Mediapost reports that the 9th Circuit scuttled a class action settlement involving sponsored adds on Facebook (this is the false advertising suit against Kellogg). Apparently, the settlement was denied by the Court because it questioned whether the attorneys’ fees were too generous:
The other major reason why the judges put the kibosh on the deal was that they found $2 million in attorneys’ fees unreasonable. “The $2 million fee award breaks out to just over $2,100 per hour. Not even the most highly sought after attorneys charge such rates to their clients,” the judges wrote.
We have certainly seen some really odd internet lawsuit class action settlements lately where tens of millions go to the lawyers while the class action plaintiffs get nothing more than a few thousand bucks and a promise from the defendant that he will be behave in the future (see the Google Buzz settlement), so I can see the Court’s concern here that the settlement may not be in the plaintiffs’ best interest.
The Court’s “kibosh” of this settlement also comes with the added bonus of potentially dissuading overzealous plaintiffs’ attorneys from taking on litigation in matters where plaintiffs were not particularly harmed in any event.
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