Judge Alsup held a 4-hour marathon evidentiary hearing in San Francisco. On trial (without being formally charged or sued) was ClaimsHero.
Claims Hero is an Arizona law firm that attempted to entice book authors who are class members in the Bartz v. Anthropic settlement. ClaimsHero tried to convince class members to opt out of the settlement, so ClaimsHero can represent them and take a percentage of any future recovery for the opt-out class members who agree to ClaimsHero’s represenation.
The Bartz Class Counsel had objected to ClaimsHero’s overtures as a misleading “bait and switch,” giving the impression that class members were actually filing “claims” instead of opting out and without disclosing the risks of opting out and potentially recovering a lower amount or nothing at all.
At an earlier hearing on November 13, Judge Alsup agreed, providing interim relief to the Bartz Class Counsel. Judge Alsup granted interim relief to the Bartz class of authors. ClaimsHero had 48 hours to update its website in the following ways:
- Produce all ClaimsHero’s marketing materials re this case to both court and parties.
- Disclose that ClaimsHero itself “has no experience in federal or state court.” Plus, disclose that ClaimsHero would enlist another law firm with a higher contingency fee to litigate the case. According to Law360, Judge Alsup said: “I feel this is the single biggest misleading part.”[Without such disclosure,] it is a “bait and switch” and “fraud.”
- Disclose that Judge Alsup ruled for Anthropic on fair use in AI training.
- Stop using the word “claims” in the way Bartz Class Counsel identified as misleading.
- Stop using Anthropic’s stylized trademarks and logos in its overtures to class members.
Wihtin the deadline, ClaimsHero changed its website to comply with Judge Alsup’s order.
The 4-hour evidentiary hearing to examine ClaimsHero
Yesterday, Judge Alsup held an evidentiary hearing to allow the lawyers to examine ClaimsHero CEO Matthew Freund, who appeared in person at the evidentiary hearing, and the 6 authors who opted out using ClaimsHero’s service before ClaimsHero changed its website via Zoom conference.
These 6 authors are:
Matthew Sacks
Lisa Barretta
Michael Kochin
Jane Adams
John Carreyrou
Philip Shishkin
Bartz Class Counsel exposes ClaimsHero co-founder Kyle Roche and law firm (Roche) Freedman’s past disqualification in a class action
According to reporting from Annelise Levy of Bloomberg Law, Bartz Class Counsel Rohit Nath examined Matt Freund, ClaimsHero CEO, on the stand. Freund admitted that Kyle Roche, a ClaimsHero co-founder and partner at then-Roche Freedman, “was featured in videos in which he boasted about using litigation as a tactic to target rival cryptocurrency companies.”
In Sept. 2022, Reuters reported that “a website called Crypto Leaks published video clips it said showed Roche boasting he used investor class actions to harm competitors of Ava Labs. He and other partners at the law firm had a financial stake in the cryptocurrency company, according to court filings. Clips on the site showed Roche referring to class action plaintiffs and jurors as ‘idiots.’”
The Roche Freedman firm was disqualified from the crypto class action. In Oct. 2022, Roche left the law firm he co-founded but later rejoined the firm in July 2024.
All of this dirty laundry came to light at yesterday’s hearing before Judge Alsup.
According to BloombergLaw, Vel Freedman of Freedman Normand Friedland LLP, representing ClaimsHero, objected to the relevance of the “years old” disqualification. Judge Alsup noted, however, the orders were just from 2023.
Judge Alsup reiterated his warning to ClaimsHero that he would refer the case to the U.S. Attorney for investigation of extortion if ClaimsHero attempts to exact a “sweeter deal” (than the Bartz class settlement) from Anthropic.
In the past, Judge Alsup has made such a referral in the high-profile case Waymo v. Uber. The person referred to the U.S. Attorney was indicted and eventually pled guilty and served time in prison.
Although ClaimsHero can continue to seek class members to opt out under the restrictions of the court’s order, Judge Alsup pressed Freedman on whether ClaimsHero was even prepared to file a lawsuit against Anthropic.
According to BloombergLaw, the Judge was highly skeptical ClaimsHero would do so. And he warned that ClaimsHero needed to decide whether to file a lawsuit soon given the January deadline for class members to opt out. Plus, Judge Alsup warned that if ClaimsHero committed to file a lawsuit against Anthropic but later backed out, after having solicited class members to opt out, “that would be so unethical you should be disbarred.”
ClaimsHero to get 40% of any recovery for opt out class members
Another revelation during the hearing was that ClaimsHero will get a whopping 40% of any recovery it obtained for class members who opted out and used its services.
That’s more than the 25% that Bartz Class Counsel will get.
And it’s more than the standard 33% contingency fee that plaintiffs’ lawyers typically get.