October 9, 2018
After nearly a year and a half without response from the agency, the Competitive Enterprise Institute is representing individuals taking the Federal Communications Commission to court over the 2016 Charter/Brighthouse/Time Warner cable merger. Arguing that the FCC has an obligation to respond to CEI’s June 2016 petition, the lawsuit requests the court to, urge the agency to respond to CEI.
The agency imposed harmful merger conditions on Charter that have nothing to do with the merger itself, which is why CEI filed a petition in 2016. CEI argued in their 2016 petition that the FCC doesn’t have the authority to put conditions in place when it comes to corporate mergers. These conditions will increase costs for consumers who will have to foot the bill for an overreaching federal agency.
In this lawsuit, CEI represents plaintiffs against the FCC in the U.S. Court of Appeals for the District of Columbia requesting a writ of mandamus.
On January 31, 2018, the D.C. Circuit ordered the FCC to respond to CEI’s petition.
On September 10, 2018, the FCC finally ruled after 25 months of doing nothing on CEI's petition for the agency to reconsider the conditions it imposed on the Charter/Time Warner Cable merger.
CEI Senior Attorney Melissa Holyoak responded to the FCC's order:
"CEI has demonstrated that the FCC imposed unlawful conditions on the Charter merger that would increase costs for consumers, who will have to foot the bill for an overreaching federal agency. Even though the FCC dismissed CEI’s petition, the FCC has no authority to micromanage the internet at the public’s expense and we are evaluating our options regarding appealing the FCC’s order."
October 4, 2018
In 2013, CEI's Center for Class Action Fairness objected to and then appealed the approval of a nationwide class settlement where 0.2% of the class received a cash benefit, a total of $225,000, and the remaining class members received low-value coupons. In the same settlement, $8.85 million went to the plaintiffs' lawyers and $3 million to local San Diego universities, including class counsel's alma maters. On appeal, the Ninth Circuit vacated the settlement approval and remanded for further consideration.
Plaintiffs claimed that the defendants' gift- and flower-delivery websites violated state and federal law by enrolling customers in rewards programs after luring them with the promise of worthless coupons. Oddly, class counsel negotiated a settlement consisting almost entirely of low-value coupons for class members. These coupons were nearly worthless as they expired after a year, were devalued because they precluded the use of standard freely-available 20% discounts, and could not be used on major holidays such as Valentine’s Day, Mother's Day, or Christmas. Nevertheless, the district court approved the settlement again on August 9, 2016, and CCAF again appealed the settlement approval.
At the Ninth Circuit, the plaintiffs filed a motion for summary affirmance that was denied. CCAF filed its opening brief on May 1, 2017. That same month, 13 state attorneys general filed an amicus brief supporting CCAF’s challenge. Oral argument will be heard on May 17, 2018.
September 28, 2018
On October 31, 2018, the U.S. Supreme Court will hear oral argument in the case Frank v. Gaos. On appeal from the Ninth Circuit, this case originates from an unfair class action settlement in Gaos v Google, a privacy lawsuit where plaintiffs sued Google for trillions of dollars in statutory damages for alleged federal privacy violations over their search engine.
CEI's Center for Class Action Fairness (CCAF) objected to the class action settlement negotiated by the plaintiffs' lawyers and Google because it provided $0 to class members, but divided $8.5 million between the plaintiffs’ lawyers and cy pres recipients. Under the settlement, the class members who claim harm are entirely ignored, while the class attorneys collect more than $2 million and a handful of third-party organizations—called cy pres recipients—receive over $5 million.
What’s worse is in this case, the cy pres recipients include class counsel's alma maters and several organizations that Google already supports through donations. This means Google was able to get rid of a lawsuit brought by 100 million class members by making no material changes to its practices and simply donating to many of the same groups it supports anyway. This unfair settlement is a textbook example of cy pres abuse and should be struck down by the court.
September 11, 2018
Last year the Center for Class Action Fairness (CCAF) and CEI won an appellate victory over the self-serving Walgreens shareholder settlement, where the Seventh Circuit labelled merger strike suits a “racket” that “must end.”
On September 18, 2017, CCAF attorney Theodore H. Frank moved to intervene and vindicate Walgreens’ directive to end such strike suits. The underlying cases concern the acquisition of Akorn, Inc. by pharmaceutical giant Fresenius Kabi AG. Plaintiffs in these suits have convinced Akorn to pay $322,500 in attorneys’ fees, although no benefit has accrued to the class—only immaterial supplemental disclosures, just as in Walgreens. The award of attorneys’ fees constitutes an end-run around Walgreens precedent and also appears to violate the Private Securities Litigation Reform Act (PLSRA) and basic principles of federal class action law.
The Akorn cases illustrate plaintiffs’ shift in tactics since CCAF’s win in Walgreens. Instead of settling merger strike suits, plaintiffs dismiss with the understanding they will apply for “mootness fees,” of hundreds of thousands of dollars per merger. This tactic has spread like wildfire in Delaware and the Federal Courts, and has enabled a dramatic uptick in merger strike suit filings. Suits against 95 merging companies were filed in the first half of 2017 compared to only 28 in the first half of 2016.
By intervening in the Akorn cases, Frank and CCAF hope to disgorge attorneys’ fees unjustly appropriated by strike suit files, and enjoin or at least discourage the filing of frivolous strike suits nationwide.
September 11, 2018
On May 2, 2017, CEI's Center for Class Action Fairness (CCAF) filed an objection on behalf of a class member to the proposed settlement in Kumar v. Salov North America Corp. This is a settlement over claims marketers of Filippo Berio olive oil deceived consumers by including the label “Imported from Italy” on their olive oil bottles, when many of the olives used to make the olive oil came from Greece, Tunisia, and elsewhere.
The settlement provides up to $5, without proof of purchase, to any consumer who is willing to attest that they relied on the product's “Imported from Italy” labeling when purchasing it. This limitation applies even though the class includes everyone who made a purchase, regardless of whether they relied on the “Imported from Italy” labeling. The settlement also enjoins Defendant from using the phrase “Imported from Italy” on its products - which matches what the company has been doing since 2015. The settlement provides attorneys’ fees and expenses of $982,500, which is four times the amount of cash they “won” for class members—a mere $210,985.
CCAF is challenging class certification, settlement fairness, and attorneys’ fees in this case. The fairness hearing was held on May 30, 2017, in Oakland, California. On July 7, 2017, the district court granted final approval of the settlement, even though more than 80 percent of the settlement fund would go to class counsel rather than the class members.
CCAF has appealed this decision to the Ninth Circuit and its opening brief was filed on November 20, 2017.
Read more about the Center for Class Action Fairness here.
September 7, 2018
Learn more about CEI's constitutional challenge to the Dodd-Frank Act and the administration's Consumer Financial Protection Bureau.
August 28, 2018
In this antitrust price-fixing case, the settlement includes a nationwide class indirect purchasers of lithium ion batteries in a variety of electronic equipment. Only about 26 states provide a cause of action for such indirect purchasers, however, and under federal law such purchasers do not have a cause of action.
As a result, a nationwide class of indirect purchasers unfairly disadvantages--and dilutes the recovery of--those indirect purchasers who have a legal cause of action in violation of Rule 23. One of the disadvantaged class members, Frank Bednarz, objected to the class certification and settlement fairness.
The district court approved the settlement on October 27, 2017.
“The class certification here not only ran roughshod over fundamental differences in state law, but contradicted Supreme Court and Ninth Circuit precedent, and the district court's own analysis,” said CEI Director of Litigation Ted Frank. “This is no mere technicality, but one that cost class members tens of millions of dollars.”
Bednarz has appealed to the U.S. Court of Appeals to the Ninth Circuit.
August 6, 2018
In November 2016, a Boston Globe’s Spotlight team reporter contacted Theodore H. Frank, director of CEI’s Center for Class Action Fairness (CCAF) concerning double-billing the Globe had spotted in a recent class action settlement by politically active Thornton Law Firm of Massachusetts. Thornton, along with two large plaintiffs firms, Labaton Sucharow LLP and Lieff Cabraser Heimann & Bernstein, LLP had received nearly $75 million in fees for their work on the case, and on November 10, 2017 the lead firm Labaton wrote to the court to advise it had double-counted hours from 17 different “staff attorneys” hired on a temporary basis, with charges worth over $4 million. The class attorneys asserted in the letter and still assert that the attorneys’ fee award in this matter was reasonable and should not be reduced.
July 30, 2018
Nationwide, 85 percent of all public merger transactions valued at more than $100 million faced litigation in the first ten months of 2017. In the vast majority of these lawsuits, the shareholder class recovers only “supplemental disclosures” providing only extraneous information, while plaintiffs’ lawyers get six-figure fees and defendants get a broad release of claims.
According to the Competitive Enterprise Institute, the settlement deal in Evangelista v. Duggan follows this pattern, as it provides no new information or value for shareholders, but instead allows plaintiffs’ attorneys to extort a substantial “merger tax” in the form of attorneys’ fees.
On behalf of shareholder Sean Griffith, CEI’s Center for Class Action Fairness is challenging this unreasonable settlement deal, which stems from the 2015 merger between Pharmacyclics and AbbVie, that gives $509,000 to the plaintiffs’ attorneys and yet, provides nothing but worthless disclosures to shareholder class members.
CEI is asking the California’s Sixth District Court of Appeals to overturn the settlement and adopt the same “disfavor” toward such disclosure-only suits adopted in other jurisdictions, including the Delaware Court of Chancery in its landmark Trulia decision and the Seventh Circuit in the Walgreen appeal won by CEI.
ABOUT: CEI’s Center for Class Action Fairness (CCAF) represents class members against unfair class action procedures and settlements. Since 2009, the center has secured millions of dollars for consumers and shareholders, winning landmark precedents that safeguard consumers, investors, and the courts.
June 26, 2018
The Center became involved in the case in 2014 when it objected to a class action settlement that would have provided attorneys $4.5 million but less than $900,000 to the class. On appeal, the Seventh Circuit agreed and reversed approval of the “selfish” settlement. Thanks to the Center’s objection, the parties negotiated a new settlement providing the class with more than $3 million additional recovery. The new settlement was approved August 25, 2016.
The new settlement was opposed by three professional objectors—that is, objectors who threaten to hold up a class action settlement unless they are paid to go away. Courts and commentators have criticized professional objectors, who essentially demand blackmail from settling parties. In this case, the settling parties are believed to have paid the three appellants to drop their appeals, which they did November 7.
On July 31, 2017, CEI filed its opening brief in its appeal of the district court’s handling of the new settlement in the 7th Circuit Court of Appeals.