During his remarks at NJCJI’s Fall Luncheon, Ted Frank, the president and founder of the Center for Class Action Fairness, explained how the In re: Dry Max Pampers litigation perfectly illustrates how the current class action settlement case law incentives bad behavior, and what CCAF is doing to challenge the existing paradigm.
As CCAF explains, “[T]here is an inherent conflict of interest between absent class members and the self-appointed class counsel and representative. A defendant is interested only in disposing of the total claim asserted against it at the lowest expense while class counsel is seeking to maximize fees; if the parties explicitly or tacitly collude, or if the defendant is indifferent to class counsel’s self-dealing, the result can be a class action settlement that is unfair or otherwise abusive or illegal. However, there is insufficient incentive for disadvantaged absent class members to police abuses of the class action system, and judges tasked with approving class action settlements often do not get a fair presentation of the issues from the ex parte submissions of the settling parties, who have an incentive to improperly exaggerate the benefits of the settlement when seeking court approval of the settlement. While professional objectors exist, the profit-maximizing business model for a professional objector also generally fails to advance the interests of the class or the public, as it will always be more profitable for an objector to engage in a self-dealing settlement to withdraw an objection than to prosecute the objection in the public interest; moreover, the business model of professional objectors often fails to distinguish between abusive class action settlements and class action settlements in the public interest. As a result, courts have trouble distinguishing between legitimate and illegitimate objections when objections are not brought by public-interest organizations without ulterior motives. Accordingly, the Center serves as a watchdog organization and engages in public interest litigation by bringing objections to unfair or arguably illegal class action settlements in order to protect the welfare of the public and improve the law in this area.”
Through CCAF, Frank has won several landmark appeals and tens of millions of dollars for consumers and other plaintiffs. Adam Liptak of the New York Times calls Frank “the leading critic of abusive classaction settlements” and the American Lawyer Litigation Daily referred to him as “the indefatigable scourge of underwhelming class action settlements.”
For more information about Center for Class Action Fairness, please visit http://www.classactionfairness.org.