Friday, September 19, 2014

Victory! Redman v. Radioshack

CCAF won a tremendous victory for class members in Redman v. Radioshack, just eleven days after oral argument!

Judge Richard Posner, a legal authority renowned worldwide, wrote an excellent and accessible opinion, explaining that class action plaintiffs' attorneys' fees must be proportionate to the benefit they've realized for their clients, and that a coupon is a coupon regardless of the percentage discount that it represents.

You can read more about the underlying case here. The oral argument made headlines last week, and is also a fun listen. (Ted Frank appears at 9:40 and 54:55.)


Monday, September 8, 2014

Redman v. RadioShack, Inc. / oral argument today

As we discussed earlier, class counsel agreed to a settlement over RadioShack credit-card receipt legality that would have paid themselves $1 million, but the 16-million-member class 83 thousand coupons with a face value of $10. The district court approved the settlement because (1) it held the $2.25 million spent to distribute those coupons was a class benefit and (2) the coupons weren't "coupons." Oral argument is scheduled this morning in the Seventh Circuit. Some time this afternoon or tomorrow, a recording of the argument will be available online.

The reply brief was fun, as plaintiffs were forced to defend an indefensible argument. From pages 5-6:

1.                  Plaintiffs rely on a logical fallacy.

It is not unfair to summarize plaintiffs’ proposed syllogism as follows:
1.         There exist websites that offer coupons where each coupon provides only a partial discount. PB26.
2.         There exists legislative history that criticizes a coupon settlement where the coupons offered provided only partial discounts. PB24-25; PB28.
3.         Therefore all “coupons” provide only partial discounts.
4.         Therefore a voucher for a free product is not a “coupon.” PB29-31.
The formal fallacy in plaintiffs’ logic is even more apparent in the following analogy:
1.         There exists a dog racing track where each racing dog is a greyhound.
2.         Actor Leonard Nimoy owns a dog that is a greyhound.
3.         Therefore all dogs are greyhounds.
4.         Therefore a collie is not a dog.
Nimoy’s most famous character had a catchphrase for this.[5]



[5] Cf. Leonard Nimoy, Highly Illogical on Two Sides of Leonard Nimoy (Dot Records 1968). Or, as Woody Allen once said, “All men are mortal. Socrates is a man. Therefore all men are Socrates.” Love and Death (United Artists 1975).

Wednesday, September 3, 2014

Oetting v. Green Jacobson / Oral argument September 10 in 8th Circuit on cy pres

Bank of America settled a nationwide securities class action in the E.D. Mo. for hundreds of millions of dollars. For some reason, the district court judge ordered that $2 million or so of the settlement fund not be distributed immediately. By a few years later in 2013 (after interest and restitution from a settlement administrator employee that had embezzled from the settlement fund), there's $2.7 million left over. At the behest of St. Louis class counsel, but over the objection of the class representative, the district court distributes that money not to the class, but to a local St. Louis charity. Class counsel rushes to hold a ceremony delivering the check notwithstanding the automatic stay on such things.

The class representative, David Oetting, retained us to take the lead on the appeal to the Eighth Circuit in a fascinating case where just about everything we complain about in the world of cy pres abuse took place. Oral argument is scheduled for the morning of September 10, and will be available at this link that afternoon or the next day. Law360 ($) coverage.

Tuesday, September 2, 2014

Laguna v. Coverall N.A.

Coverall N.A. settled a class action over janitorial franchises by paying a $1M attorney fee and setting up a claims-made process that would pay about $56,625 to the class. The parties justified this settlement by pointing out injunctive relief that some class members would be eligible for; if the maximum number of class members took advantage of the injunctive relief, they said, it would be worth $20 million. Wait a second, complained an objector: most class members will never take advantage of the injunctive relief because they're not eligible for it, and the court should get that data from the defendant to find out the true value of the injunctive relief before approving a settlement that might run afoul of Bluetooth. The district court approved the settlement without engaging in the inquiry: meh, maybe the injunctive relief isn't worth $20 million, but if it were worth $4 million, the settlement would be fair. (After all, perhaps the settling parties might exaggerate the value of injunctive relief by 400%, but what monster would ever exaggerate the value of injunctive relief by 20-fold or 100-fold?)

The objector (not represented by us) appealed. On June 3, the day after Eubank v. Pella Corp. was decided, the Ninth Circuit affirmed on abuse-of-discretion grounds, over a fervent dissent that pointed out the decision contradicted both Pampers and existing Ninth Circuit precedent. 

Now here's where it gets interesting. The objector petitioned for en banc review. While the petition was pending, Coverall paid him $15,000 to drop his appeal (more than a quarter of the cash relief paid to the class), and the objector did so. But Ninth Circuit judges can request a vote for en banc review sua sponte, and the Ninth Circuit issued an order demanding a response to the petition. That order granted leave to amici to file briefs on the subject, and how could the Center for Class Action Fairness resist? The appellant's en banc petition focused on conflicts with Ninth Circuit law, so our amicus focused on the circuit split created by Laguna, as well as the interesting and largely unresolved jurisdictional issues. 

Thursday, July 24, 2014

Allen v. Dairy Farmers of America

What happens when class counsel wants to settle and the class representatives do not? Rule 23(a)(4) and the Constitution require adequate class representation before individual class members can be bound. If class counsel can hijack a class and force a settlement when no class representative approves, it would seem to unconstitutionally abrogate the Rule 23(a)(4) inquiry. If class representatives have limited power to bind a class (as the Supreme Court has held in Standard Fire Ins. Co. v. Knowles and Smith v. Bayer Corp.), how can a class without any representation do so? And if a zombie class can proceed and settle without any class representatives, why have the Rule 23(a) requirements at all, and not just allow attorneys to sue on behalf of a class without any individual standing?

This issue is about to arise in Allen v. Dairy Farmers of Am., Inc., No. 5:09-CV-00230 (D. Vt.), where class counsel moved for preliminary approval of a settlement without a single class representative agreeing to the settlement. Unfortunately for the class representatives, the Second Circuit permits this shenanigan; unless the district court steps in, they will need to persuade the Second Circuit to reverse itself and join circuits like the Seventh that hold that class representation requires class representatives, or eventually take the case to the Supreme Court. The district court has so far withheld preliminary approval, so the class representatives may be able to prevail on the merits without need for resort to the niceties of constitutional law and procedural protections for absent class members, but this will someday be an issue that the Supreme Court resolves, and almost certainly resolves against current Second Circuit law.

Thursday, July 10, 2014

Letter to Chicago Lawyer Magazine

To the editor:

Your June 2014 article "Cy pres success" contains a material misstatement of the law, when it implies that giving the class's money to legal services organizations is invariably a "recognized approach to avoid granting awards to dubious organizations." A number of decisions, including Ira Holtzman, CPA v. Turza, 728 F.3d 682 (7th Cir. 2013), have held such cy pres recipients to be inappropriate, rejecting the reasoning of the article for such distributions. 

One might overlook this statement as an excusable oversimplification of a complex area of the law, except that the author's firm, McDermott Will & Emery, currently represents the National Legal Aid and Defender Association in at least two pending appeals (including one adverse to one of my clients, Oetting v. Green Jacobson, No. 13-2620 (8th Cir.)) where it is arguing for affirmance of cy pres awards against existing precedent. This conflict is nowhere disclosed in the article.

Very truly yours,

Theodore H. Frank
Center for Class Action Fairness
Washington, DC