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Twenty months after the Class Action Fairness Act took effect, state attorneys general have not exactly raced to exercise the power the act grants them to review class action settlements. In addition to greatly extending federal jurisdiction over class actions, CAFA requires defendants to notify state attorneys general and federal regulators of proposed settlement agreements. The purpose of the notification is to prevent attorneys from crafting abusive settlements favoring lawyers over consumers. But few attorneys general have taken up the cudgel. One exception is Florida Attorney General Charlie Crist. In July, Crist announced a $2.3 million settlement over undisclosed automatic surcharges improperly added to guest bills at hotels run by Wyndham International Inc. The case stemmed from a five-year investigation that Crist’s office was conducting into Wyndham’s related business practices. The attorney general got involved by objecting to a proposed coupon settlement unfavorable to consumers, said JoAnn Carrin, a spokeswoman for Crist. It is the only class action settlement the office has objected to since CAFA took effect in January 2005. The settlement provided cash restitution for consumers and required the hotels change their business practice. State of Florida v. Wyndham International Inc., No. 02-CA-1296 (Leon Co., Fla., Cir. Ct.). James E. Tierney, director of the National State Attorneys General Program and an adjunct professor at Columbia Law School in New York, said he was not aware of any post-CAFA objections to class action settlements. But the new law may have an effect not reflected in whether regulators are formally objecting to settlements. The review process lets attorneys general convey their views informally to parties rather than filing official complaints or intervening in cases, Tierney said. The informal approach Herschel T. Elkins, special assistant attorney general for consumer policy, coordination and development in the California attorney general’s office, said that the office has not formally objected to any of the 40 to 45 class action settlements it has received since the new law took effect. But the office has been involved with the settling parties. In several instances, it has informally contacted the attorneys and gotten changes to class action settlements before they were finalized, Elkins said. He noted that the office has been effective in commenting informally about settlements rather than having to take cases over-a move that spares strained resources. Attorneys general of Illinois, Nevada, New Mexico and New York each have a process for reviewing class action settlements, but none of them has objected to one since CAFA took effect. Deborah Hagan, chief of the Illinois attorney general’s consumer protection division; Brian G. Armstrong, senior deputy attorney general in Nevada’s Bureau of Consumer Protection; and Paul Nixon, spokesman for New Mexico Attorney General Patricia Madrid, said that their offices have not objected to a settlement since the new law took effect. Thomas Conway, chief of the New York attorney general’s consumer fraud bureau, added that his office objected to class action settlements “only infrequently” before CAFA. But some in the private class action bar suggest that CAFA, which has been lauded by defendants for expanding federal jurisdiction over class actions, could end up as a powerful tool in the hands of plaintiffs and public interest lawyers-as well as politically ambitious attorneys general. CAFA is an uncharted territory: Standards for handling class action litigation federally are just starting to evolve in states where the most cases are filed, said Frank A. Hirsch Jr., a partner in the Raleigh, N.C., office of Columbia, S.C.’s Nelson Mullins Riley & Scarborough who defends financial services companies in class actions. But state and federal regulators could be tempted by the potentially greater access that CAFA’s settlement-review provision gives them into corporate practices and behavior, Hirsch said. For instance, a goldmine of information concerning federal class action settlements that would never see the light of day buried in a state court file is becoming available online nationwide via PACER, the systemwide federal court database, he said. Advising clients to take federal jurisdiction is complicated by the prospect that large numbers of settlements in federal court offer the potential for a huge database that plaintiffs, public interest groups and attorneys general could exploit to defendants’ disadvantage, he said. “Data’s powerful stuff. You can do a lot of things with it. I think there are long term implications of CAFA sunshine that make it not easy now to say where it’s going,” Hirsch said.

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