A recent Law.com article, “Here’s Why Plaintiffs Lawyers Deserve Those Fat Fees,” reports on plaintiffs’ attorney fee awards in class action cases. The article states:
At first glance, it looks like a total rip-off. Class members in a settlement involving deceptively marketed Duracell batteries collected just $345,000, but their lawyers got a whopping $5.7 million in fees.
The Center for Class Action Fairness in December filed a cert petition with the U.S. Supreme Court. “This case is an object lesson in how the class action mechanism can go wrong,” wrote Thomas Goldstein of Goldstein & Russell for the center, founded by tort reformer Theodore Frank and part of the Competitive Enterprise Institute.
Except that on closer inspection, the fee award isn’t so outrageous. Given the nature of the suit, which involved millions of customers who bought a low-cost item, there’s a compelling public policy argument in favor of the attorney fee payment.
I speak as a member of the class. I bought the batteries at issue: Duracell Ultra Power or Ultra Advanced, size AA or AAA, between June 2009 and July 2013. My son’s Game Boy Color video game devoured them.
We were persuaded by claims on the packaging that they lasted up to 30 percent longer than the regular “Copper Top” variety. They cost an extra 30 cents or so per battery, but hey, if it meant my son wouldn’t go ballistic during a car trip because his game battery died, it was well worth it.
Were we short-changed? I have no idea. The plaintiffs lawyers—among them Schubert Jonckheer & Kolbe; Wiggins Childs Pantazis Fisher Goldfarb; and The Lowe Law Firm—say the longer-lasting claims were a lie, and constituted deceptive advertising.
Duracell vigorously disputes this. Represented by Jones Day and Carlton Fields, it says that the batteries lived up to their representation.
We’ll never know for sure. The suit settled in 2013.
The remedy: If you bought the batteries, you could get a $3 per package refund, limit two per household, with no proof of purchase required (because seriously, who saves a 5-year-old battery receipt?). All you had to do was fill out a form online. If you kept your receipts, you could get up to $12 for four packages.
Duracell quit making the Ultra batteries, prompted in large part by the litigation. And the company agreed to donate $6 million in batteries to charity.
It’s a fair remedy. Class members incurred average damages of $2.89—the price difference between Copper Tops and Ultras—and on average purchased 1.4 packs during the class period.
The lawyers estimated that there were 7.26 million class members. If they all submitted claims, the payout would be about $50 million. By that measure, the attorney fees of $5.7 million were 11 percent of the total fund, well below the 25 percent benchmark.
But everyone knew there was no way that all class members would file claims.
I didn’t. Despite ads in Better Homes & Gardens, Ebony, National Geographic, People, People en Espanol, TV Guide, USA Today, the Orlando Sentinel, and the San Francisco Chronicle, and Internet banner ads with 92 million impressions, the settlement wasn’t on my radar. And even if it was—we’re talking $6. I’m busy.
In fact, less than 1 percent of eligible class members submitted claims. That’s why attorney fees vastly exceeded the benefits paid to class members.
Is this bad? The Center for Class Action Fairness says the U.S. Court of Appeals for the Eleventh Circuit, which approved the Duracell settlement, used the wrong standard. The real measure when calculating attorney fees, it says, should be the actual, not potential, class recovery. Plaintiffs lawyers have more incentive to get the biggest award for the class, and to make sure many people file claims, the center said.
But that just won’t work in cases where many people are owed small amounts of money. Plaintiffs lawyers would lose money bringing those suits. And so they wouldn’t be pursued.
As a class member, I care far less about collecting my $6 than sending a message to companies that they can’t make stuff up and put it on their packaging.