{"id":4685,"date":"2004-01-29T13:23:39","date_gmt":"2004-01-29T17:23:39","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/formerlyknownas\/2004\/01\/29\/posner-at-his-best-sinking-fl"},"modified":"2011-08-05T15:00:28","modified_gmt":"2011-08-05T19:00:28","slug":"posner-at-his-best-sinking-fleets-class-action-settlement","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/2004\/01\/29\/posner-at-his-best-sinking-fleets-class-action-settlement\/","title":{"rendered":"Posner At His Best Sinking Fleet’s Class Action Settlement"},"content":{"rendered":"

<\/a><\/p>\n

Class action lawyers will surely be heading their shopping carts away from the 7th Circuit’s check-out aisle, after today’s decision in Mirfasihi v. Fleet<\/A> Mort. Corp<\/EM>.  And district court judges might be slipping out the backdoor, too. (7th Cir, No. 03-1069, Jan. 29, 2004)  In a tour de force<\/EM> of Posnerian logic and rhetoric, the class action settlement involving Fleet’s distribution of customer information was unanimously set aside today. (Thanks to Howard<\/A> for the pointer)<\/FONT><\/P>
\n

\"compass . . .<\/FONT><\/P>
\n

You didn’t need a compass to tell which way this opinion was heading, once Judge Richard A. Poser asked (emphasis added):  <\/FONT><\/DIV>
\n

\n
“Would it be too cynica<\/U>l to speculate that what may be going on here<\/U> is that class counsel wanted a settlement that would give them a generous fee and Fleet wanted a settlement that would extinguish 1.4 million claims against it at no cost to itself?”<\/FONT><\/DIV><\/BLOCKQUOTE>
\n
Judge Poser’s patience was also wearing a bit thin, when he penned (emphasis added): “Fleet, joined by the class counsel, argues that the members of the pure information-sharing class didn’t <\/FONT>really <\/FONT><\/I>receive <\/FONT><\/FONT>nothing in exchange for giving up their claims; they re<\/U><\/FONT>ceived the emotional satisfaction<\/U> of knowing that Fleet had <\/FONT>been forced to give up its profits. That is a preposterous <\/U><\/FONT>argument<\/U>. . . . <\/FONT>The idea that a rational fiduciary would <\/FONT>surrender a claim worth $35 million in exchange for the <\/FONT>satisfaction of knowing that his wrongdoer had been forced <\/FONT>to pay $243,000 to members of another class staggers the <\/FONT>imagination.”<\/FONT><\/FONT><\/DIV>
\n
<\/FONT> <\/DIV>
\n
Here are a few other points made in the opinion<\/A><\/FONT>, which chides the plaintiffs’ attorneys for overlooking their fiduciary duties and the district court judge for ignoring his obligation to assure (emphasis added): <\/FONT><\/DIV>
\n

\n
“A colorable claim may <\/U><\/FONT>have considerable settlement value (and not merely nuisance <\/U><\/FONT>settlement value)<\/U> because the defendant may no more <\/FONT>want to assume a nontrivial risk of losing than the plaintiff <\/FONT>does.<\/FONT><\/DIV>
\n

“The part of the $2.4 million that is not claimed <\/FONT>will revert to Fleet, and it is likely to be a large part because <\/FONT>many people won’t bother to do the paperwork necessary to <\/U><\/FONT>obtain $10<\/U>, or even a somewhat larger amount.<\/FONT><\/P>
\n

“The <\/FONT><\/FONT>district judge has approved a handsome fee for the class <\/U><\/FONT>lawyers, $750,000, despite the meagerness of the relief<\/U> <\/FONT>agreed to in the settlement.<\/FONT><\/P>
\n

“Because class actions are rife with potential conflicts of <\/U><\/FONT>interest between class counsel and class members<\/U> [cites omitted], <\/FONT>district judges presiding over such actions are <\/FONT>expected to give careful scrutiny to the terms of proposed <\/FONT>settlements in order to make sure that class counsel are <\/FONT>behaving as honest fiduciaries for the class as a whole.” <\/FONT><\/P>
\n

“Unfortunately the <\/U><\/FONT>district judge’s decision approving the settlement does not <\/U><\/FONT>discuss the settlement’s questionable features<\/U>—not only the <\/FONT>one we’ve stressed, namely the denial of any relief to an <\/FONT>entire class, the kind of thing that led to rejection of the <\/FONT>settlements in <\/FONT>Crawford v. Equifax Payment Services, Inc<\/FONT><\/I>., 201, <\/FONT><\/FONT>but also the reversion of unclaimed refunds to the putative <\/FONT>wrongdoer and the fact that the class that was denied relief <\/FONT>did not have separate counsel from the counsel for the <\/FONT>favored class.” <\/FONT><\/FONT><\/P>
\n

“In <\/FONT>Reynolds v. Beneficial National <\/FONT>Bank<\/FONT><\/I>, supra<\/I><\/FONT>, 288 F.3d at 284-85, we emphasized the district <\/FONT><\/FONT>judge’s duty in a class action settlement situation to estimate the litigation value of the claims of the class and determine whether the settlement is a reasonable approximation of that value.  [cites omitted] The district judge in this case made no estimate of the value of the legal claims<\/U> of the information-sharing class.”<\/FONT><\/P><\/BLOCKQUOTE>
\n

Summing up, “So the settlement cannot stand.”<\/FONT><\/FONT><\/P><\/p>\n","protected":false},"excerpt":{"rendered":"

Class action lawyers will surely be heading their shopping carts away from the 7th Circuit’s check-out aisle, after today’s decision in Mirfasihi v. Fleet Mort. Corp.  And district court judges might be slipping out the backdoor, too. (7th Cir, No. 03-1069, Jan. 29, 2004)  In a tour de force of Posnerian logic and rhetoric, the class action […]<\/p>\n","protected":false},"author":94,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[2926],"tags":[],"class_list":["post-4685","post","type-post","status-publish","format-standard","hentry","category-pre-06-2006"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p6kP1R-1dz","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/4685","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/users\/94"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/comments?post=4685"}],"version-history":[{"count":1,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/4685\/revisions"}],"predecessor-version":[{"id":14018,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/posts\/4685\/revisions\/14018"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/media?parent=4685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/categories?post=4685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/ethicalesq\/wp-json\/wp\/v2\/tags?post=4685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}