Krauss Objections Aid Judge in Class Action Case
Objections by Professor Michael Krauss and lawyers at the Center for Class Action Fairness, a non-profit project that represents class members pro bono, came to the aid of a judge weighing the benefits of a class action lawsuit against website Classmates.com.
U.S. District Judge Richard Jones read hundreds of objections to a 2010 initial settlement proposal, finally determining the proposal to be "the hallmark of a promotion for Classmates, not of a benefit concurred." The initial settlement called for paying class members around $52,000 in all, with the lawyers bringing the case to receive over $1 million.
"This case is a powerful example of the need to be wary of class counsel's inherent conflict of interest once settlement negotiations begin," noted Jones.
Jones complimented Krauss's contributions to his deliberations leading to a final settlement approved in June 2012, saying, "Mr. Krauss provided substantial legal authority for his positions, much of which was helpful to the court."
How lawsuit against Classmates.com ended in paltry $3.93 payouts, ars technica, November 8, 2012. By Joe Mullin.
"'The overwhelming majority of those 60 million users will receive nothing,' acknowledged Jones in his final order (PDF). 'About 700,000 of them submitted claims, and will receive less than four dollars each for their efforts.' Classmates will pay $2.75 million to class members, $800,000 to the lawyers who negotiated the settlement, and more than $1 million in administration costs, as well as its own legal costs, Jones noted. 'If the purpose of class action litigation is to impose hefty costs on corporations accused of wrongdoing, one could view this settlement as a success. But class actions, as the lingo implies, are supposed to be about class members. From their perspective, it is difficult to muster much enthusiasm for this settlement.'
"The $3.93 sum came about from dividing the $2.75 million payout by the nearly 700,000 users that made a claim. (Full disclosure: the author of this article received one of those $3.93 payouts.)
"The case originated with two lawsuits claiming that Classmates.com had sent out millions of deceptive e-mails telling users that an old friend was trying to contact them, and had viewed their profile or signed their 'guestbook.' For the great majority, that wasn't true; no one at all had shown an interest in their profile. About 60 million users were contacted, and about 3 million actually took the bait, paying between $10 and $40 to Classmates.