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Three HP class actions settled in USA

October 3, 2014

hplogonewThe three actions claimed HP had “misled consumers” about its cartridges and when they needed to be replaced.

Courthouse News reported on the settlement, which was confirmed on 30 September, and which saw $1.35 million (€1.06 million) in fees paid to lawyers on behalf of the plaintiffs in all three class actions, numbering around 13 million people, though only 122,000 “filed claims” for coupons to be received as compensation.

All three of the class actions were submitted in 2007, with one case claiming HP “duped consumers into believing that they needed to replace the ink cartridges before the cartridges were empty”; another alleging HP “neglected to tell customers that its printers combined colours from ink cartridges to print black and white text”; and the final one claiming the OEM “concealed that some of the ink cartridges had expiration dates”.

The settlement saw HP agree to issue coupons, as mentioned above, for the value of between $2 and $6 (€1.58 and €4.75) to consumers, as well as “discontinue using certain pop-up messages showing an image of an ink gauge”, and to “disclose additional information through the packaging, user manuals, interfaces [of printers] and the HP website”.

One particularly interesting aspect of the settlement is its links to the HP-Autonomy situation, with US lawyer Ted Frank condemning the OEM’s settlement with its own shareholders because the law firm representing the shareholders, Cotchett Pitre & McCarthy, also represents the class action plaintiffs, with Frank fighting the class action settlement “for years on behalf of plaintiffs who weren’t happy with the deal”.

The settlement initially offered inkjet cartridge purchasers a $2 (€1.49) coupon but paid the lawyers $2.9 million (€2.1 million), which “seemed like high compensation to the lawyers for a meagre return to the plaintiffs”, and so Frank challenged the settlement, with an appeals court agreeing and sending the case back for negotiation; he believes that “most settlements are just paying off the attorneys”.

Frank stated that he founded his organisation “to intervene in cases where he felt lawyers were benefitting far more than their clients”, and he believes that the Autonomy settlement between HP and its shareholders “violates basic conflict-of-interest ideals”, as a law firm “shouldn’t be both suing and defending the same company at the same time”, with his document filed as part of the inkjet case to bring the Autonomy case to the court’s attention.

At the time the settlement was originally made, US District Court Judge Jeremy Fogel awarded $1.5 million (€1.18 million) in attorney fees and nearly $600,000 (€475,183) in costs, based on his conclusion that the “ultimate value” of the settlement to the class was approximately $1.5 million – a “significant step down” from the $7 million (€5.5 million) the law firm wanted, and a “slight reduction” from the $2.3 million (€1.8 million) that HP had agreed to pay.

On appeal, the ninth circuit court ruled the attorney fees must be “attributable to the award of coupons”, and must be calculated “using the redemption value of the coupons”, as it would be “improper for the fee award to outstrip” the class action benefit. The final amount of $1.5 million “reflects a 10 percent reduction in the amount previously awarded”, therefore, and Fogel “declined to disqualify” the law firm despite Frank’s objections.

Fogel concluded: “Given that the prior award of $1.5 million was meant to compensate class counsel for obtaining the entire settlement, including both the coupon and non-coupon aspects, and that the court’s current task is to compensate class counsel for obtaining only the non-coupon aspects of the settlement, the court concludes that it must reduce the original $1.5 million award to reflect those fees attributable to the coupon aspect of the settlement.”

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