June 5, 2017
On behalf of objector David G. Duggan, CCAF is appealing the approval of the settlement of a shareholder suit in which the plaintiffs' attorneys received $575,000, while the shareholders recovered only immaterial supplemental disclosures. The district court refused to apply the Seventh Circuit's landmark ruling against disclosure-only settlements in In re Walgreen Co. Stockholder Litigation, noting the lack of similar Fifth Circuit precedent.
The Walgreen ruling was a helpful step in protecting shareholders from getting the raw end of the deal in disclosure-only settlements, and CCAF hopes the court recognizes that the same principles apply in Aron v. Crestwood. See CCAF’s work in the Walgreen case here.
Oral argument in Aron v. Crestwood was heard on June 5, 2017. Listen to the oral argument here.
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 20, 2017
In 2013, CCAF (now part of CEI) objected to the fees in a securities class action in which class counsel sought an outsized percentage of the $590 settlement fund. Class counsel had submitted a $100.3 million fee request, which they claimed represented a lodestar (time they spent on the case multiplied by their hourly billing rates) of $51.4 million. But in reality, class counsel greatly exaggerated its lodestar by attributing $500-per-hour billing rates to temporary, $25-32-per-hour attorneys doing basic administrative work. To put it in perspective, the fee request would have amounted to over $900-per-hour spend on the case by temporary contract attorneys making $25-per-hour. And over 15 percent of the fee request was billed after the case had settled.
Based on CEI's objection, the U.S. District Court for the Southern District of New York reduced the fees substantially in August 2013, returning $26.7 million to the class. The case received national publicity and encouraged other courts to scrutinize fee requests more closely.
After settlement funds were distributed to shareholder class members over several years, class counsel returned to court on February 5, 2016 to request distribution of the remaining amount, $374,000, to three third party advocacy groups. The court granted this request on February 16, before allowing only 14 days for interested parties to file an opposition under the rules. CEI moved to reconsider the order and objected to the distribution, arguing that the advocacy groups chosen by class counsel did not meet the legal standards for cy pres as the “next best” recipients. “Next best” means people, after class members themselves, who best represent the interests of the class – in this case, Citigroup shareholders.
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.
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.