Class Action: Lawyers & Manufacturers Rule, Consumers Drool

Posted 12/29/2009 at 3:47pm | by Bart Salisbury

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Class action lawsuits lately seem a dime-a-dozen. Someone, on behalf of a nebulously defined ‘harmed class’ is suing a manufacturer because diagonal screen sizes or hard drive capacities are misleading. The goal seems reasonable: rectifying a wrong done to a group of similarly situated people. But the end result seems little more than the manufacturer getting off the hook, a big pay day for a law firm, and the harmed class getting little more than a pat on the head.

Take for example Microsoft’s price-fixing case in Wisconsin. Microsoft was ordered to cough up $234 million to Wisconsin consumers and businesses, according to the settlement. The distribution was in the form of vouchers, with values dependent upon what Microsoft products were purchased. For example, if you had bought a copy of Office you’d get a voucher for $23.

Except, of course, the vouchers are redeemable only for Microsoft products. It would seem that purchasers got nothing of real value from the deal, while Microsoft made off like a bandit. You’d either buy more Microsoft product, for which you were over-charged in the first place, or round-file the voucher, saving Microsoft any expense, save the printing.

How useful are such settlements? No word is yet in on redemption in Wisconsin, but in a similar deal in California, where $1 billion in vouchers were distributed, fewer than one million of the 14 million vouchers were redeemed.

But, law firms don’t get vouchers for their work. They get cold, hard cash. In the Wisconsin case a Court of Appeals recently upheld a lower court’s order that Microsoft pay the law firm, Zelle, Hofmann, Voebel & Mason LLP, $5.6 million for their work in defending the interests of the harmed class. Not a bad payday, considering how their clients made out.

Image Credit: martin.danielsson/Flickr