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Update: An Empirical Analysis of Federal Consumer Fraud Class Action Settlements (2019–2020)
Class action settlements in consumer fraud cases have generated significant controversy. Critics opine that these settlements primarily benefit lawyers, and that class members have often suffered little or no injury to begin with. These criticisms frequently turn to calls for legal reform. Our Jones Day White Paper published in April 2020, "An Empirical Analysis of Federal Consumer Fraud Class Action Settlements (2010–2018)," analyzed data showing that lawyers—not class members—frequently are the ones primarily benefitting from monetary settlement awards.
This White Paper updates our 2020 study with data drawn from 31 cases in which federal courts approved consumer class action settlements in 2019 and 2020. We analyzed data regarding class member participation rates and the allocation of monetary benefits among class members, class counsel, and other recipients—all in light of amendments made to Federal Rule of Civil Procedure 23. Those amendments went into effect in December 2018, after the settlements in our previous study were finalized. Based on the number of settlements approved in the two years since, there is sufficient data to meaningfully consider the 2018 amendments' effects on consumer fraud class action settlements.
The new data show that: (i) typically only a small fraction of class members receive any monetary benefits from the settlements; (ii) after the amendments to Rule 23, some courts continue to approve class action settlements without key data about take rates; and (iii) in claims-made settlements, class members as a whole receive on average less than 30% of any monetary award.
