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Archive for June, 2008

I couldn’t resist commenting on this tidbit of class action-related news today.  A New Jersey federal judge has granted a motion for extention of time to amend the complaint and make service of process in a would-be class action filed by a disgruntled New York Jets fan against the New England Patriots and their coach, Bill Belichick arising out of the well-publicized “Spygate” scandal.  The original complaint reportedly sought certification of a class of Jets season tickets holders and alleges that the acts of the Patriots and their coach in secretly videotaping opponents’ signals, which cost the Patriots a first round draft pick and drew calls for a Congressional investigation by Pennsylvania Senator Arlen Spector, violated the “contractual expectations and rights” of plaintiff and the would-be class “to observe an honest match played in compliance with all laws and regulations.”  See the full article below.

http://www.miamiherald.com/858/story/584669.html

I’m not prepared to comment about the likelihood of class certification or success on the merits of this case if the defendants ever get served, but I will say that as a life long Seattle Seahawks fan and season ticket holder, I’ll be watching this case intently as a test case for a possible class action against the officiating crew from Super Bowl XL for violating my rights “to observe an honest match played in compliance with all laws and regulations.” 

If you’re a Seahawks fan too, you’ll know what I’m talking about. 

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If you’re interested in what “appropriate” governmental officals could do after receiving notice of a federal class action settlement, here’s a case that might interest you.  (See my earlier entries on the official notice requirements of 28 U.S.C. 1715 dated March 28 and April 9).  In Figueroa v. Sharper Image Corp., Case No. 05-21251-CIV-ALTONAGA/Bandstra (S.D. Fla., Oct. 11, 2007) (Click Here for a Copy of the Order), the court denied final approval of a coupon settlement in no small part due to an amicus brief critical of the settlement filed by Attorneys General of about 35 states and the District of Columbia.  This is one of the rare cases after the passage of CAFA in which government officials have actually taken steps to comment on the settlement after receiving notice, but it reflects both the influence that government officials may have on a class action settlement if they believe that it is necessary to take action and  means by which they might take action if they choose to do so.  The statute does not prescribe or even expressly permit any particular action to be taken by officials in response to a CAFA notice, but as the Sharper Image decision illustrates, an amicus brief filed by one or more officials in objection to a settlement is likely to strongly influence the court’s final approval decision.

Many thanks to Andy McCallin of the Colorado AG’s office for tipping me off to this decision.  Andy gave a fantastic presentation today on the role of the “appropriate” state officials under CAFA for the inaugural CLE luncheon sponsored by the CBA Class Actions subsection.

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Here are some links to blog entries that might be of interest to class action practitioners from this past week…

Class Action Scandals

Portfolio.com comments on unidentified “conspiring former partners” implicated in the Milberg Weiss kickback scandal.

http://www.portfolio.com/news-markets/top-5/2008/06/24/Former-Milberg-Partners-Identified

Natural Gas Guru comments on the wire fraud trial of two lawyers arising out of a settlement in a Kentucky fen-phen class action…

http://natgagu.blogspot.com/2008/06/way-class-action-really-work-from-fen.html

PPH Legal Blog discusses the testimony of class action “guru” Stanley Chesley in the same trial…

http://pphlawyer.attorneysandlawyers4you.com/2008/06/18/class-action-guru-takes-stand-in-fen-phen-trial/

…and more on the conclusion of the trial from Letter of Apology

http://letterofapology.com/2008/06/24/kentucky-fen-phen-case-goes-to-jury-today/

and PointofLaw:

http://www.pointoflaw.com/archives/2008/06/fenphen-wrapping-it-up.php

Class Action Procedure

California Labor & Employment Law Blog discusses a recent California case upholding a defendant’s right to move to strike class allegations prior to class certification.

http://www.callaborlaw.com/archives/court-decisions-motion-to-strike-class-allegations-upheld.html

Class Action Defense Blog provides a thorough summary of a recent decision involving conditional certification and later decertification of a collective action under the Fair Labor Standards Act (FLSA) and discussing the interplay between Rule 23 and the collective action procedure applicable to FLSA actions.

http://classactiondefense.jmbm.com/2008/06/flsa_class_action_defense_case_14.html

Thanks to The D&O Diary for providing a link to a commentary by Law Prof on the Looseon a novel procedural device for bringing representative actions called “aggregator” standing.  (for more on the various types of representative actions, see Partial Glossary of Representative Actions and Terms).

http://www.dandodiary.com/2008/06/articles/foreign-corrupt-practices-act/anticorruption-enforcement-stalemate-and-other-web-notes/

http://jsiegel.blogspot.com/2008/06/standing-in-quicksand.html

Class Action Reform

American Courthouse summarizes a paper by California State Senator Tom Harman regarding a class action reform bill he has proposed.  (See my previous entry about Senator Harman’s bill here.)

http://americancourthouse.com/2008/06/20/cleaning-up-class-action-abuse.html

Corpreform challenges Judge Richard Posner’s observation that “[t]he realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.”

http://www.corpreform.com/2008/06/am-i-a-lunatic.html

Tort Deform comments on a recent New York Times Article addressing recent tort reform issues, including a comparison of the lobbying efforts of pro-business groups versus trial lawyer groups, proposed legislation, public relations efforts, and other aspects of the battle for and against tort reform…

http://www.tortdeform.com/archives/2008/06/my_take_on_the_tort_wars.html

…and more on the same article from Mass Tort Litigation Blog

http://lawprofessors.typepad.com/mass_tort_litigation/2008/06/viewing-the-bat.html

International Class Action Law

Phil Law Weblog reports on a class action filed by British citizens against to reclaim alleged property tax overcharges from the Spanish Government.

http://law.taragana.net/archive/brits-file-class-action-lawsuit-against-spanish-govt/

Class Certification Decisions

Classified discusses an Alabama federal court’s recent decision to certify a class of pharmacies in a breach of contract case, despite objections by the defendant that the class representatives were inadequate due to their lack of knowledge about the case.

http://www.carltonfields.com/classactionblog/blog.aspx?entry=224

Miscellaneous Class Action News and Commentary

Good Honest Dollar $$ provides a nonlawyer’s perspective on the positives and negatives of shareholder class actions.

http://www.goodhonestdollar.com/shareholder-class-actions-good-for-lawyers-or-shareholders

Overlawyered comments on objections to a class action settlement in which plaintiffs’ counsel allegedly “fished for a lead plaintiff” after reaching a settlement agreement with the defendant.

The Lighter Side of Class Actions

Avatar Briefs proposes a class action by “all the refined citizens of the world” against “all low and high rise g-string wearers” while commenting on a recent lawsuit filed by a woman who was allegedly injured while trying on a g-string.

http://avatarbriefs.blogspot.com/2008/06/class-action-against-g-string-wearers.html

And finally, The Complex Litigator offers commentary on the class action potential of wage and hour claims brought by several exotic dancers against nightclubs, admitting that “I just wanted the chance to discuss news about dancers suing for better wages, and now I have.”

http://www.thecomplexlitigator.com/2008/06/future-class-ac.html

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Sarah Waldeck, contributor to a great general interest law blog called Concurring Opinions, has posted a commentary discussing the recent decision to certify a class of out-of-state law graduates challenging Wisconsin’s “diploma privilege,” which allows in-state graduates to be admitted to practice without taking the bar examination.  Ms. Waldeck’s article raises questions about the social utility of a state requiring recent graduates to take the bar examination at all, sparking some thoughtful comments in response.

I don’t have a strong opinion about the benefits of requiring admittees to take the bar examination generally.  I supposed that if I’m really honest about it, my view is similar to my view on freshman initiation when I was a high school senior: I had to go through it, so you should too.  A requirement that every new admittee have passed at least one bar exam provides a minimal test of the analytical abilities and, perhaps more importantly, the level of commitment to preparation and study necessary to provide competent representation to the lawyer’s clients.  But surviving three years of law school demonstrates these skills to some extent too.

A more important question to me is whether there is any practical benefit to a state requiring applicants to take its own bar examination, when most of what gets tested is similar from state to state anyway and when the vagaries of a state’s unique laws and procedures are not likely to sink in without the repetition of practice anyway even when one has attended law school in that state.  Having taken and passed the ethics portion of the Washington state bar exam earlier this year, part of me is leaning toward the “I had to do it, you should too” attitude on that issue too.  But then again, like many commercial litigators with clients who do business nationwide, it is not feasible to restrict my practice to a single state, nor is it feasible to meet the general admission requirements of every state where one of my clients might get sued some day. 

See my earlier entry discussing Wisconsin class certification decision followed by loosely-related musings on mulitijurisdictional practice of law here.

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Class action settlement issues provided fuel for commentary in the class action blogosphere this week, and there was still plenty of analysis and debate about the recent class action lawyer scandals.  Here are links to those and other blog postings that might be of interest to class action practitioners:

Class Action Settlements

Wage Law analyzes a series of recent decisions by the U.S. District Court for the Northern District of California reluctantly approving a settlement in a wage and hour class action, ultimately granting final approval, but reducing the fee award requested by plaintiffs’ counsel.  The opinions offer a warning to both sides in making sure to tend to the details negotiating and implementing a class action settlement:

http://wagelaw.typepad.com/wage_law/2008/06/the-emerging-tr.html

Trial Ad Notes has an interesting discussion of a provision of the Washington State version of Rule 23 that requires that a portion of “residual funds” from class action settlements be paid to the state’s legal aid foundation.

http://trialadnotes.blogspot.com/2008/06/cy-pres-and-class-action-funds-in.html

Unusual Activity profiles a “professional objector” to class action settlements.

http://www.unusualactivity.com/2008/06/profile-of-a-pr.html

The D&O Diary comments on the social utility of a changes made to the terms in a settlement in a options backdating derivative action that reportedly was preliminarily approved last week after an earlier settlement had been rejected:

http://www.dandodiary.com/2008/06/articles/corporate-governance/restatements-clawbacks-and-cfo-career-consequences/

Class Action Scandals

Overlawyered offers a rebuttal to disgraced class action lawyer William Lerach’s recent essay “I am guilty.”

http://overlawyered.com/2008/06/rebutting-bill-lerach-in-portfolio/

See the full rebuttal article on Portfolio.com here…

http://www.portfolio.com/executives/features/2008/06/16/Walter-Olson-Answers-Bill-Lerach 

…and the original essay here:

http://www.portfolio.com/executives/features/2008/06/02/Bill-Lerach-Essay

WSJ Law Blog reports on the testimony of class action “guru” Stan Chesney in the trial of two Kentucky lawyers accused of wire fraud in connection with the settlement of a fen-phen diet drug class action.

http://blogs.wsj.com/law/2008/06/17/class-action-guru-stan-chesley-takes-stand-in-fen-phen-trial/

Letter of Apology reports on the settlement reached between class action firm Milberg Weiss and the Department of Justice to resolve various criminal charges arising out of illegal kickback schemes involving several of its former partners.

http://letterofapology.com/2008/06/17/milberg-settles-criminal-case/

Class Action Decisions

The Complex Litigator comments on recent California authority on shifting of the burden of proof in wage and hour class actions.

http://www.thecomplexlitigator.com/2008/06/more-on-amaral.html

Technology Law Update discusses a recent class certification decision by the U.S. District Court for the Western District of Texas in a case filed against several online travel companies involving occupancy taxes.

http://brownraysman.typepad.com/technology_law_update/2008/06/texas-district.html

Virtually Perfect 3.0 discusses recent decisions on both class certification and the merits of a lawsuit filed under the Americans with Disability Act and several California laws against an online retailer for allegedly failing to make its Website accessible to the blind.

http://fritzboyle.edublogs.org/2008/06/11/legal-precedent-set-for-web-accessibility/

CAFA Issues

Classified offers multiple recent entries discussing CAFA (Class Action Fairness Act) removal decisions:

http://www.carltonfields.com/classactionblog/blog.aspx?entry=220

http://www.carltonfields.com/classactionblog/blog.aspx?entry=219

How Appealing details a Seventh Circuit opinion authored by Chief Judge Frank H. Easterbrook on the proper interpretation of the time limitation for appealing remand orders under CAFA.

http://howappealing.law.com/061108.html#029130

Civil Procedure

SCOTUSBlog recaps a recent U.S. Supreme Court addressing complex sovereign immunity and FRCP 19 indispensable party issues in an interpleader action brought to resolve a dispute over assets attached by a class of human rights victims who had previously obtained a judgment against former Philippines President, Ferdinand Marcos where the same assets were also being claimed in a separate action under Philippine law by the Republic of the Philippines.  If you think that description is complicated, read the opinion!

http://www.scotusblog.com/wp/opinion-recap-republic-of-the-philippines-v-pimentel/

Class Action Defense Blog reviews a recent order of the Federal Judicial Panel for Multidistrict Litigation (MDL) granting a home lender’s motion centralization of related subprime class action lawsuits filed in various federal courts.

http://classactiondefense.jmbm.com/2008/06/class_action_defense_casesin_r_96.html

Other Representative Actions

Mass Tort Litigation Blog and Drug and Device Law Blog review a recent U.S. Supreme Court decision addressing the concept of nonparty virtual representation:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/06/taylor-v-sturge.html

http://druganddevicelaw.blogspot.com/2008/06/taylor-v-sturgell-on-virtual.html

Canadian Class Action Trends

thespec.com summarizes recent trends in Canadian class actions.

http://www.thespec.com/article/385060

The Bizop News discusses an unsuccessful Canadian class action in which the defendant was awarded a more than $200,000 in costs.

http://www.bizop.ca/blog2/canlii-2008-canlii-27822-on-sc.html

Class Action and Tort Reform

See these links for a spirited debate between the authors of American Courthouse and AttorneyButler.net about the merits of a proposed $1.6 billion tax break for lawyers who front expenses in contingent fee lawsuits.

http://americancourthouse.com/2008/06/05/a-16-billion-earmark-for-trial-lawyers.html

http://www.attorneybutler.net/2008/06/dan-pero-americ.html

and more on the news on the same proposed legislation from Point of Law:

http://www.pointoflaw.com/archives/2008/06/tax-break-for-trial-lawyers-bl-1.php

Law and More offers an analysis on possible ways to combat mass food contamination, offering litigation, including “the threat of class-action, individual, and shareholder lawsuits” and the imposition of strict liability against manufacturers. 

http://lawandmore.typepad.com/law_and_more/2008/06/a-lawyers-perspective-on-global-food-poisoning—bill-marler-in-london.html

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The Associated Press reported today that United States District Judge Barbara Crabb of the Western District of Wisconsin has certified a class action filed on behalf of out-of-state bar applicants.  (See the article as published in the Chicago Tribune here.)

What piqued my interest about this case was not that a class was certified but rather the potential impact of the underlying claims in the case, which challenge individual state restrictions on the right to practice law.  The named plaintiff is reportedly a recent law graduate from Oklahoma who argues that Wisconsin’s rule allowing in-state law graduates to be admitted without taking the bar examination is unconstitutional.  The particular constitutional grounds are not discussed in the article, but presumably among the arguments raised is that discrimination among bar applicants based on whether an applicant’s law school is in-state or out of state, violates the privileges and immunities clause and the dormant commerce clause.  These arguments have been used to attack states’ restrictions on admission to practice law with varying success. (See this Eleventh Circuit Court of Appeals’ decision and the cases cited within as examples).

The development of the law regarding bar admission restrictions is of special interest to those of us who practice in the areas of class actions and other complex civil litigation, where multi-jurisdictional practice is becoming the norm.  While a litigator can often without much trouble appear in specific cases in other states under the rules permitting pro hac vice admission, some states’ rules have become increasingly protectionist in preventing out-of-state lawyers from appearing even for this limited purpose.  For example, my home state of Montana limits any given lawyer or firm to 2 appearances after 1998, without any end date, absent a showing of good cause.  Admissions for good cause are “not to be routinely granted” and would include, by way of example, instances where the applicant “possesses experience or expertise not commonly available in the membership of the State Bar of Montana or where the attorney or firm is acting as counsel in a multi-state class action [but evidently not a state-wide class action].”    Montana Pro Hac Vice Rule.  

The ABA has proposed various model rules relating to admission by motion or reciprocity, pro hac vice admission, and other aspects of multi-jurisdictional practice, which are intended to strike a balance between the realities of multi-jurisdictional practice and the need for individual states to be able to regulate the conduct of out-of-state lawyers’ conduct.  See the ABA Commission on Multijurisdictional Practice webpage here.  The webpage has a chart outlining which states have adopted which model rules (Note, you may need to be an ABA member to access these links).

By the way, those of us who are already licensed elsewhere won’t be able to just wait for the outcome of the Wisconsin case to apply for admission there.  According to the AP article, the class is limited to those out-of-state law graduates who apply for admission within 30 days of graduating from law school.

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This article on claims-made settlements appeared originally in the guest column section of the March 10, 2008 issue of ProductLiabilityLaw360.  Under the submission guidelines, I retain copyrights to the article, but I was required to wait at least three months before reprinting the article elsewhere.

Claims-Made Settlements In Consumer Class Actions

Monday, Mar 10, 2008 — In recent years, commentators, consumer advocates, and courts have become increasingly critical of perceived abuses in consumer class action settlements.

Recent changes to Rule 23, Federal Rules of Civil Procedure, and provisions of the 2005 Class Action Fairness Act impose express requirements on courts for assessing the constitutionality and fairness of class action settlements before approving them.

Much of the debate has focused on so-called “coupon” settlements, in which class members are given coupons with little or no value in exchange for a release of claims by the class against the defendant and payment of substantial attorneys’ fees to class counsel.

In light of debate at the federal level, state court judges are also reviewing class action settlements with a more critical eye.

In the context of this additional scrutiny, attorneys in consumer class actions still face the challenge of trying to fashion a settlement acceptable to both sides or face the prospect of years of prolonged and expensive litigation.

One tool still available to counsel in meeting this challenge is the claims-made settlement, in which the defendant agrees to pay a monetary settlement award to qualifying class members who mail in a claim for a payment.

Claims-made settlements can be controversial because like coupon settlements, they do not ensure monetary relief to every member of the class.

However, claims-made settlements can provide a win-win solution for all of the true stakeholders in a consumer class action. They can maximize the relief available to individual class members who take the minimal steps necessary to participate, provide reasonable compensation to the attorneys and class representatives who took the time and effort necessary to pursue the class action, and still keep the cost of the settlement low for the defendant.

If they are done right, claims-made settlements remain a viable tool for resolving consumer class actions despite the atmosphere of additional scrutiny.

Each class action settlement is unique, but there are several common methods for distributing relief to the class. They include: (1) direct payment; (2) fund; (3) claims-made; (4) coupon; and (5) equitable relief.

Two or more methods may be used in combination as part of an overall settlement structure. In a direct payment settlement, class members are sent payments or have accounts credited directly without having to take any affirmative action.

In fund settlements, the defendant pays an agreed sum to a fund that may then be used to pay for settlement costs, attorneys’ fees, and cash awards to class members. Class members may or may not have to file claims for benefits as part of a fund settlement.

In coupon settlements, class members are sent coupons for free or discounted products or services from the defendant, which provide actual monetary benefits only to the extent the coupons are redeemed. Equitable relief, in which the defendant agrees to change its conduct in the future, may be provided on its own or in addition to other relief.

The basic mechanics of a claims-made settlement are typically as follows:

The defendant agrees to pay a monetary award to class members who return a timely claim form after receiving notice of the settlement.

Only qualifying class members who timely mail in claim forms are entitled to payment; no settlement fund is created.

The settlement agreement includes a release of claims by all class members, whether or not they submit a claim, unless they exclude themselves pursuant to Rule 23.

Administrative costs and attorneys fees are paid separately from the amounts to be paid to claimants.

Within this basic structure, there can be many variables.  For example, the award amount can be calculated in numerous ways. It can be a set dollar amount, a percentage of an agreed calculation of the plaintiffs’ alleged damages for each class member, a formula that reasonably approximates the harm to each individual, etc.

The notice plan may also differ from case to case. Common means of providing notice include direct mailings to class members, publication in newspapers or other media, or a combination of mailing and publication.

Claim form requirements also can vary. In some cases, each claimant may simply be asked to correct any address information and sign a claim form. In other cases, additional information may be requested to assist in the calculation of award amounts. The amount of verification needed for claims will also vary.

The response rate to a claims-made settlement can vary depending on the makeup of the class, the amount of individual awards, the geographic scope of the settlement, and numerous other factors. Predicting response rates is an art, not a science.

Although it is impossible for a defendant to predict the response rate with certainty, consulting with attorneys and class action administrators with experience in claims-made settlements can help to at least provide a ballpark estimate of what the settlement will ultimately cost.

The claims-made approach differs from other common methods for distributing class relief in several key ways. Unlike direct payment settlements, no payments are made without class members taking the affirmative step of returning a claim form.

Unlike fund settlements, the amount the defendant must pay is not predetermined.  Instead, the defendant only pays to the extent claims are made.

This also means that the defendant’s risk is not capped. Also, in a fund settlement, attorneys’ fees and administrative costs are often paid out of the fund, which reduces the amount of money available to class members. These amounts are usually paid separately in a claims-made settlement.

Finally, despite sharing with coupon settlements the characteristic that class members must do something affirmative to enjoy benefits of the settlement, claims-made settlements are not coupon settlements. Real money is paid.

The unique characteristics of claims-made settlements provide advantages over other possible methods of distributing relief. They can allow the parties to maximize the amount of individual awards available to those class members who take the time and effort to make a claim, while minimizing the overall cost to the defendant of funding the settlement.

This makes it much easier to reach an agreement. Certain administrative costs are avoided because there is no fund. There is no need to set up a structure to deal with unclaimed funds because only those award amounts that are claimed are to be paid.

This eliminates the need for settlement provisions for distributing unclaimed funds, which commonly require that unclaimed funds be paid to a charity or to the state or revert back to the defendant.

Finally, the amount of money available to a class member is not reduced by administrative costs and attorneys’ fees because those amounts do not come out of a common fund.

Despite these advantages, the claims-made settlement is not without criticisms. The criticisms can be grouped into two categories.

The first relates to traits inherent to the claims-made settlement structure that cannot be changed but may be explained and justified. The main criticism in this category is that not all class members are guaranteed relief. This is true, and, in fact, in many cases the number of class members who actually make a claim may be quite low, especially in cases where individual award amounts are low.

As a philosophical matter, a response to perceived unfairness in not guaranteeing relief to the entire class is that the structure maximizes the potential relief afforded to any given individual class member who is interested enough in obtaining relief to participate.

A defendant is much more likely to agree to a higher individual settlement award when faced with the prospect that it will not have to pay 100% of the claims of all class members.

Therefore, while the settlement structure does not guarantee an award to all class members, it does maximize the opportunity available to each class member.

Moreover, oftentimes there is no way to guarantee monetary relief to each class member regardless of the settlement structure, especially in those cases where the defendant lacks contact information for all or part of the settlement class. So, forcing the defendant to pay 100% of all possible claims often does not guarantee that class members will receive those benefits.

Whatever the justification for not guaranteeing relief to all class members in a particular case, courts generally have not rejected claims-made settlements for this reason alone.

Courts typically look to the reach and adequacy of the notice given to class members, not whether all class members ultimately receive monetary relief.

As long as there have not been unreasonable restrictions on access to notice and the opportunity to participate, claims-made settlements are commonly approved.

The second category of criticisms has to do with potential problems that can be avoided in any given settlement. For example, some critics argue that claims-made settlements create an incentive for the defendant to keep the claims rate low.

While this might be a legitimate objection in a settlement where unreasonable hurdles to receiving notice of the settlement and participating in its benefits have been erected, it can be overcome if the parties agree to a notice plan that is reasonably calculated to reach and provide simple, understandable notice and an opportunity to participate to the maximum possible number of class members.

A reputable notice expert will be able to assist in creating a notice plan that meets these objectives. Another common objection is that the attorneys’ fees award may be disproportionate to the payout to class members. This criticism can be tempered if fees are paid separately from the money being made available to class members and if the parties wait to negotiate fees until after reaching agreement on relief to be made available to the class. Including equitable relief can also help to justify a fee award.

A final criticism is that notices tend to be in legalese, causing class members to ignore them or throw them away. This criticism can be avoided in any given case by hiring a qualified notice administrator and by following notice guidelines adopted by the Federal Judicial Center.

Counsel can also maximize the likelihood of court approval, both at the preliminary approval stage and at the final approval stage, by giving full disclosure to the court. Counsel should be up front with the court at or before preliminary approval by explaining all of the material elements of the settlement, including the pivotal factor that only class members who submit claims will be paid.

If the judge is unfamiliar with claims-made settlements, it is a good idea to have at least one hearing in open court where the settlement structure can be explained by the attorneys for both sides, and the judge can ask why the parties agreed to this particular settlement structure.

At the time of preliminary approval, it may even be a good idea to point out some of the criticisms that have been made against claims-made settlements and explain why the settlement before the court is fair. The parties should attempt to quantify the relief available to each individual class member and its relation to the award amounts available to claimants under the settlement plan.

It is a good idea to explain these facts in a memorandum accompanying the preliminary approval motion, along with a discussion of why the litigation risks to plaintiffs and the class justify any discounts used in determining the settlement award.

If it is done right, the claims-made settlement can be a very effective way to resolve consumer class action lawsuits. This settlement structure facilitates the maximum possible benefit to the class representatives, those class members who make the effort to participate, and class counsel.

In addition, it can make the settlement less expensive for the defendant. This makes settlement more likely under terms that are favorable to those class members who care to participate. The parties should be able to adequately respond to any criticisms by providing full disclosure to the court from the beginning and by utilizing a fair and adequate notice plan.

–By Paul G. Karlsgodt, Baker & Hostetler LLP

 

Paul Karlsgodt is a partner with Baker & Hostetler in the Denver office.

 

 

 

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Here are some blog postings from the week that was that might be of interest to class action practitioners.  The topic headings may or may not be a permanent addition to this weekly column.  They made sense this week given logical groupings in the topics being discussed around the blogosphere.  Let me know what you think.

Class Action Decisions

The Complex Litigator discusses the latest California appellate decision addressing the test for employment and provides a more general analysis of trends in wage and hour class action litigation surrounding alleged misclassification of employees as independent contractors.

http://www.thecomplexlitigator.com/2008/06/the-borello-rig.html

Class Action Defense Blog summarizes a recent Tenth Circuit Court of Appeals decision affirming the dismissal of a class action lawsuit, holding in part that the alleged violation of a licensing statute is insufficient to support a claim for unjust enrichment.

http://classactiondefense.jmbm.com/2008/06/class_action_defense_casesvan.html

Drug and Device Law Blog reviews the latest in medical monitoring class action decisions:

http://druganddevicelaw.blogspot.com/2008/06/first-thoughts-on-sinclair-v-merck.html

Class Action Trends

The UCL Practitioner provides a link to a powerpoint presentation from a recent CLE course discussing the California Unfair Competition Law (UCL or Section 17200) after Proposition 64.

http://www.uclpractitioner.com/2008/06/california-unfa.html

The D&O Diary provides a summary of rulings on motions to dismiss subprime and credit-crisis-related lawsuits

http://www.dandodiary.com/2008/06/articles/subprime-litigation/the-list-subprime-lawsuit-dismissals-and-denials/

If you’re interested in tracking the latest trends in the useof technology in class action settlements, see this Class Reactions posting discusses a recent class action settlement permitting the online submission of claims:

http://classreactions.com/?p=34

Class Action News

Classified summarizes the latest class action news:

http://www.carltonfields.com/classactionblog/blog.aspx?entry=216

Mass Tort Litigation Blog reviews an interesting article of general interest to litigators, discussing an emperical study of trends in summary judgment orders:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/06/new-emprical-st.html

Legislation Impacting Class Actions 

Point of Law reviews an editorial in The Examiner praising Senator John Cornyn’s securities class action reform bill (see my earlier discussion of the bill here)…

http://www.pointoflaw.com/archives/2008/06/classaction-transparency.php

… and reports on the demise of a Senate Bill that would have resulted in a tax deduction on expenses advanced by lawyers in contingency fee cases:

http://www.pointoflaw.com/archives/2008/06/tax-break-for-trial-lawyers-bl.php

http://www.pointoflaw.com/archives/2008/06/tax-break-for-trial-lawyers-mo.php

Here’s more critical commentary on the same bill from RejectSociety.com:

http://www.rejectsociety.com/index.php/2008/06/09/republic-in-distress/

Class Action Scandals

Ideoblog provides a thoughtful and thorough response to St. John’s Law Professor Michael Perino’s paper on the Milberg Weiss kickback scandal…

http://busmovie.typepad.com/ideoblog/2008/06/another-perspec.html

…while Law and More critiques William Lerach’s somewhat-less-than-confessional essay “I am Guilty”

http://lawandmore.typepad.com/law_and_more/2008/06/bill-lerach—a-con-in-full.html

For a report on developments in the phen-fen corruption trial in Kentucky, see this Folo posting:

http://www.folo.us/2008/06/10/their-lips-were-legally-sealed-says-phen-fen-witness/

Internet and Tech Issues

Slashdot reports on a class action lawsuit filed in Quebec against a telecom company on behalf of DSL subcribers and other recent legislative developments in Canada implicating Net neutrality…

http://news.slashdot.org/article.pl?sid=08/05/31/0148221&from=rss

…more on the same case from Michael Geist:

http://www.michaelgeist.ca/content/view/2979/125/

…while TechCrunch comments on a class action lawsuit accusing an Internet business and services directory of online advertising “click fraud”:

http://www.techcrunch.com/2008/05/27/citysearch-sued-for-click-fraud/

Arbitration Clauses and Class Action Waivers

Tort Deform provides a lengthy criticism of mandatory arbitration clauses in consumer agreements…

http://www.tortdeform.com/archives/2008/06/businessweek_on_consumer_arbit.html

… and Wage Law discusses the results of a recent opinion poll of American consumers regarding binding arbitration and attitudes toward potential legislation banning binding arbitration clauses in consumer agreements:

http://wagelaw.typepad.com/wage_law/2008/06/poll-says-americans-do-not-want-binding-arbitration.html

Potpourri

Overlawyered contributor Ted Frank chronicles his experiences as a pro se objector to a class action settlement involving video game purchasers.

http://overlawyered.com/2008/06/grand-theft-auto-class-action-the-frank-brief/

Finally, Bits and Pieces columnist Emory Schley laments the frustration and disappointment of participating in class action settlements:

http://www.ocala.com/article/20080610/COLUMNISTS/806100303/-1/NEWS

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Washington Post columnist has David Ignatius published a great op-ed last week regarding the downfalls of high-profile plaintiffs’ class action lawyers Melvyn Weiss and Dickie Scruggs.  The column appears in the June 5 edition of the Post under the title Reining in the Kings of Tort and in the June 6 edition of the Indianapolis Star under the title The Case of the Runaway Class Action Lawyers.  Mr. Ignatius points out that the recent bribery, illegal kickback, and other scandals involving class action lawyers are tarnishing an image of plaintiffs’ lawyers as the “good guys” fighting for the common man against corporate greed and corruption.  He analyzes the possible motivations underlying these scandals and their impact on popular myths about class action lawyers as champions of the people created by authors like John Grisham and the works of consumer advocates like Ralph Nader.  He observes that men like Weiss and Scruggs were probably not motivated by greed–they both had more money than they could spend.  More likely, they became so zealous in their belief that they were protecting the interests people who had been the victims of harm that they began to “cut corners.”  The end justified the means. 

Scandals like those involving Weiss and Scruggs and abuses of trust of other so-called consumer advocates like former New York Attorney General and Governor Eliot Spitzer don’t mean that all plaintiffs’ lawyers and consumer advocates are greedy, unethical egomaniacs (see my earlier commentary here).  However, they do expose over-simplistic popular conceptions of who is a hero and who is a villain.  As important as recognizing that plaintiffs’ class action lawyers are not all heroes is the recognition that not all corporations are out to exploit, defraud, or otherwise harm the public.  Just as plaintiffs’ class action lawyers are human beings with real human flaws, large corporations are run by human beings with real human compassion.  Hopefully it doesn’t take reading Mr. Ignatius’s column for most people to appreciate those realities, but his column does serve as an important reminder.  Real life is not like a John Grisham novel.

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Genie Tyburski, a law librarian for the firm of Ballard Spahr Andrews & Ingersoll and web manager for the site www.virtualchase.com, has put together a nice list of online legal research tools available for litigators entitled “10 Essential Web Sites for Litigators.”  I like this list because it includes resources that are free, not necessarily well known, and reasonably likely to provide helpful research information.

http://www.virtualchase.com/articles/sites_for_litigators.html

Thanks to the law.com legal blog watch for tipping me off to this helpful information.

If you’re interested in online resources particular to class actions, see this previous entry.

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