My guess is this is settled quickly: a few million for the attorneys, a few thousand for the lead plaintiff, and either a coupon for each of the class members or nothing at all (cy pres).
Appellate courts have been cracking down on cy pres awards recently: http://www.forbes.com/sites/wlf/2014/11/26/seventh-circuit-c.... As the Seventh Circuit recently clarified in overturning an approved settlement, a cy pres award is only proper if it's impractical to find and compensate the class members directly. Here, there will be sales records to allow easy identification of affected purchasers.
That aside, a permanent injunction and a coupon would be a reasonable result here. Civil lawsuits aren't intended to punish people, they're intended to compensate people for their injuries. Who was actually harmed here?
Would there be huge problems caused by requiring something like a $10 (actual cash) minimum to settle on behalf of the class? Or something other modest amount, I'm not stuck on $10.
The problem I see is that the class lawyers and lead plaintiff have an incentive to settle regardless of the benefit to the rest of the class. I think I've actually gotten checks for less than $1.
I guess an easy one is that sometimes the harm comes from a service and scales based on how much the service was used, so some members might get a substantial claim at the same time others get $0.50. But those people probably aren't going to pursue anything, so I'm not sure how troublesome they are.
> The exorbitant legal fees are ultimately reflected in prices.
Prices are set by supply and demand. If companies had the market power to raise prices to pass on the costs of defending class action lawsuits, they would do so with or without the lawsuit.
Class action lawsuits don't usually uniformly increase costs to all suppliers--some companies get sued less than others and have an incentive to keep it that way. The exception is industry-wide actions like tobacco.
The fundamental problem is that it's really easy to get away with cheating people out of nickles here and there so long as you limit your scale enough to not attract the government's attention, and such activity is pervasive. The European approach has been strict consumer regulations and government enforcement, but compliance also has a cost, one that does fall uniformly on the industry as opposed to just on bad actors. The alternative to all that is to let things slide, but that's not wholly satisfactory either.
I guess I don't see a problem with a tri-furcated system: 1) substantial damages per individual -- opt-in tort system, 2) diffuse damages that collectively add up to substantial wrongdoing -- government fines, 3) diffuse damages that don't collectively add up substantially enough to attract government attention -- reputational damage.
Mid-career federal government lawyers in an expensive city make $130k a year. Class action attorneys generally get a significant fraction of the value of the settlement. And the value of the settlement is calculated in kind of a crazy way particularly when it comes to injunctive relief.
In the google buzz case, which resulted in no monetary relief to the class in general (representative plaintiffs were given a small award, the rest was cy pres) class plaintiffs were awarded over $2.1M plus expenses for 2550 billable hours* over the course of a calendar year.
*That's a little understated because the filing that number came from was near the end of the litigation, but not at the very end.
