Litigation

The NVIDIA class action settlement bait-and-switch

By Ted Frank

They deny it, but NVIDIA marketed a defective chip for use in laptop motherboards that would overheat and damage other components in the laptop. A series of class actions were consolidated in the Northern District of California behind lead counsel Milberg LLP (formerly Milberg Weiss), and settled.

The settlement seemed eminently fair: Apple and Dell laptop owners would get their laptops repaired for free; HP laptops couldn't be repaired, but their owners would get a HP replacement laptop of "like or similar kind and value" (though they weren't more specific than that in the class notice, the settlement papers, or the court filings). NVIDIA set aside hundreds of millions of dollars of charges for the settlement and class counsel got $13 million in fees. There were a handful of professional objectors making boilerplate claims, but if a class member had come to me late last year and asked if I would object to the settlement, I would have told them no.

I've seen class counsel and defendants tacitly collude to rip off class members in a variety of ways in the class action settlement process, but never anything like this: NVIDIA simply ignored what the settlement said, and told every class member that, no matter which of the thousands of configurations of laptop they owned, from the most budget Compaq to the highest-end 17-inch dual-core-processor full-size laptop to $1700 tablet computers with touch screens to sophisticated entertainment centers designed to be hooked up to HDTVs and edit video, all they would get under the settlement was a low-end single-core-processor Compaq CQ-56-115DX, which sold at Best Buy last week for $329.99. Milberg, rather than enforcing their clients' rights, told class members who complained that this is what the judge approved, and generally ignored them. It's not surprising that the response rate is less than 1% so far, with less than two weeks before the claims deadline; NVIDIA would save tens of millions of dollars relative to what they promised in the settlement if no one intervened.

Class members apparently abandoned by their attorneys approached me, and the Center for Class Action Fairness (which is not affiliated with the Manhattan Institute) on Monday filed expedited motion papers asking the Court to enforce the settlement. In my mind, it's so plainly obvious that the settlement is not being followed that the only question remaining is why I was the one who filed these papers with the Court rather than Milberg. I hope we get to find that out. And look at me: the tort reform advocate is a plaintiffs' attorney now. Most of the relevant docket is available at the CCAF site.

Full post as published by Point of Law on March 01, 2011 (boomark / email).