August 26, 2017

"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."

Wrote 7th Circuit Judge Diane Sykes for the 3-judge panel that threw out the case against Subway that was premised on the restaurant's promotion of "footlong" subs that were not always actually a foot long.
The litigation began after Australian teenager Matt Corby in January 2013 posted a Facebook photo showing a Footlong sandwich he bought was only 11 inches long, not 12....
By the way, Sykes "is considered to be near the top of Trump’s short list" of potential Supreme Court nominees, according to a Politico article from last January. She used to be a justice on the Wisconsin Supreme Court, and "was part of a legal movement that helped set in motion a conservative transformation of the judiciary in her home state."

57 comments:

Bay Area Guy said...

Sykes is a sharp cookie! Put her on SCOTUS.

Hagar said...

She sounds promising.

Laslo Spatula said...

Suing because the sandwich wasn't a full twelve inches?

Next will be women suing men for misstating their penis size.

Thank goodness the law has stated that eleven inches is good enough.

I asm Laslo.

Titus said...

Activist judge

Ignorance is Bliss said...

Yes, I don't know how many times I've been notified that I'm part of a class, the proposed settlement of which would net me less than a dollar, while costing some business that I use tens of millions, thus raising my long-term costs by more than the settlement.

Or I get some coupon to save me on future purchases. I'm pretty sure the class counsel isn't accepting their fees in the form of coupons.

Jake said...

Why Charlie Sykes is so butt hurt.

traditionalguy said...

Making America's judiciary Great Again, one honest Judge at a time.

Greg Hlatky said...

Isn't this the case in most class-action laesuits?

Michael K said...

Titus is still thinking about that eleven inch penis.

David Begley said...

Send Wisconsin to SCOTUS.

Fernandinande said...

Greg Hlatky said...
Isn't this the case in most class-action laesuits?


A lot of them.

"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."

Is that a matter of law (if so, which one?) or just something she/they pulled out of their ass(es)?

Bay Area Guy said...

In essence, Judge Sykes told the Plaintiff attorneys to take their 11 inch Subway Sandwich and stuff it!

Ann Althouse said...

"Isn't this the case in most class-action lawsuits?"

That's why it's an important ruling.

Look at the quote that ends the article: "This is exactly the opinion we were hoping for. It affirms the principle that when attorneys bring class actions to benefit only themselves, it's an abuse of the system, and courts should not tolerate it." That's from "prominent class-action critic, Ted Frank."

Diogenes of Sinope said...

No shit. Our "legal system" is loaded with money making schemes for lawyers. And due to the terrible financial burdens imposed on the victims of these scams, they effectively act as fiat law setting rules and restrictions on all of us. The country is run by and for lawyers.

traditionalguy said...

And another thing at Subway, the oatmeal bread loaf is made from wheat. Huge damages ensue.

Diogenes of Sinope said...

Make contingency fees illegal; institute loser pays.

Fernandinande said...

Ann Althouse said...
Look at the quote that ends the article: "This is exactly the opinion we were hoping for. It affirms the principle that when attorneys bring class actions to benefit only themselves, it's an abuse of the system, and courts should not tolerate it."


So they did just pull it out of their asses. If judges are supposed to make decisions based on "principles" rather than laws, why bother with the laws?

And $5,000 obviously isn't "worthless", so the judgette also lied.

Jersey Fled said...

Any bets the lawyer bringing the suit is a big Dem donor?

Douglas said...

The solution is to adopt my "loser's lawyer pays" rule.

Fernandinande said...

Diogenes of Sinope said...
No shit. Our "legal system" is loaded with money making schemes for lawyers.


Definitely. Overall it's a horrible scam enriching thousands of scammers, but letting judges get away with making up shit as they go along is a big part of that problem.

Bill R said...

Coming from a judge, a clear declarative sentence expressing simple common sense.

What is this world coming to? I blame Donald Trump.

Murph said...

A few years ago, Delaware started cracking down on M&A nuisance suits that typically resulted in a few lines of additional [but useless] prospectus disclosure, and big $$$ for plaintiff lawyers.
Guess what? It works.

https://www.forbes.com/sites/danielfisher/2016/08/02/lawyers-flee-delaware-as-judges-crack-down-on-deal-tax-suits/#3e3a5f1e4429

Birkel said...

Equity.
Do you speak it?

Fernandinande said...

A few other judges recently in the news who followed the "rule of whatever" rather than the "rule of law" are the judge who denied a jury trial to Arpaio, and the two who claimed they could read Trump's mind, and that its contents took precedence over what was written, regarding Trumps immigration/refugee orders.

They should all be fired and probably fined, at least. But they won't be.

buwaya said...

You will not fix this by promoting one good judge at a time.
In your system number of villains is vast, the number of the virtuous is tiny. The decay is universal and constant, the reforms are limited and rare.

The Godfather said...

I felt this way about class actions when I first learned about them in law school in the late 1960's, and everything I've observed since then has confirmed that conclusion. The reductio ad absurdum is the settlement that awards the class members coupons to buy the defective product the law suit was about. I've passed on several such opportunities.

Birkel said...

The lawyers should face sanction for acting as poor agents for their clients. They placed their own enrichment above that of the clients.

Sanctions should follow.

Birches said...

Common sense judge.

mockturtle said...

I'm surprised that most people aren't already aware of the 'class action lawsuit' scam but then I'm always overestimating the American populace.
'

Humperdink said...

Years ago my company was involved in a class action lawsuit against a group of manufacturers of a product. Price fixing was the charge. Our "class" prevailed, or should I say a settlement was reached.

My company's reward? We received $100 coupons to be applied against future orders with said firms. One coupon per order. Our typical order size was $8-10K. What a deal.

The lawyers did real well, the companies did real well, the aggrieved parties received a bone.

James Smith said...

I've always thought the Subway suit was sponsored by a competitor trying to hurt the Subway brand. If Subway were able to prove this suit was sponsored by a competitor, could they sue that competitor now that the case was dismissed?

Narayanan Subramanian said...

Isn't 'class action' itself an American judicial 'in(nov)en(a)tion' in the last century.

Anonymous said...

That's the way it's been with most class actions in which I've gotten a notice that something bad happened to me that I had no idea about, the payout is so ridiculously small that it would never have even been worth going to small claims court about.

And the funny thing is, in most cases, consumers can get a better redress simply by addressing their complaint to the business without the lawyers involved. I'll use Best Buy as an example here. Once upon a time, I ended up purchasing their Geek Squad warranty plan on a desktop. As it happened, the piece of junk they sold me died within the warranty period. When I presented a claim, the local management of the store claimed that the coverage they sold me didn't apply to the product in question.

Now sure, had I wanted to, lawyers could have been brought in. Instead, the matter was pursued with Best Buy corporate, and somebody on that end noticed the problem with selling warranties and not honoring them real quick, and must have read the riot act to the local store. Granted, it took a couple phone calls and e-mails and maybe an hour or two of time in total, but the result was a much better computer as a replacement plus a direct refund of the value of the warranty package sold. In that instance, I probably came out $300 to $500 ahead in value. A class action on warranty scams isn't likely to have yielded as much, plus it would have taken years to get anything out of it.

It's similar at a lot of eateries and small retail - most managers I've dealt with, when presented a valid complaint, will either comp something or offer up to $5 to $10 in discount to make up for things. Most class action settlements I've been eligible for tend to amount to about the same.

EDH said...

What this decision does is point out a gaping chasm in the Rules of Professional Conduct governing attorneys as it relates to Personal Conflicts of Interest and Fees.

Yancey Ward said...

If a settlement for a class member is issued in coupons, then the lawyers should be paid in coupons, too.

I think a good law to be passed here would limit attorney fees to no more than 10 times the average class individuals recovery. Class actions suits, as practiced in this country, are a massive form of corruption.

Levi Starks said...

Talk like that will get her disbarred

Fernandinande said...

The $500K in the sandwich affair is chump change compared to the bestest class-action evar, the MSA.

"The nasty little secret of the nationwide tobacco settlement is that it violates both the antittust laws and the Constitution.

The settlement transforms a competitive industry into a cartel, then protects the cartel by erecting barriers to entry that preserve the 99% market dominance of the tobacco giants. Far from being victims, the big four tobacco companies or at the very center of the scheme. In collaboration with state attorneys general and their trial lawyer friends, the four majors have managed to carve out a protected market for themselves - all at the expense of smokers and the tobacco companies that didn't sign the November 1998 Master Settlement Agreement (MSA).
...
Naturally, any challenge to the MSA will be contested by virtually all of the states, the major tobacco companies, and the instant billionaires among the plaintiffs bar."

++

IIRC, the "instant billionaires" phrase is accurate except that "instant" was really a few months or years.

dda6ga dda6ga said...

And there is always the Black Farmers in the South class action; multiple billions...Care to Comment Ms Althouse?

steve uhr said...

Let's not throw the baby out with the bathwater. Class actions are the only practical avenue in many cases to address substantial corporate misconduct where the typical victim's losses are real but relatively small. Cases like this give all class actions a bad name, which is too bad.

Jonathan Graehl said...

Surely there's also a public interest in punishing corporate shaving - even if nobody injured has much claim.

SukieTawdry said...

I concur with Judge Sykes. We need more Wisconsin. And less Alabama, ground zero for out-of-control class actions and "drive-by" certification. Alabama attorneys troll for "victims" who have been "harmed" under the state's Deceptive Trade Practices Act. To their credit, Alabama lawmakers tried to confine suits brought under the Act to individuals, but a federal appeals court said, nope, you can file these class actions in federal court. Not only that, you can bring plaintiffs in from other states.

Through various investments, we've been party to numerous class action suits. Whenever a notification of such arrives, I ridicule it for a moment and then put it in the junk mail recycle bag. A perpetual payday for attorneys and unfortunately for the rest of us, most judges are former attorneys as are many, many lawmakers.

cyrus83 is quite right. You can accomplish a great deal on your own if you're willing to be diligent. I've done it successfully both as an individual and on behalf of various employers. My advice is to pursue the issue first through regular channels, but if you're not successful on that level, go straight to the top. For example, I once had to take on the late-but-not-lamented Countrywide. After being brushed off by various levels of management, I took the complaint to the CEO. His office not only resolved the matter to my satisfaction, but also sent me a very nice letter. Try it--it's fun.

The Vault Dweller said...

Class Actions, where the members of the class get relatively worthless coupons and counsel gets millions in fees have always been a pet peeve of mine. I can see the need for class actions, but the attorney award has to have a stronger tie to what is given to the class. Something, where as the difference between the average individual class award and the attorneys' fee award increases an additional formula would be layed on top to decrease the attorneys' fees by a percentage relative to the logarithm of the difference.

I know some say, but then corporations will get away with small time cheats on a massive scale. But I think that is underestimating the market response. People aren't completely rational decision makers. If people discover a company has been cheating them on nickel and dime stuff for a while and hid it, many will simply say screw them, I'm done with them. Plus the long-term damage to the brand when cheating is discovered. Also in the event that the people simply don't care, then why is it important that a class action avenue exist in the first place?

Ted Frank said...

Thanks, Ann. We're challenging settlements much worse than that one. If you get a class notice, you have rights to object to avusuve attorney fees, and we represent consumers and shareholders like that pro bono.

https://cei.org/blog/rose-any-other-name-would-smell-just-sweet-these-flower-delivery-settlement-coupons-are-noisome

Bruce Hayden said...

"Let's not throw the baby out with the bathwater. Class actions are the only practical avenue in many cases to address substantial corporate misconduct where the typical victim's losses are real but relatively small. Cases like this give all class actions a bad name, which is too bad."

For most of us, the bad we see far exceeds the good. Reality is that class action suits, if successful, cut off the right of aggrieved parties to sue for actual damages. Which is one big reason that companies settle- by paying off the class action lawyers handsomely, and giving the entire class negligible benefit, they can settle real problems far, far cheaper than if they were sued individually.

But that is precisely why most class action settlements should be ethically suspect. The driving goal of the attys is mostly to maximize their own fees, and not to maximally benefit the allegedly aggrieved class members, and in many, if not most cases, the two negotiating parties, the defendant and the class action attys, have a mutual financial incentive to minimize class payout, if that means higher atty. fees, which it arguably often does.

The Godfather said...

The linked story about this ruling was unclear about how this matter got up to the 7th Circuit when both the plaintiff class and defendant company had agreed on the settlement. This led at least one commenter here to observe that the 7th Circuit decision amounted to "letting judges get away with making up shit as they go along". In fact, what happened was that a member of the plaintiff class objected to the settlement. A class member is affected by a judgment in a class action suit and so has a right to appeal even where the class as a whole, represented by class counsel (who would receive the half million-dollar payout), agrees to the settlement. The 7th Circuit was responding to this appeal, and ruled in favor of the appealing class member, because it found that the settlement was not reasonable.

It would probably be better if trial courts were more attentive to the reasonableness of class action settlements, and sometimes they are, but where the trial court let this settlement go through, it was fortunate that a class member was sufficiently committed to take the matter upstairs.

Bruce Hayden said...

"I know some say, but then corporations will get away with small time cheats on a massive scale. But I think that is underestimating the market response. People aren't completely rational decision makers. If people discover a company has been cheating them on nickel and dime stuff for a while and hid it, many will simply say screw them, I'm done with them. Plus the long-term damage to the brand when cheating is discovered. Also in the event that the people simply don't care, then why is it important that a class action avenue exist in the first place?"

So many of these suits are BS. Who really cares if Subway foot long subs are only 11 inches long? It's called "puffing". One of the problems that that franchise faces is that the franchisees bake their own bread. The loaves are bought from corporate cold, put in the proofer to rise, then into the oven to bake. At the Subway here, that work is often done by high school students. High school students with no interest in going to college next year. No one is deceived - you get to look at the loaves before you buy.

If I am actually aggrieved by a company, I will work the hierarchy for awhile. Then, if that isn't availing, I will sue them. For most, Small Claims is often the way to go. I prefer County Court, because that drives up their legal fees. A jury demand is sometimes in order to augment that. Enough people acting like that, and the evil corporations involved would probably do well to try to get a class action suit against them rolling.

Paco Wové said...

"...many cases ... address substantial corporate misconduct where the typical victim's losses are real but relatively small."

Examples, please.

Guildofcannonballs said...

Yeah I complained to my bank and they adamantly blamed me, and me alone, for the overcharge fees. $38 a pop. Numerous.

I got a fucking check a year and a half later from the fucking robber/lawyers for $4. I hope you fucks celebrate to end all celebrations, truly.

Purchases for $10 or so cost me $48 because the purchases were not posted, fraudulently, until a large check had cleared and put the balance negative.

It gives me great joy to comprehend these people think a few clever words will cement their future of prosperous boot stompings. Having had to comprehend my hubris because of the drastic disparity between it and certain milestones of my life, I am, not an expert, that would invoke too much hubris, but certainly more consciousness of its deadly toll.

Unknown said...

I want this judge. Probably about half of lawsuits should be thrown out.

Guildofcannonballs said...

"You will not fix this by promoting one good judge at a time.
In your system number of villains is vast, the number of the virtuous is tiny. The decay is universal and constant, the reforms are limited and rare."

Name a society in existence beyond fantasy for which what you wrote is false. Sorry to be critical but I've come to expect precision from a man of your wealth of intellect and experience.

Thank you. The refreshed trees of liberty haven't had the need to muck around America in a while, and the perspective that when they do we will continue, with nobody knowing quite why or how, better than most places in world history (if not number 1 in terms of when we muck it all up, we have vast resources to help cope with the ugly unmucking). This reminds us all, every cognizant one in the world, America is in the position to lose sole super-power status, if us Americans allow it, which we haven't much so far under the Trump trend just starting. We want Chinese buying over-inflated real estate and depending on the friendly China-fucks-our-ass-bloody-and-we-say-we-love-Confucius way. We want to owe trillions to China. Believe me. We drink their milkshake because of their biological lactose intolerance.

What better indicator can a nation have of future global performance than giant ammassed wealth and heavily-resourced backed power to insulate from corrections and reconstruction's natural ruin? The fact, despite the successful Cloward-Pivening, America is just as dangerously dominant after their Commie plans succeeded ought to strike fear into even the most fearless foe whose interests aren't aligned with whatever our American leaders at the time whimsically legislate. America is like a drunk, blind, broken-legged, broken-armed boxer still kicking the shit out of anyone dumb enough to directly take us on, and predicatably the second-rate countries feel they are farted upon and want justice, but know enough to simply let America's will non-chalantly create what history will record as they consciously mumble nothing of significance.

I now believe our $20 Trillion debt is not of utmost importance because we will dictate to the world, like we have been thrust, or were we born this way?, into doing as there are seemingly only dipshit countries competing with us, for the last couple of hundred years in many cases, what will happen. This isn't to diminish the threat Obama/Hillary posed, and the evil media currently intentionally creating hatred and violence, and matter-of-factly Trump downplayed our inconceivable reserves of strength in sympathy to those not currently bearing the fruits, but the fact remains there is only one top dog, us in America. Some of us know what we got, and it ain't gone yet.

I shudder to think of America without the cache to attract many area's best and brightest, a ludicrous standard applied in reverse, of course, as the best Americans rarely leave seeing as how the world in all its history has failed to provide a relatively satisfactory place to relocate, despite and indeed including all the overly-noted blemishes and over-priveledged sad-sacks downplaying the greatest success story in governance terms, a Hellish low standard I admit, called America our universe has beholded.

Guildofcannonballs said...
This comment has been removed by the author.
hombre said...

The Senate has confirmed four of Trump's twenty-seven judicial nominees other than Gorsuch.

Bart Hall (Kansas, USA) said...

Paco, at 4:44 pm -- One example. There are more. Williams v. Duke Energy. The company paid unlawful rebates to a handful of large corporate customers, thereby increasing the electric bills of ordinary customers and reducing the dividends paid to shareholders. My total payout was $31.74, but I was one of millions. I'm sure the lawyers were well paid -- such cases are terribly complex -- but 30 bucks is 30 bucks, and I'd not have received it otherwise. Will it change my life? No. Will it smarten up some large corporations? Yes, probably, some of them.

Big Mike said...

Shakespeare's suggestion looks better all the time.

Alan Grey said...
This comment has been removed by the author.
Alan Grey said...

Can we now create a class action lawsuit against lawyers who have created class action lawsuits only to benefit themselves?

Inkling said...

I have seen this scam in action. I happened to have two low-end Macs, a desktop and a laptop, that qualified me for the settlement of lawsuit against Apple for promising they'd run the then-forthcoming OS X, when they didn't. The settlement no doubt paid the lawyers who were claiming to be representing me well, probably in excess of $400/hour. But the paperwork I'd have to go through was so onerous, I would have been making less than $4 hour had I filed.

That's the nasty game we're talking about here. These so-called settlements enrich the tort lawyers who're suing, but deliberately have onerous clauses to discourage those who were actually harmed from collecting. The result is that the alleged victims get little, the alleged misbehaving company gets off lightly, and the tort lawyers get rich.

Perhaps there should be a way to sue tort lawyers who enrich themselves at the expense of those they're claiming to represent. But until we have that, having the judge toss out these fake settlements out is good enough. Then the tort lawyers get nothing for all their trouble.