Settlement: Le Cordon Bleu/Western Culinary and Career Education Corp.

It only took 10 years. Late yesterday, we agreed to settle our consumer fraud class action against Western Culinary Institute, Le Cordon Bleu-Portland, and Career Education Corp.

Under the settlement, class members will get refunds of 44 percent of the amounts that they paid for tuition, books, and fees. The 44 percent is reduced for class members who owe money directly to the school. (That reduction does NOT apply to student loans; it’s only if you owed money directly to the school.) The settlement must be approved by the court, so it is not a done deal, and we still have far to go.

There are some other features to the settlement. About $1 million in debts owed by students back to the school will be wiped clean. The defendants will pay attorney fees on top of the refund amounts. The Court will decide how much in attorney fees we will receive.

There is one other feature that is kind of a big deal. In the world of student loans, a borrower can defend against a collection action by raising the fraud of the school. Under the settlement, class members can still litigate the fraud of the school as a defense to loans. Also, they can use the information that we gathered over the last 10 years to help defend against collection actions. It is possible that former students could have their loan balances wiped away.

The student loan wipe-away is something that class members will have to undertake on their own–Sallie Mae and Navient were not parties to this case. Class members who want to pursue that option will need to hire their own student-loan defense lawyers. If you’re in Oregon, Washington, or Idaho, we can provide a reference.

So if you’ve read this far, you probably want to know how much and when. If all goes well, payment would be sometime this summer. But it could be delayed. As far as how much, it’s simply math. If you paid $40,000 toward an associates degree–many paid more–and you don’t owe money back to the school, your 44 percent refund would pay back $17,600.

To get the money, you will need to file a claim. Claim forms should be going out in March. Once the claim period starts, you will have 90 days to file your claim. If you don’t file it by then, you lose your right to make a claim, and Career Education Corp. gets to keep the money. We don’t want that to happen! So we’ll be working with you to make sure that you get your claim filed.

Also, this settlement doesn’t apply to those who have to go to arbitration. If you’re in the arbitration group, we can continue to help you, but you have to help us help you. We are pursuing refunds for the arbitration group and will do whatever is necessary to achieve a recovery. If you’re a member of the arbitration group and haven’t done so, please sign up through our portal. There are deadlines for filing for arbitration. If you don’t take action, your rights will be lost.

So that’s the story. We’re pleased with our progress and this development. And of course, we will continue forward.

-David

Honda civic hybrid class action settlement faces social media backlash

It sounds like a lousy class action settlement, though it is possible that it is not as bad as it sounds. This report in the LA Times, about a pending class action settlement on behalf of consumers who bought the Honda Civic Hybrid, raises some eyebrows.

I don’t know anything about the case or the settlement, but a class action for car buyers that gives class members a coupon for purchases on future cars is almost always a problem. If the problem isn’t apparent, here is a stupid question: How often do you buy a new car? Consumers also get cash, but it’s apparently as low as $100 per purchaser.

Lest anyone accuse me of being totally one-sided, it’s worth noting that there are times when cases don’t work for one reason or another, and a modest settlement is appropriate. I doubt this is how the case went because the attorneys for the consumers are getting a large fee, according to the same report. Even so, I am not licensed in California, and I have no information on the case. I haven’t seen the notice or the settlement agreement, so I’m not very informed.

So all this background leads me to Heather Peters, one of the consumers who is not happy with the settlement. Through her website, Ms. Peters is campaigning to get the word out to consumers who are affected by the settlement. She’s also on Twitter here.

Props to Ms. Peters for a few reasons. First, bad class action settlements are a problem. While I still don’t know enough to know about this one, it smells bad from here. More important, Ms. Peters is apparently providing consumers with information about alternatives, including opting out and small claims.

I’m intrigued by Ms. Peters’ campaign. I hope to learn more about the merits of the settlement and whether it’s as bad as it sounds. My guess is that her pioneering use of social media may become a model for future problem class action settlements.

Update: My Twitter pal, George Wallace, aka @foolintheforest, provides helpful California law context here at his Declarations and Exclusions blog. Besides being endlessly amusing on Twitter, George brings his A-game to the world of California insurance law and civil law issues beyond. In the linked post, George asks some compelling questions about things lurking in the shadows of the LA Times report.

 

 

Comcast Oregon late fee class action settlement receives final approval

On Monday, May 2, 2011, Multnomah County Circuit Court Judge Henry Kantor granted final approval to the class settlement entered between Comcast and Oregon consumers billed cable TV late fees. Under the terms of the settlement, Comcast pays $16 per late fee to claiming class members, up to $23 million, together with attorney fees and costs of $5 million, and a $75,000 charitable contribution split between the Oregon Food Bank and the United Way.

Class counsel decided to leverage the charitable giving by adding $100,000 from our fees to be divided between five groups that provide legal services to low and moderate Oregonians and national groups that advocate for consumers. The five non-profits that will split the legal team’s contribution are Oregon’s Campaign for Justice, St. Andrews Legal Clinic, Oregon Law Center (through the Campaign for Justice), National Consumer Law Center, and Public Justice Foundation. We’re really pleased to be able to make these contributions.

If you’re a consumer who was billed a late fee you need to file your claim before July 1. Here is the link to the claim form. Fill it out. If you paid one or two late fees, you only need to sign it and return it. If you paid more than two, you need to sign the claim form in front of a notary or provide documentation of how many late fees you paid.

Under Oregon law, unclaimed monies are returned to Comcast. So if you paid a cable TV late fee in the class period and you want to make a difference, it would be a good thing to make a claim.

As this thing winds to completion, it’s hard not to reflect on the ups and downs of a long (seven year!) case. It’s been a tough haul, but we knew it would be. In the end I am pleased with the outcome. It’s a big settlement, and a win for consumers. Those are rare, so we savor them.

If you’re class member and you have questions, feel free to contact me, as I will work with class members to make sure that you get your claim filed.

David Sugerman

Comcast Oregon late fee class action settlement–cable TV

We are starting to get calls and emails about the class action settlement with Comcast.

Here is the link to the settlement information

A few recurring questions:

1. The settlement applies to Oregon Comcast subscribers

2. It is limited to subscribers who paid late fees on Cable TV bills.

3. The link above takes you to a claim form which you must open, print, fill out and mail.

4. The mailing address for claim forms and deadline information for filing the claim are also in the link posted above.

More questions?

Contact us here. I am class counsel and will do my best to answer your questions.

Honda Civic class action coupon settlement smells of abuse

Here is a report of what looks to be an abusive coupon settlement in a class action in California. It prompts me to do some explaining, as I’m a consumer class action lawyer.

As the linked report explains, the case involves a California false advertising class action in which two consumers filed a class action against Honda for overstating the mileage on its Civic Hybrid. I’m going to assume that Herb Weisbaum, the MSNBC Consumerman columnist, got the story right. He usually does a good job on consumer issues. I don’t know anything about the case or have access to the court file. I’m relying on his report for this analysis.

The story goes that Honda and the class reached a settlement that provided for coupons and an informational DVD for the class, incentive payments for the class representatives, and a seven-figure attorney fee award for class counsel.

The coupons are the problem. According to the linked report, the coupons are worth $500-$1,000 but only redeemable on the purchase of a qualifying model of a Honda or Acura. That stinks. And it stinks in both directions. If Honda did wrong, then it should provide real relief to the class and shouldn’t be rewarded with a marketing campaign for consumer ripoffs. If, on the other hand, Honda did not violate California law then it shouldn’t be paying millions to attorneys who pursue class actions.

And as for the lawyers for the class it stinks because coupon settlements are acceptable under a rare set of circumstances. Here are some things that should be in place to make for a fair coupon settlement. They make sense when the coupons are for widely-purchased consumer goods, like gasoline or toothpaste. To be a fair settlement, coupons should almost always be transferable and/or redeemable for cash. Consumers who receive coupons to settle a class action should be able to get real benefit from them. The reported Honda coupon settlement fails on all fronts.

It’s possible that I’m missing something, and if so, as is my general practice, I will update this post. But save me the defamation threat letters that don’t include a thorough and documented explanation of how I’m missing the mark.

I imagine that much criticism will be heaped on the class lawyers for this settlement. Let’s be clear. Based upon the reported facts in the MSNBC column, that criticism is well-deserved. It looks like Honda chose to pay millions to class counsel to snuff out a liability and promote future sales of various products. Settlements take two sides. Honda deserves some of the darts on this deal as well.

The other piece is that it seems to me that class members may want to strongly consider objecting to this settlement. Class action settlements must be reviewed and approved by the court, so if you’re a class member and you get a notice, you might want to consider whether to object. A rejection of this settlement might send a message to both sides that consumers deserve better.

David Sugerman