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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Filed Under: class action lawsuits, settlements, ted frank


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  1. icon
    kmhappel (profile), 27 Mar 2010 @ 11:53pm

    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.

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