Campbell et al v. Facebook Inc.

Filing 241

***SEE DOCKET ENTRY #243 FOR CORRECTED DOCUMENT*** OBJECTIONS to Proposed Settlement by Anna St. John. (Attachments: # 1 Declaration of Theodore H. Frank, # 2 Declaration of Anna St. John)(Chamberlain, William) (Filed on 6/26/2017) Modified on 6/28/2017 (cjlS, COURT STAFF).

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1 2 3 4 5 6 Theodore H. Frank (SBN 196332) William I. Chamberlain (SBN 306046) COMPETITIVE ENTERPRISE INSTITUTE CENTER FOR CLASS ACTION FAIRNESS 1310 L Street, NW, 7th Floor Washington, DC 20005 Voice: (202) 331-2263 Email: Email: Attorneys for Objector Anna St. John 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 10 11 MATTHEW CAMPBELL, MICHAEL HURLEY, on behalf of themselves and all others similarly situated, 12 Plaintiffs, 13 v. 14 FACEBOOK INC., 15 Defendant. 16 17 18 19 ANNA ST. JOHN, Objector. 20 21 22 23 24 25 26 27 28 Case No. 4:13-cv-5996-PJH DECLARATION OF THEODORE H. FRANK Case No. 4:13-cv-5996-PJH DECLARATION OF THEODORE H. FRANK Date: Time: Courtroom: Judge: August 9, 2017 9:00 a.m. 3, 3rd Floor Hon. Phyllis J. Hamilton 1 I, Theodore H. Frank, declare as follows: 2 1. I have personal knowledge of the facts set forth herein and, if called as witness, could and 3 would testify competently thereto. 4 2. My business address is Competitive Enterprise Institute, 1310 L Street NW, 7th Floor, 5 Washington, DC 20005. My telephone number is (202) 331-2263. My email address is 6 Center for Class Action Fairness 7 8 3. I founded the non-profit Center for Class Action Fairness (“CCAF” or the “Center”), a 9 501(c)(3) non-profit public-interest law firm based out of Washington, DC, in 2009. In 2015, CCAF 10 merged with the non-profit Competitive Enterprise Institute (“CEI”). 11 4. CCAF litigates on behalf of class members against unfair class-action procedures and 12 settlements. See, e.g., Pearson v. NBTY, Inc., 772 F.3d 778, 787 (7th Cir. 2014) (Posner, J.) (praising 13 CCAF’s work); In re Dry Max Pampers Litig., 724 F.3d 713, 716-17 (6th Cir. 2013) (describing CCAF’s 14 client’s objections as “numerous, detailed and substantive”) (reversing settlement approval and 15 certification); Richardson v. L’Oreal USA, Inc., 991 F. Supp. 2d 181, 205 (D.D.C. 2013) (describing 16 CCAF’s client’s objection as “comprehensive and sophisticated” and noting that “[o]ne good objector 17 may be worth many frivolous objections in ascertaining the fairness of a settlement”) (rejecting 18 settlement approval and certification.) The Center has won millions of dollars for class members and 19 received national acclaim for its work. See, e.g., Gina Passarella, Third Circuit Vacates $18.5 Mil. Cy Pres 20 Award in Baby Products Class Action, L. INTELLIGENCER (Feb. 20, 2013); Adam Liptak, When Lawyers 21 Cut Their Clients Out of the Deal, N.Y. TIMES (Aug. 13, 2013) (calling me “the leading critic of abusive 22 class action settlements”); Jeffrey B. Jacobson, Lessons From CCAF on Designing Class Action Settlements, 23 Law360 (Aug. 6, 2013) (discussing Center’s track record); Ashby Jones, A Litigator Fights Class-Action 24 Suits, WALL ST. J. (Oct. 31, 2011). 25 5. While obviously the Center has not won every case it has litigated, the Center has been 26 successful, winning fourteen federal appeals decided to date, a substantial majority of the appeals it 27 28 4:13-cv-05996-PJH DECLARATION OF THEODORE H. FRANK 2 1 has litigated. In re Target Corp. Customer Data Security Breach Litig., 847 F.3d 608 (8th Cir. 2017); In re 2 Walgreen Co. Stockholder Litig., 832 F.3d 718 (7th Cir. 2016); In re EasySaver Rewards Litig., No. 13-55373 3 (9th Cir. Mar. 19, 2015) (unpublished); In re BankAmerica Corp. Secs. Litig., 775 F.3d 1060 (8th Cir. 4 2015); Pearson, 772 F.3d 778; Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014); In re MagSafe 5 Apple Power Adapter Litig., Nos. 12-15757, 12-15782, 2014 U.S. App. LEXIS 7708 (9th Cir. Apr. 24, 6 2014) (unpublished); In re Dry Max Pampers Litig., 724 F.3d 713; In re HP Inkjet Printer Litigation, 716 7 F.3d 1173 (9th Cir. 2013); In re Baby Products Antitrust Litigation, 708 F.3d 163 (3d Cir. 2013); Dewey v. 8 Volkswagen, 681 F.3d 170 (3d Cir. 2012); Robert F. Booth Trust v. Crowley, 687 F.3d 314 (7th Cir. 2012); 9 Nachshin v. AOL, LLC, 663 F.3d 1034, 1039 (9th Cir. 2011); In re Bluetooth Headset Prods. Liab. Litig., 10 654 F.3d 935 (9th Cir. 2011). 11 6. CCAF has “recouped more than $100 million for class members” by driving the settling 12 parties to reach an improved bargain or by reducing outsized fee awards. Andrea Estes, Critics hit law 13 firms’ bills after class-action lawsuits, BOSTON GLOBE (Dec. 17, 2016). See, e.g., McDonough v. Toys “R” Us, 14 80 F. Supp. 3d 626, 661 (E.D. Pa. 2015) (“CCAF’s time was judiciously spent to increase the value of 15 the settlement to class members”) (internal quotation omitted); In re Citigroup Inc. Secs. Litig., 965 F. 16 Supp. 2d 369 (S.D.N.Y. 2013) (reducing fees, and thus increasing class recovery, by more than $26 17 million to account for a “significantly overstated lodestar”). 18 7. In my experience, class counsel often responds to CCAF objections by making a variety 19 of ad hominem attacks. In an effort to anticipate such attacks and to avoid collateral litigation over a 20 right to file a reply, I discuss and refute the most common ones below. 21 8. CCAF’s mission sets it apart from so-called “professional objectors,” which are for-profit 22 attorneys who threaten to disrupt a settlement unless plaintiffs’ attorneys buy them off with a share 23 of attorneys’ fees. See Edward Brunet, Class Action Objectors: Extortionist Free Riders or Fairness Guarantors, 24 2003 U. CHI. LEGAL F. 403, 437 n.150 (2003) (public interest groups are not professional objectors). 25 This is not CCAF’s modus operandi. Paul Karlsgodt & Raj Chohan, Class Action Settlement Objectors: 26 Minor Nuisance or Serious Threat to Approval, BNA: Class Action Litig. Report (Aug. 12, 2011) 27 28 4:13-cv-05996-PJH DECLARATION OF THEODORE H. FRANK 3 1 (distinguishing CCAF from professional objectors). CCAF refuses to engage in quid pro quo settlements 2 and does not extort attorneys; it has never withdrawn an objection in exchange for payment. Instead, 3 it is funded entirely through charitable donations and court-awarded attorneys’ fees. Indeed, tax law 4 would not permit any employees of CEI to personally profit from this objection. The difference 5 between a so-called “professional objector” and a public-interest objector is a material one. As the 6 federal rules are currently set up, “professional objectors” have an incentive to file objections 7 regardless of the merits of the settlement or the objection. In contrast, a public-interest objector such 8 as CCAF has to triage dozens of requests for pro bono representation and dozens of unfair class action 9 settlements, loses money on every losing objection (and most winning objections) brought, can only 10 raise charitable donations necessary to remain afloat by demonstrating success, and has no interest in 11 wasting limited resources and time on a “baseless objection.” CCAF objects to only a small fraction 12 of the number of unfair class action settlements it sees; indeed, I personally object to only a fraction 13 of the number of unfair class action settlements where I am a class member. (While one district court 14 called me a “professional objector” in a broader sense, that court stated that it was not meant 15 pejoratively, and awarded CCAF fees for a successful objection and appeal that improved the 16 settlement for the class. Dewey v. Volkswagen, 909 F. Supp. 2d 373, 396 n.24 (D.N.J. 2012).) 17 9. Indeed, CCAF feels strongly enough about the problem of bad-faith objectors profiting 18 at the expense of the class through extortionate means that it has initiated litigation to require such 19 objectors to disgorge their ill-gotten gains to the class. Pearson v. NBTY, Inc., No. 11-cv-7972 (N.D. 20 Ill.); see also Jacob Gershman, Lawsuits Allege ‘Objector Blackmail’ in Class Action Litigation, Wall Street 21 Journal Law Blog (Dec. 7, 2016). 22 10. CCAF has no interest in pursuing “baseless objections,” because every objection we bring 23 on behalf of a class member has the opportunity cost of not having time to pursue a meritorious 24 objection in another case. We are confronted with many more opportunities to object (or appeal 25 erroneous settlement approvals) than we have resources to use, and make painful decisions several 26 times a year picking and choosing which cases to pursue, and even which issues to pursue within the 27 28 4:13-cv-05996-PJH DECLARATION OF THEODORE H. FRANK 4 1 case. CCAF turns down the opportunity to represent class members wishing to object to settlements 2 or fees when CCAF believes the underlying settlement or fee request is relatively fair. 3 11. CCAF’s attorneys have been objecting to class action settlements for eight years. Plaintiffs’ 4 attorneys have a habit of cherry picking a handful of cases in which CCAF’s objection was partially 5 criticized by the court in an effort to undermine our objections in different cases. Often, the plaintiffs’ 6 attorneys cite these cases misleadingly and without the relevant context. I seek to preempt any rehash 7 of those mischaracterizations here by addressing a couple of the most commonly cited examples. 8 12. As one example, in Lonardo v. Travelers Indemnity Co., 706 F. Supp. 2d 766, 804 (N.D. Ohio 9 2010), the court criticized a single policy-based argument by CCAF as supposedly “short on law”; 10 however, CCAF ultimately was successful in the Seventh and Ninth Circuits on that same argument. 11 See In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (agreeing that reversionary 12 clauses are a problematic sign of self-dealing); Pearson v. NBTY, Inc., 772 F.3d 778 (7th Cir. 2014) 13 (same). Moreover, the court in Lonardo stated its belief that “Mr. Frank’s goals are policy-oriented as 14 opposed to economic and self-serving” and even awarded CCAF about $40,000 in attorneys’ fees for 15 increasing the class benefit by $2 million. Lonardo, 706 F. Supp. 2d at 813-17. 16 13. As another example, in City of Livonia Emps.’ Ret. Sys. v. Wyeth, No. 07-cv-10329, 2013 U.S. 17 Dist. LEXIS 113658, the court criticized CCAF’s client’s objection (after mischaracterizing the nature 18 of that objection); however, the court nevertheless ultimately agreed with my client that class counsel’s 19 fee request was too high, and reduced it by several million dollars to the shareholder class members. 20 14. Twice, district courts criticized our pending appeals as “frivolous.” Both times we 21 ultimately won the appeal. CCAF has never been sanctioned under Rule 11 or Fed. R. App. Proc. 38. 22 15. While I am often accused of being an “ideological objector,” the ideology of CCAF’s 23 objections is merely the correct application of Rule 23 to ensure the fair treatment of class members. 24 Likewise, I have often seen class counsel assert that I oppose all class actions and am seeking to end 25 them, not improve them. The accusation—aside from being utterly irrelevant to the legal merits of 26 any particular objection—has no basis in reality. I have been writing and speaking about class actions 27 28 4:13-cv-05996-PJH DECLARATION OF THEODORE H. FRANK 5 1 publicly for nearly a decade, including in testimony before state and federal legislative subcommittees, 2 and I have never asked for an end to the class action, just proposed reforms for ending the abuse of 3 class actions and class-action settlements. That I oppose class action abuse no more means that I 4 oppose class actions than someone who opposes food poisoning opposes food. As a child, I admired 5 Ralph Nader and consumer reporter Marvin Zindler (whose autographed photo was one of my prized 6 childhood possessions), and read Consumer Reports monthly from cover to cover. I have focused my 7 practice on conflicts of interest in class actions because, among other reasons, I saw a need to protect 8 consumers that no one else was filling, and as a way to fulfill my childhood dream of being a consumer 9 advocate. I have frequently confirmed my support for the principles behind class actions in 10 declarations under oath, interviews, essays, and public speeches, including a January 2014 presentation 11 in New York that was broadcast nationally on C-SPAN and in my certiorari petition filed in 2015 in 12 Frank v. Poertner. On multiple occasions, successful objections brought by CCAF have resulted in new 13 class-action settlements where the defendants pay substantially more money to the plaintiff class 14 without CCAF objecting to the revised settlement. And I am the class representative in a pending 15 federal class action, represented by a prominent plaintiffs’ firm. Frank v. BMOCorp., Inc., 16 No. 4:17-cv-870 (E.D. Mo.). 17 16. On October 1, 2015, after consultation with its board of directors and its donors, the 18 Center merged with the much larger CEI, to take advantage of the economies of scale realized by 19 eliminating some of the enormous fixed costs required for bureaucratic administration of and 20 regulatory compliance by non-profits. The Center was on financially sound footing, and consistently 21 growing its assets faster than its spending, but a disproportionate amount of attorney time was taken 22 up with non-litigation tasks, and we were not large enough to justify hiring full-time communications, 23 fundraising, or regulatory-compliance staff, which I felt was limiting our effect. 24 17. Prior to its merger with CEI, the Center never took or solicited money from corporate 25 donors other than court-awarded attorneys’ fees. CEI, which is much larger than the Center, does take 26 a percentage of its donations from corporate donors. As part of the merger agreement, I negotiated a 27 28 4:13-cv-05996-PJH DECLARATION OF THEODORE H. FRANK 6 1 commitment that CEI would not permit donors to interfere with CCAF’s case selection or case 2 management. In the event of a breach of this commitment, I am permitted to treat the breach as a 3 constructive discharge entitling me to substantial severance pay. CEI has honored that commitment. 4 18. None of the corporate donors to CEI have earmarked contributions to CCAF. I am 5 unaware of whether there exist any corporate donors to CEI who take a position on the underlying 6 litigation in this case, though it is possible one exists. CEI pays me on a salary basis that does not vary 7 with the result in any case. I do not receive a contingent bonus based on success in any case, a structure 8 that would be contrary to I.R.S. restrictions. 9 19. For example, I am personally the objector-appellant in a pending Ninth Circuit appeal 10 against the cy pres settlement of a corporate donor to CEI who has contributed substantially to CEI. 11 No one at CEI has complained that I am currently prosecuting that appeal against the donor, sought 12 to interfere with the pending appeal, or even told me that I was adverse to the donor. I only discovered 13 that information by happenstance when looking at the corporate donor’s website. 14 20. Similarly, CEI represented an objector to the massive Volkswagen diesel MDL settlement, 15 arguing that the settlement structure short-changed class members by hundreds of millions of dollars. 16 I learned only after a plaintiffs’ attorney opposed our motion for leave to file an amicus brief in that 17 case that Volkswagen had previously donated to CEI. No one at CEI had told me Volkswagen was a 18 donor, or asked me to refrain from litigating against a donor’s interests. 19 21. My understanding is that CEI’s litigation history includes several lawsuits against the 20 interests of some of its corporate donors. Based on this and based on my own experience working at 21 CEI since 2015, I have every confidence that CCAF will continue to have the autonomy for which I 22 negotiated. 23 22. CEI is affiliated with dozens of scholars who take a variety of controversial positions. I 24 don’t agree with all of those positions, and they should not be ascribed to CCAF or this objection, 25 any more than my support for a Pigouvian carbon tax should be ascribed to CEI scholars who oppose 26 that position. 27 28 4:13-cv-05996-PJH DECLARATION OF THEODORE H. FRANK 7 1 I declare under penalty of perjury under the laws of the United States of America that the foregoing 2 is true and correct. 3 4 Executed on June 26, 2017, in Washington, DC. 5 6 7 Theodore H. Frank 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4:13-cv-05996-PJH DECLARATION OF THEODORE H. FRANK 8

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