Law360 (December 22, 2020, 5:00 PM EST) -- Since the pandemic forced courts to go virtual in March, fairness hearings held over Zoom have drawn more unrepresented objectors voicing their concerns about the adequacy of big-ticket, multidistrict litigation deals and class counsel fees, increasing the time and scrutiny judges give to settlement hearings.
University of Connecticut School of Law professor Alexandra Lahav calls virtual fairness hearings "the democratization of class actions," but noted that the flip side of providing easier access to courtroom procedures is that people who are unfamiliar with the class action settlement process may raise meritless objections, wasting judicial resources that could be spent deciding other legal disputes.
This balancing act between public access and judicial efficiency is currently playing out in multiple virtual courtroom proceedings in California's Northern District, where many technology legal battles over consumer protection and product liability claims are litigated.
For example, unrepresented objector and iPhone buyer Charles Cousins appeared earlier this month before more than a dozen BigLaw attorneys and California District Judge Edward Davila during a Zoom hearing on Apple's proposed $500 million settlement to end multidistrict litigation.
"What do you do when someone pulls a gun on you?" Cousins asked the attendees, who had their mics muted. "You call 911."
Cousins' question and answer came roughly an hour into what would be a four-hour hearing on the tech giant's $500 million deal, which sought to resolve dozens of consumer protection lawsuits that were filed after Apple admitted to issuing software updates that slowed certain iPhones.
In two minutes, Cousins argued that the settlement — which awards class counsel $87.7 million in fees and nearly $1 million in costs for two years of litigation — gives attorneys too much money without fixing the iPhones' connectivity issues.
He claimed those issues interfered with his ability to call 911 when he was held up at knifepoint outside his apartment and the $25 he would be entitled to under the deal wouldn't even be enough to replace his phone — much less compensate for the risk to his safety.
"My life is worth more than $25," he said.
Judge Davila listened to Cousins and pointed out that class members could receive up to $65 under the deal, but the judge also acknowledged that the final amount per class member is "still quite fluid."
Cousins wrapped up his brief speech by noting the settlement proposes to resolve claims by millions of class members, but there were only 50 people on the call and 120 attendees, which appeared notably small to him.
"I fear that this hearing lacks transparency for the consumer," he said.
Cousins was one of multiple class members without counsel who attended the Zoom hearing to object to the deal, but unlike attorneys representing other objectors, he and the other class members had not notified the court in advance that he would be appearing on Zoom.
He and the other unrepresented objectors explained to Judge Davila they had followed a link on the court's website after they received a notice about the settlement and wanted to be heard.
Judge Davila agreed to give the unrepresented objectors two minutes each to share their concerns about the settlement, drawing out what would have typically been an hourlong hearing to go on for more than four hours.
At the end of the hearing, Judge Davila held off on approving the settlement and instead asked the parties to submit more information. The fairness hearing in the Apple MDL wasn't the first held over Zoom that attracted multiple, unannounced and unrepresented objectors.
At the end of a four-hour hearing in July, U.S. District Judge Lucy Koh also refused to sign off on Yahoo's $117.5 million deal and class counsel's $30 million fee bid to resolve a sprawling Yahoo data breach MDL after hearing from many data breach victims who objected to the deal. Judge Koh also requested more billing information from dozens of plaintiffs' firms — including the "markup" on work by first-year law students.
Tug of War Between Due Process Rights and Efficiency
Professor Lahav noted that as more class members are able to attend virtual fairness hearings, it may also become more difficult to obtain settlement approval, and "air time" — or the time someone is allowed to spend arguing in front of the judge — will become more valuable.
However, Lahav noted that limiting the number of objectors who are allowed to speak publicly could raise due process concerns.
Although Rule 23 of the Federal Rules of Civil Procedure ensures class members have a right to object to a settlement, the law does not clarify what form the objection must take, and private due process rights must be weighed against the government's interest in managing court dockets and resolving litigation efficiently, Lahav said.
"How much should we allow them to have their say, but how much are we wasting the judge's time that could be spent on other litigation?" Lahav said. "There are all these trade-offs, but it does seem one of the complaints about class actions is that [consumers] never get their day in court."
Lahav said similar due process issues arose during a legendary fairness hearing in 2008 on Google Books' proposed $125 million deal to settle several copyright infringement class actions by authors and publishers.
So many people showed up at U.S. District Judge Denny Chin's courtroom in the Southern District of New York to speak against the deal that the hearing lasted for three days and there was a line to sit in an overflow courtroom where the live proceedings were being aired, Lahav said. After sitting through days of testimony, Judge Chin eventually rejected the proposed deal and asked for revisions.
Lahav observed that some judges may allow class members to publicly air their grievances regardless of whether it will impact the outcome of the judge's decision, as psychological literature shows that when people have a chance to be heard, they are more satisfied with the outcome of the process than when they're shut down outright.
"On the one hand you could say, 'Hey, these consumer cases are not that important, if you think of the range of important things in the world.' But on the other hand, people are affected by this litigation," Lahav said.
The Value of Listening to Objectors
California U.S. District Judge James Donato, who recently preliminarily approved Facebook's proposed $650 million deal to resolve biometric privacy claims brought against the social media company, told Law360 that he considers virtual hearings a "complete plus."
He noted that attorneys don't have to incur costs associated with traveling to courts, and class members can participate in the proceedings.
"I see nothing but an upside," the judge said.
Since March, Judge Donato has touted the benefits of going virtual and said he has noticed that legal proceedings that normally would draw very few people in the courtroom have attracted dozens of viewers on Zoom. He added that allowing the public to watch the proceedings builds confidence and credibility in the courts.
In regard to fairness hearings, Judge Donato said it will be up to each individual judge to police the hearings and determine how long individuals can speak, but he also stressed he hasn't experienced any issues with participants dialing in, "grabbing the mic" and speaking out of turn. He noted he recently presided over a hearing in litigation brought by victims of California wildfires against PG&E Corp., and many claimants attended to watch the court in action.
"That was the best thing ever," Judge Donato said. "These are people who were burnt out of their homes, with no solid replacement over their heads for two or three years, and yet they were able to dial in and see the proceedings. Could there be anything better than that? It's revolutionary. We should have done it a long time ago."
On Jan. 7, Judge Donato is slated to preside over the final fairness hearing in the Facebook MDL covering 1.5 million claims, and he said he expects many class members to be watching. Although objectors should file a notice if they want to speak so the court can budget time, the judge said, "the key is just to be flexible."
"There will be a tipping point where so many people speak that the procedure becomes useless, but I haven't seen any evidence that that's happened," he said.
Judge Donato added that the pandemic is going to end at some point, and when it does, courtroom proceedings will go back to taking place primarily in person without remote access being allowed.
"We're operating under an exception now," Judge Donato said. "This is not by any means a guaranteed outlet for court proceedings that we're going to keep."
That's why it's important that attorneys, bar associations, educators and members of the media speak up and say they want to keep virtual proceedings so that the federal judiciary will allow for it in the future, according to Judge Donato.
"The federal judiciary has not been friendly to televised proceedings" Judge Donato said. "It's just not been receptive to that, and that culture has to change because there's such a wonderful benefit to the people."
Robert Clore of Bandas Law Firm PC, a seasoned plaintiffs attorney who has successfully represented clients objecting to a number of big-ticket MDL settlements before trial courts and on appeal, agreed there are benefits to holding fairness hearings via Zoom and other platforms.
Still, Clore said he prefers the opportunity to appear before a judge in person.
"I find it easier to convey that something is important to my client with in-person, face-to-face interaction," Clore said.
Clore added that perhaps when in-person hearings are allowed again, courts should consider allowing virtual appearances for class members unable to attend physically.
"But personally, I will be glad to be back in the courtroom," he said.
--Editing by Philip Shea and Jill Coffey.
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