December 10, 2018
Class member and CCAF attorney Adam Schulman objected to settlement approval and class certification in Berni v. Barilla. The legal claim involves whether Barilla's cardboard pasta boxes contain an excessive and deceptive amount of empty space, a claim known as a "slack-fill". The proposed settlement provides class members with worthless labeling changes, simply adding a minimum fill line and an obvious disclaimer that the "product may settle". At the same time, and in a clear signal of who the settlement is structured to benefit, the class attorneys and named representatives are seeking combined payments of $450,000.
The fairness hearing will be held in December.
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 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.
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.
June 26, 2018
In this class action plaintiffs alleged violations of the Securities Exchange Act of 1934 and the Securities Act of 1933 arising from allegedly material misstatements and omissions by Brazilian majority-state-owned oil company Petrobras about the value of its assets and other financial matters, internal controls over financial reporting, and the transparency of its management and operations.
The settlement reached in the case will distribute funds to class members who purchased Petrobras securities in both domestic and foreign transactions. Foreign-transaction purchasers have no claim under U.S. securities laws, however, and, as a result, the allocation of funds to them dilutes the recovery for U.S. shareholders with valid claims.
This result was reached by counsel representing both sets of purchasers, despite their sharp conflict of interests. On behalf of class member William Thomas Haynes, CEI is objecting to the inadequate representation provided by class counsel as evidenced by this settlement process and result, as well as to the excessive fees sought by class counsel. Class counsel is seeking fees of $285 million based on nearly $100 million in overbilling in their alleged lodestar where no multiplier of the value of their time is warranted due to the low risk of the litigation or the result where the size of the recovery is largely due to the size of the class, scope of misconduct, and prior government enforcement actions.
Settlement approval is currently pending before the U.S. District Court for the Southern District of New York.
May 15, 2018
This class action relates to a data breach of Anthem's computer system containing personal information of 78.8 million people, with a claims-made settlement that proposes to pay $40.95 million to class counsel, $23 million to settlement administrators, and $52 million to the class in the form of credit monitoring and cash.
On behalf of class member Adam Schulman, CEI is challenging the excessiveness of the attorneys' fee request. In particular, CEI is arguing that because this is a megafund case, any fee award should be significantly less than the 25% benchmark; the unusually sizable settlement-administration costs require reduction in the valuation of the settlement; and plaintiffs' counsel drastically overstated their lodestar with millions of dollars of work by contract attorneys billed at excessive rates and with duplication of effort.
CEI asked the court to investigate overbilling that was not disclosed to the court or the class. Judge Koh agreed and appointed a special master to investigate overbilling in the Anthem case on February 8, 2018.
On April 24, 2018, the U.S. District Court for the Northern District of California released retired Santa Clara County Superior Court Judge James Kleinberg's special master report and recommendations based on his review of the time and expenses spent litigating the Anthem case.
April 23, 2018
In this class action plaintiffs alleged that the extended overdrawn balance charges that Bank of America, N.A. charged on consumer checking accounts violated the usury provision of the National Bank Act. Under the settlement, class members--those who were charged an EOBC that was not refunded during the class period--will receive a pro rata share of the $37.5 million cash fund or, if their account was closed with a negative balance, "debt reduction" up to $35 at a collective value of $29.1 million.
Class counsel sought attorneys' fees of more than $7700 per hour of work on the case. They requested fees of $16.6 million while their claimed lodestar is only $1.4 million. The alleged lodestar itself appears to be overinflated meaning that they are asking the court to award them between 11 and 18 times the value of the time they spent working on the case. At the same time, class members recover less than 10% of the potential value of their claims. On behalf of a class member, CCAF is objecting to the windfall fees requested by class counsel.
April 17, 2018
Cannon v. Ashburn is a class action involving claims that Wines 'Til Sold Out (WTSO) sold wines with advertised "Original Prices" and percentage discounts that were deceptive because the wines were never sold at that original price, and as a result, consumers were erroneously led to believe they received a greater discount than they did.
Under the first proposed settlement, class members who submit a claim would receive "credits" in an amount between $0.20 and $2.00 that can be used to purchase wine from Wines 'Til Sold Out through its website for a period of one year.
Although the parties failed to address the Class Action Fairness Act in their court filings, this settlement contained a number of abusive features that the Act sought to stamp out:
- Class members cannot choose cash in place of a "credit," meaning they are required to do business with the defendant in order to recover;
- the credits are only available through a claims process;
- the credits expire in one year; and
- a maximum of $2.00 in credits can be used toward each purchase.
Claims and coupon redemption rates in low-value consumer settlements such as this are notoriously low. While class members would receive nominal benefits under the settlement, class counsel negotiated $1.7 million in fees and expenses, unopposed by Wines 'Til Sold Out, without regard to the actual recovery by class members. The result was a settlement that impermissibly allocated the bulk of the settlement benefit to the class attorneys rather than class members.
April 10, 2018
Class member and CCAF attorney Anna St. John objected to settlement approval, class certification, and the request for attorneys' fees in Ma v. Harmless Harvest, Inc. The legal claim involved whether Harmless Harvest’s labeling representations that their products were “100% organic” and “raw” were accurate. The proposed settlement provides class members with worthless injunctive relief, simply codifying labeling changes that Harmless Harvest voluntarily made in 2015. At the same time, and in a clear signal of who the settlement is structured to benefit, the class attorneys and named representatives are seeking combined payments of $575,000.
Following a fairness hearing, the district court issued an order denying approval of the settlement and attorneys' fee award. The court agreed with CEI that the settlement is not fair, reasonable, and adequate, and cited the Subway Footlong case CEI previously won on the same merits.
CEI attorney Adam Schulman said, “The district court properly recognized that obligating the defendant to do what it was already doing benefits no one. When plaintiffs' attorneys seek a half-million-dollar payday, they must first confer a reciprocal benefit upon the absent class members. The court also found something even worse, that to the detriment of the class, class counsel was 'less than frank' about the benefit to the class and showed a 'willingness to avoid scrutiny.”