Class actions often are viewed as little more than vehicles by which trial lawyers get rich with only incidental benefits to the purportedly aggrieved consumers they represent.
Critics of the litigation point to settlements in which the plaintiffs' lawyers collect millions in attorneys' fees from the defendant but the class members get mere coupons for discounted future purchases. The coupons are near worthless as the overwhelming majority are never redeemed. Indeed, why would a class member who allegedly was injured by the defendant in the first place want to purchase more goods or services in order to redeem the coupon?
However, in an increasing number of settled cases, the class members aren't even getting a stinkin' coupon as compensation for their supposed injuries, and the defendants do little more than commit some money to raise consumer awareness on some silly issue.
For example, this week trial lawyers settled a class action against MySpace involving its alleged disclosure of users' browsing history after the social networking site agreed "to donate $50,000 to a nonprofit group or consultant to research the promotion of online privacy" as reported by Thom Weidlich for Bloomberg.
And earlier this month trial lawyers settled a class action against Procter & Gamble over its Pampers Dry Max diapers which allegedly caused diaper rash after the consumer product giant agreed to spend $400,000 to educate the public about "pediatric skin conditions" as reported by David Holthaus for Gannett.
In both cases the few named plaintiffs got token amounts for their efforts, and the many putative class members didn't get a penny.
But the trial lawyers made out like kings in getting their attorneys' fees covered by the defendants. In the MySpace settlement the plaintiffs' lawyers will collect $750,000, and in the Procter & Gamble settlement the plaintiffs' lawyers will collect $2.7 million.
Reading which may be of further interest:
Recent Comments