Tiny Settlement Check Gets Man “Angry” About Massive Plaintiff Lawyer Payouts

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Jon Sourbeer, a computer science student and science fiction writer in Washington State, got so angry at the $20.91 settlement check he received from Toyota that he wrote an op-ed in the Wall Street Journal [subscription required].

However, if you think he’s mad at the car company for stiffing him, you’re wrong.

Sourbeer points out that while he and other Toyota owners received a check that can’t cover a single tank of gas, plaintiff lawyers made bank:

The court awarded attorneys fees totaling $200 million, plus $27 million for expenses. And what did that get? Well, besides my $20.91 check, the 25 primary plaintiffs and class representatives—those connected directly to the case and participating in the actual lawsuit—received $395,270.

You read that right: The group of some 85 attorneys and their firms made about 500 times as much as the total amount the primary plaintiffs received.

Such massive disparities aren’t unusual in class action lawsuits. A 2013 Institute for Legal Reform (ILR) study found that plaintiff lawyers “are frequently the only real beneficiaries of the class actions.” It notes other examples where plaintiff lawyers got big paydays while class action members got little:

  • A Missouri case against a stock broker resulted in “only $20.42 to each of the brokerage’s former customers and three $8.22 coupons to each current customer.” Plaintiff lawyers got $21 million.
  • In a class action suit against Kellogg’s, “class members could request $5 refunds for up to three boxes of cereal.” Plaintiff lawyers got $1.3 million.

And recently, U.S. Chamber President and CEO Tom Donohue explained how lawyers made more than half-a-million dollars from three text messages:

A Buffalo Bills fan sued the NFL team for receiving too many text messages—messages that he had signed up to receive. The fan claimed that he received three more messages in a two-week period than the Bills had promised to send and sought statutory damages. In the end, the lead plaintiff pocketed $5,000 in damages, other recipients of the extra texts received $2.4 million in payouts, and the lawyers walked away with a cool $562,500. So if you ask the Bills how much three extra text messages cost, the answer is $3 million.

Such lawsuit abuse harms the whole economy, Sourbeer points out:

How much will that cost me in the future? Will it add $200 to the price of my next car? Or $500? Or $1,000? Maybe that’s too much of an add-on in this case. But is it too much when we start totaling the lawsuits that hit all the products we buy every year?

The United States has the costliest legal system in the world. This weighs down our economy and makes us less competitive globally.

Knowing that make me angry too.

EDITORS NOTE: The featured image is of a settlement check similar to one that was sent to Jon Sourbeer. Photo credit: Gilardi & Co. LLC.