Class action settlements in consumer fraud cases have generated significant controversy in recent years. Critics opine that these settlements primarily benefit lawyers, and that class members have often suffered little or no injury to begin with. These criticisms frequently turn to calls for legal reform. But few empirical studies have been undertaken to confirm whether the settlement data support these arguments.
This Jones Day White Paper provides an empirical analysis of consumer fraud class action settlements. The study uses a broad data set of 110 cases in which federal courts approved class settlements from 2010 to 2018. The analysis focuses on class member participation rates and allocation of monetary benefits among class members, class counsel, and other recipients (such as claims administrators and cy pres recipients).
The data principally show that: (i) only a small fraction of class members receive any monetary benefit at all from the settlements; (ii) class counsel are often given very large attorneys' fee awards even when class members receive little to no monetary recovery; and (iii) in claims-made settlements, class members as a whole receive on average only 23% of the settlement amount, with the remainder being consumed by attorneys' fees, expenses, or cy pres distributions; and even considering all types of settlements, more than 60% on average goes to attorneys or others who are not members of the class.
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