A successful class action involving consumer claims requires rigorous analysis and careful planning. In particular, claims that involve a uniform misrepresentation, common harm, and slight variances in class members’ damages often make for ideal candidates for class certification. However, class actions involving consumer products and services are incredibly complex. This article will cover some critical issues arising in those cases.
Class Action Settlements
Class action lawsuits filed by one or a few people on behalf of a large group of individuals who share similar losses, harms, or costs provide consumers with a powerful tool for holding companies accountable for wrongdoing. In addition, a storage class action settlement can provide substantial compensation to many consumers who would not otherwise be able to sue on their own. But when payment amounts become too large, they raise the cost of doing business. Ultimately passed on to all consumers- a phenomenon some legal commentators call a “tort tax.”
In addition to the potential for overly generous attorney’s fees awards. There are concerns about whether or not enough eligible class members will claim their portion of a settlement. A recent Federal Trade Commission (FTC) study examined 149 class action settlements to learn more about factors affecting consumer claims and check-cashing rates. It found that even when class members were offered significant sums, only a tiny segment claimed their settlement rewards. Possible reasons for this low response rate include that some consumers do not receive or pay attention to class action notices. May be suspicious of how they were identified as class members. May be overwhelmed by the paperwork required to file a claim.
The Commission has made its views on these and other issues surrounding class action settlements. Known through various means, including speeches and interviews, consumer education pamphlets, and amicus briefs in judicial proceedings.
Predominance of Common Issues
For class actions that involve a breach of contract. The plaintiffs must demonstrate that the defendant’s conduct “predominates over other claims.” The district courts have generally endorsed a common proof standard for this inquiry. However, some lower court decisions have raised doubts about whether certain types of statistical evidence are admissible to support a finding of predominance. The Supreme Court addressed this issue by rejecting a defendant’s argument. That statistical evidence of averages cannot be used to prove a claim for damages on a class-wide basis.
In the case at hand, Apple is being sued for misrepresenting its iCloud terms and conditions to customers. Claiming that iCloud paid storage subscribers data would be stored on company servers. When in fact, the data was stored on Amazon, Google, and Microsoft servers. Among other things, this misrepresentation depresses users’ willingness to pay for iCloud storage.
In this case, the Court agrees that the defendant’s waiver defense cannot defeat predominance. Because all putative class members signed a standardized iCloud Agreement that contains the challenged language. Furthermore, public disclosures of third-party storage should not preclude class certification. Because settled contract law and Ninth Circuit precedent do not require individualized inquiries in such situations. As a result, the Court concludes that Plaintiffs’ damages model satisfies Comcast and the other requirements of Rule 23. Consequently, it grants class certification.
Predominance of Individual Issues
As a result of the decision, some defendants have sought to limit class action claims by asserting that plaintiffs cannot satisfy the predominance requirement without showing that damages are susceptible to determination through standard proofs. The Ninth Circuit, however, has rejected this argument in the case of Olean Wholesale Oil.
In the Extra Space Storage case, plaintiffs claimed that the company violated state law by selling storage unit contents to a third party before contacting the owner to allow them to retrieve the items. Extra Space agreed to deposit a million in a fund distributed to class members to settle the claim.
Those eligible for a payout will be notified through email. The awards are pro-rata to a subscriber’s storage tier. Meaning those on the 1TB tier will receive more than those on the 50GB or 200GB tiers. The judge overseeing the settlement has yet to decide whether it should be approved.
As class action lawsuits continue to increase in number, companies must be ready to adapt their defense strategies. This includes identifying the key issues that could drive litigation strategy and developing strategic ways to challenge requests for issue class certification. It also means developing creative approaches to address the growing use of representative statistical evidence in class action damages cases.
Class Certification
While the Court does not believe that a class action is necessary. It notes that it would be difficult to recoup any significant amounts for Class Members in this case, given that Public Storage voluntarily settled the claim. In addition, the million settlement fund represents about 20% of the maximum damages that could be recovered on the allegations and enables Class Members to recover their actual damages without waiting for the outcome of a jury trial.
This is a substantial result and reflects the excellent work of Class Counsel. The Court also believes that a million settlement is in the best interests of the Class because it provides them with immediate relief without having to wait through a lengthy, expensive trial and possible appeals.
In addition, the Court finds that the settlement amount is a fair and reasonable amount considering that Plaintiff’s expert testimony, on average, consumers purchasing TIP would have bought it regardless of knowledge of Public Storage’s profits and that its alleged failure to disclose those profits did not cause any harm.
Finally, the Court is satisfied that the proposed settlement was reached only after extensive arm’s-length negotiations by experienced counsel. It is a result of the diligent efforts of both parties and, when approved by the Court, will provide valuable benefits to tens of thousands of Class Members.
