addiction is the number three killer in america yet we don't talk about it. by nick cited about now is that the conversation is changing. it's changing because the people i think on this panel. the obama administration has made some remarkable steps forward. the thing i think will make the biggest difference is first of all that we are having the conversation. second, when we understand the drug use is often a symptom, we talk about drugs and tell kids to just say no and we try to scare them, but we have to understand the reason most people use drugs, the reason that our children do it there was a study that they asked parents over the country why they think their kids use drugs and the answer was overwhelmingly because it feels great, they get high, peer pressure. but when they asked the kids why they get high to the answer that

they gave, the number one answer was stressed. so i think we need to think about why our kids are so stressed out. what is happening in our world when on one hand, we have this pressure on kids that by the time they are 12-years-old if they haven't told other college resume they are going to fail in life and on the other hand we have kids growing up without support, without family, and broken neighborhoods. until we deal with these underlining reason that kids are using drugs, we are not going to solve this problem. but the hopeful news is that it is solvable. >> and of course, john and noopur, you forward he meant. i want this to be a discussion and i think it's important that everyone here has a personal attachment to this issue. the first thing i would like to do is further establish how severe the problem this is. we are living in the day and age where one in 14 is used a

prescription medicine. you mentioned stress. what are the factors? if you have a home or four kids one of them has misused prescription medicine. i think first of all there are some practical facts that they are easy to get. most of the time we think of drug dealers on the street that isn't necessarily where they are getting their prescription drugs. people don't understand because they were prettified doctors can't because their parents take them and often times kids think they are safe. i think that the other thing is that the reason that people use drugs, these are called painkillers, it's because they do kill the pain. i think that people suffer and whatever it is, when you are a teenager, you are stressed out, when you are heading off to college suddenly you are away from home for the first time and

you are dealing with a world that is overwhelming in many cases into somebody hands you a pill you figure out how to get it and guess what? they work. the pain goes away for a while. so often we go back for another. >> and i will just add ice presented some of the statistics about college students -- if -- and this issue of feeling depressed is really pervasive and it raises the question about how we are supporting the youth. the panel talked about to be efficiencies into this idea of the extent to which. what can we do and what can the scorer schools do to feel connected and like they belong as a big part of this and for those that are struggling with

emotional distress and mental health issues, how are we identifying them and connecting them and reducing the shame the stigma and the secrecy the people in need will raise their hand and connect? of this ithis is all part of th. >> i was just going to jump into. one of the biggest challenges when you talk about the perception medicine, perceptions do start in the doctors office in the emergency department. and the irony is these medicines are prescribed to treat pain. one of the tenants of the medical school is you were taught very early on to treat your patients pain. when someone comes in and pain as a physician you want to treat their pain. underneath this veil of treating pain, this epidemic of prescription drug abuse has occurred and it was slowly simmering. you hit the nail on the head of

the resides of this connect and in some cases maybe it still is a disconnect. maybe it isn't always fully understanding the pain they need to be treating is truly a mental health issue as much as a physical pain. i would like you to address that but keep everyone involved area we asked you what is the most common source for people that abuse perception drugs to obtain their medication coming and the results that we have our 71% said that it is obtained from a religious or a friend, and that is absolutely correct. and i think that leads to this discussion of people think these are somehow safe, which they are not. but they are readily available. >> so, this health matters is all about the big picture and how we can orient our healthcare

system to address this. but ultimately we need to reorient our culture. our culture needs to be reoriented to stop keeping silent about this. because the biggest enemy is the silence. it's the topology of not being able to talk about the elephant in the room. and my mom had suffered from severe and persistent mental illness and alcoholism. we never talked about it. my family is pretty progressive, liberal minded, never breathed a word about it and then she disappeared to go to treatment. david writes about it in his books. the biggest challenge here is we need a conversation. i love the fact that mtv is trying to break the barriers down but the stigma as the director can say it is the most insidious enemy because this isn't just about prescription

drug abuse. as david pointed out i could have been addicted to anything. i was a genetically predisposed and have an environment that discouraged and then it was oxycontin for me for a while. i was hospitalized for oxycontin but then i came out and i couldn't sleep so i started abusing amby. we need to get to the bigger picture. it's not the name of the drug. it's the underlining issue you as you said about the mental health. and as our culture goes forward, we do not have the nomenclature to talk about our emotional and psychic development, the spiritual development that is crucial to us as human beings. so, we teach our kids did we leave out this important piece that part of their development is being able to be a social being and not be stuck on their phone or their ipod.

i love technology but part of our problem is we are more connected and get disconnected because we do not have that interaction the previous panel talked about. and that i think is going to be one of the big public health issues we need to talk about. i'm been announced to him it is still part of the answer that is service to others and connectedness to your community and it is serving your fellow human being, your brother and sister who needs help. that's how my dedication -- medication fo for myself centeredness is trying to help someone else. so i would offer that as a broad topic. i know it deviates from your issue is how do we get doctors to change but frankly it's everybody has to change. >> it is patients and doctors working together and it's also a community based. but we were talking earlier, patrick, you go back in time and

attention to abusing oxycontin which has become a very common word. and a lot of people may or may not know is a narcotic painkiller and there are a lot of different types out there but they ultimately have the same effect they are in the same family with morphine or more commonly known street drug but more are dying from prescription drug abuse than heroin or cocaine when you were abusing oxycontin. if they've never abuse the drug how do you communicate with someone. talking about the cancer personalized medicine, they are doing screenings. you don't ask me where i come from, what my family situation

is, what i'm dealing with. you're going to keep writing the script to keep the kind of, you know, whatever the doctor was doing. but after while everyone had to have known i've been in and out of rehab a dozen times, and no one is asking me. it isn't on my medical record. i go to a doctor and guess what if it isn't on my medical record, they will give me what i want. we have a cultural problem, and you ask about a system problem as the first panelist talked about. we can correct that and treat this like every other physical illness because this isn't just a character flaw. this is also a canister a industry and our medical system is not trained for this. they don't know how to ask about it, and i think that, you know,

that is the big issue that we need to change. >> you acknowledged that as a patient you were going to the doctor and getting medicine from a doctor. let's briefly focus on one of the things in this panel and that his colleges and teenagers. and there are a lot of people getting these medicines through friends and the clintons is assuming they are safer because of course it was written by a physician as a prescription. how do we impact of these kids who are going off to college away from mom or dad for the first time i and a friend says i got some of these. it's prescribed by a doctor, try this. as i mentioned in the opening remarks, one of the ways of wayf courses to helcourse is to helps understand that the drugs are not safer. we actually had a students we spoke with when we were doing research for these videos who said she was taking energy drinks to prepare for an exam and her friends that i can't

delete your taking energy drinks, they are so bad for you. and i honestly was caught off guard and i couldn't believe that was the thinking. so just the actual true information about the reality of the consequences, that is a big way to move the needle and then of course as people sit on the panel, getting to the underlining issues of why are the students so stressed. the other thing i wanted to point out, half of those over the past seven years is speaking to people thinking of taking the drugs were currently abusing them because what we have seen is oftentimes friends are that first line of defense. young people are more likely to turn to their friends than any other source if they are dealing with an issue so if we equip them with the knowledge and information and empower them to step in when they see a problem occurring, then i think that will help us to get a lot of the way there. >> one of the things that is

important is the two drugs that are the most frequently used by the pain medications into the otherand theothers are the stime you were mentioning. there is something that we haven't discussed which is the pressure of these kids to perform scholastically to be able to achieve the grades that they need. so if they see another kid with stimulants, they feel the pressure if they don't take them that they would be at a disadvantage. so anyway we are creating a system that is pushing them to take a medication that outside of the context can actually be very addictive. as a culture we try to solve all of the problems with a an appeal to just give you an idea about how important these perceptions are in the united states in

2011, there were 230 million prescriptions for either hydrocodone or oxycontin. now think about it, 211 or 13 million perceptions. that means that how many americans do we have? do we really have such country in such a level o of pain that would prescribe prescription medication so we need to also address the cultural aspect that we have in this society that may be promoting the use of substance as a way to resolve issues that make us feel uncomfortable to sustain. >> we are in a society that is obsessed with taking pills and i see that as say that as a physi. and it's interesting that we have 5% of the world's population. and yes, we use about 75% of the prescription medicine. medicine. windowwindows can be lifesavingd

they certainly are in many cases they can life's short. it's interesting when you talk about the stimulants they can be effective for kids that need them, but one out of eight use those without a prescription. and in some cases, you even have parents begging the doctor to get to their kids on these medicines, and that is another cultural problem because they are not meant to be taken without the guidance of a physician for a known medical problems. ..

can help students as they transition from high school to college to talk about the fact these as well,, that they will be told and give them the skills and tools to say now and to be ready for this when it happens. >> david, as a father who has written publicly about your son's addiction, what kind of conversation should parents be having with their kid way >> we should start way earlier than we think. we should assume -- every parent

that i talked to was worried about drugs and yet no one knows how to even have the congress nation. no one knows what to do about it. since we know that so much drug use and escalated use and addiction is related to the whole list of risk that is if you have addiction and your family, if you have mental illness in your family, if you have psychological disorders, if a child is six. in a loss or trauma, once we understand these things, we know if parents are educated, we know that we can teach adults to look very closely, even closer at our children as a physician's pediatrician said if you're struggling, rather than wait for some pain, the problem to escalate, intravenous units you can. you're not expected to be a doctor. if there's a need for

intervention, that at times to intervene. >> and i think everyone has dressed the connection between mental health and in many cases that leading to prescription drug abuse service use, i want to get to a question that we got from allison wilson. what can be found to increase mental health awareness to inform the public when and how to access care because i has to imagine that there is a lot of fear in taking that first step to access the system because mental health, as you mentioned, very afraid to admit when mental health issues arise. >> so i'm kind of like an old hair club for men guided that not only am i the founder of the comp me, i am also a client. so i rode along with my dad and pete domenici mental health

parity equity act, which was meant to eliminate the insurance principally disparities in access and care for mental health and addiction. so there were higher treatment limitations when it comes to brain illness like addiction or depression than there are for diabetes, cardiovascular disease, as not, for example. so we have to implement the law. president obama. george w. bush signed into law. bipartisan. president obama's implementing this mental-health parity. we can't have mental health be something separate. although they are separate issues for people with severe and persistent mental health. you can't treat a person with cardiovascular disease or diabetes. you hear that often. all morning we heard about chronic illnesses. leaves out mental health. it can't be just the purview of psychiatrists and psychologists in the lake. it's got to be the purview of

all of those treating health conditions. as those of you interest in outcomes, you know, as a tenant, and eeo, the outcomes are going to be benefited if you're treating the cardiovascular with depression or four times as likely to have another heart attack. if they are diabetic and drinking out paul, forget about it. you will not get to the compliance issues. it not about a bifurcation. mental health overhearing physical health over here. it's really about making sure that it is a must. if i don't have to worry about going to see a psychiatrist, in other words, go down the hall to read a site where it is, i am not going to be obsessed about whether i have a mental health issue or not because it is going to be a routine part of my checkout and it's not going to be so unusual when the doctor says what is your anxiety level?

how many drinks have you had this week? questions that we don't get asked in the health care system. >> and i think it is important. it is so important that anyone out there who is made in access are wanting access to mental-health care, you know, number one from your very public about your own struggles. mental health in seeking health can and is a private matter and there's so many resources out there. of course one of the reasons for doing this panel because hand in hand you see mental-health issues. often times saturday night the emergency department, everyone would think the majority of people are there for car accidents, gunshot was. and sometimes they are. the majority of the time people are there for mental health issues which have led to drug abuse, which do in fact he says lead to unfortunate and untimely deaths. >> travis, when you ride up an

insurance claim, to put contusion, laceration in order to get reimbursed by her insurance friends 30 starbase a nifty treat this person alcoholism or addiction, they are not going to be falling down the stairs and ending up in my yard. if you say that they are in the yard because they drank, you might jeopardize the reimbursement by your insurance company. that is a fact of life. >> out of once again into how health care is changing, but that is where we are headed to the point of how do we prevent all this from happening in the first way is? that was really the focus of the most important part of this panel. you've mentioned the importance of access to mental health. moving back a little bit in time to teenagers and younger kids because i can tell believe of all the people out there who are trying an experiment in that is the age we can prevent the experimentation, we can prevent

these unfortunate deaths. >> just to add to that, i think what we've seen over the years and several of the reasons people don't go and seek that care. they don't even want to go see cat because they feel like they are the only one who feels this way and no one else is going through this and nobody could possibly understand them and help them. hubert patcher, the young man in the video say he thought this is something other young people didn't go through and he is an unusual case. they feel like it's embarrassing, shameful and i don't want to be labeled as somebody with a mental health issue. is that treatment really going to work? that is where authentic storytelling comes in and that's what was done with our partnership with the foundation is used where authentic tories as units to show that you're not alone. there were people who are just like you going through the same things and we use stories from

celebrities like michael moore who is the biggest artist for our audience right now, showing that it's not shameful. it's okay to open up to you have an issue and success stories of people who did go to rehab or get treatment and that worked in industry critics parents for them. so i think what those real stories we can get them through the first barrier, which is looking for the how. >> i just want to emphasize the chronic nature of these elements is so that they don't just go to rehab and the issue goes away. we need to have the chronic care model that is supplying two diabetes and asthma in cardiovascular disease incorporate mental-health because all those folks on mtv time there is tories are going to need to continue to man recovery. that requires what is known as cognitive behavioral therapy in many respects change the way you act, change the way he thinks. that's been paid for by all of

our competitors in countries around the world. the united states was one that came up with cognitive behavioral therapy. we exported it and haven't used it in our own country. there's so much we could do to improve the mental health and well-being of our own people and yet as we are at increased panels, it is not paid for. it's not reimbursed. >> you are speaking about it because the panel before they spoke about the notion of loneliness, when the lonely will put you at great risk for disorder. there is a lack of alternatives, and environment with a particular task. it is a representation that come from lower socioeconomic and on one hand they have more stress. when addressing the issue of all

men, teaching kids behaviors that actually is going to be cared for the body to help them overcome i get the notion that we need to integrate mental illness with our whole body. >> should feel stressed and anxious. i never got the tools until after his increases. the key is to be early on. show people if they do this, you'll feel better. if you get socially connected, you'll feel better. and they're only given given to us after we implode and how do we live? we didn't know before how to

live. you can start to incorporate some of those best practices yet as david said, triage. they'll have a genetic predisposition. if you had a stressful event in their lives, we have to see where he put our resources because this is not a one size fits all. you can find out based upon a personal interview with someone with their family background is. and just like you would do in the original patrick story about cancer, they check -- everyone in my family that can't are pierced i get all kinds of cancer screenings. no one ever bothers to ask me with mental illness and addiction in my family. doesn't it create equal morbidity and mortality and cancer. you bet it does. we need a change that fundamentally so that it's not

just a separate kind of lets do with mental health and addiction over here. it becomes part of a healthier conversation. the mac is a panels later about healthy lifestyles. ironically a lot of people it never says he mental health with healthy lifestyles. we'll talk and not at all about how simple list of changes can greatly risk mental illnesses that lead to drug abuse were running out of time. i want to ask one last question from sean on twitter because this is part of the discussion. when should we discuss the culture of pressure and unhealthy competition that drives kuester prescription drug abuse. >> i was going to say they think drugs are cool. the fact who is going to affect

kids more properly, which change the conversation. it's not that we have a culture that glorifies drug use and we rarely talk about the glories kummer reports, choice of recovery. the other thing is we have this idea that 80% of our kids at some point before they are 18 or court to try something are not supposed to appear at a prescription medication, pot, harder drugs. these kids -- we view this whole idea that any kid, good and bad. good kids to its tracks. bad use drugs. but the truth is, these are our kids. they're not good kids, not bad kids. we have to help them grow up as healthily and safely as we can and it is going to take media. it's going to take programs. it is going to take the research that's happening at the national institute of drug abuse. it's a complicated problem, but i think the fact we sit here

together suggest that we can solve this. >> and the clocks is zero, which means we are out of time. i want to thank each and everyone of you personally for being here and sharing this passion and certainly brought you in the audience, if you are watching at home, streaming myth and you are dealing with any of these issues, one of the things we've tried to highlight his various help out there and also as a parent, don't be afraid to have a conversation with your kids before it is too late. thank you all very much. [applause]

>> at the creation museum, we are only too willing to admit our beliefs, but we also teach people the difference between the police and what can observe. people think critically and then write terms about science. i believe it is the creationists that should be educating the kids out there. i'll teach the right way to think. origins of historical science based upon the bible. i am to admit the evolution and be up front about the difference here. >> i encourage you to explain to last why we should accept your word for it that natural law changed just 4000 years ago completely and there is no record of it. you know, there appeared that that are older.

it's just not reasonable that everything changes for a thousand years ago. the surface of the earth and the relationship of all of it means. it's not reasonable.

>> now a discussion of class-action lawsuits that critics argue benefit nobody but the attorneys with settlement sometimes going to designated charities. the manhattan institute event is 90 minutes. >> so our topic tonight is class-action abuse. i want to just before introducing my friend and colleague, ted frank, for his remarks, want to frame this discussion a little bit for those of us in the audience who aren't attorneys, particularly those in the viewing television audience out there. class-action lawsuits. you take a bunch of claims, but certainly numerous clients that are similar in there and it took them all together into a single

lawsuit. this has existed for some time now under u.s. law and its largely deemed a matter of judicial efficiency. it's cheaper to try similar cases in one large piece of litigation and individual separate cases that the cases are truly alike. the genesis of the modern class-action bar so to speak at modern class-action practice came about in the mid-60s but the 1966 revision of the rules of civil procedure that developed what is called the opt-out class-action before this point in time to join a class-action lawsuit, you had to affirmatively opt-in to the legal action. after this point in time, you have to ought to out of the legal action if he didn't so if so comedy are presumptively a member of the plaintiff class and were part of the litigation. since this time, there have been

a number of critics of class-action litigation and the abuses inherent in this. one of the foremost is here today with us, ted frank, one of the leading reformers in this area as well as professor brigman who has published extensively on this topic. this sort of criticism has led to various reform after his, both legislatively and through the judiciary. so for instance, in congress for security litigation involving so-called fraud of market that causes stock price to be overinflated and subsequently falls, that type of litigation went very significant congressional reform in the mid-90s, 1995 private securities litigation reform act, which was intended to clean up that litigation. in some respects it did. in other respects, unintended consequences of that litigation.

it is passed in the middle of the last decade in 2005 at the class-action fairness act, which was a jurisdictional shift. this was in reaction to research done by folks like professor brickman and matt institute, showing what was happening when you got state-level courts, separate state and federal courts in the united states and the state courts are getting class-action and making determinations that affected the national flow of commerce and some of the state courts in fact were becoming so-called magnetic words that were attracting a disproportionate, in some cases a large percentage of the national class-action bar in those judges and juries tended to be favorable towards the plaintiffs. the class-action fairness act of 2005 in part was designed to give federal jurisdiction over

these cases said they be heard in a federal court that procedurally would have a more neutral base of rules for determining litigation. a separate part of that reform was designed to eliminate so-called coupon settlements, where individuals got coupons in lieu of cash and the lawyers' fees for inflated and that is very akin to the types of settlements that mr. frank regularly challenges and will be talking about in a minute. the supreme court has been active in this area in recent years. two main lines of decision in particular has generated a lot of press. one relating to the certification standards. in other words, how do you get class-action? how do you have to determine there is really a numerous class of truly similar the generated plaintiffs and so when the wal-mart beat duke's

discrimination case and the antitrust case with the supreme court in two different cases trying to tighten certification requirements to get into a class-action lawsuit to actually get one with scrutiny and away the ability ability of class-action remedies vis-à-vis contractual clauses, arbitration clauses and in particular, how much do you need to have a class-action remedy and in a couple of recent cases, one of which ted s. written about significantly. at&t mobility and american express did the supreme court basically said that you can have a class-action remedy, but you also can waive it for a fair arbitration clause that gives you an alternative means of redress as an individual consumer. so this is the sort of back trap we face today. a lot of controversy around class-action practice. before we get to our panel, we

are going to have a presentation by adobe presenter here, commonly known as ted, who is the center for class-action fairness, which he serves as president and treasurer general counsel. he is also an adjunct fellow at the manhattan institute center for legal policy and a longtime blogger honor points of law.com web magazine. the manhattan institute, are institutionally separate. that ted is an excellent person to have talk about a certain area to class-action abuse here. really in a class-action abuse, but in particular the class-action fairness focuses on, which is class-action settlement that are thought to be unfair to the point of classes of. ted can explain more about what we mean by that. he's been called a major publications a leading tort reform advocated by "the wall

street journal." adam liptak of "the new york times" called him the leading critic of abusive class-action settlements. he comes with the african experience doing work like what i do is the first president of the american enterprise since the two, legal center for the public interest as well as the decades experience in the law as a litigator with a lot of class-action experience on that and. on the seventh circuit court of appeals for the high honors graduate of the university of chicago law school and member of the american law institute and the executive committee of the federalist society of litigation practice. [applause] >> thanks to jim for that kind introduction and the men had institute for putting this together and to all of you for coming out on such a desolate

evening. janissary disorders that this page for what he class-action is in the nature of the problem. i am not sure he completely communicated the immense settlement pressure creates on defendants. such is the very fact that he class-action is out there means that the defendant facing what commonly speaks of a billion dollars in damages when you have a billion dollars case, even if you have a 99% chance of prevailing, you have a substantial incentive to pay a substantial amount of money to get rid of the case. the class-action present a unique issue that you don't see in normal litigation. you have a breakdown of the contractual model because unlike your typical litigation, a class-action will have involuntary members of the class to the united state to class-action is up that

litigation rather than opt-in litigation. everybody in this room is probably a member of the pending class-action somewhere voluntarily or not. the attorney representing them for the good of the supposed class or perhaps not effect the end of the day seeking a paycheck in the settlement process where they are both negotiating the release for their putative clients that they have roped in this large make a classy and for themselves. while they may negotiate with a separately, they know in advance every dollar that the defendant is paying for his settlement for class members in the dollars they won't get for themselves or negotiate a large comments on and come in and take a percentage of that kind and not necessarily seek an amount that a paying client would pay.

so we have a class-action settlement problem because you have on one side the defendant and their goal is to minimize the cost. they want to get out of class-action whether it is 1% or 20% or 90% chance of losing. you have the plaintiffs attorney, but they have their own personal conflict of interest. there's no one they are making sure that the class-action attorney and we party this conflict of interest that we are talking about. no one is out there looking for the class. hypothetically, a judge is supposed to approve the settlement workers forward. that is the nature of due process. you have unrepresented pass members, so you have to give them notice and a hearing before you breathe their rights to the underlying cause of action and at that hearing they can object to the settlement. if it's unfair or that allocation process they talk about for attorneys negotiate

themselves and not their clients. the whole reason we have class-action is because supposedly hypothetically in economics to negotiate the original claim is for some $10 speed up the phone companies charge you or what have you in the class-action attorney come in and says we need to aggregate all the places together so we can have one giant class-action case would be impossible to pursue this as an individual case. it is even more impossible to litigate -- common objects. you have less time. the attorneys have no incentives to do that. you have a $10 claim. you won't pay $10,000 to file an objection for you. indeed, probably not even worth your time to read the class-action notice and read a letter to the court yourself. so as a result, what you would have this one-sided presentations. the plaintiffs working together that they want to see the settlement go forward. but that one is there looking

out for the class member themselves. the judge is supposed to do that and some are better about this than others. the judge as i have these in front of me, such a huge complex case. do i want this settlement to go forward and take something that is taken up a lot of my time on the docket out of my hands. i want to put a lot of work into thinking about whether or not this is a really reasonable settlement and knock it down. part of the problem is judges were only thinking, well, is this fair as a whole? you know, is this a reasonably valued settlement for the nature of the claims and not thinking about the conflict of interest, allocation problem between the class-action attorneys and the class members. as with the center for class-action fairness came in.

in 2009, for the purpose of standing up, whereas they normally active class member would not have the answers to common complaint not a problem problem in the settlement. we realize we can create positive externalities by go away now, getting funding and coming in and doing pro bono work that is pro bono for the public good, representing class members in the settlement to get the notices they wired the attorneys getting the money and why am i getting nothing? we've had just really remarkable success. we mentioned similar accolades from the press. but we've knocked out hundreds of millions of dollars in unfair fees. with one some landmark appeals that utterly change the landscape of class-action settlement to change the way judges are looking at these things and we have done that,

spending less than a million and a half dollars in our first four years. we are up to four attorneys now and we are looking to expand because our constraint is not that there are not objectionable class-action settlement, but that there are more of these than we have time to go forward with. so what is it that attorneys do to create the class-action settlement clicks well, let's step back for a second. why is that the settlements are a problem? a larger societal problem not in terms of the fairness to class members, but a larger social problem. i would like to point out -- i'd like to start with a case that was her first appellate victory in bluetooth product liability. are these bluetooth has vast effective? the answer in his theory of the case that these had that do not

warn you that if you are bluetooth had that and then listening to someone talk on and on maximum volume for nine hours come you could have hearing problems later because of the loud volume and listening to it for so long. obviously, this is not a suit that is going to go very far in front of the jury or even a reasonable judge, but for the defendants, for three defendants in this case taste with the expense of litigating class-action and trying to get rid of it, paying lawyers to have discovery all that risk and the plaintiffs come to them and say we are willing to settle this for a million dollars. the defendants say okay, that is great. we get to close this off of our books. we don't have to spend our money on lawyers and here's your million dollars go away. at the million dollars split reasonably come a quarter

million for attorneys and $750,000 to class members, class members wouldn't get much at the end of the day. more importantly, this would not be economic for the attorneys to bring. attorneys might be willing to bring this sort of frivolous lawsuit when they can structure the settlements to get all the million dollars to themselves and not actually have to give anything to the class members. if they have to reasonably share it with their clients, suddenly changes the economics of it and we are paid without, forcing attorneys to reasonably share with their client because the attorneys have a fiduciary duty to their clients. they're supposed to be doing this in the first place. and again, remember we have this fairness requirement before class actions be approved. our position has always been as a legal matter, fairness includes the allocation between the attorneys and the class because again, attorneys have the fiduciary duty and if the attorneys can extract a million dollars and the defendant, that

belongs to the class burst attorneys take a reasonable share of that. 100% is not reasonable in the bluetooth case with what happens if there is about a dollars going out there and there's $100,000 going to charity and $850,000 going to the attorneys in the class got a big zero. we found seven class members who are unhappy. we brought the objection. the judge says that the parties agree to that. settlement is a good thing. rubberstamp the settlements quite literally with staff. the ticket to the ninth circuit and after a year and a half we got the result that said you have to look out defense and whether the eternal czar favors of themselves. it is starting to turn the tide because before we got involved,

again, you have these one-sided presentations and judges with bank, my job is to promote settlement and wouldn't necessarily look at this allocation problem. again, it is important because the latter settlement can go forward. you'll see more class-action and manages bad for everybody. is bad for kids at risk because their costs go up. it's also bad because if you're a plaintiff's attorney, do i want to bring this complex class-action or do i want to bring lots and lots of small class-action that i can quickly make a big paycheck on? the answer is your not even going after the bad guy. you are looking for ways to go after deep pocket after deep pocket, whether there is the

class-action misallocation of resources to actually do some good by going out to real fraud are instead going after the easy payday. that is that both because frauds are nurtured because attorneys are going after the wrong defendant, but it means that corporations them selves have noticed and is to be good versus bad because it doesn't matter. even though it meant that in the bluetooth case motorola heads had more money on lawyers going up and down the ninth circuit trying to get the settlements approved and we get some defense counsel very upset at us. apple attorney has said some really nasty things. the settlements are good for society for consumers in the long run, for defendants in the long run this post is numerous, even if the raise the cost of the individual case. so how do you make about settlement clicks the answer is

to create the illusion of relief without giving actual release. the defendant wants to minimize how much they are paying out in the attorneys want to maximize the amount that are coming in for themselves. you can only do that if the class doesn't actually get anything or if you sort of minimize but it is the class is getting because every dollar going to the class isn't going to the attorneys. so there are lots of little tricks you can use to do that. something i discussed. claims made, something also discuss. you just make up things on your fee application. we had a case involving citigroup, which was a big victory for us and i'll talk about that later. so let's explore why you need this. let's say you have a class-action nuc $4 billion.

it's worth $20 million to get rid of the case. the plaintiffs attorneys on a $15 million payday. how can you do that? you can save $15 million for us, $5 million for the class because even the laziest judge in the world will look at adding a there something wrong here. as a 25% benchmark normally and hear the attorneys are getting 70 fibers on. so what do you do to get around that? the classic way to do it until recently was with the coupon settlement. you go when and you say here's $150 million of coupons for the class and were only asking for 15 million in attorneys fees. in the judge says the outcome you're so generous at $150 million in coupons. $15 million for the attorneys that looks completely and reasonably fair. in reality, has said he is as old as a decade ago go cubbies the only 1% of 3% of coupons give redeemed.

real cost is substantially less than $150 million in fact you've created the illusion of relief without actually forcing the defendant to pay anything and as a result of that, the attorneys actually get the bulk of the value of the settlement. in this 1% to 3%, the studies have shown that, i've seen settlements were as much, much smaller as an 75 coupons out of the million getting redeemed. so as part of the class-action fairness act of the main part of it we were to change the jurisdictional state court, he created a new role that says if you have a coupon settlement, judges are not allowed to work turns these unless they do it based on their redemption rate. you have to look at the fact that only 1% to 3% per redeemed.

you say okay i am rewarding and based on the million dollars of coupons that are cached in rather than the $150 million of value creating. the problem there is who's going to enforce that. again, if you recall her earlier model of the fairness hearing, you have defense attorneys and they are presenting their experts say for the judge. please approve this fairness settlement. there's this law that says you have to look out the redemption value. if no one point.out, forcing the parties to say, you have to do this. this case are still getting rubberstamped and for the first eight years after the class-action fairness lawsuit was passed, they were not enforcing god. in part because when there is a coupon settlement, parties and say we had a coupon settlement.

we have rebates. free of gift cards. we have the vouchers. all sorts of thesaurus must've been exhausted because you would have these coupons, but no one would ever call it a coupon settlement and judges would just be okay with that. at least until the center for class-action fairness kidman. all six cases we represent and even with us coming and appointing a 17th else does he have to do this release you can treat this as a coupon case, only half the courts actually did anything. in one case it was because we took it up on appeal. i said eight years because he was the first appellate decision actually addressing how you treat coupon settlement and then not very first case, the ninth circuit says no you actually have to follow the law says. so sometimes people ask me, well, do we need legislative

change? the answer is how do you rewrite the statutes of the judges follow it? i mean, the laws ratepayer. the language is right there. this time we really mean it. i think the answer is you need not just a legislative response. looking now for the laws that the courts are supposed to be following, but you need a third prompted the attack, not just the executive level and legislative level, the creating precedents out there so judges have been in their mind the law needs to be followed and you need in this particular case because the plaintiffs and defendants don't have the incentive to do it, so you need somebody out there looking for consumers and saying congress favors the settlements and unique to treat them the right way. the gift card case we have

depending on appeal, arguing the ninth circuit on the very third can listen online life now because they have cheap the rules and will let you do that. so, with the coupon settlement be disfavored, congress stepped on that one squishy part of the blanket, but other lumps have been popping up because there's raised to create the illusion of relief without actual relief. the main way we have seen since two by the something called side prey. that is a fancy word instead of giving money to the class will give it to a third-party charity. originally side parade came in the context, somebody -- the classic example is someone in the 19th century leads their fortune to the abolition cause. i want to abolish slavery. low and behold, slavery thankfully is abolished and you have all this money in the trust is to abolish avery.

what you do with it? the adoption of side parade, you give it to the next best use instead of the cause of abolition, you know, a judge reforms the trust of the trust invalid or the trust is now giving money to i think in this particular case, african-american college education. ..

and that is created obviously inevitable conflicts of interest first of all, one way that a cy pres might be structured is, the judge, here's a lump sum of money, you distributed. well, wait a second. d'agata would judge and say, judge, if you ran my motion to dismiss i will give a million dollars to the charity of your choice, there will audience and needed jail. if you do it in a class-action settlement and say, your honor, if you approve the settlement, we will have $01 million fundamentals were deported, that is considered appropriate somehow. and we have seen some very odd cases and the google buzz case the judge ignored this suggestion and said, you know, there is a local university here , and i think they should get $250,000 of this fund. he did not mention that this is where i teach.

just really extraordinary. another case involving a class action over a hotel fire, and the judge gave it to an animal rights charity. you have that sort of weird conflict of interest, but if the defendant is picking where it goes you might have, again, the illusion of relief. and whom the case that we took to the supreme court facebook created its own charity. that is for the first time in the money was going to go to the facebook privacy charity. and it would sort of teach parents how to keep their kids safe from privacy problems on the internet. in other words, promoting facebook century for this the attorneys had $2 million. or you have a conflict of interest with the plaintiff. in the apple bank securities litigation we had success knocking out a side pray that was going to go to a charity with a plan to attorneys on the board. the alma mater of the

plaintiff's attorney. or you could have a settlement structured so that the attorneys are doing things to make sure that it does not actually get to the class members, but is, instead, going to the charities. the attorney refers the because the charity will be much more grateful than the class members. so you see that it seems bias to local charities. bank of america securities case pending in the eighth circuit right now, the attorney said $3 million left over in a big, giant securities settlement fund in part because the judge ordered the parties to withhold two and a half million dollars in payment for some time. then they said instead of distributing those $3 million to the remaining class members, we are going to give it to our -- this charity next door, you know, perfectly great charity here in st. louis that does lee delayed. and there is the federal home of

the lead plaintiff's attorney holding a big check, giving it to a local charity. you know, and look what a nice guy yes, giving away other people's money. we argue that this was illegal and will see if the eighth circuit in greece. if not, the supreme court has expressed some interest. we took beck case to the supreme court, have not argued below, but took over for the other attorneys when we saw that the ninth circuit had upheld a $0 settlement while the money went to charity. we took it to the supreme court and the supreme court did not grant tertiary. there are court of limited -- you know, discretionary jurisdiction, but interestingly chief justice roberts wrote separately this is very unusual and says, i agree we should not grant certiorari year. the very fact specific. but it's there are all these problems, including everything that we list year.

and this is something we as the supreme court should look at in the future. and we are going to be preserving the argument that justice roberts implied should have been preserved in the facebook beacon case. and i think the word is out, and we are seeing settlements being structured now so that there is lot less cypress because they are anticipating three years of appeal to the supreme court if they do not do that. another way to create the illusion of relief is incentive relief. look, we're forcing the defendant to do something. this incentive relief is how it will to the class, but what is and then to release. it could be as simple as saying, i will not defraud the class. there are all sorts of things that are intended to relieve that are not necessarily a benefit to the class. and very often the engine to relief is purely the illusion of relief. we had one case unfortunately we were not able to pursue it, but

the incentive relief was check yahoo. yaw who will now offer a new product to consumers. but they are charging for this product. it is a business model, and it is something that they want to do anyway because google is eating there lunch. why is this incentive relief? especially when it is a product being proposed to class members and non class members. so one way that these injunctive relief settlements go through is you have economists coming up with quack expert testimony promoting the idea that this is valuable to the class. so in rey motor fuel temperature settlement, and this is a great example of a frivolous claim check to have class action settlement, frivolous class-action. that theory of the cases that you, the consumer, have been defrauded by every single

gasoline retailer in america because they did not tell you what you learned in seventh grade physics, which is that gasoline is a liquid. the critics bins with temperature. therefore, when it is 90 degrees out there are fewer molecules in a gallon of gasoline and when it is 60 degrees out of 30 degrees out. and they are from the -- fraudulent. they tell you is a gallon of gasoline, but there are fewer molecules in it. they're not telling you that changes in the molecules. you get -- gas mileage might go down half a percent. now, in these cases they are being settled by everyone agreeing to install very expensive temperature adjustment mechanisms on the gasoline pumps why does this benefit consumers? well, when it is : out you would get fewer gallons. is not clear that somebody doing that would not get charged for consumer fraud. i'm getting 222 cubic milliliter

set of children 26. that might not be accurate. don't quote me on the metrics. or they're going to read so you larger gallons, on average. is it really the case if he had a class action that redefined as next to the 18 you would get six free eggs every time you went to the grocery store? and basic common sense economics would say no, but this economists says now everyone will get larger guns on average which is free gasoline and is worth a hundred billion dollars. and the judge bought it. we will see whether that goes forward at some point. in the case such talk to you earlier about, the headsets, the incentive relief that was supposed to benefit the class was that in your blue to fed sets all the blue to the fed said manufacturers will have a statement on their website warning about the dangers of listening to your blue to had set at two high volume. rihanna the first thing you do

when you get a book to that set, you read your owner's manual very carefully, covered a cover. you get to the website and make sure they're not any warnings about hearing damage. after all, none of us of our the concept that loud noises can cause hearing problems. we never would have known that if not for the warning. because of that there expert says that this is worth $878 billion to the class because he knows how many people not to death because of this. not going deaf is worth so much money and so on and so forth. fortunately the judge did not agree with that. another way to create the illusion of relief is the claims made settlement. we are creating this big settlement fund, going out and offering everybody in the class can go out and make a claim for $50 or go out and make a claim for $5 from this $35 million fund. at the problem is class numbers

don't make claims. of the claims process and then one of these cases the claims product case, the baby products, yet to fill a five page form that said you needed to know that -- the day and date did you buy your stroller for your car seat. nobody filled out this form. as a result there were only $3 million of money actually going to the class, and the attorneys are perfectly happy with that because the other $15 million in the settlement will go to charity. meanwhile there were getting out $4 million v. the attorneys are getting 14 million. the class probably is not getting very much because they're not going to make claims. and the judge would not even find out how many claims were being made and how much was

actually going to get distributed to the class. we have to take it to the third circuit, in the third circuit as to the attorneys demand at that point the jury sentiment that the class was not given anything are getting very little relative to the class. you know, throughout this process and briefing, we cannot make the plastic money. there's no way we can get this money to the class. it is unfair. the world is going to and if you do this because we will never be allowed to grant class-action, never be allowed to get money to the class. how dare you to our attorneys fees to the amount the class is actually getting. as it turns of the ever initiated the settlement and loan deal discovered a list of class members of the canals checks to and leftover $35 million is now no longer going to charity but to the class numbers. so we have improved that someone $15 million or so. we were entitled to the same 40% as the attorneys as plaintiffs' attorneys often claim there until tuition funds for several years. i don't think the judge is going

toward the 6 million. when adding a task force of lists -- 6 million. veritas for substantially less than that. it will be interesting to see whether winning money for the class is what this must to this judge is threatening to one money for the class as a dozen or $14 million of first time around. the case was a fascinating case. unlike many of these settlements the class actually got something, negotiating a six under million dollar settlement fund. they said, look, we are entitled to under million dollars. and the reason we are entitled to under million is because we spent a lot of time on this case we spent $50 million of time on this case. and so when we ask for $100 million it is paying as for the risk of taking on the case. and compensating as for that risk encompassing as for the $50 million in time and reported. an tweeted some investigation on behalf of class members.

zone so cases where i was a shareholder. if you do, make sure you sell them fairly. ended turns out will was happening is that they had contracts attorneys that they were hiring for $20 an hour, and the only thing his attorneys were doing was looking at computer screens of documents and clicking on buttons. this one mentions bond issue number one. this one issued in mansion's security issue number three. this one has an attorney's name on it. this one has this witness's name on it. something that not only could be done by an on attorney expected basically be done by computer is days. and when paying clients to this they ask for either their $28 our people to look at or they ask for a computer system to do it, and then a very, very fewer hours of attorneys to actually double check it.

but these attorneys are coming in and saying, we want $550 an hour for each of these $28 our attorneys. did not say there are $28 our attorneys. they did not even say their work contract attorneys. they said that there were attorneys with the law firm even though they were never hired by the law firm and/or as in for $550 an hour multiplied by two, 1100 our because there is risk when you hire somebody at $20 an hour. the judge knocked that down to $200 an hour which is still on ridges, especially since it is supposed to be the market rate and was very clearly establish that the market rate is what paying clients pay for this is they pay cost another $20 an hour. they -- no law firm in the world gets away with marking in up to $550 an hour, much less 200. the other thing we discovered was a misjudgment and turnover their time sheets, this case settled on may 12th and on may 13th they hired two dozen new contract attorneys to work

60 hours per week revealing documents. meanwhile, all of the real attorneys and the case had stopped work. so it was not we have to keep working on this case in case the settlement falls through, and the settlement -- how do we inflate our lodestar, our hourly bills that we can claim to justify the big fee we are asking for, again, with the multiplier. the judges of knocking out $26 million of the fees. we thought it should be more now looking for future cases to make that point because 80 percent of the security cases settle once they get passed a motion to dismiss. you may spend a million dollars hitting to the motion to dismiss, but anything after that and you know you will settle the case, you should not be getting into or three times multiplier. yes, in cases where they ask for aforetime multiplier and is selling 80 percent of your

cases. so we are doing a lot of good out there. one way you can help us is looking for cases where you are a class member and are getting these seven notices. you don't have to throw them away. send them my way. i am happy to take a look at them. but, you know, we are making very good use of the nonprofit donations that we are getting. and we are, i think, doing a lot of good, not just in the case where we bring action, but is having an effect in cases where we have attorneys. i hear from defense counsel and some initiations, you cannot do that. the center for class-action and fairness will come after you. and we are seeing, you know, -- the world changes a lot of we won the baby products a center of europe 2013, and the settlements we're seeing in 2013 are a lot better us elements we saw in 2009, but there is still a lot of abuse going on. and there are more cases out there than we have time to take with the attorneys are we haven't we hope to take on more.

>> thank you. [applause] >> thank you, ted. we are not going to talk amongst ourselves a little bit before we open up to the audience. and to discuss this we have got to experts that, at this from different perspectives on our panel. professor lesser bregman, a professor of law in the d card so while school where a formerly served as the acting dean and has been a leading rider in the field of legal ethics. particularly legal abuse, mass tort abuse, class action accused of the structure abuse. in two dozen 11 after writing multiple law review articles on this topic he published his book with cambridge university press which was in manhattan institute supported book. we are happy to have professor burton here to comment. and then to my immediate right

we have got robert d. norton the second, bob martin, a the vice-president of the lenin harry bradley foundation, but before he got to the nonprofit world where bob and i knew each other for years was when he was the assistant general counsel at chrysler or dimer chrysler corporation including the head for seven years of their class-action practice there, so he has seen many of these cases from the perspective of a corporate defense counsel and can shed light on the issue from that perspective. i want to start with you a full return to bob. you have done a lot of work on this issue and come at it from a legal ethics standpoint. what is the fundamental ethical legal issue that is at play here between class councils and the clients? >> i would say that there are two main issues. one is the inherent conflict of interest between the interest of the class members and interest of the attorney that suit them

up into a class. it is interesting when you think about how they class is formed. if, theoretically, the 50,000 people that constitute this class were pulled an estimate how many of you would like to join a litigation for whatever purpose stated. and if the overwhelming majority said no, we don't want to do that, that makes not one bit of difference because the attorney only has to find a single member of that class, and then he just vacuum's of all of the class members. they're only remedy is to seek to opt out, which is probably relatively rarely done simply because people really don't go in and read these notices that they get in the mail, as was pointed out.

the conflict of interest manifest itself in the fee issue, how visa said. this also extends into the area, the breach of fiduciary obligation. i would say generally most ethical rules regarding fees and fiduciary obligation are largely suspended in the area of class actions. the judges have accommodated the interest of lawyers to such a degree that the rules of ethics, whether in the form of risk -- professional responsibility, the current rules of professional conduct is largely inapplicable or at least not applied to a class action litigation, to the

lawyers who have anointed themselves as the class lawyers. it is a breach of fiduciary obligation for a lawyer jack in his own self-interest, at the a expense of his clients. under to pecans of the fiduciary obligation a lawyer has to put his client's interests above his own financial interests. well, not so in class actions. in class actions a lawyer overtly purchase his own self interest above that of the members in the class and it is sustained by courts. i will give you a few examples. in most class action settlements the lawyer for the class will obtain an agreement from the defense lawyer called a clear

sailing agreement. what this is is an agreement by the defense not to contest the lawyers -- the fee that the lawyer is seeking. now, this is an important factor in favor of the interests of a class where. so it is certainly -- is a virtual certainty that in exchange for getting that clear sailing iran the defendant got something. and this something comes not from the lawyer but the class that the lawyer is supposed to represent. there are numerous, may be dozens and dozens of examples where in negotiating the fee the lawyer favors his own self-interest at the expense of the class. let me give you this one more example. there are certain class actions which are based on the statutory violation rather than on a

breach of contract for a toward matter. in these statutory -- that is based upon violation of the statute. in these sets a jury class actions the fee by supreme court decision is limited to what is called the lodestar, which is the number of hours reasonably expanded times the feed that the judge has okayed as the fee to be paid on an hourly basis to be tantamount 15, 20, 50, 100 lawyers. you can add easily that many in some of these dissections are have a hand in the pot. so take did just the loadstar rather than a percentage fee which often is two, three, four, five times the amount of the lodestar of the lawyers will

settle a statutory class action plan with the defendant so as not to come under the edict of the supreme court decision limiting the feed to livestock. they will settle the case before it gets to the point of a decision. and then there will negotiate with the defendant the fee that the lawyer will be paid separate through this settlement, separate from the amount to be paid to the class. and so in that way they have completely circumvented the rule , the supreme court ruled, it says, and a statutory class-action, one based on mileage of the statute. you can only get a lodestar. this would give them, double, triple, quadruple where even more multiples than that. so the bottom line -- and nobody is going to be shocked. this is not the line at of

possible lock up. lawyers seek their own self-interest. and the courts have tolerated this. now, you see all kinds of judicial talks. there is a clear standing agreement you have to look more closely because maybe things are not quite right about that. well, sometimes they talk the talk, but they almost never walk the walk. they will say, we have to pay particular attention as judges to certain kinds of things, but the reality is when push comes to shove it basically favor the interests of the lawyer. the lawyers, when they seek fees , generally get approval for about 90 percent of the fees that they're seeking, which is quite a telling statistic. and really the best hope that we have for changing this situation, i think, is the work that ted is doing. he has obtained some really

fantastic decisions, but more importantly because we are anticipating even more in the future, he has gotten judges to actually pay attention to at least one objector, whereas in the past that judges just disposed of these objections willy-nilly and without really giving any thought. now at least at the federal level judges are, when debt is involved, judges are really paying attention which is one of the great achievements that he has brought to this area. [applause] >> thank you. some of these examples you was talking about, a clear sailing agreements of this sort of side deals. i mean, does this not intersect with some of the challenges the you have been burning? >> that's right. we cite his work quite a bit in our breves, he has done a phenomenal work and lay the groundwork of what we are doing in many cases, the road map. we were not even aware of the

attorneys you and tell us to read about it. looking for it and sure enough but that clear sailing agreement is something that we raise all the time. and we have done good opinions from the ninth circuit, sixth circuit criticizing clear sailing agreements precisely because of what lester describes, using almost the exact same language. it was fantastic. >> so, bob, from the corporate perspective, you obviously saw many different class actions involved in lots of defenses and settlements when you're at chrysler. as a threshold matter, he laid at the economics. why do you think that the

corporate community is so willing to settle class-action suits, even when they are maraniss? >> i don't know how so willingly are. corporate counsel comes in different flavors. uni gets an average of the biggest crisis took a very hard line. was fortunate that bad management to speed on this issue and decided to put their foot down and not try to be dragged along on this path. so it was a fun place to work because we were resisting it. but they're is a lot of reasons why corporations are led down the path of least of which is the share price, and there is the amount of promotion that is going to be caused the plaintiff is sophisticated command what you're looking at is as many firms is are out there and each one will try to take their own by the apple, as for discovery. i know lester dahlia up to speed on after bubble pausing for discovery alone from and if your company like apple, chrysler, general motors and they're able to give very broad, far-reaching

discovery. the cost of conducting the discovery alone is very expensive. they're allowed to plead there case in a fairly broad manner and said there is something wrong. you like to know more, one of the design specs, testing, what may be out there, alternative designs, what they knew or should have known. 110 ball the notes from all the schedules, everything. a lot of that is very proprietary. so you have a company that is staring down the barrel of losing the lawsuit that is purporting to be the billion dollar lawsuit, and even if you think kievan 90 percent chance the u.n., after did not tell management had a better than 75% chance of winning a case. an opinion, it's like the adjacent some child. but you don't know what a jury is going to do and how the plaintiffs will be allowed by the judge to put in their case and what they're going to be told. i've had class-action lawsuits, 58 of them at the time. and the engines were not durable

enough for had been oil sledging problem. well, you know, the question is, let us see all of the engine design plans you have going back for the last ten years, all of the options you considered. what testing was done. one of those testing results, one of the factors you thought about putting in are not putting in, and then we will decide whether not week until a jury it you did everything possible to make that angina's robust unbearable as could be. and without even going any further in this is about as far as you have to go, i'm sure there will find something in one of our engineering know put the set we could have done something else and the use touch indianism magnesium that or done something else other than what we did, so they will find something and be able to then say it was a step that we took it was not proper. so you're looking at this as to now we might even have the chance of, you know, the lawsuit, a 75 percent chance of winning, we at the expense of millions and millions of dollars. we have got the news press that will be out there covering this

command that is something else the plaintiffs' bar is pretty sophisticated that. you get to know that they have friends out there in the press that there will start the drum beat with and make it harder and harder for you not to just say, this is stupid. i have had some very contentious cases where the plaintiff's lawyers are lightweight and so what we will give "usa today" next month, or until you see what happens after that. we will be a professional courtesy interview that we talk to these consumer advocacy groups. by the way, tell your friends. every implicit threat of blackmail. make sure your other corporate frenzy when we come after them is to try to find a way to resist. in the case of my management, there were pretty savvy about this game. there were not going to be bullied. we resolve the cases in novel ways. my colleagues and i oversaw this we wrote an article that is in the georgetown journal on legal ethics same route by to take upon settlements. we did that in part to be making a chess move up their publicly that says don't come to us.

we are not interested. we will not go there. but then we settled cases in novel ways, including a consumer public-service announcement about not putting children offensive cars because we didn't think that was a good thing. and in that case the plaintiffs lawyers at the end of the day with the judge approved purported to be of the $20 poorer, what the plaintiffs lawyers got from the work they had done. whether they had the bills and up we don't know. but we did agree on the fee that we were willing to even -- the agreement in place, we thought that is what the judge will be led to believe based upon the value of the public service announcement and thinking 30% or so is with their fees might be. and it turned out that way. so did the pain to stop and willing if you have a management properly counseled, that is where that term counselor comes and, if they're willing to hang in there and make them prove there case, you will contest the plant system a contest that there's harmon appeal it, the plaintiffs' bar also tell their

friends, look, these people and they're ready to sue. you might want to try something else. unfortunately you're moving it down the street, but lisa sang don't come here. it will make it tough funny. >> of the big companies, and it is the big companies that will get this type of litigation because they have the deep pockets, you know, you face this essentially repeatedly. so the god line, you are seeing 58 cases over a span of seven years of something, it could benefit you. but there are still complications with that, obviously. let me play devil's advocate here a bit for a minute. this will be protests, but anyone appear in talk about it. there have been a number of folks, at least one prominent among but other folks as well in the academy in the press, that would sort of jealous this general position and challenged as work. basically presuppositions. does not really matter if they get any compensation and not. here's a plaintiff gets

compensation and gets no compensation and lotus of the attorneys because the attorneys during a public service by deterring fraud, the turn misconduct and malfeasance on the part of these corporations. how would you respond to that? >> that a sense of the cases avoiding similar good cases. nbc from motor fuel, see from lots of these cases that the underlying cause of action is completely bogus. what is happening is this sort of extortion the above is talking about. nuys company. it would be a shame if he had to spend millions of dollars in attorneys' fees. you can either pay as a million dollars now or you can pay your cherries $3 million to get rid of the case. you probably want to pay as the million dollars. and if you are a bean counter at the firm you say yes to save those $2 million. and, you know, the-externalities' are going to go on my competition in now will

face the same sort of class-action. so what is being deterred? i don't see that. so i would say that, you know, if a law professor you're talking about is saying, welcome millennia of $0 settlement you're encouraging people to bring these class actions. now you won't. i was said is a feature, not a bug. >> lester, bob, about? >> as an academic in a very distinct minority, i have taken note in my book about the reliance of most legal scholars on a belief in the deterrence value of class-action. indeed, i regard that from their

perspective as a matter of faith that is, it is a conviction that if corporations pay billions of dollars to settle class actions, that must be good. now, when you look behind that to see whether there is any empirical basis for that you find out wisely that there is none. moreover, you begin, as i have done in my research, dca close financial relationship between the legal academy and plane to council. there are tens of millions a year, tens of millions of dollars a year that move from plaintiffs' counsel to members of the legal academy for, among other things, to do with class actions what i call and my book the fee council are law professors who are hired by the

class counsel at the time of the settlements to write an opinion to the judge saying, we think this fee is fair. indeed, understated. and so those opinions, they get bit trickier $100,000. the greater that they are affiliated with the more prominent, the higher the fee. i do not think that class actions meet the test of generating deterrence. i think it is very rare. the the majority of class actions have no deterrent value and they're just simply ways of transferring money from lawyers -- for corporations to lawyers. how about that. you worked at the company. utilities. do you think there is deterrent

that comes with these? >> i'm sure there have been cases. no one to say that there is never been one, but i was thinking of a case that was going on a target it really is just take that as an example. how many of us really believe target left themselves wide open and want to dollar client data to be stolen? well, it happened, and i understand it is a criminal enterprise, but i also see what started is doing. they are now already offering remedies that of come out. they're off -- offering people credit tracking for your children. this in a nice letter to somebody explaining what happened then i understand there have been congressional hearings about this. congress has a pretty good idea to get -- on how to get their attention and make sure. it will cost a lot of time, effort, and money. they're already set to my letter from target. the center of this communications. what now more is the planters are going to do to help consumers the and have them -- how to make sure they have not been breached, make sure that

they can do all it they can't. medical book, they're gone their public story, now their congress turned jump them solve their problems. nobody wants congress to try the copies of your problem. but in other cases, whether it be an fta product or the national highway traffic safety ministration regulated automobile, you already have a regulatory body up there and also and the fact that most of your big companies want to do the right thing. their quality and warranty and other things built-in and reputation to%. the degree of incremental the turn stuff is really very minimal the he signal of, the companies of? there is lot more we give sega of england his, fight and you will lend him his friends from law school and otherwise are saying, i sure hope you when that firm. otherwise someone said will be on the block for having decided to make this big fight. they're thinking of their own personal interest to most common

of -- what kind -- what kind of advice to my going to get fit. i had one case where cnn started mentioning it regularly on a continuous news loop as our pr people met and they said get rid of it. it will cost us more in advertising and a particular issue than it is worth. so right or wrong, doing what they were supposed to do and say it will cost us hundreds of millions of dollars to undo what has been done. still the case. do whatever you have to do to make a lake. a lot of different -- different ethical tensions. the real duty to shareholders, you know, if i incur more legal costs than i think over five years it will be lowered. but whether or not, hey, your fiduciary duty to the cheryl resisted the million dollar deal , but ago. in yet delicate weather and i your pride and a problem and whether this is giving you an inoculation broader than you are going to get already with the government regulators. so you already have some of these deterrent factor is in place.

iraqis -- irrevocable damage is one of the issues are trying to avoid. once you have had that, what is left? >> a lot more questions, but i want to let our audience have the option of asking questions. i will call on you, and please identify yourself. and away from the microphone. any questions from the audience? of. >> all right. jerry lewis. alligator urine new york city. and i generally do class-action litigation, but i have had situations where my clients have come to me with these class action notice is proposing settlements. and the situation is even more perverse than the panel has suggested. this was -- in miami experience even if the underlying class-action litigation is a good case, you need a corporation to have done something seriously wrong, plaintiffs' counsel will still cut a deal with the defense

counsel for a low ball settlement that gives them their fees and that essentially cuts of the class even in the case of a valid and good lawsuit. that has happened in my experience of my own clients. either situation will -- a group of physicians, and there was a class action brought alleging that certain insurers said underpaid the physicians' groups to the scene of hundreds of thousands of dollars per doctor over years. and the proposed settlement was going to give the doctors like to in dollars a head, so was clearly a horrible settlement for my clients. i advise them to opt out. that was the advice that was appropriate under the circumstances. my point to the panel is it you're talking about a good case, a case that -- and meritorious case, the incentives remain perverse for plaintiffs' counsel. of course in that case defense counsel would be ecstatic to settle because there would be getting rid of a huge liability

problem by cutting a deal with the plaintiffs' lawyers. let me suggest that those kinds of scenarios occur and are perverse in this context. >> i have seen a settlement like that. we have one pending in front of the ninth circuit the attorneys got $9 million. you know, the attorneys were certainly thrill of that. about $225,000 cash was paid for the kinds. and another $3 million would go the attorneys -- would go to local colleges that were all affiliated with the plan to send defense attorneys. and what this company has done was, i think, pretty clearly fraudulent. it was the type of thing where you did not realize that you're being subscribe to. please click on this button. by the way, your credit card will now be billed $25 per month. and it was a worthless

settlement. the attorneys have paid over a thousand dollars an hour. everybody was happy acheson to the class members to did not know that there attorneys and sold them out. it was very fortunate that we found an objector who wanted to do the right thing. and we will see if the judge approves the settlement anyway and see what the ninth circuit wants to do with it. but opting out is not going to do anything. in the case of -- unless you can actually mobilize tens of thousands of doctors to opt out, opting out does is that these doctors are not right to bail to get their $10 is still left rights bill to bring the lawsuit because the reason was a class-action in the first place and was because it would be mps will to bring the clam individually. so the only time and not that really makes a difference is in

a securities litigation where you have lots of small individuals shareholders began fees of we opt out, but maybe a large pension fund cannot doubt. what i hear is least anecdotally in and no one studies this call will what i hear anecdotally is even in these big settlements where it looks like the defendant is giving of hundreds of millions of dollars when a large institutional shareholder of sun the class they end up being a will to negotiate a better deal for themselves separately would suggest that to the extent these shareholders have any merit the cheryl lewis are, you know, they get shareholder cases aren't doing much better than the bad cheryl is. then.

this cheryl is a selling for $0.3 on the dollar. very clearly a nuisance settlement if. while the attorneys getting -- the attorneys are asking for four times there hourly rate for saddling politically pennies and the dollar. hal -- why -- how is it that you are giving any incentive to attorneys to bring a good case because you cannot -- what are you going to do when someone actually won the case to make you cannot give them more than what these attorneys are getting, but, you know, when a case like that happens they brought a bad case and a selling it for pennies on the dollar or in which case they should not be paid. they should be punished. of they're selling of their clients to have a legitimate claim. again, they should not be paid. they should be punished. they get rewarded by the status quo and the judge criticizing. how dare you say they settled

for too little. and the judge was kind enough to of slightly slice the fees, but was certainly a lot more mean to me that he was city attorneys. that sort of raises i guess i question i had. someone else has a question camorra's and. in of the matter we fix this, apart from what you are doing? this is one of the best ways to fix it, but, of course, the problem with it is, you have to keep doing it. if ted frank retires and there is not someone who is equally smart and energetic filling your shoes, these things could revert pretty quickly back to the way that they were. so what are some policy -- i mean, i think bob's comment on the cost of discovery suggests may rediscover reform is one answer where you could at least take that piece out of the economic equation which would

encourage defendants not to settle bad cases, but what are some policy -- what are some changes in the laws that could actually have affects your? >> well, i mean, it is hard to say. we are not -- the law was already there. it just was not being enforced. so, perhaps you can create a system whereby you come in and do make a successful objection. the plaintiffs' attorneys are required to pay that objector a sum of money. now you have people with the incentive to do it. i got into this -- the very first objection eyebrow was as a private citizen in 2008, and i noticed a bad settlement over a video game where the attorneys are in million dollars in the class members were getting 24,000. and i went in an objective of my own. sure enough, the judge blows of the settlement among but meanwhile i'm not a couple of thousand dollars. i took some time off.

i had to travel to new york. you know, it adds up. and without my particular brand of insanity defense insanity that objection will not have happened. unfortunately i found people -- fortunately i found people generous enough to fund me in my grant from insanity, but it should not have to be that way. you know, we award plaintiffs attorneys for bringing successful class actions even when the class actions are now less successful. but what i have found is even as a non-profit, when we bring pretty modest fee requests judges that are very happy to rubberstamp multimillion-dollar fee requests come in and start asking about every little piece of our theory question, knocked down. and it has gone to the point

where we are not wasting time anymore. it is just sapping -- zapping too much of our resources. it will do it in one big case a year. we have won millions and millions of dollars and it is unambiguous. you know, without creating that sort of incentive structure there is always going to be that problem. in a class-action fairness act, section 1715, covers up they were doing something. before you have a class-action settlement captain of file the state attorneys general's that there is class-action settlement and given a chance to object. that provision has done absolutely nothing. we see the state attorney general's coming in may be one or two cases a year. there are more than one are two cases meriting an objection. even then judges ignore them. the state attorneys general has no standing to appeal. so there is no incentive for the judge to value their say.

there's no incentive for the state attorneys general to get involved, and a general is not. you know, you can create a federal ombudsman are something like that, then who will watch the watch and watch and the watchman? i don't see how that does not have regulatory capture. once upon a time in the bush of ministration the fcc thought about getting involved. there was a young staffer by the name of ten crews. i don't know whatever happened to him, but he came up with the idea that the fcc should get involved in those things. that aspect of the sec, still paying for their staffers who are apparently devoted to it but have done nothing says the most recent president got elected. >> if you want to feel better. >> sure. we will go back quickly. i want to let pam baughman lester see if they have any

policy ideas. >> i promise. this is actually a policy question based upon something tensest which intrigues me. you mentioned the word bounty in your remarks. i saw an article by a fordham law professor several years ago proposing that it would be better if they adopted false claims types of principles providing bounties in false claims cases to change the incentive structure. might that work is a policy option? >> well, yeah. and the principle is there in terms of the common benefit and so on and so forth. and it just needs to be a real substantial volume. we don't see that. right now the incentive -- there is no incentive for people to come in and do this. i have had people approach me, you know, the blood starting to think about it because they realize how much abuse is going on as securities cases and what

you need to know why you need the institutional investors to come in and say you are stealing money from us with these fee requests. probably hundreds of millions being siphoned out of the economy in pure rent seeking. and, you know, why aren't our elected officials who are managing these pensions doing more about it? may be some political pressure in that and. you know, the status quo right now, the only thing that is happening in the non-profit area , you know, public citizen's come in and bring a handful, but nowhere near the scale of what we do. and there are typically more on the settlement as too low and the defendant should be forced to pay more rather than on the sort of abuse of allocation that we're pointing out. >> ideas on this? >> i think the idea of statutory relief of any kind is simply out

of the question, at least for the foreseeable future. so whenever changes that are feasible are restricted, i think, to the judiciary which created the problem in the first place, first by changing the rule with regard to laugh often-opt out in 1966 and expecting only a very small change in the way that jurisprudence would occur thereafter, but failing to take into account the enormous incentives that lawyers are provided with by contingency fees, i think one way in which we could improve the situation would be to clone said. we would need more tense, and it is not out of the question. there might be others that

follow in his footsteps. because when courts kids serious lawyers making serious arguments that will pay attention in ways that they have not heretofore with regard to objectives. there are couple of specific policy areas that i focused on and my book. one has to do with the so-called american rule as opposed to the english rule and the american rule of. each side is responsible for their own attorney fees whereas under the english system, english rule the losing party pays some part of the prevailing party's attorneys' fees. now, we do have statutory fee shifting in our country in which the prevailing party is able to collect attorney fees under various statutes involving civil rights, environmental issues, and a variety of climate issues and other things, but when the supreme court of the united states adopted the american role

back in the early 19th century, sometimes to of the 18 twenties is something like that, that is having a remarkable fact sense that a lawyer is having -- seeking clacks the -- class action status on someone trying to use the asymmetrical costs that benefit them that they can impose enormous costs on the defendant by discovery requests and force them to deal with millions, chilly millions of documents. that can generate settlements just in terms of cost avoidance for the corporation. but there is no incentive for the corporation really to do get out because the lawyer -- the

class lawyer loses the case, spends a lot of time come but there is no financial penalty because the prevailing party, i.e. the corporation that the case dismissed campeau's any fees. and i think some enterprising judge should look for a crack in the american role doctrine so that in cases which are brought solely for the class action, brought solely for the economic interests of the lawyers and these, i think, in many cases are pretty apparent. a judge can say -- it may be bad faith, but that may be a bit of a stretch. the plaintiffs' lawyers will have to reimburse the company for some part of its legal expenses. that would be -- there are some judges that might be willing to do that. one of my pet peeves in the class action system which really have not touched upon is the

lodestar, a big word that simply means the number of hours worked times the yearly fee. i wrote in my book and some of the lawyers have fees that are out of this world. and that meant that literally because while the day on artisan in 24 hours, 740 hours and some of the lawyer's bill on seventh time. at least i have seen bills with 72 hours billed in a single place, not that uncommon. look, the loadstar is on an honor system basis. and, frankly, i think there is an enormous amount of cheating it goes on. now, if you're sitting down in writing yourself to check you have a choice. write to check for a thousand dollars to myself for $10,000 or hundred thousand dollars. let me see. this is a tough one. at the decide what to do. there is way in which judges

could go behind this. they don't want to, frankly, because if this was really exposed it would be an embarrassment to the judiciary, but if the judge required not just that the request of a law firm which could run literally thousands of pages. fifteen, taunted, 30, 40 lawyers and one firm working on the matter over to, three, four years. but if they require the firms when they put in a fee request to also put in the hours that their staff people, their attorneys have worked out of class actions as well as all other matters, and this could be done electronically. a very simple coating process, you would find out that the depth of cheating that goes on in terms of how many hours were worked. my seat in the pants sense is we're talking about anywhere

from 25 to 40 percent of the hours claimed in the lodestar are simply -- i don't mean the kind of hours were you me with your partner and you both bill. and talking about real cheating. >> fascinating, and we can talk about it all might mumble we're running short on time. .. there are a lot of good