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Supreme Court Could End Trial Lawyer Paydays

Class-action trial lawyers who pose as selfless crusaders while suing greedy Fortune 500 defendants for harming defenseless people are often the only ones who get paid — but the U.S. Supreme Court could soon put an end to such injustices.

The high court will decide March 18 whether to hear a challenge to the settlement in Joshua D. Poertner v The Gillette Co., et. al. in which the trial lawyers got $5.7 million, while 99 percent of the 7.26 million alleged victims they represented got nothing. The challenge was filed by Ted Frank, director of the Competitive Enterprise Institute’s Center for Class-Action Fairness.

Only four of the eight sitting justices are required to accept the case in order for it to be heard by the full court. The decision will be announced March 21.

Frank declined to speculate on the odds of the challenge being accepted, telling The Daily Caller News Foundation, “the court has ruled 8-0 against the trial lawyers when they were wrong and 8-0 for them when they were right.”

The Poernter settlement came about after questionable advertising claims were made on behalf of battery company Duracell Inc. The one percent of alleged victims who received payment got between $3 and $6 each. The settlement also included a provision requiring a $6 million charitable contribution be made by Duracell. The batteries at issue were discontinued before the settlement was upheld by the U.S. Court of Appeals for the 11th Circuit in Florida.

The case likely would have turned out differently had it been heard in a different federal court. Federal Court Rule 23(e) requires that class-action settlements be reasonable, but how the rule is applied varies widely among the jurisdictions.

Frank argued in his request to the high court that it consider the Seventh Circuit’s requirement that “the attorney award must be a fraction of the amount actually realized by the class, a test this settlement would flunk spectacularly.” Frank told TheDCNF he would be pleased if the high court applied this rule nationwide.

There have been many class-action settlements that would fail the Seventh Circuit’s rule just as spectacularly. In multiple cases under the Motor Fuel Temperatures Sales Practices litigation, for example, one of the defendants, Costco Wholesale Corporation, agreed to a settlement that paid the trial lawyers $10 million but gave no money to the alleged victims, according to the Center for Class-Action Fairness.

While in a case involving the Subway franchise, the center said “the proposed settlement would award attorneys $525,000 but leave all but nine members of the class with nothing more than a sense of satisfaction that some sandwich bread will be hand measured.”

And in a case in which Google was sued for alleged privacy violations through its search engine, “class counsel negotiated a settlement that provided $0 to class members and $8.5 million to be divided between class counsel and third-party charities, including class counsel’s alma maters, and several charities Google routinely donated to,” according to the center.

Trial lawyers aren’t likely to support nationalizing the Seventh Circuit rule that counsel fees be much less than what is actually received by the alleged victims. Often only a tiny number ever actually receive their share of a settlement in cases with millions of alleged victims.

Frank told TheDCNF that courts have ways of ensuring “the money gets to the victims,” including “telling the lawyers they don’t get paid if they don’t find” everybody who should be paid.

“When the courts hold their feet to the fire, the money gets to the victims,” Frank said.

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