Fixing Class Action Lawsuits

from the objecting-to-settlements dept

For a long time, we’ve noted that while class action lawsuits do serve a useful purpose, it seems like all too often they’re abused. Quite frequently, we see the only “class” that really benefits from such lawsuits are the lawyers who file the lawsuit, who end up taking the bulk of any “settlement.” In some cases, it’s even worse — where not only do lawyers get the bulk of the settlement, the rest of the class actually gets pushed into buying more products from the company that was sued. Such class action lawsuits not only make the lawyers richer, they actually act as marketing for the company that was sued. One of the worst such cases we can remember involved Netflix, which “settled” a class action lawsuit by giving current customers a “free” one-month upgrade — but if you didn’t manually downgrade your account, they started charging you the higher price the following month. That’s not a “settlement” so much as a way to get a bunch of customers to upgrade. If I remember correctly, that settlement was actually thrown out.

Eric Goldman points us to an interesting profile of Ted Frank, a lawyer who is focusing on trying to stop such bad class action lawsuits and settlements by objecting to the settlements when they seem so far over the line. While, as the article notes, there have been a bunch of “professional settlment objectors” in the past, most have been doing it for money (getting some of the attorney’s fees). Frank, however, hasn’t taken attorney fees (though he says it’s a possibility in the future), and is funded by a charity:

“The whole reason I started this is because there is a high probability of district courts rubber-stamping settlements,” Frank says. “I think these are very bad settlements that the [9th U.S. Circuit Court of Appeals] will … provide guidance for when judges should or shouldn’t approve settlements.”

Again, the concept of a class action lawsuit isn’t bad, but it’s definitely been widely abused — so it’s nice to see someone pushing back from within to try to stop the worst abuses.

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Comments on “Fixing Class Action Lawsuits”

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Steve R. (profile) says:

Sprint Bad

Sprint, a few years ago, settled a class action lawsuit for “improper billing”. Under the settlement we would have been entitled to a $15.00 refund. We never saw the money.

The catch, you had to be a Sprint customer. By that time, we had dropped Sprint. Sure, we could have “received” our $15.00 had we signed up for a new two year plan (even though we still had the old phone)!

Moreover, even if you were still a Sprint customer; you never actually saw the “refund” since it would appear as a deduction on your future bills.

Settlements such as these demonstrate how ridiculous class action lawsuits are. If the injured party only receives “coupons” that force them to buy from the company that hurt them – that is exactly how the lawyers should be paid; in coupons!

Another issue with class action lawsuits, to my knowledge, their is no commitment on the part of the company in stopping their abusive practices.

kmhappel (profile) says:

Cox Censorship

I am the coordinator of a tea party group in Vista, CA. Today I was notified that I will not be allowed to send emails to the members of the tea party group that had given me their emails addresses specificly for the purpose of receiving the emails. The reason: they are considered spam by cox.

I think a class action lawsuit is the only option in such cases. In this case I want that outgoing message filter made illegal. HOw else can I stop this. We discovered that a neighboring tea party has been bblocked for six months and was never notified (see the blog post here about Cox doing that to people)

Do you have an alternative? I don’t care about the money, but inhtis case they are setting precident for censorship by autonomous software review of content and outgoing mail patterns of an individual user to individual users without invalid addresses and with their permission.The comapny said they could do nothing about it and that I should send them one at a time.

Steve R. (profile) says:

Re: Cox Censorship

A major concern with class action lawsuits is that the lawyers only get involved if they can make $$$$$. You also have an issue of damages. Where are they? Your email didn’t go out, so what?

Whether you realize it or not, your post actually raises a very subtle point of the net-neutrality debate. If the ISPs, such as COX, are not required to provide a neutral internet you will find a lot more “obstructions” than an inability to send email. We need guarantees for a neutral internet.

Actually, as I was writing this, it occurred to me that many of those in the tea party movement are against government involvement in a persons life. While I have no idea concerning your position on government regulation; I find it amusing that you would be complaining about what the company is allowing you to do on “their” network. Many people on the political “right” claim that companies can do whatever they want whenever they want. Customers have no rights. If you are a disgruntled consumer, too bad. Don’t use Cox.

kmhappel (profile) says:

Cox Censorship

Actually I was invited to testify and participate in the virtual hearings on net neutrality. Your comment,

?I find it amusing that you would be complaining about what the company is allowing you to do on “their” network. Many people on the political “right” claim that companies can do whatever they want whenever they want. Customers have no rights. If you are a disgruntled consumer, too bad. Don’t use Cox.?

First a factual point, I am not using ?their network? anymore than a given DSL service is using ?its? network. There are two distinctly different functions, one is physical access and the second is content access. But you must know this. The second is that your statement, ?Many people on the political “right” claim that companies can do whatever they want whenever they want? is a ridiculous assertion. It is too bad that you miss the point entirely.

The issue of net neutrality is about the fact that net access is provided through an ISP?s bandwidth tunnel into one of the NAPs (Network Access Points) and that ISPs have been placing various types of restraint upon that bandwidth. All types of regulation have dangers with respect to access freedom and content control.

One view of regulation is that any kind of constraint on edge access to a NAP is illegal. Having no edge restriction will mean that content providers will have to provide content based access restriction instead of ISPs and edge networks. Some feel that no limitations would lead, in time, to content access based upon content provider memberships where control of content access is closest to a direct user-provider relationship and is open DNS access adverse. This idea is opposed by those fear an end to net anonymity and giving each provider and user a hard and legally binding ID. One consequence would be an end to the commercial marketing model currently used by the pornography industry

Another idea about regulation is to regulate a common set of access restraint and then build content filters into the edge networks for enforcement. The problem with a common set of access restraint regulations is that each and every issue based concept can ultimately place new restrictions in the mix.

Imagine the types of content constraint that could be added by religious movements or by enforcement agencies when the current net neutral concept is replaced and very different regulatory concept is imposed upon access. The Chinese, for example, use such a regulatory model. Google now wants to back out after they had agreed to that access restraint and are finding it not as easy as they thought.

Actually the need is not for net neutrality but for edge network access freedom. No regulatory body is empowered with the kind of infrastructure and tools that would be required to detect, validate and prosecute such a strategy except the national intelligence agencies. Not your first choice either I would guess, based upon your comments.

Jimr (profile) says:

Being involved in a couple of class action law suits I have found them to be very strange business models…. largely to the benefit of the lawyer or law firm in charge.

One product I complained about the manufacture clearly admitted guilt but since they had already settled a class action law suit I had to seek my damages from a law firm. I do not know which is worst – trying to get a basic repair cost out of a major company or hoping to get 10% of the repair cost covered from a law firm. The company has at least the interest of trying to keep me a future customer… the law firm not so much.

Anonymous Coward says:

Cox Censorship

I can only imagine how blunt a class action sword is. Having founded an international telecom (died in when Greenspan raised interest rates and the cost of financing international fiber laying went above $10,000 a foot (“all in” as the say in Texas hold um)and two other companies, one of which went public in the UK, I can’t understand what drives some corporate behavior. Usually, corporate behavior of the type that class action suits tend to addresses is a terrible business strategy. BTW, thanks for the comments.

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