On The Case

Plaintiffs' lawyer Jay Edelson slams $380 million Equifax deal in amicus brief at 11th Circuit

(Reuters) - Jay Edelson is a class action plaintiffs’ lawyer who specializes in privacy cases. His eponymous firm has had a lead role in some of the biggest cases of the past few years, including a $650 million biometric privacy settlement with Facebook in 2020 and a 2019 jury verdict of more than $900 million in a Telephone Consumer Protection Act case against the telemarketer ViSalus. Edelson has a powerful interest, in other words, in the integrity of the class action system.

He claims that Equifax’s $380.5 million data breach settlement undermines public faith in that system, accusing the judge and class counsel of adding to cynicism about the benefits of class actions.

Edelson made that assertion in an amicus brief filed Friday at the 11th U.S. Circuit Court of Appeals, where objectors are challenging final approval (2020 WL 256132) of the settlement by U.S. District Judge Thomas Thrash of Atlanta.

Edelson echoed arguments by objectors’ lawyers from the Hamilton Lincoln Law Institute that Judge Thrash and class counsel neglected to account for potential damages for class members in jurisdictions with robust statutory penalties for privacy violations, like Utah and the District of Columbia. At the very least, Edelson said, Judge Thrash should have required class counsel from Doffermyre Shields Canfield & Knowles, DiCello Levitt Gutzler and Stueve Siegel Hanson to submit evidence of the range of potential recovery, based on statutory damages, for the nearly 150 million people whose personal information was compromised in the 2017 Equifax breach. Instead, Edelson’s brief argued, class counsel merely asserted that the settlement would avert the prospect that their entire case might be tossed if they could not show concrete injuries from the breach. Judge Thrash, he said, abused his discretion by failing to calculate how much of a discount the settlement imposes on class members.

I emailed class counsel for a response to Edelson’s brief. They did not provide a statement. It’s worth noting that, according to a declaration class counsel filed to bolster their $77.5 million fee request, state regulators – who presumably have an interest in enforcing the statutory penalties cited by Edelson and objectors – had a strong say in the settlement Judge Thrash approved. For his part, Edelson represented the city of Chicago in the data breach litigation against Equifax. (The company, broadly speaking, claimed that plaintiffs could not trace any alleged injuries to the breach of its data safeguards.) Chicago alleged violations of its consumer fraud statute, which carries penalties of up to $10,000 for each offense. The city settled its claims last April for $1.5 million.

Edelson’s amicus brief doesn’t just assert legal arguments about a trial judge’s discretion, though. The filing alleges that the Equifax settlement process eroded confidence that class actions protect consumers. As you may recall, and as Edelson’s brief recounts, early news of the settlement – including the initial, short-form notice to class members – suggested that class members who had not suffered out-of-pocket losses would be entitled either to credit monitoring or a $125 cash payment. Millions of people attempted to sign up for the $125 payment. But in a subsequent notice to the class, class counsel underscored that the cash payment was available only to class members who could prove they already had credit monitoring services – and that $125 was a ceiling, not a guarantee, from a $31 million cash fund for class members without out-of-pocket claims. Edelson’s brief noted that class counsel have not said precisely what individual class members will end up getting from the fund, but objectors have estimated the amount to be just a few dollars.

Confusion about the settlement terms is entirely the fault of class counsel, Edelson’s brief said. And its effects will taint the entire class action bar, he argued. “This case involved an issue that affected nearly every (if not every) adult American,” the brief said. “The whole country was watching. And when the class action bar stepped up to do its part to help right this wrong, our representatives provided inadequate compensation, misleading notice, and an ad hoc and confusing claims process. It seems no understatement to say that, because of what happened here, no class action notices for some time will carry any air of credibility.”

That’s strong stuff – and from a plaintiffs’ lawyer who will almost certainly cross paths in some future case with the fellow class action lawyers whose work the brief slams. In an email, Edelson told me there’s an “unwritten rule in the plaintiff’s bar that we are not supposed to do things like file amicus briefs criticizing settlements or speaking out against bad settlements publicly.” But the Equifax deal, he said, undermines his firm’s push for class action settlements that deliver cash to class members.

“It will undermine public confidence in class actions generally and privacy deals in particular,” Edelson said. “That is the headwind we are fighting against and why we decided to file the brief.”

Edelson is generally no friend to so-called “serial” class action objectors: His firm last year forced a lawyer who had objected to one of his TCPA settlements to agree not to practice in Illinois. He said, however, that he and Ted Frank of the Hamilton Lincoln Law Institute, who is one of the objectors appealing the Equifax deal, “have some overlapping goals, even though we see the broader world very differently.”

Edelson previously represented Frank as the lead plaintiff in a TCPA suit but the two have not joined forces in a class action objection. Frank joked in an email that if the 11th Circuit overturns approval of the Equifax settlement, Edelson could represent a subclass - with Frank as the class representative.

The appeal is Huang v. Spector and Equifax, No. 20-10249 at the 11th Circuit.