Class Action Fairness Coalition

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     News Release

 

EMBARGOED FOR RELEASE

July 6, 2004  

CONTACTS:  Joan Gartlan,

Mike Heimowitz or Michael Schick

(202) 955-6200

 

Top Ten Most Outrageous State Class Action Settlements

 

Consumers Lose in a System Intended to Protect Them

 

U.S. Senate Considers Bill Today

 

WASHINGTON, DC - The Class Action Fairness Coalition today released a list of the top ten worst state court class action settlements. The list shows that venue shopping by class action lawyers in certain magnet state courts around the country has produced a litany of outrageous class action settlements that provide millions of dollars in fees to lawyers and little or nothing for consumers.

 

The U.S. Senate today begins consideration of "The Class Action Fairness Act" (S.2062).

 

"The state court class action system is desperately in need of reform," said Stanton D. Anderson, Executive Vice President and Chief Legal Officer of the U.S. Chamber of Commerce and Chair of the Class Action Fairness Coalition. "The Class Action Fairness Act is a moderate and reasonable bill aimed at fixing what is broken and making a class action lawsuit system that is fair for consumers and businesses."

 

Topping the list of state court class action lawsuit abuses is the settlement of a nationwide class action lawsuit in Alabama involving hundreds of thousands of consumers against the Bank of Boston. Class members actually lost money as a result of the settlement, some of them over $100 each. The money class members lost went to pay "their" lawyers $8.5 million in legal fees.

 

"The top ten list of the worst class action settlements shows a pattern of settlements in which only the lawyers receive any real cash," said Anderson. "In many of the cases cited consumers only receive coupons that require them to spend additional money for products they complained about in the first place."

 

For example, in a recent settlement of a class action lawsuit against Poland Spring over the purity of its water, class members received coupons for discounts on future purchases of Poland Spring water. The only people who made any cash on the settlement were the class action lawyers, who pocketed $1.35 million. Poland Spring admitted no wrongdoing and did not have to change anything about the way it bottles or markets its water.

 

The Class Action Fairness Act would discourage worthless coupon settlements. It includes a provision that would require that legal fees in coupon settlements be based on the number of coupons redeemed or on the number of hours the lawyers actually worked.

A list of the top ten most outrageous state court class action settlements for consumers is attached.

 

 

 

 

 

 

Top Ten Most Outrageous State Court Class Action Settlements For Consumers

 

1. You Win, You Lose: In a nationwide class action lawsuit filed in Alabama against the Bank of Boston over mortgage escrow accounts, the class members "won" the case, but actually lost money. Under the settlement agreement, the 700,000 class members received small payments of just a couple of dollars or no money at all. About a year later, they found out that anywhere from $90 to $140 had been deducted from their escrow accounts to pay their lawyers' legal fees of $8.5 million. When some of the class members sued their class action lawyers for malpractice, the lawyers countersued them for $25 million saying their former clients were trying to harass them.

 

2. Lawyers Pocket $22 Million, Consumers Walk Away From Settlement: In the settlement of a class action lawsuit in Madison County, Illinois against Thomson Consumer Electronics over allegedly faulty television sets, customers were eligible for rebates on future purchases ranging in value from $25-$50. Lawyers pocketed $22 million. Thousands of consumers reportedly walked away from the settlement altogether because the form was so complicated and the attorneys' fees were so high.

 

3. Conned By a Con Man and Then Conned by Their Lawyers: A Madison County, Illinois judge recently approved a class action settlement in a case against a convicted con man, who bilked as many as a million people, most of them elderly, out of $120 million. Under the settlement, the plaintiffs' lawyers would receive $2 million in legal fees. A New York Times story on the case said that could be 40 times the amount of money the entire class will receive. Some class members were cut out of the settlement altogether. A Madison County, Illinois judge approved the settlement even after a federal jury in Chicago slammed plaintiffs' attorneys with a $36 million verdict for selling out their clients.

 

4. $16 Million For Lawyers, $5 Phone Cards for Consumers: In a class action case in Madison County, Illinois, class members claimed Ameritech wrongly charged a fee for a warranty on people's phone lines without first making sure people wanted it. Under the settlement agreement, consumers received $5 pay phone cards, which could only be used at pay phones owned by Ameritech's parent company, SBC. However, consumers in some states couldn't use the cards at all because there were no Ameritech pay phones where they live. The judge who presided over this case awarded the same law firm a total of $16 million in legal fees in two separate suits against Ameritech. The lawyers were the only ones who got any cash in either case.

 

5. Lawyers Get a "Blockbuster" Deal, Consumers Get Coupons: In a settlement of a class action lawsuit filed in Texas against Blockbuster over late fees (currently on appeal to the Texas Supreme Court), plaintiffs' lawyers will receive $9.25 million in fees and expenses and the class members will receive two coupons for movie rentals and one $1.00 off coupon. While the lawyers made enough money to produce their own movie, Blockbuster customers couldn't even use their coupons to buy a bag of popcorn because their coupons only covered nonfood items. The settlement allows Blockbuster to continue its practice of charging customers for a new rental period when they return a tape late.

 

6. Cheerios-A Honey of A Deal-If You're An Attorney: As part of a settlement of a class action lawsuit in Cook County, Illinois against the manufacturer of Cheerios, the company put coupons for a free box of the cereal in the newspapers. But, it was the plaintiffs' lawyers who got the prize at the bottom of the cereal box. They milked the company for $1.75 million in fees-an estimated $1200 per hour for their legal services. For these class action attorneys, Cheerios truly proved to be a "honey of an O."

 

7. Six Dollars for You, $6 Million for Your Lawyer: In a class action lawsuit filed in California, more than 50 well-known computer manufacturers and distributors were accused of misrepresenting the screen size of their computer monitors. The nationwide class of an estimated 40 million consumers received $13 rebates on new computers and monitors or $6 in cash. The lawyers received almost $6 million in legal fees.

 

 

 

 

 

8. Lawyers Pocket $1.35 Million, Plaintiffs Get More of What They Complained About: In a recent class action lawsuit in Kane County, Illinois against Poland Spring, class members claimed the company's bottled water was not pure and was not from a spring. Under the settlement, consumers received coupons for discounts on Poland Spring water. Poland Spring admitted no wrongdoing and is not changing anything about the way it bottles or markets its water. The only people who made any cash on the settlement were the class action lawyers, who pocketed $1.35 million.

 

9. Lawyers Sail Away With Fees, Consumers Get Coupons: In a class action lawsuit filed in Florida against Premier Cruise Lines, consumers alleged that they were charged for "port charges" higher than Premier actually paid. Under the settlement, class members received coupons for $30 to $40 discounts on another cruise line (Premier had since gone out of business), and their lawyers received $887,000 in fees. While the lawyers made off with all the money, another cruise line gained a promotional opportunity.

 

10. Lawyers Receive $1 Million, Sell Out Class: In a recent settlement of a class action lawsuit in Cook County, Illinois against KB toys over alleged deceptive pricing practices, the toy company paid attorneys' fees and costs of $1 million dollars, but no cash to class members. As part of the settlement, the store held a one-week unadvertised 30 percent-off sale on selected products.

 

 

 

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The Class Action Fairness Coalition is a group of companies and business organizations dedicated to making America’s class-action lawsuit system simpler, fairer and faster.