Court Approves MacBook Cord Settlement After Slashing Attorneys’ Fees

As is often the case in a settlement, there is no great noise accompanying the final approval of the settlement with Apple, Inc. by the large class of plaintiffs who claimed that Apple’s Magsafe power adapters were faulty.  This lawsuit was first filed in 2009 and alleged that the Magsafe power adapters were prone to fraying at the ends.  This fraying tendency created a possible fire hazard and so the plaintiffs claim that Apple was negligent in their design.  In November 2011, Apple agreed to a settlement offer by the lawyers of the class action, and agreed to pay consumers up to the price of a new adapter each, depending on how long ago the consumer bought the adapter.  Consumers were contacted and filed their information to receive the settlement using a website specifically created for this purpose: adapterssettlement.com.  Apple was explicit on this website, in saying under the frequently asked questions section that “Apple denies all allegations and has asserted many defenses. The settlement is not an admission of wrongdoing.” 

The matter should have been resolved once and for all at that point, but members of the class objected to the particularly large attorneys fees of $3 million and that the judge made an appeal too difficult, requiring a $75,000 bond from objectors.  The 9^th Circuit vacated the settlement after review and required the negotiations to continue.  The judge in particular was uncomfortable with how the lower court judge had come to the $2 million dollar base pay for attorneys without explaining how he had come to that number, and then increased that amount to $3 million by applying a multiplier without explaining why it was necessary.

The opinion was unpublished, meaning it had no precedential value, but a copy of it can be found here.  This decision is very important not only to Apple because it cast even more negative attention the class action, but it is also important to lawyers, who should remember that even settlement offers can be rejected by the courts in certain situations.

In general, settlement can be a great option for companies to keep the alleged negligence somewhat quiet and, as Apple said, avoid admitting wrong action.  For a consumer goods company like Apple, it is very important to maintain a good market image so that consumers think of your company in a positive way.  That is why when class actions such as this one rear their ugly heads, settling can be a great option.  From a PR perspective, class action lawsuits can be a nightmare, and juries on these issues can find very large damages.  It was wise for Apple to take the case into their own hands with settlement.

In this case, for the class, the settlement seems fair.  Thanks to the diligence of the challenger and the 9^th Circuit courts, the class will receive more of the money themselves rather than giving it all to the attorneys.  Though the attorneys no doubt worked hard on the case, they should not receive too large of a percentage of the settlement amount unless there is good cause.  As the 9^th Circuit pointed out, there was no such cause here.

* John Hodnette is a third year law student at Wake Forest University School of Law. He holds a Bachelor of Arts in English, with a minor in Philosophy, from Auburn University. Upon graduation, he intends to practice in the Chicago area.