June 26, 2017
On behalf of class member Joshua Holyoak, CEI's Center for Class Action Fairness objected to class counsel's excessive fee request in Edwards v. Milk. Under Ninth Circuit law, the appropriate benchmark for fees in a common fund case is 25 percent. Here, class counsel sought nearly 40 percent. CCAF urged the court to reduce the percentage of fees to 25 percent of the fund, after excluding notice and administrative costs that do not benefit the class, which would allow the class to recover an additional $7.2 million.
On June 26, 2017, in a victory for CCAF, the U.S. District Court for the Northern District of California adopted some of our objections, reducing the plaintiffs' attorneys fee request by 25 percent, from more than $17 million to $13 million.
CCAF Attorney Anna St. John commented on the victory, "The Court rightly recognized that the results achieved by plaintiffs were hardly exceptional and reduced the bloated fee request accordingly. Another $4.3 million will now go where it belongs, to the class members, and not to further enrich the attorneys."
April 17, 2017
On September 16, 2016, CEI filed an objection on behalf of a class member to the proposed settlement in In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation. This settlement is the result of class action litigation following the Volkswagen emissions scandal that erupted in 2015. In re Volkswagen ʺClean Dieselʺ Marketing, Sales Practices, and Products Liability Litigation follows from Volkswagen's disclosure to the EPA and California Air Resources Board that Volkswagen installed software in certain diesel vehicles that was designed to bypass emissions standards.
In the case, class member Matthew Comlish objected to class counsel’s breach of fiduciary duty in negotiating a settlement that imposes costs on class members with zero marginal benefits. Class counsel misinformed class members that they could not obtain the relief provided by the class action settlement if they “opt out,” when the same benefits are available through settlements with the Department of Justice and the Federal Trade Commission. Further, class counsel provided insufficient information regarding their fee request, which could be as high as $332.5 million, though a competitive bidding process would have likely reduced that by more than 90 percent and returned hundreds of millions more to the class.
Comlish asked the U.S. District Court for the Northern District of California to postpone the fairness hearing and order class counsel to provide corrected notice, its attorneys’ fee request, and any agreement with Volkswagen regarding those fees. CEI also asked the court to order the FTC settlement to take effect immediately, so as to not let the class-action litigation further delay relief to Volkswagen owners.
The court approved the settlement on October 25, 2016. CEI attorney Anna St. John said the following about the settlement approval:
April 12, 2017
CEI's Center for Class Action Fairness (CCAF) filed an objection on July 1, 2016, to the proposed settlement in Allen v. Similasan, which proposed to pay the class nothing and the attorneys $545,000.
The settlement purported to provide injunctive relief in the form of label disclaimers and a website page hosted by the defendant homeopathic drug manufacterer. In fact, these appear to be promotional tools for the defendant and they provide no relief to the class in any event. Because the settlement provides nothing in exchange for release, CEI objected on behalf of absent class members, and urged the court to reject the cynical payday requested by class counsel. On July 28, 2016, the Attorneys General of eight states filed a brief supporting CCAF’s position and urging the court to reject the settlement. On August 10, 2016, the U.S. District Court of the Southern District of California denied the settlement and the motion for attorneys’ fees.
UPDATE: On April 12, 2017, the U.S. District Court of the Southern District of California granted preliminary approval of a greatly improved class action settlement.
In a victory for CCAF, the new settlement provides a $700,000 fund, which will provide more than $500,000 to class members, as a result of the Center’s involvement in the litigation. The original settlement provided only attorneys’ fees and meaningless label changes to class members.
The final hearing for settlement approval is set for August 7, 2017.
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 10, 2017
The Center for Class Action Fairness represents National class member Michael Barton in objecting to this nationwide class action. CCAF filed an objection on behalf of Barton April 11, 2016, before District Court for the Southern District of New York.
The settlement pays plaintiffs' attorneys $3.6 million, while only New York class members recover any cash. The divergence in recovery between the New York Class and the National Class evidences a conflict of interest for which class members’ interests were not adequately represented. Even if the Court does not decertify the classes on this ground, Barton argues that the settlement should be rejected as unfair due to the severe disproportion between class counsel’s recovery and class members’ recovery.
Other than the $100 recovered by the New York class, class members of both classes recover only a "date voucher," which the parties value at $450 but which cannot be transferred for any consideration and is useless to any class member who is not single or otherwise not interested in using IJL's date-matching services, and injunctive relief that only even potentially benefits future clients of IJL. Class counsel requests its full lodestar of $3.6 million based on a settlement valuation that assumes an entirely unrealistic 100% claims rate and redemption rate of the date coupons.
On March 10, 2017, in a victory for CCAF, the district court denied approval of the settlement. From the bench, and for many of the reasons discussed in Barton's objection, the Court observed that the proposed settlement provided little to no benefit to the national class and, thus, class members were better off retaining their rights than settling for the relief provided by the settlement.
November 30, 2016
CCAF objected to the approval of a settlement that allocates a disproportionate share of the settlement proceeds to the attorneys and has all of the hallmarks of an unfair, lawyer-driven settlement identified by the Ninth Circuit. Despite having class members' contact information and an awareness that consumer class actions such as this typically have single-digit claims rates, the parties required class members to file a cash-election claim to receive any cash benefit from the settlement. The non-electing class members will be sent a "value certificate" worth $11.50 in McAfee and Intel Security consumer products--coupons that the overwhelming majority of class members will never use. By structuring the settlement to provide such illusory relief, the defendant limited its payout while class counsel claimed an excessive fee award based on an inflated settlement benefit valuation derived from a fictional 100% claims rate.
July 29, 2016
On July 29, 2016 the U.S. District Court for the Eastern District of Pennsylvania ruled in Ascena v. Rougvie that the $14 million fee request by attorneys in a coupon settlement over Justice clothing store sales was excessive under federal law and that only $5.3 million could be currently justified.
The Competitive Enterprise Institute’s Center for Class Action Fairness (CEI) represented two class members objecting to the class action settlement arising out of fake "sales" at Justice stores. The settlement would unacceptably allow class counsel to capture 50% of the concrete settlement benefit, leaving most class members with nothing other than a coupon subject to severe usage restrictions.
August 20, 2015
The Center’s client objected to a settlement over Southwest drink coupons given to “Business Select” passengers as a perk. Thanks to the Center’s involvement in the case, in 2017 the parties agreed to a resolution providing class members triple the recovery than would have been provided under the 2012 settlement agreement.
Business Select drink coupons entitle passengers to receive one alcoholic drink, which otherwise costs $5. In 2010, Southwest added expiration dates to Business Select drink coupons so they would have to be used on the day of flight. This change invalidated any unredeemed coupons, which prompted plaintiffs’ lawsuit. The 2012 settlement would have provided one drink coupon for every valid claim submitted by a class member. Counsel proposed to award themselves $3 million in cash, not coupons. Plaintiffs implausibly claimed that the coupons would be worth up to $29 million, but the Center’s 2013 objection accurately predicted that few class members would ever file claims for their coupons.
The district court approved the settlement, but it reduced the fee request substantially and only awarded $1.65 million overall. The Center appealed approval of the settlement and plaintiffs’ counsel appealed the reduction in fees. The Seventh Circuit denied plaintiffs cross-appeal in 2015, but it also affirmed approval. The panel found that the case was unusual for a coupon settlement and that the district court had appropriately scrutinized and reduced fees. However, the panel agreed with the Center that counsel had improperly failed to disclose a possible conflict of interest, so further reduced the fee request and disallowed a $15,000 “incentive payment” to the apparently conflicted named plaintiff. The Center moved to rehear the matter en banc, which was denied.
August 10, 2015
In this action, Plaintiffs allege that defendant falsely marketed an ingredient in its antibacterial soap as eliminating 99% of germs.
CCAF objected to the settlement that would pay class counsel $2 million and would leave the class members with nothing but valueless labeling changes on a product defendant was no longer selling. The objection was overruled. CCAF noticed appeal concerning cy pres payments to non-class members, but dismissed the appeal when this became moot.
August 4, 2015
The Center for Class Action Fairness successfully objected to the settlement of an antitrust case where the class would only receive injunctive relief of uncertain value while class counsel seeks $75 million in fees. The settling parties had also tried to deter class members from opting out, which would waive unknown future claims. The court agreed with CCAF and rejected the proposed settlement on August 4, 2015.”