Hilda Bankston, Who Testified Before Congress About Her Fen-Phen Settlement Was Driven Out Of Business After Being Named In Numerous Lawsuits

gov+fen+phen, Mar 11, 2005

In a recent class action lawsuit in Illinois against Poland Spring, class members claimed the company’s bottled water was not pure and was not from a spring. Underthe settlement, consumers received coupons for discounts on Poland Spring water. Poland Spring admitted no wrongdoing and is not changing anything about the way it bottles or markets its water. The only people who made any cash on the settlementwere the class action lawyers, who pocketed $1.35 million. In a 2001 Texas class action over late fees on movie rentals, Blockbuster Video agreed to a nationwide settlement in which each plaintiff became eligible to receive up to $20 worth of coupons for free video rentals (not including new releases) and certificates for $1 off non-food items. Meanwhile, plaintiffs’ attorneys received over $9.25 million in fees and expenses. It is estimated that less than 10 percent of the coupons were used.

In an Alabama class action lawsuit against Bank of Boston in the 1990s, the more than 700,000 people in the class “won” the case, but actually lost money. The case involved the amount of money kept in mortgage escrow accounts. Under the settlement agreement, some class members received payments of less than $10, after which they saw about $90 deducted from their accounts to pay the $8.5 million infees for their lawyers. Class members ended up losing about $85 to $90 each. In a class action suit against Cheerios over a food additive with no evidence ofinjury to any consumers—lawyers were paid nearly $2 million in fees, which worked out to a rate of approximately $2,000 an hour. Consumers in the class received coupons for a free box of cereal. Local drug store owner Hilda Bankston, who testified before Congress about her classaction experiences, was driven out of business after being named in numerouslawsuits alleging defective manufacture of Fen-Phen, Rezulin, and Propsulsid.

By including her drugstore as a defendant, plaintiffs’ lawyers kept cases against out-of-state defendants in Jefferson County, Mississippi, from being removed to federal court. Although she was eventually dropped from the suits, Bankston has been forced to spend thousands of dollars in legal fees. As I said at the outset, the Class Action Fairness Act began as an effort to update diversity jurisdiction for the modern-day, multi-state class action. But we soon realizedthat consumers are being victimized by Trial Lawyer, Inc., just as much as, and perhapsmore than, defendant companies. So we included some consumer protection provisions in the legislation. The bill addresses one of the biggest concerns that has been expressed by consumer groups about class actions—the prevalence of coupon settlements that provide little or no value to consumers but result in millions for their lawyers. It says attorneys’ fees incoupon settlements must be based on the value of the coupons actually redeemed by consumers or on the hours actually spent bringing the case (rather than the theoretical

 value of all the coupons being offered). It also includes a “Consumer Class Action Bill of Rights,” which would: