Here, in a report by Ted Frank (who is objecting to the settlement) and Will Chamberlain about Kumar v. Salov North America Corp., . Excerpt:
The class will probably recover about $320,000 in cash; roughly 65,000 class members jumped through the hoops to file claims worth about $5 each. But class counsel is asking for $987,500 in fees, triple what the class will actually receive. How did class counsel justify such a disproportionate fee?
Here’s how: embedded deep in the settlement agreement is a “kill-switch” provision that allows the defendants to cancel the entire settlement if their total payout of claims, fees, and administrative costs exceeds $5,000,000. Based on this provision, the parties argue that the defendants “made available” $5,000,000 to the class. The problem? This number bears no resemblance to reality, because the settlement throttles the number of claims. Anyone who purchased Filippo Berio is a class member; but only those class members who are willing to attest, under oath, that they relied on the tiny “Imported from Italy” wording [which is alleged to be deceptive] can file claims. The parties admitted, in their own briefing, that this requirement meant there was almost no way the $5,000,000 figure could be reached without massive fraud. In their words, the kill-switch provision was an “escape valve,” not a good-faith estimate of class recovery.