New Lawsuits Allege Companies Conspired To Secretly Pocket Class Action Payouts

Forbes

30-05-2025

The new lawsuit accuses the companies that manage class action payouts and the banks that hold the settlement funds of conspiracy and fraud, among other charges.
Getty
Prominent attorney David Boies and his firm Boies Schiller Flexner filed three lawsuits this week alleging that at least five companies handling payouts for class action settlements conspired to secretly pocket bank interest payments and award each other business outside the view of attorneys and judges. The suit says the scheme has resulted in lower class action payouts for consumers.
The firm filed the suit against claims administration companies Angeion, Epiq and JND Legal Administration, three firms that were also the subject of a recent lawsuit accusing them of taking secret payments from fintech companies. The Boies suit also named Huntington and Western Alliance, the two leading custodial banks for class action lawsuits, as defendants.
Boies filed the case in three different federal courts: the Northern District of California, the Southern District of New York and the Southern District of Florida. The charges are numerous and include allegations of conspiracy, fraud, breach of fiduciary duty, unjust enrichment and unfair competition. (The multiple filings, with different plaintiffs, may be an attempt to position the Boies firm to be the lead counsel in any multidistrict class action that is certified.)
The allegations are part of a troubling pattern in class action payouts that Forbes reported on last week in an in-depth article about the companies quietly pocketing class action payouts.
In statements to Forbes, representatives from Angeion and JND denied the allegations of the new suit, calling them 'baseless.' A spokesperson for Western Alliance called them 'false' and 'full of inaccuracies.' Huntington declined to comment, and Epiq didn't respond to our request for comment.
Have a story tip? Contact Jeff Kauflin at [e-mail] or on Signal at jeff.273.
Here's how the money in class action payouts moves: When a lawsuit is settled, a judge appoints a claims administration company to handle the distribution of funds to consumers. The administrators also choose a bank to house the money before it's distributed. These deposits can total hundreds of millions of dollars in a large case, and since it can take months or years for the money to be paid out, the funds can earn millions of dollars in interest while sitting idle.
Most settlement agreements dictate that any interest earned on the settlement funds should go to the consumers harmed by the company being sued, but the new Boies suit alleges that claims administrators, instead of giving all the interest to the class members, 'demanded that they be given a cut of the profits.' If the banks said no, the administrators threatened to take the lucrative deposits elsewhere. 'The Administrator Defendants agreed with each other that they would implement such a scheme, and each of them proceeded to act accordingly, in concert with one another,' the suit says.
The filed complaint gives examples of eight class action suits, including the $119 million Capital One data breach and the $117 million Yahoo! data breach, where the interest rate paid to class members was less than 0.5% despite market rates then being between 4% and 6%. The suit says that, according to former employees at Huntington and Western Alliance, the banks paid to claims administrators 'at minimum, the difference between the market rate on an interest bearing account and the interest that the Bank Defendants paid to the class members.'
The banks would 'deposit the kickbacks into [special purpose entities] separately created by the Administrator Defendants to hide the scheme.' None of these payments were ever reported to a judge, the suit says, despite the fact that claims administrators are required to submit a proposal outlining all of their services and costs and get them approved by a judge before a payout begins.
One topic the Boies lawsuit doesn't address is the rebates that fintech companies have paid to settlement administrators in exchange for hiring them to distribute class action payouts through digital prepaid cards, which Forbes covered in our reporting last week. Boies Schiller Flexner declined to comment.