Abstract:
This report empirically examines the allocation of settlements and awards in no-injury class actions among plaintiffs, attorneys, and cy pres funds. The results are based on my study of 432 no-injury class action settlements and trial awards from 2005-2015. The study finds that, on average, 60% of the total monetary award paid by the defendants was allocated to the plaintiffs’ class and 37.9% was allocated to attorneys’ fees. However, because many settlements disperse the unclaimed portion of the settlement fund to a cy pres fund, the funds available to class members at the time of settlement may significantly overstate the actual amount class members ultimately receive. Although 60% of the total monetary award may be available to class members, in reality, they typically receive less than 9% of the total. In comparison, class counsel receives an average of 37.9% of available funds, over 4 times the funds typically distributed to the class. A result in which plaintiffs recover less than 10% of the award, with the rest going to lawyers or unrelated groups, clearly does not achieve the compensatory goals of class actions. Instead, the costs of no-injury class actions are passed on to consumers in the form of higher prices, lower product quality, and reduced innovation.
Shepherd, Joanna, An Empirical Survey of No-Injury Class Actions (February 1, 2016).
First posted 2016-02-05 08:02:04
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