Judge Nixes PS3 Linux Class Action Settlement As Class's Lawyers Victimize The Class A Second Time

from the class-dismissed dept

We've made the point for several years now that the way class action lawsuits are handled in America is flawed in fundemental ways. What was supposed to be a method for enabling large groups of the aggrieved to pool resources against much larger and better-funded entities has instead devolved into a procedure that appears almost perfectly designed to enrich unscrupulous lawyers while the class itself gets a laughable percentage any monetary damages.

We get to see these flaws in practice yet again, this time in an update for the story that simply will not die: the legal action over Sony removing the PS3's ability to run Linux, which it advertised when the console launched. The class action suit had reached a proposed settlement, only to have the presiding judge nix it, essentially over concerns that the class was being victimized all over again, this time by its own lawyers.

The California judge presiding over the litigation is now killing the proposed settlement amid concerns the lawyers representing the class haven't explained why they should get $2.25 million for their legal services, especially considering that the deal has made it burdensome on gamers to get their cash. Of the gamers who tried to get their $55 refund, 25 percent have been rejected. "The Court has concerns, based upon how the notice and claims process preceded, the results it produced, and the disproportionality of the attorneys’ fees versus the class recovery, that the settlement agreement is not fair, reasonable, and adequate."

Judge Yvonne Gonzalez separates her concerns into two categories: the cut taken by the class's lawyers and the burden on the class in attempting to collect on the settlement. For the question about the lawyers' fees, the numbers are pretty ridiculous. The maximum the class would be compensated under the settlement would be just over $600,000. For this award, the class's lawyers would be compensated $2.25 million. In submitting the settlement to the court, there was apparently no attempt to justify this fee, which is perhaps because any justification would be difficult to formulate for a case that the court notes never got further than discovery and a grand total of two motions before the court.

This lack of evidence is all the more concerning in light of the fact that the litigation here never progressed beyond a motion to dismiss and an appeal of that motion. While some discovery was apparently conducted, that discovery does not nearly approach the level that would have been required to take the case to class certification, or beyond. Without billing records or some more detailed explanation of the basis for the fee request, the Court is without sufficient information to determine whether the request is reasonable.

And then there are the hoops members of the class would have to jump through should they attempt to collect. The same lawyers happy to take four-times the money as the entire class had apparently agreed to settlement conditions including the following:

Here are some of the hoops that were required for both groups to get the refund: proof of purchase, a console serial number, and the Playstation Network Sign-in ID used with the Fat PS3 between November 1, 2006 and April 1, 2010. Class A members were also required to prove use of the Other OS functionality and a statement under the penalty of perjury that the Linux operating system was installed and used. Consumer Class B members had to provide a statement under the penalty of perjury that they knew about the Other OS functionality and relied upon the Other OS functionality in making the decision to purchase a Fat PS3, "and intended at the time of your purchase to use the Other OS functionality." There were also other hurdles, including forcing gamers to obtain a "temporary ID" from the settlement administrator that Sony would use to check against its own records to verify purchase of a Fat PS3.

So, claimants would have to provide all kinds of proof of all kinds of everything in order to collect on the settlement...and obtain a temporary ID so that Sony could verify much of that same information in its own records. If that seems like the settlement was designed to throw up as many annoying barriers as possible to collecting the maximum $55 per claim, it's likely because that's exactly what occurred. The court notes that this kind of circular runaround is likely to discourage claims.

Class action lawsuits: great in theory, brutally corrupt in practice. It's nice to see a court recognize this and look out for the public to keep them from being victimized all over again.

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Filed Under: class action, lawyers, linux, ps3