February 14th, 2017

Class Action Action, Here We Come…

Alison Frankel

We may be in for some serious action on the class action front, due to two big items:

First, legislation has been introduced in the House by Representative Bob Goodlatte that would eviscerate class action law suits. Those suits, started under Federal Rule of Civil Procedure 23 allow numerous people with small claims to group together to bring suit. Because one can’t realistically hire counsel to sue for getting screwed on a defective $10 widget, but if 1,000,000 people get screwed, justice has a good shot at being served.

Or, perhaps, if someone wants to create a phony university about selling real estate with phony promises, the class action is the way that the group can come together for justice against a grifter.

Make no mistake about it, the class action suit is a major factor in empowering the little guy to keep Big Business honest in consumer dealings, and I’m a big fan of them when used right.

As Alison Frankel points out in a Reuters column, however, those class actions are now under a new assault. With Republicans now controlling both houses of Congress and the White House, there is the potential for the courthouse doors to get slammed shut in the faces of consumers.

Since Frankel has already done a great job writing the story up, no need for me to do it again. Read it here.

Next up on the class action front is a potential showdown in the United States Supreme Court on how legal fees are calculated when class actions settle.

Prof. Josh Blackman

In Blackman v. Gascho, the court will face this issue regarding the computation of legal fees: Should a trial court look to the full value of the settlement, as if every person redeems a coupon that may be offered? Or should it be based on how many people actually redeem those coupons (if coupons are used). In other words, on a claims-made basis.

Regular readers know I have been down this path before having been screwed on a class action once. I then proceeded to hire Ted Frank to represent me as an objector, despite him being a tort “reformer.” As Scott Greenfield once pointed out, Frank had now become a plaintiff’s lawyer of sorts, by standing between members of the class and lawyers that he felt (in certain cases) had over-reached on the legal fee.

The issue arose when law professor Josh Blackman — who has been producing constitutional commentary regarding the Trump administration on his blog, twitter and cable shows like a fire hose going full blast — was a class member regarding a gym contract. The gym was sued and the matter settled.

But rather than simply mailing checks to the class members on a pro rata basis, postcards and emails were sent with directions on how to redeem the funds. This, Blackman argues, was designed to lower the actual payout to class members with a low response rate, and thereby give a disproportionate share of the recovery to the lawyers.

While the gym argued that the entire class settlement was $15.5M, thus justifying a $2.39M award of costs and fees, Blackman and Frank contend that they anticipate less than 10% response, and that therefore the funds were paid disproportionately to lawyers instead of class members.

The case is set to be conferenced by the Supreme Court this coming Friday, February 17th, to decide if cert should be granted.

If cert is granted, and the Goodlatte bill moves forward, expect class action discussions to come to the forefront of legal discussion.




December 21st, 2012

Twittering With the Enemy (A Blogospheric Celebration)

Yesterday I re-tweeted something that Ted Frank wrote over at Point of Law; a piece about lawyers whining about no work. His point — after noting that he started up a successful public interest law firm dedicated to objecting to class actions that don’t treat the plaintiffs well — was that there were many good causes out there for lawyers to get involved with. Get off your ass, he effectively said, and go find a cause to represent.

The main point that I took, before he addressed a myriad of potential legal issues, was how much he enjoyed what he was doing as opposed to the career track toward academia he had anticipated. He wrote that he

discovered how much I like litigation when I have autonomy and don’t have to make arguments I don’t believe in, and discarded the idea of writing law-review articles no one would read. Today I have two attorneys working for me, a fascinating docket, and get to argue more appellate cases every six months than I did in my entire ten-year BigLaw career.

Frank’s political views, of course, are not universally shared, particularly by members of the plaintiff’s personal injury bar. But he did address, as I said, a number of issues that could be raised by lawyers looking for new career tracks.

There are three different reactions that I’ve seen, though I think the last one might be the most important…stick with me here, because this time I have an actual point to make.

The first reaction to the Frank piece came  from Max Kennerly (First Lesson For New Plaintiff’s Lawyers: If It Was Easy, Everyone Would Be Doing It). Kennerly is always a good read, and he gets into the nitty gritty of the details of the clients and lawyers actually meeting each other:

plaintiffs’ law firms don’t just discover viable legal claims somewhere in the world and file them, they only enter the picture after clients find and hire the lawyersMarketing lawyers is hard work.

He goes on to discuss — and I won’t give it all here because I think you should head over to his site and read it yourself — the extraordinary difficulties of the entire contingent fee arrangement and trying to fund mass actions:

Frank is arguing for inexperienced, poorly capitalized lawyers to dive right into expensive and prolonged complex litigation involving procedural mechanisms (e.g., the class action) and causes of action (e.g., antitrust) that are routinely attacked by no less a force than the United States Supreme Court against defendants with essentially unlimited resources, like “Ivy League schools” and “the Obama administration.”

The second objection comes from Elie Mystel over at Above the Law. First he identifies the problem:

the problem is that “the reason” most people went to law school was “money.” The “cause” most people signed up for was “risk-averse earning potential.” Frank is essentially telling a group of mercenaries to find a cause they believe in and fight for free for a time, and then the money will come. And it’d be great advice except for that fact that most mercenaries didn’t get into the business for a cause, they’re in it for the cash.

But from there Mystel digs deeper and points the finger at the law schools that teach legal theory, as opposed to the actual practice of law. Young, unemployed lawyers are simply not up to the task of doing what Frank advocates because they’ve never been taught. He notes:

Not everybody has the skills to start their own business, and it’s not like law school spends a lot of time — or any time whatsoever — teaching and training people in the art of making money with a J.D. Heck, there are hard-working, incredibly intelligent partners at law firms who have no freaking clue how to market themselves or their legal expertise. We call them “service partners,” and they’d probably be working for the hourly rates of an SAT tutor if it weren’t for “rainmakers” with business savvy who know how best to turn talent into money.

Scraping clients together is hard, not everybody knows how to do it, and law schools aren’t teaching people.

And finally, there is a third objection that I didn’t expect, and the one I consider most important. This one comes from “Michael” on Twitter, who was displeased that I (and Dave Waterbury) re-tweeted Frank’s piece to begin with:

@Turkewitz @dewesq55 Really? Sending a link advocating undercutting standard fees on contingency fees = asking for a race to the bottom.

That is correct, I re-tweeted something even though I had disagreements with parts of it and even though Frank has a long history of being a tort “deformer” whose political views I oppose. And you know what? I once hired him as my attorney anyway. I explained that in detail a few years ago: Turkewitz v. Yahoo (Meet My Lawyer, Ted Frank).

Now the point I wanted to make — I told you I would get here: When I was just a baby blogger, some six years ago, I was irritated by some point or article that Walter Olson noted at Overlawyered and wrote a response. And Olson proceeded to give me the best damn lesson in blogging that I ever received: He amended his post to say, and for an opposing view, see Turkewitz. WTF?

“The enemy” had just given me link juice and readers. It took just a heartbeat to fully comprehend the nature of the blogosphere. We are not islands unto ourselves, but this is an ongoing conversation. Nor is this a conversation to be had solely among those with whom we agree. What good is that?

Unlike many politicians (and arguing spouses) that simply talk past each other, barely even acknowledging the position of the other, Olson engaged. And with less than a year under my belt, he then added me to his blogroll (which I wrote about).

Frank wrote something that was interesting. People responded. They may agree or disagree with him, but this is what makes for a vibrant blogosphere. Let us celebrate.

Why is this important? Because many still don’t get it, with social media gurus telling clients to fill their blogs with all manner of Google friendly search terms regardless of the dreck it produces. This is a favorite topic of people like Scott Greenfield and Brian Tannebaum.

Look at the four faces you see in this post. That, my friends, is how blogging is supposed to be done. Break out the boxing gloves and debate the merits and to hell with what the social media gurus tell you about how Google thinks. Google, you may be surprised to learn, could be a tad smarter than you think.


December 29th, 2009

Turkewitz v. Yahoo (Part 2: Class Counsel Responds To My Objections With Nonsense)

As I wrote two weeks ago, I’m a member of the class of people victimized by Yahoo! click-fraud, and was stunned at being given the shaft in the proposed settlement. You can read the details of said shafting at that link, but it includes over four million dollars for class counsel — the lawyers that represented the class of victims — and virtually nothing for the actual victims. I get zippo in this deal if the judge approves it, which led me to object to the settlement.

When I first wrote, I wondered how class counsel would justify taking the fat fee while the class members got reamed. And I wrote “I look forward to the response to my objection where the attorneys get to state in open court that my interests were protected by giving me nothing.”

Well, now they’ve filed their response to my objections (YahooClassCounselResponse.pdf), as well as the objections of nine other victims. And that response can only be described as moronic. Unless, of course, you prefer the words dopey, dimwitted, inane, pointless, ludicrous, bizarre, and flouting the basic premise of attorney-client relations. Yes, I know that last part isn’t a word, but I’m on a roll and I’ve got a thesaurus. Stay with me here.

In their response, the lawyers counter my objection by saying it was filed by a professional objector, Ted Frank at The Center for Class Action Fairness:

The Turkewitz objection was filed by the “Center for Class Action Fairness” (“Center”), a professional objector to class action settlements. See http://centerforclassactionfairness.blogspot.com/ (blog of the Center for Class Action Fairness discussing three objections it filed in the month of December 2009 alone).

Except that Frank isn’t the objector. I am. Frank is counsel. I really shouldn’t have to explain this concept to anyone who went to law school and now wants four million bucks in legal fees. If their lawyering is that lame (or feeble, faulty or ineffective — I’ve still got that thesaurus out), maybe they deserve zero for a fee.

Let’s be clear about this since class counsel can’t figure it out: I contacted Frank to handle the objection for me. Frank has familiarity with the laws surrounding class action objections. I toyed with the idea of hiring a matrimonial or real estate lawyer to represent me but, oddly enough, chose someone familiar with the field. Go figure.

They attack Frank, of course, because they can’t attack me. I’m a plaintiff’s guy. I think class actions under Rule 23 are a highly effective means of dealing with situations like this, and I said so in my court filing. In addition, I’ve never objected to a class action in my life, despite being involved as a class participant in many. And that appears to be why class counsel tried to shift away from the merits of the argument — that most victims are being shafted — to the lawyer representing me.

In fact, the reply papers are so miserably superficial on this point I don’t know how it made it past the first draft. Was there more than one draft? There are four separate lawyers listed below the signature line. Did any of them read it? Don’t any of these folks know how to edit out awful?

Next up, class counsel disputed my assertion that this suit was about click-fraud. Why bother with another irrelevant and idiotic argument? Likely because they know what they’ve done to the victims and again need to distract.

You see this suit was about pay per click advertising and it was about misrepresentation, and numerous others have, therefore, referred to this as a suit about click-fraud or misrepresentation. (See, for example: Virtual Blight, eBrandz, and Seeking Alpha.) Yahoo! was alleged to have permitted ads to be displayed in spyware, domain name parking sites, pop-ups, pop-unders ad typosquatting sites. Yuck. I get sick just thinking about where Yahoo! wasted my money.

More importantly, Yahoo! has confirmed that I’m a member of the protected class, making this issue moot as well. Even if I asserted that the case was about Crazy Eddie stock, it wouldn’t matter. Because I’m a member of the class and that is what matters. I need not make any showing of individual facts to receive compensation — assuming that I was getting any compensation which, if you’ve been reading you know by now, I’m clearly not.

So class counsel figures, I guess, that if you can’t beat an objector on the merits then you just try to distract the judge. If you got the facts, after all, you argue the facts. And if you got the law, you argue the law. Class counsel has neither, so they shovel manure. Think the judge will notice?

I’ll leave it to Ted Frank to argue the legal merits in a reply and beat the crap out of them further, since they all deserve it.

The issue has been picked up, by the way, by TechDirt and Todd Zywicki @ Volokh (who focuses on Frank, and the reason I chose him).

Links to this post:

First, I’m taking suggestions. If there is anything you want me to include or change, email me at [email protected]. Do not email me with questions. If you want to pay me, that’s a different story. But if there is something that
posted by David M. Gottlieb @ January 01, 2010 9:20 PM


December 14th, 2009

Turkewitz v. Yahoo! (Part 1: Meet My Lawyer, Ted Frank)

I’ve hired a lawyer because I’m objecting to the settlement of a Yahoo! class action regarding click-fraud. And I’d like you to meet that lawyer, though many of my regular readers already know something about him. His name is Ted Frank, a man the Wall Street Journal once called a “leading tort-reform advocate.” He has promoted ideas that, I think, would close the courthouse for many. He is a frequent contributor to Overlawyered, a member of the conservative Federalist Society, and was, until recently, a fellow at the conservative American Enterprise Institute where big corporations seem to get a lot more favor than Joe Sixpack.

So why’s a guy like me, that does personal injury litigation for plaintiffs, consorting with the likes of Ted, who often rails against trial lawyers? Well as it happens, Ted is also one of the nation’s most knowledgeable people in the country in a niche of a niche. He doesn’t just know about class actions, but knows first hand how to object to a settlement if it fails to actually protect the class of people that are supposed benefit from the action.

Class actions can be a beautiful thing. Started pursuant to Federal Rule of Procedure 23, they allow large numbers of people with similar claims to bring an action together. Since without class status the suits wouldn’t be economical to bring, the suits tend to hold large wrong-doing companies accountable for conduct they might otherwise have gotten away with. Big companies hate class actions.

But if the settlement doesn’t seem fair, members of the class get to object. That might happen if the lawyers get a big fee relative to the financial benefits to the class victims. And Ted has a history of having done just that with a class suit regarding the video game Grand Theft Auto. He objected on his own time and his own dime, and it landed him in the New York Times, among many other places (Above the Law; Heritage Foundation; National Law Journal). Forbes later called him “a lawyer who tries to block class action settlements.”

Flush with the fame and fortune of his Grand Theft Auto objection, or at least the fame part, he left the American Enterprise Institute to start up the Center for Class Action Fairness, devoted to knocking down some of the settlements that don’t really benefit the class. Ted, in his own quirky way, had become a plaintiff’s lawyer, standing up for the little guy. He had, as Scott Greenfield aptly put it, found his groove. And that groove is the place between the class lawyers and the victims, and the conflict of interest that can occur.

So after Yahoo’s notice of settlement of the class action regarding pay-per-click fraud arrived in my mailbox — and having read it and realized I’d gotten the shaft — I knew who to call. I had received that notice because I had used Yahoo’s pay per click service from 2001 to 2005. I dumped the company in late 2005 when I strongly suspected click-fraud and the company did nothing about it. Over the years I spent about $5,000 per year on these ads, about $22,000 in total. I imagine that makes me a typical small business owner in the world of pay-per-click advertising.

There was just one bitty problem with the settlement that I took issue with. While the lawyers were asking for over four million dollars in legal fees, I got nothing. As in nada. Zip. Bupkus. And not just me, but if this settlement is approved the vast majority of the class will come away with checks for a similar amount: Zero.

Now the Rules governing class action are supposed to prevent this from happening. Federal Rule 23(a)(4), asserts that “the representative parties will fairly and adequately protect the interests of the class” and Rule 23(g)(1)(B) provides that “An attorney appointed to serve as class counsel must fairly and adequately represent the interests of the class.”

Here’s how they are trying to settle this case: The proposed click-fraud class settlement chopped up the thousands of paying customers into these three categories:

a. Those who still advertise with Yahoo!;
b. Those whose companies failed; and
c. Those whose companies are going concerns and no longer advertise with Yahoo!

Then they decided to “settle” the case by paying a whole 20 bucks to those people and companies that formerly used Yahoo! but their business failed. The rest got stiffed. No, this didn’t make sense to me either. Until I realized that this group of defunct businesses is the least likely to fill out paper work and make a claim. So the payment isn’t just measly beer money to a few, but beer money that even fewer will try to collect.

Another aspect of the “settlement” is that Yahoo! will improve its service. Well jolly good for them. They’ve been destroyed by Google, so trying to figure out a better way to treat your customers makes sense. But don’t try to sell that as part of a settlement. Yahoo! does that for its own survival, and no other reason.

So I spent money on Yahoo! for the ads, yet I got nothing back in this settlement. I have, quite literally, nothing to lose by objecting to this settlement. From where I sit, the Rules were clearly violated in that the class representatives and the lawyers didn’t “fairly and adequately protect” my interests. I look forward to the response to my objection where the attorneys get to state in open court that my interests were protected by giving me nothing. That should be a fun hearing.

And that’s why I contacted Ted. Sometimes strange alliances form in life. Ted Olson and David Boies, who fought opposing sides of Bush v. Gore, are now working together on the California gay marriage issue. Left wing political strategist James Carville married right wing political strategist Mary Matalin. And now, Turkewitz and Frank, together at last. Not quite Bogey and Bacall but you get the idea.

One thing I learned early on as a lawyer was not to pick personal fights. I watched my father try a case once, and he and the other lawyer would knock heads in the courtroom, then go out for coffee. Personal animus is not helpful in any way for winning a case. But it can hurt you if you need to talk to the other side about anything from adjournments, to witness schedules to settlement. So I try not to do it in life, and I don’t generally do it here.

The differences Ted and I have are those of ideas, so it was easy for me to contact him. In fact, we often agree that certain cases are dumb and frivolous, but we differ on whether those anecdotes support changes in policies.

For this case, it was a no-brainer that Ted Frank should be my lawyer. And so he is.

Stay tuned…
License plate of Ted Frank’s car, via Byron Stier @ MassTorts

Links to this post:

Former Yahoo Advertisers Objecting To Class Action Settlement
We’ve discussed in the past how the class action lawsuit process if often abused mercilessly. While the concept of a class action lawsuit can make a lot of sense, as you look at the details of many of the lawsuits, they do little to

posted by Mike Masnick @ December 16, 2009 8:59 PM

Class action objection
Eric Turkewitz, noted plaintiff’s-lawyer blogger, teams up with Ted Frank, noted Overlawyered.com blogger, to object to a Yahoo! class action settlement. Tags: class action settlements, legal blogs, Ted Frank
posted by Walter Olson @ December 15, 2009 8:50 AM