SAN FRANCISCO — The $9 million class-action lawsuit settlement agreed to by software developer Carrier IQ and several mobile phone manufacturers in a U.S. District Court in California looks very large, and it certainly impressed the judge in the case.
"The settlement agreement is fair, reasonable, adequate, and in the best interests of the settlement class," Judge Edward Chen of the U.S. District Court of Northern California, San Francisco Division, wrote in an order issued last week week. The settlement, he wrote, "Substantially fulfills the purposes and objectives of the class action and provides beneficial relief to the settlement class."
Only it really doesn't, California Citizens Against Lawsuit Abuse (CCALA) Central Valley Director Julie Griffiths recently told the Northern California Record.
Under the terms of this particular settlement, which awaits Chen's final approval, software developer Carrier IQ and several mobile phone manufacturers will deposit $9 million to an account, and a large portion of that money will be distributed among members of the class. With as many as 79 million people estimated to be eligible for a share, however, each member of the settlement class may receive a few dollars, a hand full of pennies or even nothing depending on how many submit claims
"We're not fans," the CCALA director said.
The settlement, if Chen grants final approval, would resolve a 4-year-old legal battle in which Carrier IQ stands accused of violating tens of millions of smartphone users' privacy. The company closed last year, with some of its assets acquired by AT&T, who also hired some of the company's former employees.
Privacy breach allegations against Carrier IQ first surfaced in November 2011, when a researcher issued a report and posted an online video that appeared to show keystroke logging. Carrier IQ soon admitted its software sometimes logs messages, but claimed the data can't be read and that it was, in fact, a feature designed to help mobile carriers track down network issues, such as dropped calls.
Many did not find that reassuring. In the controversy that followed, many lawsuits were filed not only against Carrier IQ but also Pantech, Motorola, LG Electronics, Samsung, HTC and Huawai. The lawsuits were consolidated into Chen's court the following year.
The $9 million class-action settlement includes provisions for consumers to receive a portion of the funds, depending on how many of the estimated 79 million members of the class actually submit claims. Should so many claims be submitted that individual payouts would be less than $4, no class members will receive anything. Instead, that portion of the fund will be split between the Electronic Frontier Foundation, the Center for Democracy and Technology, and CyLab Usable Privacy and Security Laboratory at Carnegie Mellon University.
Were the less-than-$4-per-person portion to be alotted instead to all 79 million members of the class, each individual payout would amount to about 11 cents.
Plaintiff's attorneys, however, are expected to receive approximately $2.25 million, according to the terms of the settlement.
It's enough to set CCALA members and supporters teeth on edge.
"We always encourage litigants seek arbitration or mediation," Griffiths said. "Early settlement is far better for plaintiffs than class-action lawsuits."
The Carrier IQ case is a typical example of class-action lawsuits that provide little financial awards to plaintiffs, but often provides a large payout for their attorneys. That provides a powerful incentive for attorneys to push class-action lawsuits, Griffiths said.
To try to change that, CCALA plans to participate in California Civil Justice Association Day at the state Capitol on March 15.
Griffiths also pointed to a case set to go before the California Supreme Court, Laffitte v. Robert Half International, Inc, which could change attorney pay in class-action lawsuits from a percentage to an hourly wage. That would be a game changer, Griffiths said, because it would remove the incentive to file a class-action case instead of opting for early settlement.
For now, class-action plaintiffs and members still can look forward to small or nonexistent payouts while attorney's claim a greater percentage, Griffith said.
"There really is a wide discrepancy between what plaintiffs receive and what attorneys receive," she said. "That isn't what the American people want."