Color of Money Live With Michelle Singletary
David Vladeck on Class Action Lawsuits Monday, September 13, 1999
Recently, Cellular One consumers received notices that they were entitled to a $15 voucher as part of a settlement. The only problem is they have to buy more services or equipment from the company to redeem the voucher.
Basically, the conditions of the settlement require customers to give the company more cash to retrieve money that they took in a questionable practice in the first place.
Settlements like these are shoddy and consumers need to start standing up for themselves, consumer legal experts say.
David Vladeck, the director of the Public Citizen Litigation Group and a visiting professor at Georgetown Law Center, joined us for an online discussion about what consumers should do if they find they are involved in a class action lawsuit and how it may affect them.
Please note: We cannot offer specific personal financial advice or answer detailed questions about individual situations.
Welcome, to another discussion. For the purposes of today's discussion let me be clear. I'm no fan of these "coupon settlement." I think they stink and we consumers should be doing everything we can to get the courts and the lawyers who are suppose to be representing our interests get better settlements or at least one that include cold, hard cash. What do you think?
Washington, D.C.: With all due respect, what shouldn't the lawyers get paid for taking on these big companies? Most consumers can't afford to hire a lawyer to win back a few bucks they are owed. Aren't these plaintiff lawyers doing some public good?
David C. Vladeck: I agree that lawyers ought to get paid for handling big consumer class action cases, and should get rewarded handsomely. As you point out, these are hard cases to win, and generally the lawyer has to finance the case out of his or her pocket.
Portsmouth, Va.: Why should we bother responding to these lawsuits if all we are going to end up with is a stupid voucher anyway?
David C. Vladeck: That is a tough question, because you're right that all too often class members end up with a "stupid voucher" that is essentially valueless.
Baltimore, Md: Why have the courts allowed these type of "coupon settlement" to continue? Can't they see they aren't fair? It's outrageous.
David C. Vladeck: The courts have allowed "coupon" or "voucher" settlements because the lawyers tell them that the settlements are good for the class members. Remember, the judges who oversee these cases are hampered in gathering information on their own, and generally have little choice but to rely on the representations of counsel.
Columbia, Md: What can I do if I've missed the deadline to respond to a class action lawsuit? Can I still participate in the class?
David C. Vladeck: This is a good question, but it is a tough one. On some occasions, the Judge will allow someone to either "opt out" (or refuse to participate) in a class action settlement where the objection is filed out of time. Generally, Judges are sympathetic to a legitimate excuse.
Washington, D.C.: Mr. Vladeck, what has been the most outrageous consumer settlement you've seen in recent years?
David C. Vladeck: A few years back Ford Motor Co. tried to settle a nationwide class action case on behalf of owners of Ford Bronco IIs, which were alleged to be prone to roll-over accidents. The plaintiffs alleged that the vehicles were defectively designed, and sought damages for the economic loss of having bought crummy vehicles.
Fairfax, Va.: Come on, do you really think writing a judge, who probably has a ton of mail and cases, is really going to do any good? Isn't it better to show up and how many consumers can afford to do that?
David C. Vladeck: It is better to show up. WHile I agree that only a handful of consumers can afford to show up, even a few people can have a profound impact on a judge's thinking about a settlement. So, I agree with your point, but would suggest that a few hours of good citizenship might go a long way.
As a Cellular One customer, I don't recall being informed about any fairness hearing on whether the court should approve the settlement. I would objected. Since the effect of the rounding up was to increase the amount of monthly call charges, the only fair way of addressing it was to give a credit to the current bill. That is what is done with utility refunds of overcharges all the time.
David C. Vladeck: That makes sense, but for former customers, why couldn't Cellular One simply cut them a check. To be sure, for existing customers giving them a break on their current accounts would make up for the overcharges. But it does not take brain surgery to identify former customers who have been charged unfairly and rebate the excess amounts to them.
Michelle Singletary: Why haven't there been more legislation aimed at fixing this problem of "coupon settlements" which based end up being just a marketing ploy for the companies that settle?
David C. Vladeck: That is the $64,000 question. To date, I know of no legislative proposal aimed at curbing the abuses of coupon settlements.
Philadelphia, Pa: What do you think of the lawsuit involving GM? The one where they are offering $1,000 but only if you buy another car?
David C. Vladeck: I take it you're referring to the proposed GM settlement relating to the C/K pickup truck -- the one with the fuel tanks outside of the frame rail of the truck, so they are prone to fuel-fed fires and explosions.
Washington DC: Not to throw the baby out with the bath water, aren't most class actions valuable ways for consumers to make sure that irresponsible companies don't rip off consumers? Can you tell us about some class actions that resulted in good results for consumers? Also what percentage of settlements are coupons or other sweet heart deals for the companies or attorneys?
David C. Vladeck: I agree that the majority of consumer class action cases are good cases that result in valuable relief to class members. I also agree that bringing and winning or settling a good case for significant relief has a strong deterrent effect that will benefit consumers in the long run. Make no mistake, I'm a fan of class action litigation. Our office has used class action cases in cases as varied as: getting notice to recipients of heart valves that their valves are defective to something as mundane to getting full value for food stamp recipients in North Dakota.
Clinton, Md: Sounds like to me that the lawyers representing people in these class action cases are getting all the money and consumers are getting zip. Why do the courts approve such high fees especially since many of the cases never make it to trial. Didn't the lawyers in the computer monitor case get something like $6 million? What a scam.
David C. Vladeck: Yes, the lawyers did get $6 million in the computer monitor case and in my view, to borrow your term, the consumers got "zip."
Michelle Singletary: So are you saying that to get things changed consumers or consumer groups have to begin lobbying in all 50 states? Is there anything you think Congress could be doing to make sure these settlements are fairer?
David C. Vladeck: Unfortunately, we both know that the idea that consumers will begin lobbying for reform in 50 states at the same time is at best fanciful. Consumer groups simply lack the muscle to mount such a substantial undertaking.
Rocky Mountain: Why would it be worth it for anyone to pay good money to fly to some town to testify in these small cases? Isn't it just plain unfair to expect consumers to do something like that to get back the money they were ripped off from in the first place.
David C. Vladeck: It wouldn't be. For out of towners, a letter is more than adequate. But for some of the examples we've been discussing, many of the class members are "hometowners," and a trip to the courthouse is not out of the question for them.
Boston: Is there any way to find out how many people actually redeem many of these coupons?
David C. Vladeck: The answer, unfortunately, is "No." We've have tried in many cases to get information out of the parties as to participation rates, but have been unsuccessful.
Michelle Singletary: How often are there fee adjustments in these kind of cases? To your knowledge have there been any cases where judges have significantly reduced fees or tied it to the settlement?
David C. Vladeck: Yes, there have been some cases where the courts have reduced fees, but only where there has been some form of opposition to the fee.
Philadelphia, Pa: But in the GM case isn't the company fighting the idea of creating a secondary market? Or won't the certificates or coupons be worth less if sold? And, if so why would that be fair. If the consumer was to get a $1,000 should they get the full value whether they keep it or not?
David C. Vladeck: The answer is that GM is trying to fight the creation of a secondary market, and yes, the coupons would be worth far less than $1,000 if sold.
Trenton, NJ.: Do you see a trend down the road in more of these cases since the companies love them so much?
David C. Vladeck: To the extent that there is any "trend," it is that the pace of these settlements is accelerating. Do you know anyone who is Not a member of one class or another. I guess the answer to your question is that I see these cases as part of the legal landscape for the foreseeable future, and I think that reform efforts will likely stall because, although big business will say otherwise, they like the status quo and would not want to see a significant change.
Michelle Singletary: Try as I might I can't remember getting a notice from Cellular One either. Of course I had just had a baby when the letters were supposed to have been mailed. But how can consumers be assured that they were contacted at all? Do the lawyers representing the consumers even check this out? I've got tons of mail from Cellular One customers who don't remember getting anything either.
David C. Vladeck: You've raised a very thorny question -- namely, do the plaintiffs' lawyers actually make certain that class members have been notified. Here's the problem
Fairfax, Va: Mr. Vladeck what exactly does your lawyer group to do to help consumers who are party to these type of class action lawsuits?
David C. Vladeck: I work for Public Citizen Litigation Group, which is a small public interest law firm that has represented objectors in about 3 dozen class action cases. We focus on hot topics in class action law -- like "coupon" settlements, "non-opt-out" settlements (where even those class members who object cannot get out of the settlement), and other serious abuses. Our web site is "citizen.org" and there is more information there
Columbia, Md: What happens if you do opt out of one of these class action lawsuits? Isn't a coupon better than nothing?
David C. Vladeck: That is the dilemma that most people face. Many of these cases involve dollar amounts that are small enough that it would not make economic sense to handle the case on your own. Thus, because "something is better than nothing," it may make more sense to stay in the case than to opt out.
It's time to settle this issue for now at least. Thanks for the great questions and the thoughtful answers from Mr. Vladeck. I'll be following up on this issue so keep me informed if you are involved in a "coupon settlement" and are unhappy. Thanks for joining me today.
© Copyright 1999 The Washington Post Company