The 7th Circuit Court of Appeals court didn’t exactly call an Indiana appeal a small-change case, but it suggested the few dollars each member of a class might receive could be more usefully given to charity.
David Hughes is the lead plaintiff in a class-action lawsuit over automated teller machines in two Indianapolis bars that he alleged failed to comply with a now-repealed federal law that required ATMs to carry a disclosure of fees both onscreen and on a sticker affixed to the machine. The sticker is no longer required, and the machines he used carried the onscreen disclosure of a $3 transaction fee.
Judge Jane Magnus-Stinson decertified the class in the U.S. District Court for the Southern District of Indiana, and Hughes appealed, winning a reversal Wednesday that at most could win for the class $10,000 under penalties for violation of the Electronic Funds Transfer Act, 15 U.S.C. § 1693b(d)(3). There are at least 2,700 people in the class in David Hughes v. Kore of Indiana Enterprise Inc., et al., 13-8018.
In reversing the District Court, Circuit Judge Richard Posner concluded for the panel, “We hold only that the judge’s opinion decertifying the class does not provide adequate grounds for her ruling. There may be such grounds. And our extended discussion of
how to distribute damages was not meant to imply that Kore must be liable in this case. For all we know, it has good defenses.”
But Posner wrote that the prospect of thousands of plaintiffs getting perhaps $3 raises questions about the process and remedies. “Since distribution of damages to the class members would provide no meaningful relief, the best solution may be what is called (with some imprecision) a “cy pres” decree. Such a decree awards to a charity the money that would otherwise go to the members of the class as damages, if distribution to the class members is infeasible.
“A foundation that receives $10,000 can use the money to do something to minimize violations of the Electronic Funds Transfer Act; as a practical matter, class members each given $3.57 cannot,” the court reasoned.
Kore, which owned and operated ATMs in bars including Average Joe’s in Broad Ripple and another establishment the court described as “said to be popular with college students” did not file a brief on appeal to the 7th Circuit, the opinion noted, and the court opined that perhaps that meant the defendants favored class status against the potential risk of individual suits.
But Posner mused that didn’t seem likely, noting no apparent individual claims had been filed. “Although one reason for the paucity of litigation may be unfamiliarity with the law, another may be the difficulty of finding a lawyer willing to handle an individual suit in which the stakes are $100 or an improbable maximum of $1000,” he wrote.
“But what is a reasonable attorney’s fee for obtaining a $100 judgment? More than one might think, if the judge thought that the suit had broadcast a needed warning about compliance with the Electronic Funds Transfer Act (albeit the specific provision that Kore is charged with violating has been repealed); but enough to interest a competent lawyer? The paucity of litigation suggests not.”