Talk about proportionality! :-) A new spin on “Jarndyce v Jarndyce”

“Ah, about those filet mignon expenses …”

By:

Catarina Conti

Jarndyce v Jarndyce is a fictional court case in “Bleak House” by Charles Dickens, progressing in the English Court of Chancery. The case is a central plot device in the novel and has become a byword for seemingly interminable legal proceedings. The case has dragged on for so many generations that, late in the narrative, legal costs have devoured the whole estate and the case is abandoned.

24 April 2018 (Washington, D.C.) – We’ve all probably been following the $33 million Fitbit class action case. You know, the one with interesting elements of “how do you get a class action case going” plus consumer fraud (the sleep-tracking functions on its devices did not work), plus some data privacy violations.

The lawsuit claimed that Fitbit made false and misleading statements about its heart rate monitoring technology. The technology was inaccurate and inconsistent, the lawsuit claimed, and as such represented a serious health risk to users. The company argued against the claims but research appeared to agree with the litigants – the fitness tracker was indeed inaccurate, and that the company knew it. When that came out, the company’s share price dropped five per cent in a single day.

You can read the salient points of the case here.

The U.S. federal judge on the case has approved the class-action lawsuit … but had a wee bit of an issue with the massive $8.25 million lawyer award claim. A $33m settlement might seem like a lot but the lawyers wanted their cut. And the judge, massively unimpressed with the attorneys’ massive efforts to elicit a massive payday out … asking for 25 per cent of the award to be put into their pockets …. told them it “might be a little rich for this case.” She also asked for an itemized list of their $242,402 expense claim, saying she wanted to make sure there weren’t any “filet mignon” dinners or first-class plane tickets stuck in there.

Side note: the judge is Susan Illston, and sports fans might recognize the name. She was an accomplished trial lawyer when the N.F.L. hired her in the 1980s to fight a referee’s wrongful termination lawsuit. She acknowledged she knew “zip” about football. She spent hours reviewing game tape and memorizing rule-book trivia, recalled her former law partner. By the time the case started, she knew more about the game “than us so-called geniuses of football” said an NFL official. A jury ruled in the league’s favor. She went on to handle several other high-profile sports cases and as a Federal judge she presided over the Barry Bonds case.

There have been a string of these cases of  “highly paid lawyers padding class action cases and diverting money intended for end users” into their firms’ pockets. Earlier this year we Tweeted about a group of 16 U.S. state attorneys general who wrote to the Supreme Court asking it to tear up an $8.5m legal settlement from Google – because none of the cash will go to the folks the class-action lawsuit was brought on behalf of. In that case, the attorneys argued that when the settlement was divided by the number of people impacted it equated to four cents per user and so wasn’t worth it.

In the Fitbit case, there were have three objectors to the settlement, two of which objected to the attorneys’ award. One argued the attorneys’ cut was “disproportionate to the amount of risk assumed by the attorneys” and that the more standard 15 per cent fee should be applied (providing an additional $3.3m to those actually impacted). He also argued for a “strict accounting” of their time and expenses.

A second noted that while he is “the proverbial skunk at the garden party” in objecting to the settlement, there were a number of significant issues with the case: not least of which was that neither side was giving the full details of their settlement, including that the attorneys were incentivized to push the agreement under a quick pay provision.

But that settlement was reached after two years of litigation and due to the large number of people involved in the class action lawsuit, two objectors is not seen as significant enough to derail the whole agreement.

And obviously, have many commentators have pointed out, there is an assumption of course is that if you don’t actively complain, you are implicitly agreeing with the settlement whereas the reality on the ground is that virtually none of class action litigants are even aware of the case until it is settled, let alone its progress.

Judge Illston explicitly addressed that situation when she said the objectors concern were not sufficient to close off the settlement altogether and noted – as always happens in these case – that those individuals always have the option to withdraw and sue the company by themselves. But, again, in reality, they don’t because of the huge effort and resources required. Which is why class action lawsuits exist in the first place.

But the judge did criticize lawyers on both sides when she noted they hadn’t even bothered to give basic details of the case and the allegations behind it on a website that was set up to detail the settlement – fitbitsecuritieslitigation.com – a requirement for the settlement’s approval.

The lawyers’ fee is to be negotiated under supervision of the judge.