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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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: [phone]
Email: [e-mail]
Email: [e-mail]
Attorneys for Objector Anna St. John

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MATTHEW CAMPBELL, MICHAEL
HURLEY, on behalf of themselves and all others
similarly situated,

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Plaintiffs,

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v.

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FACEBOOK INC.,

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Defendant.

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ANNA ST. JOHN,
Objector.

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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

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I, Theodore H. Frank, declare as follows:

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1. I have personal knowledge of the facts set forth herein and, if called as witness, could and

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would testify competently thereto.

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2. My business address is Competitive Enterprise Institute, 1310 L Street NW, 7th Floor,

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Washington, DC 20005. My telephone number is [phone]. My email address is

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[e-mail].
Center for Class Action Fairness

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3. I founded the non-profit Center for Class Action Fairness (“CCAF” or the “Center”), a

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501(c)(3) non-profit public-interest law firm based out of Washington, DC, in 2009. In 2015, CCAF

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merged with the non-profit Competitive Enterprise Institute (“CEI”).

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4. CCAF litigates on behalf of class members against unfair class-action procedures and

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settlements. See, e.g., Pearson v. NBTY, Inc., 772 F.3d 778, 787 (7th Cir. 2014) (Posner, J.) (praising

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CCAF’s work); In re Dry Max Pampers Litig., 724 F.3d 713, 716-17 (6th Cir. 2013) (describing CCAF’s

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client’s objections as “numerous, detailed and substantive”) (reversing settlement approval and

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certification); Richardson v. L’Oreal USA, Inc., 991 F. Supp. 2d 181, 205 (D.D.C. 2013) (describing

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CCAF’s client’s objection as “comprehensive and sophisticated” and noting that “[o]ne good objector

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may be worth many frivolous objections in ascertaining the fairness of a settlement”) (rejecting

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settlement approval and certification.) The Center has won millions of dollars for class members and

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received national acclaim for its work. See, e.g., Gina Passarella, Third Circuit Vacates $18.5 Mil. Cy Pres

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Award in Baby Products Class Action, L. INTELLIGENCER (Feb. 20, 2013); Adam Liptak, When Lawyers

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Cut Their Clients Out of the Deal, N.Y. TIMES (Aug. 13, 2013) (calling me “the leading critic of abusive

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class action settlements”); Jeffrey B. Jacobson, Lessons From CCAF on Designing Class Action Settlements,

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Law360 (Aug. 6, 2013) (discussing Center’s track record); Ashby Jones, A Litigator Fights Class-Action

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Suits, WALL ST. J. (Oct. 31, 2011).

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5. While obviously the Center has not won every case it has litigated, the Center has been

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successful, winning fourteen federal appeals decided to date, a substantial majority of the appeals it

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4:13-cv-05996-PJH
DECLARATION OF THEODORE H. FRANK

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has litigated. In re Target Corp. Customer Data Security Breach Litig., 847 F.3d 608 (8th Cir. 2017); In re

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Walgreen Co. Stockholder Litig., 832 F.3d 718 (7th Cir. 2016); In re EasySaver Rewards Litig., No. 13-55373

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(9th Cir. Mar. 19, 2015) (unpublished); In re BankAmerica Corp. Secs. Litig., 775 F.3d 1060 (8th Cir.

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2015); Pearson, 772 F.3d 778; Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014); In re MagSafe

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Apple Power Adapter Litig., Nos. 12-15757, 12-15782, 2014 U.S. App. LEXIS 7708 (9th Cir. Apr. 24,

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2014) (unpublished); In re Dry Max Pampers Litig., 724 F.3d 713; In re HP Inkjet Printer Litigation, 716

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F.3d 1173 (9th Cir. 2013); In re Baby Products Antitrust Litigation, 708 F.3d 163 (3d Cir. 2013); Dewey v.

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Volkswagen, 681 F.3d 170 (3d Cir. 2012); Robert F. Booth Trust v. Crowley, 687 F.3d 314 (7th Cir. 2012);

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Nachshin v. AOL, LLC, 663 F.3d 1034, 1039 (9th Cir. 2011); In re Bluetooth Headset Prods. Liab. Litig.,

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654 F.3d 935 (9th Cir. 2011).

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6. CCAF has “recouped more than $100 million for class members” by driving the settling

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parties to reach an improved bargain or by reducing outsized fee awards. Andrea Estes, Critics hit law

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firms’ bills after class-action lawsuits, BOSTON GLOBE (Dec. 17, 2016). See, e.g., McDonough v. Toys “R” Us,

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80 F. Supp. 3d 626, 661 (E.D. Pa. 2015) (“CCAF’s time was judiciously spent to increase the value of

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the settlement to class members”) (internal quotation omitted); In re Citigroup Inc. Secs. Litig., 965 F.

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Supp. 2d 369 (S.D.N.Y. 2013) (reducing fees, and thus increasing class recovery, by more than $26

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million to account for a “significantly overstated lodestar”).

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7. In my experience, class counsel often responds to CCAF objections by making a variety

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of ad hominem attacks. In an effort to anticipate such attacks and to avoid collateral litigation over a

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right to file a reply, I discuss and refute the most common ones below.

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8. CCAF’s mission sets it apart from so-called “professional objectors,” which are for-profit

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attorneys who threaten to disrupt a settlement unless plaintiffs’ attorneys buy them off with a share

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of attorneys’ fees. See Edward Brunet, Class Action Objectors: Extortionist Free Riders or Fairness Guarantors,

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2003 U. CHI. LEGAL F. 403, 437 n.150 (2003) (public interest groups are not professional objectors).

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This is not CCAF’s modus operandi. Paul Karlsgodt & Raj Chohan, Class Action Settlement Objectors:

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Minor Nuisance or Serious Threat to Approval, BNA: Class Action Litig. Report (Aug. 12, 2011)

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DECLARATION OF THEODORE H. FRANK

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(distinguishing CCAF from professional objectors). CCAF refuses to engage in quid pro quo settlements

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and does not extort attorneys; it has never withdrawn an objection in exchange for payment. Instead,

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it is funded entirely through charitable donations and court-awarded attorneys’ fees. Indeed, tax law

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would not permit any employees of CEI to personally profit from this objection. The difference

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between a so-called “professional objector” and a public-interest objector is a material one. As the

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federal rules are currently set up, “professional objectors” have an incentive to file objections

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regardless of the merits of the settlement or the objection. In contrast, a public-interest objector such

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as CCAF has to triage dozens of requests for pro bono representation and dozens of unfair class action

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settlements, loses money on every losing objection (and most winning objections) brought, can only

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raise charitable donations necessary to remain afloat by demonstrating success, and has no interest in

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wasting limited resources and time on a “baseless objection.” CCAF objects to only a small fraction

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of the number of unfair class action settlements it sees; indeed, I personally object to only a fraction

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of the number of unfair class action settlements where I am a class member. (While one district court

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called me a “professional objector” in a broader sense, that court stated that it was not meant

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pejoratively, and awarded CCAF fees for a successful objection and appeal that improved the

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settlement for the class. Dewey v. Volkswagen, 909 F. Supp. 2d 373, 396 n.24 (D.N.J. 2012).)

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9. Indeed, CCAF feels strongly enough about the problem of bad-faith objectors profiting

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at the expense of the class through extortionate means that it has initiated litigation to require such

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objectors to disgorge their ill-gotten gains to the class. Pearson v. NBTY, Inc., No. 11-cv-7972 (N.D.

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Ill.); see also Jacob Gershman, Lawsuits Allege ‘Objector Blackmail’ in Class Action Litigation, Wall Street

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Journal Law Blog (Dec. 7, 2016).

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10. CCAF has no interest in pursuing “baseless objections,” because every objection we bring

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on behalf of a class member has the opportunity cost of not having time to pursue a meritorious

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objection in another case. We are confronted with many more opportunities to object (or appeal

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erroneous settlement approvals) than we have resources to use, and make painful decisions several

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times a year picking and choosing which cases to pursue, and even which issues to pursue within the

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4:13-cv-05996-PJH
DECLARATION OF THEODORE H. FRANK

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case. CCAF turns down the opportunity to represent class members wishing to object to settlements

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or fees when CCAF believes the underlying settlement or fee request is relatively fair.

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11. CCAF’s attorneys have been objecting to class action settlements for eight years. Plaintiffs’

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attorneys have a habit of cherry picking a handful of cases in which CCAF’s objection was partially

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criticized by the court in an effort to undermine our objections in different cases. Often, the plaintiffs’

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attorneys cite these cases misleadingly and without the relevant context. I seek to preempt any rehash

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of those mischaracterizations here by addressing a couple of the most commonly cited examples.

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12. As one example, in Lonardo v. Travelers Indemnity Co., 706 F. Supp. 2d 766, 804 (N.D. Ohio

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2010), the court criticized a single policy-based argument by CCAF as supposedly “short on law”;

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however, CCAF ultimately was successful in the Seventh and Ninth Circuits on that same argument.

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See In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (agreeing that reversionary

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clauses are a problematic sign of self-dealing); Pearson v. NBTY, Inc., 772 F.3d 778 (7th Cir. 2014)

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(same). Moreover, the court in Lonardo stated its belief that “Mr. Frank’s goals are policy-oriented as

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opposed to economic and self-serving” and even awarded CCAF about $40,000 in attorneys’ fees for

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increasing the class benefit by $2 million. Lonardo, 706 F. Supp. 2d at 813-17.

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13. As another example, in City of Livonia Emps.’ Ret. Sys. v. Wyeth, No. 07-cv-10329, 2013 U.S.

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Dist. LEXIS 113658, the court criticized CCAF’s client’s objection (after mischaracterizing the nature

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of that objection); however, the court nevertheless ultimately agreed with my client that class counsel’s

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fee request was too high, and reduced it by several million dollars to the shareholder class members.

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14. Twice, district courts criticized our pending appeals as “frivolous.” Both times we

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ultimately won the appeal. CCAF has never been sanctioned under Rule 11 or Fed. R. App. Proc. 38.

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15. While I am often accused of being an “ideological objector,” the ideology of CCAF’s

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objections is merely the correct application of Rule 23 to ensure the fair treatment of class members.

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Likewise, I have often seen class counsel assert that I oppose all class actions and am seeking to end

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them, not improve them. The accusation—aside from being utterly irrelevant to the legal merits of

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any particular objection—has no basis in reality. I have been writing and speaking about class actions

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publicly for nearly a decade, including in testimony before state and federal legislative subcommittees,

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and I have never asked for an end to the class action, just proposed reforms for ending the abuse of

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class actions and class-action settlements. That I oppose class action abuse no more means that I

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oppose class actions than someone who opposes food poisoning opposes food. As a child, I admired

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Ralph Nader and consumer reporter Marvin Zindler (whose autographed photo was one of my prized

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childhood possessions), and read Consumer Reports monthly from cover to cover. I have focused my

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practice on conflicts of interest in class actions because, among other reasons, I saw a need to protect

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consumers that no one else was filling, and as a way to fulfill my childhood dream of being a consumer

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advocate. I have frequently confirmed my support for the principles behind class actions in

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declarations under oath, interviews, essays, and public speeches, including a January 2014 presentation

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in New York that was broadcast nationally on C-SPAN and in my certiorari petition filed in 2015 in

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Frank v. Poertner. On multiple occasions, successful objections brought by CCAF have resulted in new

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class-action settlements where the defendants pay substantially more money to the plaintiff class

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without CCAF objecting to the revised settlement. And I am the class representative in a pending

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federal class action, represented by a prominent plaintiffs’ firm. Frank v. BMOCorp., Inc.,

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No. 4:17-cv-870 (E.D. Mo.).

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16. On October 1, 2015, after consultation with its board of directors and its donors, the

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Center merged with the much larger CEI, to take advantage of the economies of scale realized by

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eliminating some of the enormous fixed costs required for bureaucratic administration of and

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regulatory compliance by non-profits. The Center was on financially sound footing, and consistently

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growing its assets faster than its spending, but a disproportionate amount of attorney time was taken

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up with non-litigation tasks, and we were not large enough to justify hiring full-time communications,

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fundraising, or regulatory-compliance staff, which I felt was limiting our effect.

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17. Prior to its merger with CEI, the Center never took or solicited money from corporate

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donors other than court-awarded attorneys’ fees. CEI, which is much larger than the Center, does take

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a percentage of its donations from corporate donors. As part of the merger agreement, I negotiated a

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commitment that CEI would not permit donors to interfere with CCAF’s case selection or case

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management. In the event of a breach of this commitment, I am permitted to treat the breach as a

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constructive discharge entitling me to substantial severance pay. CEI has honored that commitment.

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18. None of the corporate donors to CEI have earmarked contributions to CCAF. I am

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unaware of whether there exist any corporate donors to CEI who take a position on the underlying

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litigation in this case, though it is possible one exists. CEI pays me on a salary basis that does not vary

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with the result in any case. I do not receive a contingent bonus based on success in any case, a structure

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that would be contrary to I.R.S. restrictions.

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19. For example, I am personally the objector-appellant in a pending Ninth Circuit appeal

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against the cy pres settlement of a corporate donor to CEI who has contributed substantially to CEI.

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No one at CEI has complained that I am currently prosecuting that appeal against the donor, sought

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to interfere with the pending appeal, or even told me that I was adverse to the donor. I only discovered

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that information by happenstance when looking at the corporate donor’s website.

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20. Similarly, CEI represented an objector to the massive Volkswagen diesel MDL settlement,

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arguing that the settlement structure short-changed class members by hundreds of millions of dollars.

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I learned only after a plaintiffs’ attorney opposed our motion for leave to file an amicus brief in that

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case that Volkswagen had previously donated to CEI. No one at CEI had told me Volkswagen was a

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donor, or asked me to refrain from litigating against a donor’s interests.

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21. My understanding is that CEI’s litigation history includes several lawsuits against the

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interests of some of its corporate donors. Based on this and based on my own experience working at

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CEI since 2015, I have every confidence that CCAF will continue to have the autonomy for which I

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negotiated.

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22. CEI is affiliated with dozens of scholars who take a variety of controversial positions. I

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don’t agree with all of those positions, and they should not be ascribed to CCAF or this objection,

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any more than my support for a Pigouvian carbon tax should be ascribed to CEI scholars who oppose

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that position.

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DECLARATION OF THEODORE H. FRANK

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I declare under penalty of perjury under the laws of the United States of America that the foregoing

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is true and correct.

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Executed on June 26, 2017, in Washington, DC.

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Theodore H. Frank

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DECLARATION OF THEODORE H. FRANK

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