Monday, February 11, 2013

Class-Action Highwaymen

After reading through that email inviting me to “participate” in a class-action lawsuit against Facebook, I figured it was a shyster scam.  But it’s actually worse than I thought:

First, the most anyone can receive is $10. Getting the $10 requires a rather complex process of filling out forms. Why would anyone take the trouble? The lawyers behind the suit know perfectly well that hardly anybody will; the $20 million is just sitting there to be siphoned off elsewhere.

Second, the lawyers haven't yet bothered to locate the people whom they say were damaged. The notice says, "No one knows in advance how much each Authorized claimant will receive" because nobody knows how many there are. If it wasn't worth the lawyers' time to find out who the plaintiffs even are, just how much merit could this case possibly have? At least ambulance-chasing lawyers have to catch the ambulance and find out who's inside so as to file a claim in their name.

Third, . . . if too many people try to benefit from the class action suit, none of them will get any money at all. Facebook's $20 million will be given to various not-for-profit organizations instead of benefiting the people who were harmed.

This is a perversion of the stated purpose of class action lawsuits. The design of the suit and the settlement virtually guarantees that nobody "harmed" will receive any relief whatsoever.

. . . .

The lawyers get their cut first, other hangers-on get paid, and claimants' payments will be cut pro rata if lots of people write in asking for $10. If anything's left - a big if - it'll go to "charity."

1 comment:

Bill said...

You left out the most important part (the reason these kind of cases exist): the attorneys for the class will receive a substantial seven figure fee. This is a typical "coupon settlement." Once the defendant faces the prospect of actually having a class certified (meaning the case can go forward) it will pony up the cost of defense as a settlement, which will primarily go to the attorneys who filed the suit. In order to sell the settlement (a court has to approve it as fair), they will jointly cook up a process which could potentially deliver a large sum to the plaintiff class (on paper), but because the difficulty of the process (and the fact that each individual claimant only gets a pittance) makes it not worthwile to participate, most potential claimants won't. Bottom line is that the attorneys get paid and the a small percentage of the supposedly injured parties get a coupon (or a few dollars).