McDonald's Class Action Settlement Madness

[Thanz]

A few years ago, employees of the promotions company that handled things like McDonald's Monopoly games were found to be stealing the winning pieces, giving them to their friends and splitting the winnings. Not surprisingly, a Class Action lawsuit sprang up and was eventually settled. Details of the settlement can be found here: http://www.gamessettlement.com/index.php3

Basically, the settlement is that McDonald's will give away 15 $1 million prizes this weekend, 5 per day, to people who show up at a restaurant in one of the covered territories, which include Canada, USA, and a bunch of others. Over 15,000 restaurants. 5 per day. That is what the Class of plaintiffs get.

The lawyers for the plaintiffs, however, get legal fees up to $3 million. Out of this they will pay $1000 or $500 each, depending, to the various representative plaintiffs.

What the heck is going on here? I'm a lawyer, and this disgusts even me. The plaintiffs get a snowball's chance in hell at some money, McDonald's has to shell out millions, plus their own defence costs, and the only people who really benefit are the lawyers. When I see crap like this it is not hard to see why people hate lawyers so much.

 

[Luke T.]

I wonder if McD's will make the money back in extra sales from people going mad trying to win the prize.

 

[Zero]

I wonder if McD's will make the money back in extra sales from people going mad trying to win the prize.

Of course they will!

 

[Brown]

I've written previously about class actions for damages. In the typical scenario, the people who are supposed to be protected (i.e., the members of the class) are the ones who end up with nothing. The lawyers who supposedly represent the class have tons of incentive to sell out their own clients, because they will then collect a huge fee from the settlement. (It is not unheard of for the defendant to make a payment to the class's lawyers, and to give the class itself nothing). And of course, the defendant, who is the accused bad guy, gets protection from future lawsuits. Let's not forget also that the judge benefits, because settlement moves a complex case off his docket.

So yes, the lawyers benefit and McDonald's benefits and the judge benefits. And the people who are supposed to benefit (indeed, the people for whom the class action system was supposedly set up to protect) get screwed.

 

[Thanz]

I wonder if McD's will make the money back in extra sales from people going mad trying to win the prize.

I don't think so, at least according to the rules as I understand them. All you have to do to enter the contest is enter the restaurant, and then you will be told if you are a winner. One entry per visit, and all attendances at the same restaurant in a two hour period are considered one visit. So, if people go crazy trying to win, what they need to do is drive around to as many restaurants as possible, enter, and if you don't win, leave and go to another. No purchase necessary.

They also aren't promoting this very much. I happened to succumb in a moment of weakness today and eat there, and I picked up a little flyer. I've heard no ads that would normally accompany this kind of giveaway.

 

[Luke T.]

My wife's father was part of a class action suit against the asbestos industry. He died in 1996. Two years ago, six years after he died, my wife received a check from the lawsuit as his heir. It was for $200.

She received another check from an entirely separate law firm a year later for about the same amount.

She received another check last week from another law firm for about $400. This check was from a law firm that sued another law firm in a class action suit against the first law firm that sued the asbestos industry in a class action suit and then didn't pay the plaintiffs!

So now we have lawyers suing lawyers.

My wife's father was a merchant marine. It looks like the merchant marines submitted her father's name to several law firms who are all class action suing the asbestos industry. We have no idea how many other law firms are out there suing on her father's behalf. And we have no idea how much money they are all making, and what companies are actually being sued. It is all very bizarre.

 

[zenith-nadir]

I remember the story because at the time a friend of mine worked at a similar marketing firm and had some interesting "opinions" about how the rigging of the McDonald's contests went undiscovered for 5 years. Unbelievably to the tune of 13 million dollars.

I just looked up Simon Marketing at Forbes, Simon Worldwide, Inc., and they are D.O.A.

 

[Jaggy Bunnet]

The plaintiffs get a snowball's chance in hell at some money,

This bit seems reasonable - after all it is the loss of this snowball's chance that they were seeking damages for so giving it back seems fair.

 

[Brown]

My wife's father was part of a class action suit against the asbestos industry.

I used to follow the asbestos litigation closely, but it's been over 12 years since then. Back then, there was resistance to class actions because every plaintiff had different damages. The litigation was treated as "mass tort litigation" but not as a class action. One basic goal was to compensate the victims first, and to compensate the lawyers second (which is the way things ought to be).

In addition, different plaintiffs were exposed to different asbestos-containing products. One of the principal issues concerned sorting out which plaintiff was exposed to which product(s). Makers of asbestos ceilings, for example, did not want to pay for damages to individuals who had been exposed to asbestos pipe insulation, but not asbestos ceilings. This sorting out of responsibility cannot be well handled in a class action.

In other words, the point of the mass tort litigation was to identify for each plaintiff which defendants were responsible, and to compensate each plaintiff according to his actual damages. This is not what a class action seeks to do.

In or around 1992, however, a judge in Pennsylvania assumed jurisdiction over all asbestos litigation. Also, some asbestos makers were seeking protection in bankruptcy court.

It is possible that this whole thing turned into a class action, but that seems unlikely to me. (I don't know whether it did or didn't.) It's possible that the payments come from insolvent companies who pay fractions-of-cents-on-the-dollar. This is still a really bad deal for the plaintiffs, but it is vastly different from what goes on in a class action.