Attorneys Take All? Not If Ted Frank Is Around
Ted Frank and his Center For Class Action Fairness are taking on abusive class action decisions where the represented class gets little or no compensation and the lawyers take all. His latest, which he sent me by email:
The Center for Class Action Fairness LLC announced today its victory in the U.S. Court of Appeals for the Third Circuit objecting to a class action settlement that arbitrarily froze out over a million class members from meaningful recovery while paying the attorneys over $9.2 million.
On Thursday, the appellate court vacated a district court's 2010 approval of a settlement of a lawsuit over allegedly defectively leaky Volkswagen and Audi sunroofs.
While the settlement permitted many class members to submit claims for water damage, an uncertified and unrepresented "subclass" of over a million car owners received no financial compensation.
The settling parties defended this unjust result by arguing that the settlement provided these owners with a letter notifying them of the need for additional maintenance, and submitted an implausible economic expert report (adopted by the trial court) that this letter was worth millions of dollars.
The Third Circuit rejected the proposition that class members in the same class with the same claims could receive such disparate treatment.
Ted Frank, who argued the appeal in March, has now won three out of the four challenges to class action settlement approvals federal appellate courts have decided since he founded CCAF in 2009.
This case is particularly important because, in late 2011, an en banc panel of the Third Circuit decided in Sullivan v. DB Investments to reduce the scrutiny given to intra-class conflicts in class action settlements; today's decision confirms that Sullivan does not given carte blanche to unfair treatment of class members.
A few years back, after I read about what Ted Frank was doing on Overlawyered.com, I volunteered to be one of the lead plaintiffs in his challenge of the Costco gas decision. I love Costco, and really can't imagine, if there was some discrepancy in the gas I paid for and the gas I got, that it amounted to more than a few pennies. But, the Costco decision was decided with the class acdtion lawyers carrying off wheelbarrows of money ($10 million) and the represented class left very unrepresented financially (getting zero dollars), so I was pleased to join on.
More about Frank and the Center here:
The Center for Class Action Fairness is a not-for-profit program that provides pro bono representation to consumers and shareholders aggrieved by class action attorneys who negotiate settlements that benefit themselves at the expense of their putative clients. With a skeleton staff, it has won millions of dollars for class members over the last three years; it has won rejections of unfair settlements, pecuniary benefits for the class, and over $150 million in fee reductions in eighteen different cases. Attorneys affiliated with the Center have eight cases pending on appeal in the federal courts, and a ninth in Texas state court.