A federal judge has approved a class action settlement involving claims that millions of owners of Motorola’s Bluetooth headsets were not adequately warned of potential hearing loss from the devices.
However, the judge raised questions about a request for $800,000 in attorney fees, which recently were criticized by objectors to the settlement.
In February, U.S. District Court Judge Dale S. Fischer approved a preliminary settlement that provides no economic recoveries for plaintiffs but requires Motorola Inc., Plantronics Inc. and GN Netcom Inc. to pay $100,000 to four institutions related to hearing loss. Bluetooth Headset Products Liability Litigation, No. MDL-1822 (C.D. Calif.). The defendants are required to post additional warnings of potential hearing loss on their Web sites and in product manuals. An additional $12,000 would go to the representative plaintiffs.
In June, Ted Frank, a resident fellow specializing in liability reform at the AEI Legal Center for the Public Interest, a conservative public policy nonprofit group in Washington, filed court documents objecting to the settlement on behalf of seven potential class members. Frank, a frequent critic of “cy pres” awards — charitable contributions that come from unclaimed funds in class action settlements — did so on behalf of the Center for Class Action Fairness, an organization he recently created in order to file future objections to other settlements.
He said that the center’s future objections could involve more settlements with cy pres awards.
“Cy pres is one way that bad settlements are negotiated through courts,” he said. “Where parties used to use coupons to exaggerate the value of the settlement, now they’re using charitable donations.”
In the Bluetooth case, he said, the attorney fees would equal eight times the cy pres award, while most class members receive no monetary recoveries.
On July 6, Fischer ruled that the lawyers for the defendants should draft a detailed order approving the settlement within 14 days, while the plaintiffs’ attorneys must provide further information regarding their fee request. She gave the plaintiffs’ attorneys 30 days to do so.
Frank said that he disagreed with the judge’s decision to approve the settlement.
“We certainly disagree with that,” he said. “But we’ll see what she does with the attorney’s fees, because if she reduces the attorney fees, so that the attorney fees aren’t getting the majority of the recovery, it’s a completely different settlement than when the attorney fees are getting eight times the cy pres and the class is getting zero.”
Motorola’s attorney, Terrence Dee, a partner at Chicago’s Kirkland & Ellis, and Mark Cramer, a partner in the Los Angeles office of Kirkland & Ellis who represents Plantronics, declined to comment. Angel Garganta, a partner in the San Francisco office of Arnold & Porter who represents GN Netcom, said the defendants have agreed not to object to the plaintiff’s fee request.
“Mr. Frank has his point of view,” he said. “As we said at the hearing, it’s a good settlement because the case had very little merit to begin with.”
Stephen Garcia, a partner at the Garcia Law Firm in Long Beach, Calif., and co-lead plaintiffs’ counsel in the case, did not return a call for comment.
According to court documents, the plaintiffs’ attorneys are seeking $800,000 in fees plus $50,000 in reimbursed litigation expenses. The attorneys claim that the fees represent a reduction from a lodestar calculation of more than $1.6 million.