f/k/a archives . . . real opinions & real haiku

February 10, 2006

clients clipped in fat-booty coupon settlement

Filed under: pre-06-2006 — David Giacalone @ 3:55 pm

pirateS ethicalEsq first complained about class action “coupon settlements — with their tiny benefits for clients and giant fees for lawyers — in June 7, 2003, at the end of this weblog’s first week of posting. Like most practices in our litigation system that feed on lawyer greed, the problem has apparently not diminished since then, despite efforts by the Federal Trade Commission and the constant vigilance of Walter Olson at Overlawyered.com.

Let’s hope, however, that the NY Appellate Division’s decision In Klein v Robert’s Am. Gourmet Food, Inc (N.Y. A.D. 2d Dept. Jan. 31, 2006), gets the attention of the class action bar (and bench) and helps to reduce significantly the likelihood of scam coupon settlements. Walter at Overlawyered.com, Point of Law‘s Ted Frank and Tom Perrotta at the New York Law Journal, have spotlighted this “Pirate’s Booty” case over the past few days. It involves a 2003 class action settlement that was approved by Nassau County Supreme Court judge Ute Wolff Lally As NYLJ summarizes (Feb. 7, 2006):


penny sm“A $3.5 million class action settlement — and $790,000 in attorney fees — over snack foods that were found to have more fat than advertised has been thrown out by a state appeals court in Brooklyn. “The [ruling] found that the trial judge who approved the settlement did not adequately consider the relevant factors in certifying a class over Pirate’s Booty snacks . . It remanded the case for further consideration. “The court, in a signed opinion by Justice Steven W. Fisher, said the attorneys who worked on the case had offered an insufficient explanation of their work to justify the fees. . . .

“Robert’s had advertised its snacks — Pirate’s Booty, Fruity Booty and Veggie Booty, among others — as low-fat, low-calorie snacks. But tests from Good Housekeeping’s Institute found that the products contained 8.5 grams of fat and 147 calories per 1-ounce serving, rather than the promised 2.5 grams of fat and 120 calories.”

penny smpenny sm What was this settlement that was valued at $3.5 million? Judge Fisher notedThe amount agreed to here was $3.5 million to be issued and redeemed by the defendants, over a period of years, in the form of discount coupons good toward future purchases of Robert’s snack foods.” The coupons were to be worth about 20% of the price of the snack items, and would not even be given directly to the class members, but would be distributed to the public at large. Judge Fisher, without needing to use any sarcasm or emoticons, summed up the value of the settlement quite well:

“[It] is unlikely to confer any benefit, either direct or indirect, upon those members of the Class who have the most serious grievances. “Class members who purchased the Products largely because of their advertised low fat and caloric content are those most likely to have been injured by the alleged misrepresentation. Yet, having sought a low-fat, low-calorie snack food, they would be the least likely to purchase the Products again now that their higher fat and caloric content has been revealed. Thus, they would be the least likely to reap any benefit from the distribution of discount coupons.”

Ted Frank points out that press reports have understated how outrageous the case and settlement was. This was not a case where lawyers uncovered the truth, and brought a recalcitrant defendant to justice. Rather, journalists discovered the error in fat-content in the product labels; Robert’s immediately apologized for the error and corrected it; and then free-riding lawyers sued in four different states, with the New York class action being certified on a nationwide basis first . . ” Ted also noted that ” the plaintiffs sought to claim as a class benefit justifying the attorneys’ fees the very marketing Robert’s was likely doing anyway. ” We wonder: Would you have to be a knave or a fool to contend that this was a good settlement for your clients?

Robert I. Lax (real name), the lead attorney for the Nassau plaintiffs couldn’t even bother to sumbit a detailed affirmation to justify the request for bloated attorneys’ fees. As the court notes:

The affirmations, however, contained only brief and general descriptions of the work performed by the firm as a whole, and, other than total hours, included no information regarding the tasks performed by any of the individual attorneys. For example, over 481 hours of work performed by the firm serving as lead counsel for the plaintiffs was attributed only to “drafting of pleadings, review of discovery, drafting of memoranda of law, and participation in settlement negotiations.” Another 106 hours of work performed by another law firm is described in exactly the same terms. Without more, such descriptions were insufficient to support an award of an attorney’s fee.

Meredith Berkman (a Manhattan journalist who had sued Robert’s in Manhattan), objected to the settlement. I agree with the comment of her lawyer, David Jaroslawicz: “This is the type of thing that brought class settlements into disrepute.” Do you think Justice Lally will know what to with this matter when it arrives on his desk on remand?

Towpath2005 a path made by bears

tiny check There’s never any excess fat in the poetry of the Towpath Haiku Society. It was founded in 1995 and is named for the C & O Canal, which connects Washington, D.C. with Cumberland, Maryland. Long ago, before Your Editor was dagosan, he loved to spend time along a stretch of the Towpath that goes through Georgetown. Now, he enjoys paging through the two anthologies published by Towpath Haiku Society (which were kindly sent to me recently by Roberta Beary), which contain haiku and senryu by the Society’s 16 members. The newest volume is a path made by bears: towpath anthology 2005 (edited by Lee Giesecke, Red Moon Press, 2005, $5). Here are a pair by Roberta Beary and by Jim Kacian:

bear needs no second look at me

night clouds gone the supply of infinity

……….. by Jim Kacian– “night clouds” – from NOON2

talk of war
the spin cycle’s
steady hum

waiting for him to tell me
what I already know

….………………… by Roberta Beary .

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