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Supreme Court Scrutinizing Class Action Settlements That Leave Consumers Empty-Handed (marketwatch.com)
If a multimillion dollar class-action settlement basically doesn't pay a single consumer, is it fair? That's not the start of a lawyer joke; it's the crux of a case being argued Wednesday in the U.S. Supreme Court that, advocates say, has serious implications for the ways consumers benefit from duels with businesses in large-scale litigation. From a report (paywalled): "This is potentially billions of dollars going from everyday consumers to lawyers' slush funds," said Ted Frank, the litigation director at the Competitive Enterprise Institute, who's disputing the $8.5 million settlement between Google and 129 million class members before the Supreme Court. The case, Frank v. Gaos, focuses on the question of whether it's fair and reasonable to ever have class action settlements that give money to outside groups instead of the class members themselves. A decision for Frank -- who also happens to be a class member in the Google case and is a longtime gadfly questioning class action settlements -- could require the money go directly to consumers and upend a class action pay out method that's been around for decades.
The underlying case has to do with Google's 2013 agreement to pay $8.5 million to settle a case claiming widespread privacy rights violations. When any web surfer looked up topics on Google, the search engine beamed the search terms -- like "depression" and "medical leave" -- in the URL string to the third-party websites. The search term revelations broke various state and federal laws, plaintiffs said. After about three years of litigation, the parties settled. Google added more online disclosures and opened its wallet without admitting liability. The settlement's payouts included a $5,000 award for each of the three named plaintiffs and $2.12 million for the legal fees of the plaintiffs' lawyers. The remaining $5.3 million was divvied up among six universities and organizations pledging to put the money towards improving internet privacy. Lawyers for both Google and the class members say Frank's objections to the settlement are unfounded.
The underlying case has to do with Google's 2013 agreement to pay $8.5 million to settle a case claiming widespread privacy rights violations. When any web surfer looked up topics on Google, the search engine beamed the search terms -- like "depression" and "medical leave" -- in the URL string to the third-party websites. The search term revelations broke various state and federal laws, plaintiffs said. After about three years of litigation, the parties settled. Google added more online disclosures and opened its wallet without admitting liability. The settlement's payouts included a $5,000 award for each of the three named plaintiffs and $2.12 million for the legal fees of the plaintiffs' lawyers. The remaining $5.3 million was divvied up among six universities and organizations pledging to put the money towards improving internet privacy. Lawyers for both Google and the class members say Frank's objections to the settlement are unfounded.
Lots of lawsuits are about "stop doing that", not about "pay me money".
If a lawsuit makes a company stop doing something bad to millions of people, isn't that a good thing?
Now, if you want to talk about what's fair & reasonable in lawyer fees, that's another conversation...
it's a terrible idea but it's the best we can get with the current political system.
I worked for a company that made everyone come in 20 minutes early to set up their workstations and leave 10 minutes late, all unpaid. 30 minutes free labor a day times several thousand employees. It was millions. I didn't get much from the lawsuit but the company did have to start paying me for those 30 minutes.
My state doesn't have a labor board (there's one on paper but it's not funded). The threat of lawyers suing for a big payday is the only thing keeping most companies honest in my neck of the woods.
Like Arbitration this strikes me as the latest attack on that very minimal protection consumers have. Would I like to live in a world where I don't rely on skeezy lawyers getting big cash payouts for little to no work as the only protection I have from abuse by mega-corps? You bet. But I don't. I live in the real world, and I'm a realist. Until I can get folks to vote for genuine change I'll take what I can get.
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Using the example from TFA/TFS: "$8.5 million settlement between Google and 129 million class members"
8.5/129 = $0.065 per person
How do the authors propose to distribute those six-and-a-half-cents? Via a postcard check, with $0.20 of postage?
Nuts, just the administration overhead to find & verify each class members would be more than six cents.
workers really need an union to stand up to bs like that!
All of them?
... that I can join a class action suit, I throw it away. Why get my hopes up that I might, some day, receive a check for something on the order of $0.17?
CUR ALLOC 20195.....5804M
No, because it would also reduce money for the lawyers. There's only one pool of money at the end, and any amount you require to go to the victims is not available to go to the lawyers.
Too many times I see these settlements where the lawyers make what amounts to a sweetheart deal with the megacorp. The class members get next to nothing of value, the lawyers collect millions, and the megacorp gets off paying ultimately a fraction of a day's revenues, often not having to admit liability, and basically keeping all the rewards from their malfeasance.
If one follows the legal firms, or their principals, it seems like sometimes they also get some lucrative business from one of the megacorp's subsidiaries or partners as a result too.
In my mind it is legal malpractice to not achieve some positive goal for the class -- getting real compensation, or punishing the violator significantly and getting legal rulings that the non-class members can use to sue without having the class action ruling being a major bar to them collecting on their own.
It's my understanding that this hearing is about Cy Pres settlement distributions, not necessarily attorney's fees.
Briefly, a cy pres award is the distribution of money from a class action settlement to a charitable organization. [taken from google]. Sometimes, it would be hard to distribute any sort of settlement to that many google users (how do you identify them? Get them their money?). So, award goes to a charity that is related to that class action.
Most media articles about this case will probably imply that it is about attorney's fees, but there are a few different things going on here.
There should be a requirement that the lawyers cannot collect any more money from the settlement than the collective payouts to the members of the class. If the courts awards $10M in the suit, then the most the lawyers can collect is $5M. And they can only collect that $5M if they are able to distribute the other $5M out to class members. Right now they have an incentive to have as few class members claim their 'winnings' as possible, since they get whatever is left.
The settlement's payouts included a $5,000 award for each of the three named plaintiffs.......The remaining $5.3 million was divvied up among six universities and organizations pledging to put the money towards improving internet privacy.
I.e. the 3 regular people who actually were involved in this case did get something. All of the other "class members" did nothing. Well, they probably filled out an online form.. But that was the extent of their involvement (most likely).
It's not like the lawyers walked away with most of the money. Looks like they took about 30%, which is a very standard practice. I think we can safely assume none of you fuckers has the resources (deep pockets) to sue GOOGLE.. So if you want to limit the lawyers to 10% (which is a shitty return on a labor intensive investment) who are you going to find who has the ability to fund lawsuits against mega corporations?
As has been previously pointed out.. These lawsuits are about correcting bad practices. The lawyers do ALL the work, they front ALL of the costs, and they take on ALL of the risks....
Look, I hate lawyers as much as anyone.. But sometimes they are a necessary evil. If they are going to front 100% of the risk, I don't have a problem with them collecting 33% of the payout.
Would you share profits with a business partner who did zero work and invested zero money? Of course you wouldn't...
Well, that's what most class action lawsuits are like.. 99% of the class members fill out a form and do absolutely nothing else. They risk nothing besides their ability to sue, independently, later..
Lastly... A constitutional amendment? WTF? Why wouldn't you just ask for a federal law? You want to clutter up that document with bullshit like payout ratios?
If you started a business and took all the risk, fronted all the capital, and did all the work, would you want to be limited, by law, to 10% profit margin?
Make the lawyers receive payment just like the members of the class do - with very small checks. If it's a $10 payout for the class, then a $10 million payday for the lawyer is in the form of one million $10 checks.
Supreme Court Scrutinizing Class Action Settlements That Leave Consumers Empty-Handed
A free small cone or fry coupon is not empty-handed!!!
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
class action lawsuits over the years, have only benefited the lawyers. while consumers get pennies or coupons, the lawyers get millions in cash. doubt anything will change, the lawyers will always win since they have all the money.
Employees didn't learn a god damn thing.
They learned that the union shop is the first one to be automated, outsourced, or off-shored.
they go to their job that pays well and is safe because of a Union from 50 years ago who won those protections at the barrel of a gun.
Sure, but what have they done for us lately? Saying we should pay union dues today because unions made sense 50 years ago isn't a very compelling argument.
I'm confused about what you're saying.
All along you seem to understand things, then in the last sentence you make a conclusion that doesn't follow from your (correct) statements.
You start with the class, people who have used Google search. That's maybe a hundred million people.
Subtract the people who don't want to be considered part of the class, so that they could theoretically sue individually. That's a few thousand people, maybe.
After subtracting the ~ zeroish people who want to sue individually, you're left with about a hundred million "injured" parties (class members).
How do you figure Google should pay those hundred million people? The total recovery net of legal fees is 5 million.
But if it's not enough to pay the operations of the law firm, then what? Yes, the senior partners are very well paid, but they also have a large team of juniors, associates, paralegals, and misc. staff. Those people need to be paid for the time they spent working. Then there's rent on their offices, travel expenses, court fees, etc. So either the amount of settlements has to go up to pay for it, or they firm won't bother taking the class action case. Don't even think about it going to court, that's too financially risky to spend all that additional time.
All in all, it's little more than a way for lawyers to milk money out of big corporations by using consumers as leverage on the wallets of said corporations.
Lawyers and legal fees.
What about compensation for the consumers?
Is that what the Supreme Court is actually looking into, or is it more like: Is it fair to bleed the corporations if no consumer gets compensation, and. therefore "wrong" to do so?
Just curious as to the reference to "fair" in this usage.
The jump from a hundred million to a few thousand was in this line:
Towards that end, there's generally a web form where claimants can go to either exclude themselves from the settlement or submit the necessary information to make their claim.
Most people don't bother with the paperwork, so they don't get a portion of the payout.
Okay, your post and reasoning makes sense to me now. Thanks.
My experience regarding the facts has been different from yours. As you said:
> At least with the handful of class action settlements I've been a party to, they send out notifications to the people in the class
At this point they already have my name and address and know I'm a class member, so they have all the information they need to send a check. I can opt OUT at that point. The lawyer would prefer I didn't, because they want to represent a large class.
Only more recently I've noticed they sometimes have two classes or subgroups, commonly those who were customers (the company did them wrong) and those who also are likely to have actual damages. If you don't respond, you're in the general class and get maybe $5. If you're in the more specific class, you submit the form and get $30 or so.
An example would be a data breach. All customers' data was leaked, so everybody gets $5. If you ALSO had a fraudulent charge on your card, you get $35. You have to submit the form to get $35. If you don't submit the form, you get $5.
That's been my experience.
I wish I could remember which class action I was part of lately. I was surprised when I got a check for a significant amount of money. I'm used to maybe $5.
I think you're considering two steps where you can respond.
1. Exclude yourself from the suit (or not).
2. Claim non-monetary compensation such as a free game.
Step 1 goes directly to the question of how many plaintiffs are representes in the suit. If the lawyer is suing on behalf of five people, the settlement or judgement will be a lot smaller than if they are suing on behalf of 50,000 people. Therefore that step needs to be completed before the settlement or judgement.
Step 2 would be after the judgement or settlement.
Suing on behalf of more people (step 1) will result in a larger total award and probably larger legal fees.
Having some people not claim the award will either a) save the defendant money or b) allow more to be distributed elsewhere.
In my cases, the only non- monetary awards I recall have been a) free credit monitoring (don't want) or b) a credit to my existing, ongoing account with the merchant. So I've never had need to pick a game or otherwise actively select anything with the award - I just get the check or account credit.
On an entirely different topic:
Sometimes I help people figure out how to make up for things they've done wrong. (Basically when they decide they don't want to be a shit head anymore.) The easiest cases are when they know exactly who they wronged, how to contact them, and what would set it right - money or whatever. Whenever possible, we set it right directly with the person harmed, by undoing whatever the harm was, by doing the opposite of the bad thing.
Other cases are much more difficult. What about this case:
Mark was controlling and abusive to many women over the course of 30 years.
At least one of those women is now dead.
Others he doesn't have any idea how to get in touch with them.
Probably NONE of them ever want to see his face again.
What can Mark do to make up for what he's done? Maybe the best he can do under the circumstances is:
Donate to an abused women's shelter.
Make darn sure he treats women right in the future.
This Google case reminds me of the latter. Of 100 million people each have ten cents worth of compensation due to them, but you don't have the names and addresses for most of them, what do you do? How do you set that right? Donating to EFF and similar organizations might be part of that.
Even more difficult is something like this instance I talked to someone about the other day:
He had an affair with a married woman.
The affair ruined her marriage, broke her family apart.
Partially due to that, she committed suicide.
How does he even begin to try to set that right in any way?
He can't do anything for her - she's dead.
Her family darn sure doesn't want to hear from him.
He owes a large debt, but how does he pay it?
Good point about it being two steps. I can't say with certainty whether those steps were distinct or done at the same time in the settlements I was party to. In my recollection they were done at once, but if I'm being honest I must admit that it's entirely possible I'm mistaken and that they were actually distinct steps. I can't say with certainty.
And I'll readily agree that there are cases where there is no good outcome. Going back to my initial comment near the top of the thread, I threw those ideas out there, and I still stand by them, but I'll admit that I don't have a surefire way to actually implement them. We live in a broken, messy world where there aren't always clear answers or rules you can follow to reach the ideal outcome. While those harmed should be compensated for the harm done to them, there are situations where that's impossible.
there is always a well-known solution to every human problem â" neat, plausible, and wrong. :)
- HL Mencken