Supreme Court Has Chance to Curb Self ‐​Dealing by Lawyers Bringing Class Actions

Ilya Shapiro andSpencer DavenportWhat happens when the counsel for a class action lawsuit doesn ’t represent the best interests of the class members? The scenario begins simply (if not mundanely). Bank of America charges a $35 fee anytime a deposit account holder writes a check against insufficient funds. When an overdraft occurs, the bank can honor the check by advancing funds. If the Bank does so, the account holder must pay back the Bank ’s advance plus any fees incurred. Failure to do so within five days triggers a second $35 fee.A group of account holders filed a class action complaint, arguing that the second fee violated the anti ‐​usury provision of the National Bank Act. Eventually, they and Bank of America agreed to a $37.5 million settlement. While each class member received a refund of about $1.07 for each $35 fee paid, the district court awarded $14.5 million in attorneys ’ fees, coming directly from class members’ recovery.Accordingly, Rachel Threatt and other class members objected to the settlement and appealed to the Ninth Circuit. In a split decision, the court affirmed the fee amount, finding that the district court ’s method of approving the settlement request was proper. In dissent, Judge Andrew Kleinfeld took issue with the amount of money the class counsel was to receive, and the level of compensation earmarked for the class members.Cato has filed anamicus brief urging the Supreme Court to review the case...

Source: Cato-at-liberty - April 26, 2021 Category: American Health Authors: Ilya Shapiro, Spencer Davenport Source Type: blogs