A Classless Action

A massive consumer lawsuit against U.S. Bank ends in nickels and dimes for the plaintiffs, but big checks for attorneys

First Bank became U.S. Bank in the summer of 1999, and Lorence says that shortly thereafter errors began appearing on his accounts. He was getting charged by marketing companies whose services he did not use. And he started receiving a flood of phone calls from solicitors. "I'm not even listed in the phone book," Lorence complains, noting that he eventually spent $4,000 refinancing his mortgage, clearing his credit history, and reopening accounts at smaller neighborhood banks because he was "real concerned with privacy issues."

Knoll, a 35-year-old native of St. Paul and alum of the University of Michigan Law School who spent four years working for the Federal Reserve, contends that the settlement is geared for the attorneys and not for the customers, taking particular issue with lawyers' fees he claims amount to $312 per hour in this case. "To agree to paying only $3.5 million in a class-action suit with so many possible members is unconscionable on its face," he insists, and adds that U.S. Bank assets stand at more than $80 million. "I would have been happy for the judge to reject the claim outright. I don't have a problem with class-action attorneys' fees. I'm just saying in this particular case there won't be any money left over for customers."

In spite of that possibility, Knoll wants more people to file, "and for everyone who is entitled to money from the bank to receive it." U.S. Bank sent forms to prospective class members in September, but there are still more claims coming in, Knoll says. (He adds that there's a Web site where U.S. Bank customers can find out more about the settlement parameters and download applications to join the class: www.claimsadministrator.com.) He's unhappy with the terms of the settlement, but he's also concerned that the paperwork is confusing and probably has been ignored by potentially hundreds of thousands of bank customers who deserve compensation.

Bill Lorence says it cost him $4,000 to restore his privacy after U.S. Bank sold his personal and financial data
Tony Nelson
Bill Lorence says it cost him $4,000 to restore his privacy after U.S. Bank sold his personal and financial data

Rick Solum of the Minneapolis law firm Dorsey and Whitney represented the bank. He argues that the number of objections raised is small in light of the fact that four million notices were sent out about the suit in September. "We are willing to put up a fund of X dollars and have a system to give out the money," Solum says. "But nobody wanted it to get beneath $10 a person." Right now, Solum believes Knoll's calculation that the settlement will result in payouts of $25 to 80,000 U.S. Bank customers "may be about right," even though initial press reports put the individual amounts at about $50.

Solum maintains that the bank is doing its part to compensate for any damages, but says it's not clear how to make things right because no U.S. Bank customers were actually injured by the information-sharing. "Nobody could figure out a level of upset and put a price where people were at," he says. "Legally, you don't get money just because you feel bad." Further, Solum points out that U.S. Bank quit swapping data as soon as the state filed suit in 1999, and that the bank surrendered its $4 million in profits from the information-selling: $1.5 million went to Habitat for Humanity; $2 million to other states; and $500,000 to the State of Minnesota.

"We didn't care much about the merits one way or the other; we just wanted to get this behind us and be honorable," Solum says. "Maybe when people get their $20 or $30, they'll see it as a token payment. Maybe others, when taken with an apology from the bank, will see it as a nice gesture."

Karl Cambronne, one of the lead attorneys for the plaintiffs, also dismisses the objections raised by Lorence and others. "Several people who have filed objections fall into the category of lawyer-bashing," says Cambronne. "But some...actually say that the lawsuit is silly, and that everybody knows companies do this, and that's an interesting aspect to the settlement. There's an element of anger associated in this case, but there's not an injury. You usually don't get money just because you're pissed off."

Cambronne doubts that enough claims will come in to drive individual awards to less than $10 each. But even if the number of plaintiffs mushrooms, he insists, this class-action suit was too "risky" to allow the plaintiffs to demand a fixed dollar amount for each claim. Why not just try to get $200 per person? "The bank would never agree to it," he says. "The bank already gave up profit and revenue [in the Hatch lawsuit]. Another $3 million or $4 million seemed fair." And although attorneys for both sides agree that U.S. Bank has taken an enormous public-relations hit, they say the case very likely would have gone against the plaintiffs had a settlement not been reached.

Knoll admits that his complaints are a "pain in the neck" in this particular settlement, and notes that his initial objection ran to 13 pages. But he feels his actions are justified. "U.S. Bank is not conceding wrongdoing, they are saying lots of banks do this," he says, "It was clear that the attorneys and the judge wanted to get it over with and that it was a formality. I was disappointed at the hearing when it became clear that the judge hadn't read any of the objections. If he doesn't know all the information now, it will hurt him in the appeal.

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