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(Wall Street Journal)   Class action settlement: $2.73M for the lawyers, $270K to be split between plaintiffs and charities. Some people seem to have a problem with that   (blogs.wsj.com) divider line 28
    More: Interesting, legal fees, Appeals Court, U.S. Court of Appeals, class-action  
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10724 clicks; posted to Main » on 07 Aug 2013 at 9:38 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-08-07 10:18:02 AM
4 votes:
In defense of class actions suits, it's not about enriching the victim, it's about punishing the bad actor.

If a company knowingly screws over thousands (or even millions) of people for a small amount, they know those people won't sue over 50 bucks. Perhaps a tiny, tiny minority will, but in general they are protected from retribution by the high hurdle to suing a corporation and the low potential reward.

So, the company knows they can break the law or harm customers as a part of their business model - so long as the cheat/harm is kept small.

That's where the class action suit comes in handy. You get a large group of people who have been harmed, and you sue for the collective damage, not the individual damage. This can add up to "real money" in the eyes of corporations - and it scares them into behaving (or correcting their behavior).

Corps hate that. So there is now a full frontal push to eliminate or limit class action suits. Which is why you see a WSJ article decrying how terrible this settlement was (never mind that it forced the company to correct their "cost savings measure" that was causing thousands of babies diaper rash). Nope, just focus on the tiny "settlement" each plantiff got. (Ignore that without this suit, the company would have been free to continue abusing babies for profit).

/not a lawyer, but occasionally I am the Devil's advocate.
2013-08-07 10:40:11 AM
2 votes:

untaken_name: Well, that's the situation today. However, had people not been lazy enough to start class actions in the first place, perhaps things would be different. It's really immaterial, however, as the alternative still exists, whether or not it's a good one. It's not like it's worth your time to cash a $1 check, either. I guess it depends on who you hate more - corporations, or lawyers.


hey man - i always advocate that if people what to spend time and money on enforcing their rights - go for it!  We have a whole bunch of small claims systems to allow just that.  The trick is, most of the class action issues involve massive discovery.  Like 2 million documents discovery.  with only a few items being relevant to your claim.  and most small claims do not allow discovery, so you may never get the documents you need to prevail.  Which means you need to sue in big boy court.  Which, alas, costs money.  Lots of money. 

TL;DR - Its not laziness - there is an inherent information and power imbalance in most consumer litigation cases that is almost impossible to overcome without coordinated and expensive legal aid.
2013-08-07 10:13:14 AM
2 votes:
It sucks that the class action members paid all that money to their lawyers, risking a fortune, on the chance that they would win the suit.  They definitely should have received a cut of the payout commensurate to the risk the took.
2013-08-07 10:08:56 AM
2 votes:

Ajakk: For everyone complaining about class action lawsuits, what do people recommend as an alternative?  If a company does something that harms 10 million people $25, how should we have a legal system that makes sure that the people who were harmed are compensated for their loss and/or the company who caused the harm does not unlawfully profit from its actions.


I recommend bringing back lynching for the CEO of the company that messes up and hurts 10 million people it would fix a lot of issues very quick

/ also think the guillotine would be a good solution to campaign finance reforme you I've a bribe over 100.00 your head goes in the basket.
2013-08-07 10:05:26 AM
2 votes:

Ajakk: For everyone complaining about class action lawsuits, what do people recommend as an alternative?  If a company does something that harms 10 million people $25, how should we have a legal system that makes sure that the people who were harmed are compensated for their loss and/or the company who caused the harm does not unlawfully profit from its actions.


It has nothing to do w/ the lawsuit, its the lawyer's payout that's the problem.
2013-08-07 09:45:18 AM
2 votes:
I can see the lawyers getting more money than any single member of the class.  But their compensation shouldn't be more than the entire class combined.
2013-08-07 09:42:06 AM
2 votes:
Coupon settlement.
2013-08-07 09:40:49 AM
2 votes:
 Isn't that how most class action suits work? The lawyers get about 90% of the settlement and the people named as plaintiffs split the remaining ten percent.
2013-08-07 12:59:37 PM
1 votes:

max_pooper: 67stang: Albert911emt:

Gotcha beat. Once lost thousands in a fraudulent stock deal. I was part of a class action lawsuit. My split?  A check for Eleven (11!)   fricking cents.

So which is better? The law firm spends millions of dollars preparing the lawsuit, gets the judge to punish the wrong doers and gets compensated for their work or there is no class action lawsuit, the company goes unpunished, continues to defraud more investors and the lawyers make zero dollars?


Couldn't there be a third option that is somehow slightly more equitable to those who were wronged? I don't know what it might be but the current system punishes the company (good), pays most of the money to the lawyers (not good), and does nothing for those who were wronged (bad).
2013-08-07 12:35:56 PM
1 votes:

Theaetetus: Albert911emt: I was once unknowingly part of some class action concerning credit card fees or something. I got a check in the mail for 33 cents, and the damn lawyers got millions. And yet lawyers always insist that tort reform is unnecessary. F*ck them.

You got free money without having to do anything. I can understand why you're upset. It's because you're a moran.


You seem like a very pleasant person, except for the whole insulting someone for no reason part.....yeah, other than that, you're not at all a jerk.
2013-08-07 12:19:09 PM
1 votes:
I like the idea of reforming the class action lawsuit with the requirement that the money that was taken from the consumers goes back to the consumers on average (Average loss per consumer was $25? Everyone gets $25) and THEN you must pay the legal fees on top of that.

Right now, they are capped at the total amount that they defrauded, so if you take in $10M, you pay out $10M and the lawyers get to bite into that. That's not a penalty, neither is the requirement to change their ways. What will happen is the company will change the least amount of their ways to remain in compliance and then do something else to cut costs/generate revenue. The company comes out ahead in the long run because they were probably making good intereste on that $10M in the first place. I've heard (anecdotal) that some companies will do something like this with the cost of a class action built into whatever form of trickery they are using to get extra dollars.

If, however, you cheat your customers and you have to pay upto 90% additional to the claim amount, that wipes out any possible hope of salvaging something good from the cheating in the first place.
2013-08-07 12:17:07 PM
1 votes:

There is a well funded smear campaign against class action.  It may seem like grass-roots but it is Astro-turf..

DON'T MISS THE farkING POINT OF CLASS ACTION!!!.

Without class-actions, huge corporations can screw, say 50,000 people out of $100 each and no individual will sue... why would they pay a $250 filing fee to recover?  Even treble doesn't help here.

So consumer has no motivation to sue and corporation has a $50,000,000 motivation to screw consumers.  So how to prevent this?  Government regulation?  Who pays for that army of inspectors?  The government already inspects food and yet we still have mass outbreaks of food poising and safety recalls every few months for contaminated stuff that escaped in spite of the inspections... and these are just lazy people cutting corners on cleanliness... not a $50,000,000 paycheck.

As the mortgage fraud financial meltdown shows, we can't expect the government to actually bring criminal prosecutions against big business. Senators know who donates to their re-election campaigns and we just can't have those donors sitting in jail now can we?  So with criminal charges off the table that means the only counter-motivation is to sue in civil court.

The class action system is not perfect but it converts plaintiffs lawyers into bounty hunters by combining all those little damage amounts into one big amount.  Bounty hunters are even better than FBI agents or inspectors because they are not government employees with a union, nice salaries and expensive retirement packages.

So the class-action lawyers protect consumers by creating a actual financial consequence for a corporation's bad behavior... and it is a consequence not so easily avoided by bribing an inspector or congressman.  Is it any wonder the freaking Wall Street Journal would try to scare up oppositions to that?
2013-08-07 11:55:33 AM
1 votes:
The whole point of the court system is to make lawyers rich.
2013-08-07 11:54:27 AM
1 votes:

Theaetetus: Albert911emt: I was once unknowingly part of some class action concerning credit card fees or something. I got a check in the mail for 33 cents, and the damn lawyers got millions. And yet lawyers always insist that tort reform is unnecessary. F*ck them.

You got free money without having to do anything. I can understand why you're upset. It's because you're a moran.


Actually consider this:  Perhaps he still uses that company.  As such, said company has to pay the millions of settlement(mostly lawyer's fees) out of current earnings.  Which means that they have to charge their customers(him) more, likely more than the .33 cents he got for the wrong doing.
 

Private_Citizen: More importantly - the credit card company had to stop screwing over their customers.


It's likely that the company 'won' some sort of freedom from any prohibition on doing it again.
2013-08-07 11:44:37 AM
1 votes:
Private, for-profit legal representation: what an utterly absurd idea.
2013-08-07 11:04:09 AM
1 votes:
What is that , about 90% for the lawyers? Maybe the should settle for the standard 1/3 and do the right thing.
What am I thinking, they are lawyers...?
2013-08-07 11:01:52 AM
1 votes:

digitalrain: What happened to lawyers having to cap at 33 1/3% or something like that?


yeah, modern lodestar analysis is not capped to a specific percent, but that tends to be the average number.  Its almost as if exceeding numbers like that are what the article is actually about.
2013-08-07 10:57:00 AM
1 votes:
Interestingly, the lawyers who pocketed the bulk of the Fen-Phen class action several years ago were sent to prison...I guess they were doing it wrong.
More:
http://www.kentucky.com/2011/04/30/1724844/farm-and-condo-owned-by-fe n -phen.html">http://www.kentucky.com/2011/04/30/1724844/farm-and-condo -owned-by-fen -phen.html#
2013-08-07 10:53:24 AM
1 votes:

Theaetetus: Albert911emt: I was once unknowingly part of some class action concerning credit card fees or something. I got a check in the mail for 33 cents, and the damn lawyers got millions. And yet lawyers always insist that tort reform is unnecessary. F*ck them.

You got free money without having to do anything. I can understand why you're upset. It's because you're a moran.


More importantly - the credit card company had to stop screwing over their customers.
2013-08-07 10:36:14 AM
1 votes:

Psylence: The woman who went solo got the 10-12k she was looking for.


1) no she did not.  It was overturned on appeal.
2) that woman was a lawyer

http://www.nbclosangeles.com/news/local/Judge-Overturns-Honda-Small- Cl aims-MPG-Ruling-Heather-Peters-Civic-Hybrid-150817375.html
2013-08-07 10:29:49 AM
1 votes:

durbnpoisn: Class action lawsuits are bullshiat for the plaitiffs.  The lawyers love them, make no mistake.  They get paid no matter what.  And they longer they drag it out, the more they get paid.  In the end the plaintiffs end up with almost nothing.

The last two suits I got settlements from were like $50 or $60, when in each case, I was over $1000 out of pocket.

It's like, here in NJ, where a bunch of towns fined people illegally from traffic light cameras to the tune of about $140 each.  Even though it was proved to be illegal. They got a settlement of $8.50.  That's just great guys.  Thanks for that.

This kind of thing should not be allowed to happen.


So you have three options:

1) No one sues - you are out $1,000
2) You sue - you are out $1,000 + legal fees + filing costs etc..  IF you win, you may be made whole as to the original 1000.  But unless something crazy happened, you arent getting fee shifting.  Thus you are probably still in the hole thousands of dollars
3) someone else sues for you.  They spend all the money, take all the risks.  At the end they give you $50

so in scenario 1 you are at negative $1,000; in scenario 2 you are likley at negative $2-10,000; in scenario 3 you are at negative $950.

explain to me how scenario 3 is the worst?
2013-08-07 10:25:33 AM
1 votes:
Class action lawsuits are bullshiat for the plaitiffs.  The lawyers love them, make no mistake.  They get paid no matter what.  And they longer they drag it out, the more they get paid.  In the end the plaintiffs end up with almost nothing.

The last two suits I got settlements from were like $50 or $60, when in each case, I was over $1000 out of pocket.

It's like, here in NJ, where a bunch of towns fined people illegally from traffic light cameras to the tune of about $140 each.  Even though it was proved to be illegal. They got a settlement of $8.50.  That's just great guys.  Thanks for that.

This kind of thing should not be allowed to happen.
2013-08-07 10:21:10 AM
1 votes:

ShadowKamui: Ajakk: For everyone complaining about class action lawsuits, what do people recommend as an alternative?  If a company does something that harms 10 million people $25, how should we have a legal system that makes sure that the people who were harmed are compensated for their loss and/or the company who caused the harm does not unlawfully profit from its actions.

It has nothing to do w/ the lawsuit, its the lawyer's payout that's the problem.


That's why the Appeals Court is refusing to accept the settlement. They have a problem with the fees as well.

I'm all for people getting paid for the work they do, and that kind of legal bill isn't totally insane if it's a really complex case. (I don't think this is a complex case). For example, if the attorneys are billing $300/hr for services, that's 9,100 hours of work on this $2.7m bill. Which is about four and a half man-years of billable hours, figuring that an attorney is expected to bill 2,000 hours in a year. So we ask - how many lawyers were on the case and for how long? A firm might devote a total of ten lawyers to it, and you'd burn through that 9,100 billed hours in under six months of continuous work. While I doubt this took that amount of work, multi-year complex litigation could certainly occupy that amount of time.
2013-08-07 10:16:27 AM
1 votes:

rumpelstiltskin: These lawyers took nothing and turned it into money. They really did do all the work, and since the plaintiffs didn't suffer any damages, why should the lawyers share even ten percent with them?


Because without them the lawyers would have no standing to file in the first place and then couldn't make any money at all? Just a guess as to why the plaintiffs haven't yet been ENTIRELY cut out of class action payouts.
2013-08-07 09:53:05 AM
1 votes:

RamboFrog: Isn't that how most class action suits work? The lawyers get about 90% of the settlement and the people named as plaintiffs split the remaining ten percent.


The one against EA for Madden/NCAA Football/Basketball/Lacross/other games was. If you bought a game between such and such years you got like $5.

Class actions these days seem basically like a legal way for lawyers to extort money from companies.
2013-08-07 09:52:34 AM
1 votes:
For everyone complaining about class action lawsuits, what do people recommend as an alternative?  If a company does something that harms 10 million people $25, how should we have a legal system that makes sure that the people who were harmed are compensated for their loss and/or the company who caused the harm does not unlawfully profit from its actions.
2013-08-07 09:45:20 AM
1 votes:

TofuTheAlmighty: So which admin greened his own paywalled WSJ submission?


This.

And the last line says the suit was challenged by someone OTHER than the plaintiffs.

tldr:  your blog sucks, submitter.
2013-08-07 09:42:55 AM
1 votes:
Class actions are farking stupid. The only winners in those are always the lawyers.

/enjoy your $5 voucher!
 
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