Posts Tagged ‘class action’

If you’re like me, at least once in your life you’ve received a mailed “Notice of Proposed Class Action Settlement.” In many instances, you aren’t required to do anything to get the so-called ‘benefits’ of the class action settlement.

However, as a bar-card carrying member of the tribe, I read the notice legalese, especially the part about how much the class action lawyers are getting paid.

Let me never be one to begrudge a lawyer’s payday — so long as the plaintiffs get genuine value consistent with the lawyers’ time and risk. Unfortunately, I’ve yet to receive a notice where the proposed remedy has been worth more than John Garner’s “bucket of warm spit.”

The reality is that too often, the class actions aren’t sensible. They don’t fix real client problems. And they don’t provide meaningful value. Indeed, the only ones making out are the lawyers.

Notably, there are exceptions. For example, there’s at least one class action lawyer calling out colleagues for filing what he terms, “lawyer’s cases.”  With unvarnished candor, he declares, “Stupid class action lawsuits filed by feckless lawyers are a disgrace.” See “Why ‘Class Action Attorney Fees’ Are Such Dirty Words.”

The foot-long.

https://upload.wikimedia.org/wikipedia/commons/9/9a/Spitoon1928Women.jpgThe rules judges and lawyers follow are supposed to govern the class action system. These rules say a class action settlement may not be approved unless it’s “fair, reasonable, and adequate.” 

In view of my own spittoon kicking experiences, I was happy to hear those rules were getting enforced thanks to last Friday’s 7th Circuit Appeals Court Opinion torpedoing the class action lawyers in the case of the foot-long Subway sandwich that wasn’t. In the words of Appeals Court Judge Diane Sykes, “Because the settlement yields fees for class counsel and “zero benefits for the class,” the class should not have been certified and the settlement should not have been approved.” The lower court was reversed.

The sub squabble sprang from a 2013 Facebook post by Australian Matt Corby whose tape measure indicated his Subway sandwich fell short of a foot-long. That was enough to get the class action bar interested. Or as the Court put it, “It went viral. Class-action litigation soon followed.”

Judge Sykes added, “In their haste to file suit, however, the lawyers neglected to consider whether the claims had any merit. They did not. Early discovery established that Subway’s unbaked bread sticks are uniform, and the baked rolls rarely fall short of 12 inches.”

For claimants’ counsel, however, no matter if there hadn’t been a compensable injury. They sandwiched in another claim instead — one for injunctive relief. And so they reached a settlement approved by the lower court.

In sum, the settlement required Subway’s 4-year implementation of steps to ensure as much as practicable that its foot-longs be at least a foot-long while at the same time acknowledging that notwithstanding such steps, chances were that natural baking variability would make such uniformity unattainable.

The size of the fees.

For plaintiffs’ lawyers, though, the heart of the hoagie was the parties’ agreement to cap class counsel fees at over half a million simoleons — $525,000.00 to be exact. It wasn’t the size of the sandwich in the fight but the size of the fees in the grinder that mattered. See “Lawsuit over Subway ‘footlong’ subs was a ‘racket’ benefiting only lawyers, judge says.”

Theodore Frank, a member of the class and as director of the Competitive Enterprise Institute’s Center for Class Action Fairness, a “professional objector to hollow class action settlements,” objected to the settlement on grounds it provided no meat to class members and only fed the lawyers.

Frank has a history of objecting to settlements that only benefit the lawyers and not the class, including a case relied on by the Court, In re Walgreen Co. Stockholder Litig., 832 F.3d 718 (7th Cir. 2016).

Citing Walgreen, the Court reversed. “A class action that “seeks only worthless benefits for the class” and “yields [only] fees for class counsel” is “no better than a racket” and “should be dismissed out of hand.” Id. at 724. That’s an apt description of this case.”

In an interview Friday, Theodore Frank declared, “It’s a great win for us and it’s an important principle that lawyers can’t bring class actions just to benefit themselves. They have actual duties to class members and when they structure litigation and settlements without any benefit to the class, courts shouldn’t tolerate that.” See “7th Circuit Says ‘Utterly Worthless’ Subway Footlong Settlement Has No Meat.”

So add the Subway case to the ignoble annals of cases like the too much ice Starbucks class action; the Jimmy Johns missing sprouts class action; the no berries in the Cap’n Crunch Crunchberry complaint and the no fruit in the Froot Loops litigation. And as I wait for the first solar eclipse eyeglass class action, there’s little doubt my expectations for more of the same will be met.


Credits: Out in Aber, Boxing Day 2009, by David Jones at Flickr; Spitoon1928Women.jpg at Wikimedia Commons, public domain; Matt Corby Facebook post; Guy dressed as a Subway sandwich, 2014 04 03, by booledozer at Flickr Creative Commons Attribution; A foot long for lunch, by Gordon Flood at Flickr Creative Commons Attribution; Subway sandwiches & salads, by Chris Harrison at Flickr Creative Commons Attribution; Waiting patiently, by Quinn Dombrowski at Creative Commons Attribution.


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I once knew a sales guy who was such a shucking and jiving backslapping ‘B.S.er’ that some of his customers called him “the laughing, lying one.” Most of them knew better than to take his salesman’s patter seriously. Still, I thought the description deliciously apt.

Now it turns out that in an entirely different context, that ‘laughing, lying’ moniker might also fit those B.S.-spewing law schools hungry to garner favorable ratings to continue attracting gullible student enrollees. However, in their case, the law schools’ “customers” are starting to take matters more seriously. And they aren’t laughing at saleman’s puffery.

For example, Anna Alaburda, a 2008 honors graduate of San Diego, California’s Thomas Jefferson School of Law (TJSL), is the lead plaintiff in a class action suit filed May 26, 2011 in state court against her alma mater. The Complaint, which can be accessed here seeks $50 million in compensatory damages on behalf of the class, which could number as many as 2,300.

Causes of Action.

The suit has 5 causes of action, mostly for various alleged violations of California’s Business & Professions Code § 17200 et seq, including alleged material misrepresentations and acts of concealment by TJSL. The plaintiffs deem these acts “unlawful, unfair and fraudulent business practices prohibited by UCL [California’s Unfair Competition Law].”

Additionally, Alaburda and the class contend TJSL violated the False Advertising Act by purportedly disseminating “false and misleading statements in U.S. News & World Report’s “Best Graduate Schools” publication, on its website, and in its marketing brochures.”

The Complaint further states that “These misleading statements concerned post-graduation employment statistics, among others. These false and misleading statements were made with the intent to induce the general public, including Plaintiff and the Class, to enroll at TJSL”

File:Vermont state fair barker bw.jpgThe third cause of action sounds in fraud. Alaburda and the class allege the school has a “fraudulent marketing program.”

The fourth cause of action is for alleged violation of the Consumer Legal Remedies Act, which “prohibits unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale of goods and services.” The underlying basis of the violation complains that TJSL misrepresented its post-graduation employment rates.

And the fifth and final cause of action alleges negligent misrepresentation.

The news of the class action comes courtesy of the website, Law School Transparency, “a Tennessee non-profit dedicated to encouraging and facilitating the transparent flow of law school consumer information.” Law School Transparency has a terrific recap on the dispute, which it posted on Friday, May 27, 2011. Also see Law.com‘s report at Law school sued over ‘false’ employment statistics.”

Given the theories raised by Alaburda and the class against TJSL and the recently widely reported law schools’ fudging of graduate post-employment numbers, it’s logical to anticipate that this suit will be closely watched by the law school industry.

Will more lawsuits follow?

But more ominously, since the theories underpinning Alaburda’s Complaint could just as easily be raised against many other law schools, i.e., the inflating of post-graduation employment numbers to induce enrollment and reputation, it’s easy to foresee similar suits to follow. In her Complaint, Alaburda makes note of the recent media reports about fudged job numbers, e.g., “Is Law School a Losing Game?” – NYTimes.com Also see, “Law schools award a degree ofBS.”

However, as much as Alaburda’s case engenders a plaintiff’s lawyer’s sympathies, it appears to me that like the foreclosure defense suits brought by underwater homeowners against predatory lenders, lawsuits against law schools may not find a lot of support from regular folks still making mortgage payments and otherwise fulfilling their obligations. Regular folks, as I have found from my own conversations, put more stock in personal responsibility. And surprisingly, they’re quicker to blame the defaulting homeowners and not the predatory mortgage industry or the quick-buck realtors or the greedy Wall Street investment firms.

Buying an unaffordably overpriced law degree by cluelessly betting on a non-existent job market is analogous to deceptively financing an unaffordably overpriced home based on a ludicrous expectation that a hyper-inflated real estate market would exist in perpetuity.

No matter that law graduates have been suckered or that their anger at law school disassembling is justified. Which side has the stronger legal and especially, the moral equities? Is it the law graduates who fell down on adequate due diligence and now have buyer’s remorse? Or is it the “laughing, lying” law schools?

And since budding lawyers freshly-sprouted from law school don’t fall neatly into what my UCC Professor often explained were “the idiot consumers the law seeks to protect,” will this ultimately be a ‘you made your bed, now sleep in it‘ argument? Or as one of my favorite thinkers, Thomas Merton, more elegantly said, “In the last analysis, the individual person is responsible for living his own life and for “finding himself.” If he persists in shifting his responsibility to somebody else, he fails to find out the meaning of his own existence.”

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