One of the keys to our victory in AT&T Mobility v. Concepcion (the Supreme Court case holding that courts can’t refuse to enforce arbitration provisions on the ground that they preclude class actions) was our ability to pull back the curtain on the consumer class action racket and show that often the only ones who benefit from class actions are the lawyers. Citing evidence we submitted showing that in many class actions only a minuscule number of consumers bother to file claims and those that do typically receive only pennies on the dollar, U.S. District Court Judge Dana Sabraw found that “the record before the Court demonstrates that a reasonable consumer may well prefer quick informal resolution with likely full payment over class litigation that could take months, if not years, and which may merely yield an opportunity to submit a claim for recovery of a small percentage of a few dollars.” The Supreme Court quoted this finding in rejecting the dissent’s contention that class actions are necessary to ensure that small claims do not “slip through the legal system.”
Though the plaintiffs’ bar has mounted a multi-front assault on Concepcion in the ensuing year—seeking to limit it in the courts and overturn it in the legislative and regulatory arenas—the evidence that class actions exist principally for the benefit of lawyers continues to mount. Recently, for example, a federal district court in Alabama granted final approval to a settlement in which zero—you’ve got that right—zero members of the class submitted claims, but the lawyers received $20,000. The case is called Gaylor v. Comala Credit Union. Read the order yourself (pdf) if you are having trouble believing me.
We’ll be reporting in future posts on other settlements in which the “take rate” is vanishingly low. But we’re also interested in adding to our database, which we hope to use to fend off attacks on Concepcion. So if you have any examples—new or old—please send them our way.
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