1.6 million spread over 600,000 class members.
- A claims process that, instead of funding direct distributions to class members, distributes a share of the settlement fund only to those class members who submit a claim. That arrangement, in effect, ensures 90 percent of the class will receive nothing.
- Special protections added by attorneys to shield their fee award from any effort by the district court to reallocate that money back to class members.
In a 2-1 split decision, a three-judge panel from the United States Court of Appeals for the Sixth Circuit ruled in favor of the settlement in May 2016 after a lower court had earlier approved it. The dissent in the Sixth Circuit ruling noted the great disparity between the recovery by class counsel and the class itself, a disparity that should have “flunked any fairness inquiry” and criticized the methodology used to credit class counsel millions of dollars for claims that were never even made.