Have you ever been a party to a class action suit?  One time my father was.  An airline screwed him and thousands of other travelers by fixing their prices in violation of anti-trust statutes.   When I was a kid, my father used to fly about once a week at times, so he joined the suit and figured he had some money coming.  Nope.  The attorneys settled the case, reaped huge attorney fees, and all my dad got was  a coupon for about fifty dollars to be used on a future flight.  The coupon had so many restrictions on its use that it was virtually worthless.  My dad wasn’t happy.  This was about 20 years ago, but problems continue with these suits.

In 2001 Block Buster video opted to  settle a class-action lawsuit over late fees, and the attorneys suing Blockbuster agreed that Blockbuster should issue coupons to the plaintiffs for free or dollar-off movie rentals.  The Texas attorneys that settled the suit saw to it that the settlement gave them $9.5 million in attorneys fees.  Critics attacked the settlement as another glaring example of what is wrong with a system whose prime beneficiaries are the lawyers.

I thought of this recently when I read in The Olympian this morning about a California judge who fought back against the system.   An attorney attempted to settle a class action suit against a woman’s clothing store that violated credit card laws.   He proposed a settlement where he would receive $125,000 cash and the women would get $10 coupons.  Judge Brett C. Klein instead ordered that the male attorney would instead get $125,000 worth of non-transferable coupons for women’s clothes.   The attorney wanted to be paid $395 per hour and instead got coupons.  Pretty funny, huh?  The California Bar didn’t think so.  As announced in the news story here, the judge was accused of grandstanding by releasing the story to the newspaper.  The judge didn’t care as he was about to retire and even agreed to the discipline action rather than fight it.  If the judge wanted to draw attention to class action coupon scams, he definitely succeeded.  The story has been picked up by the wire service and is all over the country now.  If you want to read the decision admonishing the judge, it is online here.

My dad would love it.

Here in Washington, there has been criticism of similar class action settlements.  In the case of Picket vs. Holland America cruise line, Justice Sanders of the Washington Supreme Court complained about a proposed settlement.     In his dissent, Justice Sanders explained:

The settlement would offer discount coupons having virtually no practical value to class members. Although Holland claimed the 1.5 million coupons offered had an aggregate face value of $ 20 million, the conditions placed on redeeming these coupons, coupled with the nature of Holland’s price schedule, ensured only a miniscule portion of these coupons would ever be used, and even then only if a class member paid Holland thousands of dollars for future trips. The coupons ranged in value from $ 10 to $ 50 and were subject to a so-called “capacity control” restriction, meaning they could be used only on travels booked less than 45 days from departure. However Holland frequently sells its cruises on an early-purchase, reduced-fare basis. Savings under this early-purchase scheme range as high as 20-25 percent of the ticket price, which sometimes goes as high as $ 5,000. Naturally, reasonable travelers will not forgo such large savings to receive a coupon credit of only $ 10 because early-purchase discounts would more than offset whatever illusory benefit might be achieved from the settlement.

What a racket.  The so called coupons are really pretty worthless.  What do you think?  Time for a little reform?  Did Judge Klein bring attention to this issue agreeing to be disciplined by the California Bar?