January 30, 2018
In Leung et al. v. XPO Logistics, Inc., CEI is objecting to a class action settlement fee request in a case involving an IKEA contractor’s alleged violation of the Telephone Consumer Protection Act (TCPA). The TCPA is a law that protects consumers from telephone solicitations, and the IKEA contractor allegedly violated the law by calling customer cell phones for them to take an automated survey about recent furniture delivery by the contractor.
CEI argues the plaintiffs’ attorneys are attempting to overpay themselves by taking over one-third of the net settlement fund, or $2.33 million, which is substantially more than the median fee award in similar cases. The settlement proposes to distribute checks from a $7 million fund—less attorneys’ fees and administration costs—to the fraction of 313,000 class members who file claims. In TCPA class actions settlements, the median fee recovery for lawyers is 25 percent of the net recovery. Applying a more appropriate 25 percent fee structure in this case would return over $600,000 to the class members.
Plaintiffs’ attorneys also failed to document the time they spent on the case. Based on past TCPA cases, it’s likely a $2.33 million fee award is five or ten times the base amount of hourly fees (called a “lodestar”) that the attorneys would normally receive. Therefore, even a 25% award likely overcompensates attorneys.
November 13, 2017
CEI v. State Department seeks records under two Freedom of Information Act requests for documents relating to the December 2015 Paris climate agreement, including regarding State’s arguments about Paris’s “legal form”. Requests were sent Oct. 6 and Oct. 10, 2017, for emails of Trigg Talley, presently in Bonn at the Paris treaty talks, and Alexandra Costello, a Hill liaison who, a previous FOIA productions shows, corresponded with aides including Senate FRC Chairman Corker’s lawyer, to calm concerns after the NYT reported in August 2014 that Obama would declare Paris was not a treaty. Corker’s lawyer objected to the “disturbing contempt” for the Senate’s constitutional treaty role. CEI seeks to educate the public on State’s efforts to avoid Senate scrutiny.
October 5, 2017
The Competitive Enterprise Institute sued the Department of Justice for emails from former Attorney General Loretta Lynch’s alias email address that used the name “Elizabeth Carlisle." In yet another example of a high ranking official in the Obama administration using an alias email address, CEI sought emails from the Carlisle account which were to or from Rhode Island Senator Sheldon Whitehouse. To date the DOJ has failed to provide any response to CEI’s August, 2017, Freedom of Information Act request for these emails, so CEI is suing the department. CEI noted in its original FOIA request, a colloquy between former Attorney General Lynch and Sen. Sheldon Whitehouse at a March 2016 hearing of the Senate Committee on the Judiciary addressing Justice Department Operations. Ms. Lynch, responding to Sen. Whitehouse’s question about using the Racketeer Influenced and Corrupt Organizations Act, or RICO, against political opponents of the ‘climate’ agenda, stated:
“This matter has been discussed. We have received information about it and have referred it to the FBI to consider whether or not it meets the criteria for which we could take action on”.
This exchange rightly generated numerous headlines questioning this use of DOJ resources. This lawsuit is a next step in CEI’s investigation into Sen. Whitehouse's call for federal racketeering investigations of opponents of the political agenda pushed in the name of climate change. In previous document productions under state open records requests, CEI encountered the Senator corresponding (via his Cox.net account) with a Senate aide, a Judiciary Committee lawyer and various college faculty activists. Subsequently, Sen. Whitehouse engaged in a colloquy at a Judiciary Committee hearing with then-AG Lynch about using the DOJ for this purpose. Lynch stated indeed it was a matter her Department had considered.
October 3, 2017
In September 2017, in response to mounting information about the role of outside influence in developing the controversial Paris climate treaty, CEI submitted a Freedom of Information Act (FOIA) request for records relating to three top former officials in the Obama administration State Department. These requests included correspondence pertaining to two officials' work with two named environmentalist pressure groups which, records show, the officials had particularly close relationships in developing the pact. The officials are former Special Envoy for Climate Change Todd Stern and former "climate change legal advisor" Sue Biniaz.
The requests also sought certain emails and attachments pertaining to Mr. Stern's and Ms. Biniaz's roles in developing the Paris treaty's "legal form", including State's Circular 175 process and memo. Circular 175 establishes a procedure for determining whether a proposed international agreement should be negotiated as a treaty requiring Senate advice and consent through the Article II, Section 2 of the U.S. Constitution.
Finally, the requests sought Stern and Biniaz correspondence with former State Department Director of Policy Planning Jake Sullivan.
To date, State has provided none of the required demonstration it is processing CEI's request. With the list of stonewalls, including but not limited to litigation, which the Trump administration has yet to address, CEI filed suit Monday, October 2, 2017 to seek prompt production of records that could prove critical in the ongoing fight to get President Trump to reverse his June 1, 2017 pledge to withdraw from Paris.
September 15, 2017
CEI’s Center for Class Action Fairness objected to an unfair settlement deal resulting from the much-publicized 2013 data breach at retail giant Target Corporation. Forty-one million consumers had credit card information stolen and 60 million consumers had personal information stolen as a result of the data breach. But the subsequent settlement deal helped class attorneys far more than class members. The terms of the deal provided a $10 million fund to class members that, in reality, is unlikely to be exhausted, gave class counsel a disproportionate $6.75 million fee, and left a large subclass of class members with zero recovery.
Representing class member Leif Olson, CEI attorneys argued that the class action could not be certified because it froze out millions of class members, releasing their claims for no recovery, without separate representation. CEI further objected to the excessive fee request and the inclusion of a "kicker" clause, whereby any decrease in the fee request would revert to the defendant (Target).
Nonetheless, the United States District Court for the District Of Minnesota approved the settlement deal, and in 2016, CEI appealed the case to the United States Court of Appeals for the Eighth Circuit. The appeal challenged both the district court’s error that class certification could not be revisited once granted and the violation of a federal rule requiring attorneys who represent a class to fairly and adequately protect the interests of the class.
In February, 2017, CEI received an important ruling on its appeal. The Eighth Circuit remanded the case back to the district court, finding that the lower court abandoned its ongoing duty to ensure class certification was proper when the court had failed to consider CEI’s objections. Additionally, the judge reversed the lower court’s ruling for an unlawful appeal bond, resulting in $46,872 being returned to CEI.
August 30, 2017
The Competitive Enterprise Institute (CEI) sued the Department of Justice (DOJ) under the Freedom of Information Act (FOIA) on August 30, 2017, seeking documents behind a controversial take-down of thousands of university videos last spring. In March, 2017, the University of California at Berkeley removed over 20,000 online educational videos after DOJ claimed that they violated the Americans with Disabilities Act (ADA) due to allegedly inadequate captions.
In a FOIA request filed shortly after the take-down, CEI asked for documents relating to this and similar DOJ investigations. DOJ essentially denied the request, and CEI’s lawsuit challenges that denial.
August 25, 2017
CEI's Center for Class Action Fairness is challenging the legality of a class action settlement with Google that provides millions of dollars to the attorneys, and zero dollars to the class. Class members, who waive all rights to damages under the settlement, receive the same benefit whether or not they opt out.
In the original class action case, plaintiffs sued Google for alleged federal privacy violations over Google's circumvention of Safari browser users' privacy settings, but class counsel negotiated a settlement that provided $0 to class members and $5.5 million to be divided between class counsel and third-party charities. One of those charities is a non-profit for which co-lead counsel serves as chairman of the board, and several others are charities to which Google routinely donates, bringing into question the benefit to the class.
The Center for Class Action Fairness (CCAF) objected to the settlement, but was overruled by U.S. District Court for the District of Delaware on February 2, 2017. CCAF director and class member in this case, Ted Frank, filed a notice of appeal on March 1, 2017. CCAF is challenging the final approval of the class action settlement in the U.S. Court of Appeals for the Third Circuit.
In July 2017, 13 state attorneys general filed an amicus brief in support of CCAF's objection. The state attorneys general agree with CCAF that the feasibility of distributing funds depends on whether it's impossible to distribute funds to some class members, not whether it's possible to distribute to all class members. According to CCAF director and senior attorney Ted Frank, this is an important distinction that helps prevent nearly every class-action settlement from turning into an abusive cy-pres-only settlement, which harms class members.
August 22, 2017
In this class action, plaintiffs allege that Art.com violated consumer protection laws and committed unlawful business practices by offering items on "sale" but at prices it ordinarily offers to consumers in the regular course of its business.
Under the settlement, class members will receive $10 vouchers for use on Art.com's ecommerce sites. The settlement has hallmarks of the coupon-settlement abuse that Congress targeted with the Class Action Fairness Act of 2005: Class members were not able to choose cash in place of a voucher, the vouchers expire in 18 months, and they can be used only for the narrow range of products available on those websites, where the average purchase price is almost twice as much as the voucher. Art.com also agreed to comply with the law going forward and to undertake a compliance program -- illusory relief that will not benefit the class of past-purchasing class members. Meanwhile, class counsel is seeking $745,000 in fees and expenses, unopposed by Art.com, despite notoriously low coupon redemption rates and, thus, minimal class benefit, in low-value consumer settlements such as this.
On August 22, 2017, the court issued a ruling finding the vouchers are coupons, approving the settlement, and deferring the issue of attorneys' fees until the coupon redemption rate is known. We will now await the coupon redemption information and further word from the court.
July 21, 2017
CEI, the Consumer Advocates for Smoke-free Alternatives Association (CASAA), and former CEI employee Gordon Cummings today filed a lawsuit in April 2016 challenging a U.S. Department of Transportation (DOT) regulation that bans the use of electronic cigarettes on planes.
The lawsuit alleges DOT has no authority to issue such a ban and that the agency is illegally rewriting congressional law. In 1989, Congress authorized DOT to issue rules banning in-flight smoking. But, as DOT itself admitted when it first proposed to ban in-flight e-cigarette use, electronic cigarettes involve neither combustion nor smoke.
Until the final rule, issued in mid-February, airlines were free to voluntarily prohibit vaping aboard their aircraft, and most did. The airlines’ ban means that DOT’s rule is not only illegal but unnecessary.
On April 28, 2016, CEI filed its initial suit against the DOT before the United States Court of Appeals for the District of Columbia. On November 4, 2016, CEI filed its reply brief before the court. On April 10, 2017, the court heard oral argument in the case. Listen to the April 10 oral argument here.
On July 21, 2017, by a 2-to-1 majority, the appeals court said that DOT could ban e-cigarette use on planes under Congress’s 1987 no-smoking law for airlines. In a lengthy dissent, Judge Douglas H. Ginsburg stated that this was an unjustified distortion of the statute’s meaning. Airlines already ban vaping on planes, but DOT nonetheless imposed its own regulatory ban as well, essentially freezing those airline policies in place.
Sam Kazman, CEI general counsel, made the following statement on today’s ruling:
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."
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 28, 2017
The Competitive Enterprise Institute (CEI) is suing the Environmental Protection Agency (EPA) over its so-called Clean Power Plan in the U.S. Court of Appeals for the District of Columbia. CEI is joined by 11 co-petitioners, including the Buckeye Institute in Ohio, the Independence Institute in Colorado, and the Rio Grande Foundation in New Mexico, arguing the Clean Power Plan goes beyond the EPA’s legal authority and would significantly raise the cost of electricity for many Americans.
EPA’s Clean Power Plan ignores court rulings and legal interpretations, and rests on a novel interpretation of the Clean Air Act’s section 111(d). By setting emission limits for each state’s energy sector rather than for specific sources, EPA is attempting to force states to act—a commandeering tactic that is contrary to both the Clean Air Act’s structure of cooperative federalism and to the Constitution’s protection of state authority. And what is worse, the agency’s cost-benefit analysis is fundamentally false, resting on the alleged benefits of reducing co-pollutants rather than carbon dioxide.
CEI and the state organizations had previously filed regulatory comments with EPA, arguing the EPA is trying to force states to do their dirty work and enact their own state regulations. This is exactly why we have the Constitution, so that the federal government can’t bully the states with its agenda.
In January 2016, CEI's lawsuit was consolidated with challenges from 28 states and more than 120 companies and organizations into one multi-party case, State of West Virginia, et al. v. EPA. On May 16, 2016, the D.C. Circuit canceled the June 2 hearing before a three-judge panel and rescheduled our Clean Power Plan oral argument for en banc review--before the full court--on September 27, 2016. An en banc hearing indicates the judges consider it a matter of exceptional importance.
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 13, 2017
In July 2012, a CEI adjunct analyst posted a column on CEI’s blog, criticizing climate scientist Michael Mann and the 2010 investigation of his work by Penn State, where Dr. Mann teaches. Mann is a leading advocate of global warming alarmism, and was responsible for the controversial and much-disputed hockey stick temperature graph.
Shortly after being posted, the column, "The Other Scandal in Unhappy Valley," was excerpted by syndicated columnist Mark Steyn in a piece on National Review Online. Dr. Mann demanded a retraction of the article by National Review and, several weeks later, by CEI as well. His demands were rejected. This article became the basis for Mann’s defamation lawsuit against CEI, the adjunct analyst who wrote the piece, National Review and Mark Steyn.
Mann filed his complaint in D.C. Superior Court in October 2012. The defendants responded with motions to dismiss, invoking D.C.’s Anti-SLAPP statute and resting on Mann’s status as public figure. These motions were denied, and three of the defendants (CEI, the adjunct analyst, and National Review) filed an interlocutory appeal of that denial with the District of Columbia Court of Appeals. In April 2014, the appeals court permitted this appeal to go forward on an expedited basis.
A number of amicus briefs were filed in support of the defendants, on behalf of such organizations as the ACLU, the Reporters Committee for Freedom of the Press, Time, The Washington Post, and dozens of other major First Amendment entities. Oral argument was held in November 2014, before a three-judge panel.
Despite the fast-track status of the case, no ruling was issued until December 22, 2016. The court ruled against CEI, though it did dismiss several of Mann’s counts.
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.
The Center represents a homeowner objecting to a settlement of claims alleging that Wells Fargo received kickbacks on flood hazard determination fees charged to mortgagors. The settlement needlessly requires class members to submit a claim form to receive payment, a burden that will enable the class attorneys to obtain more than their fair share of the proceeds. Compounding the problem, the attorneys’ fee amounts to more than five times their usual billing rate.