CEI Objects to Attorneys’ Windfall in Anthem Data Breach Megafund Settlement

Today, the Competitive Enterprise Institute’s (CEI) Center for Class Action Fairness objected to excessive attorneys’ fees in the settlement of In re Anthem, Inc. Data Breach Litigation, a class action that resulted from a data breach of insurance provider Anthem’s computer systems containing personal information of 78.8 million people. The settlement proposes to pay class counsel more than 40 percent of the settlement fund, or $41 million, while less than half of the fund will go to the millions of class members harmed by the breach.

CEI argues the attorneys’ fees are artificially inflated by the fact this is a megafund case with a $115 million settlement, the fee calculation includes $23 million in settlement-administration costs that should not count toward the valuation of the settlement, and the attorneys drastically overstated their lodestar.

“Consumers were injured by the Anthem data breach, and are being victimized again by class counsel that negotiated a settlement that seeks to pay the attorneys and settlement administrator more than the class, which will receive less than $1/class member,” said CEI senior attorney and director of litigation Ted Frank. “The fees request is too high by at least $26 million and, even worse, is inflated by class counsel’s deceptive billing practices of marking up menial work done by staff attorneys by as much as 1000 percent from market rates—even though one of the lead firms is already under a $3 million special master investigation in another case for the same abuse.”

CEI is calling on the court to follow the lead of the District of Massachusetts to retain a special master to investigate these practices to prevent overbilling at the class’ expense in this case and deter such action by class counsel in other cases.​

“We’ve come to expect ambitious fee requests, but overreaching by more than $25 million is beyond the pale,” said class member and CEI attorney Adam Schulman. “The attorneys’ fee request epitomizes the ills plaguing the class action industry: overbilling of time and expenses for the under-delivery of results to clients.”​

CEI’s Center for Class Action Fairness represents class members against unfair class action procedures and settlements. Founded by Ted Frank in 2009, the center has won millions of dollars for consumers and shareholders and won landmark precedents that safeguard investors, courts, and the general public.

>> See CEI’s objection and more about the case here.