In all my long years of reporting on class actions, I can’t remember ever writing a story about one of the handful of U.S. companies in the business of administering settlements. Sure, I’ve covered BP’s recent feud with court-appointed claims administrator Patrick Juneau and the alleged misconduct of some of Juneau’s staff. But not about Garden City Group, PricewaterhouseCoopers or Brown Greer, the companies that are actually processing claims from the Deepwater Horizon oil spill litigation, under both Juneau and his predecessor at the Gulf Coast Claims Facility, Kenneth Feinberg of Feinberg Rozen. I’ve written about U.S. District Judge William Pauley chastising the Securities and Exchange Commission for failing to exercise strict supervision over the investors’ compensation fund established in the SEC’s 2009 settlement with Zurich Financial, but not about the fees Garden City Group charged to administer the investor fund. Claims administrators are an essential part of the class action mechanism. They’re the businesses that help lawyers figure out how to inform potential class members that they may have claims and subsequently evaluate the claims that are submitted. Yet there’s scant scrutiny of the claims administration business by journalists, or, for that matter, judges.
For its part, the industry treasures its reputation for neutrality, according to Steven Weisbrot, an executive vice president at the recently-formed claims administration firm Angeion Group, which was founded by longtime executives from other firms in the business. “Both sides have to trust claims administrators,” Weisbrot said. “Trust allows the system to work.” So as a rule, he told me, businesses that make their money administering class actions prefer a low profile. Sometimes courts will ask a claims administrator to submit declarations explaining a class notice plan, Weisbrot said, and some judges insist on competitive bidding for settlement administration gigs. Generally, though, claims administrators would rather not attract attention.
That’s why I was surprised to see an amicus brief from Angeion in support of reconsideration of a ruling by the 3rd Circuit Court of Appeals that decertified a class of Florida purchasers of Bayer’s One-A-Day WeightSmart diet supplement. As I suspected it would, the reconsideration motion, filed by Deepak Gupta of Gupta Beck, has generated some impressive amicus support. Last week, Public Citizen and Public Justice both joined the Florida class in arguments that the 3rd Circuit panel set an impossible – and unnecessary – standard of ascertainability when it said that the class couldn’t be certified without a rock-solid plan to determine purchasers of the Bayer diet supplement. A group of 10 law professors specializing in civil procedure, led by Arthur Miller of Harvard Law School, asserted in another amicus brief advocating reconsideration that the appellate panel’s new ascertainability standard is “a notion entirely divorced from the text and purposes of Rule 23″ and a “doctrinal error (that) threatens to render the class action procedure unavailable in the very small-value consumer cases that necessitated Rule 23 in the first instance.”
Those are all forceful arguments, but public interest groups and law profs are frequent filers of amicus briefs. Claims administrators are not. So why did Angeion feel the need to poke its head up? It was to defend the expertise and best practices of its industry, Weisbrot told me, from an appellate ruling that, in Angeion’s view, disregarded claims administrators’ hard-won ability to discern between valid and invalid claims.
At the trial court level, Florida purchasers obtained a declaration from James Prutsman, an executive at the claims administrator Rust Consulting. Prutsman described, in general terms, Rust’s class notice and eligibility processes. (The Federal Judicial Center offers considerable guidance for judges evaluating proposed class notices, but screening claims on a settlement fund seems to be entirely the purview of claims administrators.) In class actions involving low-cost consumer products for which purchasers are unlikely to save receipts, the industry does rely upon sworn affidavits from class members, Prutsman said. But administrators have learned to ask for information that will weed out fake claims, such as where claimants made purchases, the manner of purchase and a physical description of the product. They also run what Prutsman called “programmatic audits” to identify duplicate claims and outliers.