On The Case

Equifax, class counsel strike back at plaintiffs' lawyer who slammed $380 mln deal

(Reuters) - The class action plaintiffs’ lawyer Jay Edelson knew he was exposing himself to attack when he filed a proposed amicus brief earlier this month at the 11th U.S. Circuit Court of Appeals, backing objectors who are challenging the approval of Equifax’s $380.5 million settlement of data breach claims.

Edelson told me his amicus brief had broken an “unwritten rule in the plaintiffs’ bar that we are not supposed to do things like file amicus briefs criticizing settlements or speaking out against bad settlements publicly.” But he said he felt compelled to speak out against a settlement that, in his view, undermines public faith in the entire class action system.

Edelson sowed the wind. On Monday, he reaped the whirlwind.

Both Equifax and class counsel filed briefs asking the 11th Circuit to reject Edelson’s amicus filing. Equifax’s lawyers at King & Spalding argued that Edelson is not a proper amicus because, among other things, he represented the city of Chicago in the underlying litigation and may himself be a member of the class of nearly 150 million Americans whose data was compromised in the 2017 Equifax hack. Class counsel from Doffermyre Shields Canfield & Knowles, DiCello Levitt Gutzler and Stueve Siegel Hanson accused Edelson of “touting false assertions” and failing “to disclose key facts that would reveal he is a partisan litigant.”

The tone of both briefs is scornful. Equifax derided Edelson’s “Monday morning quarterbacking” and “biased, hyperbolic rhetoric.” Class counsel suggested that Edelson’s own representation of Chicago undercuts his amicus arguments that the class action deal failed to account for claims by class members from states with big statutory penalties for privacy breaches. Chicago, class counsel said, settled with Equifax for “just $1.5 million” after U.S. District Judge Thomas Thrash approved the consumer class action, with Edelson “abandoning any claim for additional restitutionary relief,” despite the city’s assertion of statutory claims. In that context, class counsel said, Edelson’s criticism of the class settlement “should be of no persuasive value.”

Edelson said by email that he was expecting no less than what Equifax and class counsel dished out in the new briefs. “We knew that they would go after me personally,” he said. “They told us that before we filed.”

But what the Equifax and class counsel briefs don’t address, Edelson said, is his concern that the Equifax settlement reinforces cynicism about a system that rewards class counsel but delivers only pennies on the dollar to class members whose interests are at stake. “Given the prominence of the (Equifax) case,” Edelson said, “it will take a decade to undo the reputational damage done to plaintiffs’ work in the court of public opinion.”

Class counsel Amy Keller of DiCello Levitt and Equifax counsel David Balser of K&S did not immediately respond to email queries.

Edelson is certainly right that the Equifax case has attracted far more public attention than class actions usually do, mostly because of erroneous reports soon after Equifax settled that class members could claim a $125 cash payout even if their data had not been misused. In fact, that $125 payout was not a guarantee but was instead a cap on prospective cash recovery available only to plaintiffs who could prove they were already receiving credit monitoring services. (The actual payout, which has not yet been disclosed, will depend on how many class members have made claims on the alternative recovery fund.) Confusion over the cash payout led to a New York Times op-ed criticizing the Equifax settlement and an unprecedented online campaign to facilitate objections to final approval of the deal.

In his proposed amicus brief, Edelson laid blame for the confusion on class counsel. They rejected that assertion in their new brief, which contends that lead plaintiffs’ firms in the case acted quickly to clarify misleading media reports and assure that class members understood what relief they were entitled to under the terms of the deal.

In fact, class counsel asserted in Monday’s filing, Edelson himself contributed to public misunderstanding about the terms of the Equifax settlement. Edelson was quoted in the New York Times piece criticizing the deal, the brief said, and also “engaged with” class action objectors’ counsel Ted Frank of the Hamilton Lincoln Law Institute in an “anti-settlement Twitter campaign.” When Judge Thrash granted final approval of the settlement in 2019, class counsel said, he called out Frank and other critics of the deal for spreading misinformation. (Frank has suggested at the 11th Circuit that class counsel actually ghostwrote Judge Thrash’s final opinion, including the judge’s harsh words about him. But that’s another story.)

Edelson’s amicus brief, class counsel said, may just be an attempt to mount a collateral attack on Thrash’s criticism of Frank, whom Edelson once represented in a Telephone Consumer Protection Act case.

Edelson didn’t include a point-by-point rebuttal to class counsel’s arguments in his email response to my query on their brief. Frank said via email that the class counsel brief opposing Edelson’s amicus filing is “entirely consistent with their repeated abusive tactics throughout this litigation of trying to distract from the issues with false ad hominem attacks.”

Judges on the 11th Circuit have recently shown their willingness to disrupt class action. In a 2019 decision in a data breach case against Home Depot, the court barred risk multipliers for plaintiffs’ lawyers when their fees are paid by defendants. And in a ruling just last week, the appeal court abolished incentive awards for lead plaintiffs. Last week’s ruling came in an appeal filed by an objector whose original lawyer was derided by the parties as a “serial objector.” Oral arguments in the Equifax appeal have not yet been scheduled, but it’s definitely a case to watch.