Aggregation As Disempowerment: Red Flags in Class Action Settlements

54 Pages Posted: 17 Apr 2016 Last revised: 14 Feb 2017

Howard M. Erichson

Fordham University School of Law

Date Written: April 10, 2016

Abstract

Class action critics and proponents cling to the conventional wisdom that class actions empower claimants. Critics complain that class actions over-empower claimants and put defendants at a disadvantage, while proponents defend class actions as essential to consumer protection and rights enforcement. This article explores how class action settlements sometimes do the opposite. Aggregation empowers claimants’ lawyers by consolidating power in the lawyers’ hands. Consolidation of power allows defendants to strike deals that benefit themselves and claimants’ lawyers while disadvantaging claimants. This article considers the phenomenon of aggregation as disempowerment by looking at specific settlement features that benefit plaintiffs’ counsel and defendants without benefiting class members. Recognizing that protection of disempowered class members lies with judges who review settlement agreements, the article identifies red flags to alert judges to problematic settlements and fee requests. By showing how certain settlement features reflect defendants’ cooption of the power of aggregation, the article offers a framework for thinking about class action power dynamics in the age of settlement.

Keywords: settlement, aggregation, class action, fees, Rule 23, coupon, cy pres, clear sailing, ethics, negotiation

JEL Classification: K41

Suggested Citation

Erichson, Howard M., Aggregation As Disempowerment: Red Flags in Class Action Settlements (April 10, 2016). 92 Notre Dame Law Review 859 (2016); Fordham Law Legal Studies Research Paper No. 2761912. Available at SSRN: https://ssrn.com/abstract=2761912

Howard M. Erichson (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States
646-312-8233 (Phone)

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