The typical class action case goes something like this:
500,000 people suffer some small injury by a big company. Say they bought a coffee maker that's supposed to filter water but the filter doesn't always work right. Call it a $10 injury. An entrepreneurial lawyer gets wind of it, and files a class action suit. After some discovery and motion practice, he decides to settle with the manufacturer for $2 for each class member ($1 mm total, with unclaimed money to go to Consumer Affairs), plus $300,000 for settlement administration, plus an injuctive promise never to do it again, plus $300,000 for the lawyers' legal fee.
The manufacturer settles because the legal fees of going to trial would probably not be much less than that and if it lost it could be looking at $5 mm in damages plus the possibility of punitive. The lawyer is happy because he made $300,000 for the equivalent of a few hundred billable hours. The class members are mostly indifferent. Even if many of them open the letter and read it (unlikely) and even if many of them think the settlement is BS, they are unlikely to write a letter to opt out for something that didn't even bother them that much. And they can't practically sue on their own anyway over $10.
This case was very different. The federal government had already forced the credit card companies to admit that they had acted in an anti-competitive manner. This lawsuit was the private follow up to that. The Sherman Antitrust Act provides for treble damages. These potential damages are in the tens or even hundreds of billions of dollars. And they aren't all distributed $10 dollars at a time. Some of the members of the class are giant retailers that individually have in the hundred million or billion dollar range. So there are a fair number of class members that are and were very well aware of what was going on in this case and weren't going to just throw out an opt out notice like most class members in most class action cases.
Like most class lawyers these guys just wanted to settle. Sure maybe they could have gotten even more after trial but $500 million in hand is worth quite a lot in the bush! What's unusual is that there was someone with the incentive and ability to litigate and point out this conflict of interest.
The manufacturer settles because the legal fees of going to trial would probably not be much less than that and if it lost it could be looking at $5 mm in damages plus the possibility of punitive. The lawyer is happy because he made $300,000 for the equivalent of a few hundred billable hours. The class members are mostly indifferent. Even if many of them open the letter and read it (unlikely) and even if many of them think the settlement is BS, they are unlikely to write a letter to opt out for something that didn't even bother them that much. And they can't practically sue on their own anyway over $10.
This case was very different. The federal government had already forced the credit card companies to admit that they had acted in an anti-competitive manner. This lawsuit was the private follow up to that. The Sherman Antitrust Act provides for treble damages. These potential damages are in the tens or even hundreds of billions of dollars. And they aren't all distributed $10 dollars at a time. Some of the members of the class are giant retailers that individually have in the hundred million or billion dollar range. So there are a fair number of class members that are and were very well aware of what was going on in this case and weren't going to just throw out an opt out notice like most class members in most class action cases.
Like most class lawyers these guys just wanted to settle. Sure maybe they could have gotten even more after trial but $500 million in hand is worth quite a lot in the bush! What's unusual is that there was someone with the incentive and ability to litigate and point out this conflict of interest.
reply