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.

Comments

Not just money

[MrLogic17]

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...

Re:Not just money

[Anubis IV]

If a lawsuit makes a company stop doing something bad to millions of people, isn't that a good thing?

Getting someone to stop engaging in illegal behavior is step one of setting things right. But there's also a step two: making reparations for harm done. That didn't happen here. Instead, the plaintiff's lawyers arranged for the settlement money to be funneled into groups to which they or their friends belong. Despite millions of people being harmed by Google's behavior, only the three named plaintiffs received even a cent.

Re:Not just money

[sjames]

However, the class action settlement in TFA was simply a cash payout to pretty much everyone but the class with not even a promise to consider changing any behavior.

Re:Not just money

[mysidia]

The suit is on behalf of class members. If there's a settlement; 99% of the proceeds ought to go to benefit the class members whose right to sue is being exhausted by the settlement. The lawyers can keep up to 1% for their expenses.

Re:Not just money

[ShanghaiBill]

Just stopping a company from doing it AGAIN doesn't mean you get compensation for when it was done to YOU, which is what a class-action lawsuit should usually be about.

If class-action lawsuits don't make money for the lawyers, then they won't happen at all.

You should think of class-actions as an outsourcing of regulation to the private sector. If the government won't regulate corporate behavior, then profit-seeking law firms will.

Ask yourself this: Should we have more class actions, or fewer? Answer: I dunno.

Re:Not just money

[ShanghaiBill]

The lawyers can keep up to 1% for their expenses.

This is effectively an abolition of class action lawsuits.

Law firms are businesses, not charities.

Lawyers will get nothing. Harmed consumers will get nothing. Corporations will have impunity.

Re:Not just money

[Calydor]

On the other hand the lawyers can't bring the cases all on their own without an injured party, so if the civilians don't see any benefit to going through the hassle of a trial (because let's face it, most of us don't have the time or resources for that just to make sure bad things don't happen to OTHER people) then we'll lose that avenue of regulation anyway.

Re:Not just money

[thegarbz]

Ask yourself this: Should we have more class actions, or fewer? Answer: I dunno.

I do, it's quite clear the class-action ecosystem of America has done (to excuse my french) fuck all for consumers. There have been far greater effects of actual laws that regulate behaviour, to say nothing of countries which actually have consumer advocacy departments that enforce those regulations with actual punishment.

If this is nothing more than "outsourcing" to the private sector then it appears to be working as well as any other outsourcing claim does. Just look at the Xbox360 red ring issue:

Australia: 15 year old complains to the ACCC under the fair trade act. ACCC launches investigation and forces Microsoft to honour all red ring failures under warranty.
America: MS extends American warranty to 3 years after losing in Australia. Class Action filed. Lawyers rich. A new Xbox 360 slim is released and the extended warranty program is cancelled.

End result: In the USA consumers are back to having to sue again, in Australia you're still covered under warranty because the laws require equipment to have expected performance.

And that's just a minor case when you compare to how Google's Privacy violations appear to be going in Europe.

Class actions aren't worth the time and certainly aren't changing behaviours of corporations. They are a speeding fine payed to the legal system, and a written off cost of doing business. Another example: BP. The class action litigation resulted in a few rich lawyers. Individual claims set aside on the other hand paid billions directly to the affected people. Actual fines and total costs for the spill amounted to the 10s of billions rendering the class-action completely moot, but at least some lawyers got rich of that one too.

Re:Not just money

[fafalone]

I find it very difficult to believe that lawyers won't take class action suits unless they get millions to tens of millions. The 1% suggested above you is generally (but not always) going to be too low, but you really want to argue these lawyers needed $2.12 million to litigate this, especially settling instead of a full trial? And that something more reasonable like $250k-$400k is just so little money lawyers aren't going to bother?
Nobody is saying lawyers should do this for free. The objection is to the obscene greed of taking $2m of an $8m settlement and not infrequently even higher percentages. These suits are like lotteries for lawyers, not fairly compensated hard work.

Re:Not just money

[Comrade Ogilvy]

It should not sit well with you. This system of class action suits is a very imperfect bandaid, yet still better than open bleeding wounds, at least it seems so to me.

The overall cheaper answer might be to have a regulator who can levy fines based on reasonable legislative guidance -- you do not need millions of dollars in lawyers fees to accomplish that, assuming you trust regulators to not be "overzealous". Of course, class action law specialists might be overzealous, too, but that is apparently more acceptable because it is monied people screwing each other over by gaming the system, rather than "big guvmint".

Re: Not just money

[CoolDiscoRex]

If this was the case, the lawsuit in TFA against Google would have never happened. Corporations would be free to act with impunity as long as their misbehavior was widely distributed. There is absolutely no way that it is cost effective to get 100 million people to "opt-in" when the damages are a few cents each.

They are already free to act with impugnity. The Supreme Court ruled that companies can write themselves out of accountability, and even the law, with arbitration agreements, and these agreements are being incorporated everywhere. Courts have ruled that the arbitration clauses apply even when the company breaks Federal or State Law. Theyâ(TM)ve ruled that they apply even in cases of bad faith.

Better yet, when the odd consumer hangs in after years of fighting, countless hours, countless dollars, and finally, FINALLY gets a favorable ruling from a jury ... the award gets reduced substantially over 85% of the time. In some cases the award is reduced by over 90%. There are also caps on punitive damages and pain & suffering that make the risk for big companies quite small.

Big corporations have little to worry about. They get taken care of.

Iâ(TM)ve been to small claims court several times over the last decade. Iâ(TM)ve either won or settled each time. Iâ(TM)m not terribly skilled, I just donâ(TM)t file suit unless I am clearly and overwhelmingly in the right. It still takes a lot of time and effort, though.

As someone who is willing to go to court, though, the opt-in nature of class-actions seems like just more abuse. I mean, have you ever tried to opt-out of one of these? The procedures are always via postal mail, and are usually very specific. If you fail to include ANY piece of requested information, including information they are not entitled to ... (why do they need my email address when they force me to opt-out via the postal service?), you get opted in. The burden of proof rests with you, so oh yeah, pay up and send it certified mail. Thatâ(TM)s right, more often than not, it will cost you.

If they offered people a real piece of the settlement, and made it easy to opt-in, people would do it. The public routinely takes down web servers when a popular consumer item goes on sale, I donâ(TM)t think theyâ(TM)d be shy about doing the same to receive financial compensation.

As it is, good luck getting anything, even when youâ(TM)re opted-in. I tried to register for the LinkedIn settlement, only to find that it was âoeclosedâ when I finally found the poorly-publicized link. Oh, and I could initiate my own suit either. The law firm took my rights, and the money. These guys arenâ(TM)t trying to help the class. The class is merely a vehicle for their own riches. And 99% of the time, the company never admits fault, and returns to the bad behavior in short order. LinkedIn now has to get you to âoeagreeâ before they SPAM your address book, but of course, the âoeagreementâ will be a fine-printed line on Page 27 of the âoeUser Agreementâ which theyâ(TM)re also allowed to change unilaterally, this rendering the entire agreement illusory.

If a company harms you, and causes you $50,000 in damages, and some law firm opts you into to a lawsuit, and steals your right to sue, in order to enrich themselves ... you often get nothing in return. I canâ(TM)t believe anyone would think that was fair.

The whole thing is a scam, from top to bottom, and the winners are the ruling-class âoelawmakersâ and their financiers who make laws like this to preserve the Plutocratic status-quo.

The only time the corporations have anything to worry about is when they get on the bad side of the ruling-class. So, they mostly donâ(TM)t, and are content to do what they will to everyone else. The courts certainly are not âoeholding them accountableâ.

Class Action is like Obamacare

[rsilvergun]

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.

Re:workers really need an union to stand up to bs

[ShanghaiBill]

workers really need an union to stand up to bs like that!

The workers would have to pay union dues.

The corporation paid for the lawsuit.

So the lawyers gave the workers a better deal than they would have got from a union.

Re:It was't Union dues that killed Unions

[ShanghaiBill]

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.

Re:Makes sense. Different from my experience

[Anubis IV]

Actually, your experience matches well with most of mine as well.

Take the Playstation Network breach from a few years back, for instance. I was a party to it since I had an account with them at the time that it happened, but my credit card showed no signs of illicit activity after the hack, so I suffered no demonstrable harm. As such, I wasn't entitled to a monetary settlement, but I was entitled to a free game from a list of available options. When the time to finalize things finally arrived, I had to fill out a bunch of paperwork before I could select and claim my game, and I had to do so before a particular date or else my claim would expire. And it seems that I filled it out improperly in some way, since I never received the promised game. That's an example of what I was talking about, with people not bothering with the paperwork (or perhaps not filling it out correctly).

The only thing you said that didn't resonate with me was the mention of the lawyer wanting you to not opt out. I always figured it was the other way around. After all, by the time they're cutting checks, the settlement amount has already been agreed on. At that point it's just a question of how the money is distributed, so any money left on the table by the claimants is money that the lawyers have likely arranged to have redirected to pet projects of theirs (which shouldn't be happening, but such is the world we're in). Towards that end, most of the settlement notices I've received over the years look at first glance like cheap spam. And even if you read them far enough to realize that they aren't, most of them required sending something in (e.g. self-addressed, stamped envelope) or filling out additional paperwork online in order to get a token settlement.

It shouldn't work that way for exactly the reasons you said—they already have your address and know you're part of the class—yet it's almost always what I see. I only recall having received one settlement check that didn't first require some work on my part, whereas I've probably seen between three and five in the last decade that required work on my part.