Judge censured for ordering class-action lawyer to take pay in $125,000 worth of gift-cards

I think this judge had the right idea: if the members of a class action settlement are expected to be happy with a card that they have to use at the store that screwed them over in the first place, why not the lawyer?

Last year, Los Angeles County Judge Brett Klein was presented with a proposed class-action settlement in which the plaintiffs' attorney would get $125,000, but class members would get only a $10 gift card, usable only at the store that allegedly violated the law in the first place. That is an example of the much-maligned "coupon settlement," in which a defendant can end up profiting from breaking the law because a consumer must buy something from the defendant to redeem the coupon. These can sometimes be okay, but Judge Klein didn't think this settlement was fair.
A Gift for You! Another L.A. County judge, Susan Bryant-Deason, had tentatively approved the settlement, but she became ill and Klein ended up presiding over the fairness hearing. In a ruling that caught my eye when it came out last year, he ordered that the attorney also be paid in $10 gift cards, just like the people he represented. Under Klein's order, Neil Fineman was to receive 12,500 gift cards that he could put toward the purchase of any merchandise he liked, as long as he liked the women's clothing at Windsor Fashions.

Censure for Judge Who Ordered Attorney Be Paid In Gift Cards, Like Class Members

(Image: Gift cards, a Creative Commons Attribution photo from robinsonsmay's photostream)

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Bevatron Repairman

I am indeed a lawyer and I love this.
SamSam

I think it was a little harsh. Even if the lawyer knew it was a terrible settlement, he’s basically an employee of the company. His job is to get the best possible deal for the company, just like a defense attorney is expected to try as hard as possible to keep his client out of jail, even if he’s sure his client committed a crime. We shouldn’t expect defense attorneys to be punished, should we?

By the way, while forcing the members of the suit to use gift-cards is indeed absurd, I don’t see exactly how the store “profits” from this, like the article claims. They still have to give out $100,000 or whatever of free goods to the plaintiffs. Sure, it didn’t cost them $100,000 to produce those goods — maybe $50,000, plus opportunity loss — but they still have to give away free merchandise, so it’s hardly a “profit.” I’m in no way suggesting that it was a fair settlement, however.
- dculberson
  
  The lawyer in question is the plaintiff lawyer, working for the class – not working for the company. The problem is that settlements like these don’t penalize the company as much as they should. Why should someone that is aggrieved be forced to further patronize the company that wronged them? They should be required to pay in cash (well, checks) to the class, not coupons or gift cards.
  - SamSam
    
    It was the plaintiff lawyer who came up with this?!? I should have read the article. I now whole-heartedly support the idea that the selfish SOB should be paid in gift certificates. Make that expired gift certificates.
- Anonymous
  
  What can you buy with 10 dollars? Not much. This is a great way to get people back in the stores and force them to spend more money if they want to “cash their settlement.” It is like giving away a free burger, people will buy a soda and french fries, and the company will make that the cost of the burger back with the other stuff you buy.
  
  And even if they can find something to buy for 10 bucks it doesn’t cost the store 10 bucks. Say the product itself cost $10 bucks retail, so it probably costs $5 wholesale, and then we can add another $2 for employee wages, and misc charges, so that $10 card the person was given in the settlement only costs the company $7.
  
  Either way not a bad deal for the company.
Anonymous

SamSam,
One of the problems with this (and the reason the store might profit) relates to the price of goods at the store. This is a women’s clothing store. How many items cost exactly $10 at your average clothing store? Socks maybe? When these people redeem thier gift card, either they are going to buy a pair of socks for $6.99 and waste the rest of the gift card, or they are gonna have to spring for a blouse or something at $24.99, pay $14.99 out of pocket, and the store ends up getting a sale.
Heartfruit

It’s pretty easy to see how a company could make money from such a settlement. First there are those among the class who will simply never use their gift card. That group is probably larger when the card is for a small amount like $10. And those that do will likely use the card to reduce the cost of a larger purchase. Sure a few will find a $10 item they want but most will not. In addition these coupons will get people who had a grudge against the store back though the front doors, potentially making these unhappy people customers again.

I admire this judges actions to bring this practice to light. While I doubt he expected the lawyer to actually be paid in gift cards, by making this ruling he’s certainly brought some attention to this subject.
semiotix

Right principle, wrong venue. I’d like to see this adopted in family court, where lawyers who successfully represent their clients in custody hearings get awarded any remainder children after an equal division between parents (so, for example, the third child of three, or the fifth child of five, etc.).
Church

“Creative” sentences for the accused are nothing new, I see no reason why “creative” compensation for lawyers should be any less common. (For class-action lawsuits they should be standard.)

The beauty of this is that the lawyer could get his ‘rent money’ by selling the cards at a discount, which is exactly the reason the company agreed to these terms (i.e., the worst case is that they get redeemed at retail prices for goods they paid wholesale for.)
Anonymous

I worked at a private airport where the attorneys for the first big tobacco lawsuit hangared their planes. The amount of money the lawyers made off the settlement was sickening. One month,lawyer flies off every week to court, next month, he’s flying the kids and new wife (old secretary) to the Bahamas with a fat Cohiba in his mouth.
JonStewartMill

This reminds me of the “Bloom County” strip where attorney Steve Dallas is arguing that his client, accused of killing her husband with an axe, deserves to be freed on bail because she’s not a threat. “Fine,” the judge responds. “I’ll release her into your custody. She’ll be living with you until the trial.”
bodenski

Ten dollar gift card at clothing store = coupon.
And most coupons are thrown away.
I am sure there were many posts about the amount that companies make through gift cards loss and expiration around Christmas.
Anonymous

The judge didn’t ignore the question of overhead expenses; he asked the plaintiff’s lawyer about them. The lawyer told the judge that he had no office and no employees; he worked at home and did his own secretarial and paralegal work. He said he spent 218 hours on the case. That means his $125,000 fee was $573 per hour.
siliconsunset

Maybe if was more common for the lawyer handling the case to share the fate of the people represented there would be a greater effort to serve those people…

I say this judge deserves a medal, not a reprimand.
badbcky

I love this a lot. I completely agree that the judge deserves a medal.

Does this make him a poetic judge?
Anonymous

If it’s good enough for the clients, it’s good enough for Mr. Lawyer.

I’ve received ‘discount coupons’ as class-action settlements (for an airline screw-up) and no, I would not pay one cent to a company that was so bad I wanted to take it to court. These settlements mean that both sides’ lawyers sit down and figure out how to screw the customers who brought the suit in the first place.

Good for Judge Klein!

Anonymous #3 – the plaintiffs have bills to pay, too. Maybe the lawyer should’ve been working to get ca$h for them, too. Even if it was just $10.
blueelm

They could try buying an item well over the 10 amount, then returning it with receipt at another location to see if they can get the full amount in return as opposed to splitting it up.

It is likely they will find a salesperson who will just do it to get them off their back, and then they can have the peace of mind from messing with the company AND they can buy a latte or something with their new 10.00.
Elapsv

I believe this is a very good practice! But, I guess company will be able to buy these cards from the lawyer =)
siliconsunset

Maybe if was more common for the lawyer handling the case to share the fate of the people represented there would be a greater effort to serve those people…

I say this judge deserves a medal, not a reprimand.
- bwcbwc
  
  Read Frank Herbert’s “The Dosadi Experiment” for some interesting thoughts in that vein…
duffyblue

Cory,

I realize most people hate lawyers, especially on the internets, but how is the lawyer supposed to pay his bills with gift cards? What if this was the only case the lawyer, or firm, worked on the entire year?

I am not a lawyer, nor do I know how much it costs annually to operate a law firm, but last time I checked, secretaries, associates, the rent, the electricity, the HEALTH INSURANCE, all has to be paid, and I’m gonna guess none of those people accept gift cards for payment.

Next month I’m going to send my landlord $1000 worth circuit city gift cards, that should be cool, right?
Anonymous

Much as I love love love the bitter irony of the judgement, the attorney still has to pay actual bills with his income.

I don’t think his landlord/bank (for his office), his employees, the electric company, etc., are going to be all that excited to accept gift cards in return for their services, nor are they going to get real happy about receiving clothing as barter.

It’s an absolutely GENIUS idea; sadly, the real world renders it impossible.

(recaptcha: sickens courts LOL)
SteveT

So Judge Klein, is he related to Solomon as he certainly has the ‘wisdom’.
spejic

The problem isn’t the limited awards for the victims, it’s that the plaintiff lawyers are only looking for big payouts and don’t care at all for the aggrieved class. I’ve been an unwilling part of a half-dozen class action suits, and they all have the same things in common: I never felt aggrieved in the first place, I never got anything of any worth (not even a gift certificate – just regular percent-off coupons), and the lawyers representing the class got rich beyond imagination. I’m talking hundreds of millions. The anti-tobacco lawyers got _billions_.
- bwcbwc
  
  Well the primary client has to accept the settlement. I suspect she is getting something more than a $10 gift card, too.
  - spejic
    
    In a class-action suit, there is no primary client, and the class has no say in what the lawyers agree to. You can only request not to be part of the class (by default you are part of the class unless you actively opt out). Whether or not you have the right to sue by yourself after leaving the class depends on the nature of the class action.
phisrow

I can definitely see a case being made that springing 12,500 gift cards, capriciously, on one specific lawyer is not the thing to do; but the whole notion that corporate criminals can settle in scrip, good only at the company store, while everybody else pays cash, is absolute bulllshit. That should be exterminated across the board.

The only thing worse is when they arrange one of those “pay in product” deals, where a software company gives away a bunch of whatever isn’t selling. Punishment is supposed to hurt.