Updating our Jun. 22 item: Madison County, Ill. Circuit Judge Andy Matoesian has dismissed without prejudice a racketeering suit brought by class action lawyers against outside class members and lawyers who’d raised objections to the alleged inadequacy of a settlement. Attorneys Stephen Swedlow and Stephen Tillery, who’d reached a $63.8 million settlement with GlaxoSmithKline over its marketing of the drug Paxil, claimed the objections of lawyers N. Albert Bacharach, Jr. and Paul S. Rothstein and citizen Lillian Rogers were frivolous and extortionate. (Steve Gonzalez, “Matoesian dismisses suit against Paxil objectors”, Madison St. Clair Record, Sept. 7).
Posts Tagged ‘class actions’
A Thousand Little Refunds, Plus Attorneys Fees
For $800,000, one could buy a nice house, two thousand iPhones, about five days’ worth of Alex Rodriguez’s contract, or 1,700 hours of class action lawyers producing absolutely nothing of any value to anybody.
In January 2006, The Smoking Gun reported that James Frey’s A Million Little Pieces memoir had significant inaccuracies. After a few days of denial, Frey admitted that the book was inaccurate. The publisher, Random House, immediately posted a statement to that effect on its website and offered a refund to anybody who was upset. Approximately 12 seconds later, hordes of trial lawyers copied down the allegations from The Smoking Gun’s website and rushed to the courthouse to file “consumer fraud” class action lawsuits against Frey and Random House. They demanded… that Random House post a disclaimer and give refunds to anybody who was upset. In a sane world, those lawyers would have been sanctioned for filing a frivolous lawsuit, and then sanctioned again for wasting everyone’s time by asking for a remedy that had already been achieved.
But as we know, this world is Overlawyered, so, more than 1,700 hours of trial lawyer time later, Random House agreed to settle the case for “up to” $2.35 million, to cover refunds, costs, and attorneys fees for the up-to-3.5 million people who purchased the book before Frey admitted it was inaccurate.
And now the other shoe has dropped, exactly as Walter predicted in May. The deadline for class members to submit their claims was October 1st, and according to filings by the class lawyers, a grand total of 1,345 people had done so by September 17th; based on past experience, they expected another 250 submissions in the last two weeks before the deadline. Yes, that total would be less than one-half of one percent of those who bought the book — the alleged “victims” of the alleged “consumer fraud.”
But despite this dismal response rate, the class action lawyers have now submitted their fee request… $783,333.33 — or one third of the imaginary $2.35 million settlement. Plus $14,000 in expenses. The lawyers defend this fee as reasonable on the grounds that they spent those 1,700 hours preparing their case. (h/t The Smoking Gun) $800,000, and 1,700 hours — for a case where the research was all done by the Smoking Gun before the suit was filed, and the only thing the lawyers had to do was create enough of a nuisance to induce Random House to settle.
For those of you scoring at home, assuming a $15 refund for each claimant, that would be a total recovery of approximately $24,000 for the class members. And $800,000 for the lawyers. Or, in other words, about 3% of the recovery for the consumers, and 97% for the lawyers. Ain’t America grand?
Canada: class action plaintiff’s lawyers on the hook?
Canada has moved toward more liberal allowance of class-action litigation in recent years; it has also, like most non-U.S. countries, chosen to retain its historic principle of “loser-pays”, or “costs follow the event”, fee shifting. What happens when prevailing defendants seek an award of costs against losing class plaintiffs, assuming that the individual class members cannot be reached for the purposes of assessing costs? In a bitterly fought lawsuit over unclaimed veterans’ pension accounts, the federal government in Ottawa went after three class lawyers for C$4 million in costs out of their own pockets. The Ontario Court of Appeal denied its petition, but the lawyers say they feel chilled from organizing more such suits. In all, the federal government spent an estimated C$6 million in legal fees and C$10 million in other costs successfully defending the pension suit. (Randy Richmond, “Ottawa claimed denying justice”, London Free Press, Sept. 20). Earlier London Free Press reports by Randy Richmond on underlying lawsuit: “One Last Battle: Dark Politics”, Oct. 30, 2006; “An ugly fight for veterans’ benefits”, Oct. 31.
Class-action suit against New England Patriots
By reader acclaim: “A New York Jets season-ticket holder filed a class-action lawsuit Friday against the New England Patriots and coach Bill Belichick for ‘deceiving customers.'” Carl Mayer of Princeton Township, N.J., is suing over revelations that the Patriots unlawfully videotaped signals from Jets coaches in a Sept. 9 game. Mayer and his attorney, Bruce Afran,
calculated that because customers paid $61.6 million to watch eight “fraudulent” games, they’re entitled to triple that amount — or $184.8 million — in compensation under the federal Racketeer Influenced and Corrupt Organization Act and the New Jersey Consumer Fraud Act.
Mayer and Afran, who consider themselves public interest lawyers, have been thorns in the side of New Jersey politicians for years, filing lawsuits and demanding investigations to advance their grievances. They are well known in the state but generally have had little success in their causes.
Both have lost bids for elected offices, and Mayer once served as a presidential campaign adviser to Ralph Nader.
(Dennis Waszak Jr., “Jets fan sues Pats, seeks $184 million”, AP/Boston Globe, Sept. 28; ProFootballTalk “Rumor Mill”, Sept. 28). More: Sadly, No!.
September 2007 Class Action Watch
In the latest issue of the Federalist Society’s Class Action Watch, Mark Behrens and Christopher Appel look at recent rulings from the New Jersey and Missouri Supreme Courts that reject lead paint public nuisance claims. James Beck looks at the American Law Institute’s “Principles” projects. Brian D. Boyle and Julia A. Berman look at fact-based scrutiny in securities and antitrust actions. Jessica D. Miller and Nina Ramos look at fluid recovery. Kenneth J. Reilly and Frank Cruz-Alvarez look at an Eleventh Circuit case that may have set a new standard for federal diversity jurisdiction. Last, but not least, there is a front-page article from me analyzing an omission in the Fair Credit Transactions Act (FACTA) that might provide a substantial windfall for the plaintiffs’ bar.
Feds indict Mel Weiss
Critics long derided the federal investigation of Milberg Weiss as slow to produce results, but things are moving along at a brisk clip now, with an indictment charging the nation’s best-known class-action securities lawyer with conspiracy, racketeering, obstruction of justice and making false statements, just after his best-known former colleague at the firm, William Lerach, agreed to cop a plea deal. “In addition, Steven G. Schulman, a former senior partner at the Milberg Weiss firm, agreed to plead guilty to a racketeering conspiracy charge, prosecutors said.” (AP/Business Week; Jurist “Paper Chase”; ABA Journal first and second stories. Documents, all PDF: Milberg Weiss superseding indictment; Schulman charge, plea, press release).
The Sirota & Sirota law blog, an “unfriendly competitor” of Milberg Weiss in the class-action biz, has this post from June offering some perspective on the ongoing investigation.
Class action lawyers: give us a live client to replace our dead one
Clients as figureheads dept.: One of the Lakin Law Firm’s class actions hit a snag when the firm discovered that the named plaintiff, Manuel Hernandez, had died two years earlier. And so the law firm petitioned an Illinois court to force the defendant, American Family Insurance, to release customer names so that it could more conveniently line up a new client and keep the action going. (Steve Korris, “American Family should provide name of live plaintiff to substitute dead one, attorneys argue”, Madison St. Clair Record, Sept. 13).
More on Lerach plea
The Washington Post quotes me on the hubris that the now-disgraced class-action potentate came to symbolize (Carrie Johnson, “Guilty Plea to End Crusading Lawyer’s Lucrative Run”, Sept. 19). Few tears will be shed in Silicon Valley (Wired “Epicenter” blog, Sept. 18). The John Edwards campaign says it’s handing over Lerach’s contributions to charity, and the Joe Biden campaign says it’s already done so; no word yet from Hillary Clinton, who took Lerach money for her Senate bid (Josh Gerstein, “Fortunes Darken for Lawyer Melvyn Weiss”, New York Sun, Sept. 19). More coverage: Lattman, What About Clients?, NAM Shop Floor. Plus: Ben Smith at Politico has more on the John Edwards connection: “Though he’s giving away the $4,600 from Lerach, Lerach is also listed as a bundler, and employees of the lawyer’s firm are his third-largest group of donors, mostly giving in the first quarter.” (Sept. 19).
Chicago Federalist Society panel on class actions
I’ll be speaking at the Tower Club 5 pm on Thursday, along with Paul Bland of the CL&P blog. If that’s not incentive enough to show up, there is apparently free food.
“A case of unchecked avarice coupled with a total absence of shame”
In unusually strong language, an appeals panel in south Florida has condemned the conduct of prominent Miami law firm Adorno & Yoss, which filed an intended class-action lawsuit against the city over an unconstitutional fire-rescue fee, and later (to quote the WSJ law blog) is alleged to have “reached a secret $7 million settlement and paid it out to seven individuals, thereby breaching its duty to the entire class”. In its defense, the law firm says that it had no fiduciary duty to the class since a class was never certified, but the appeals panel took a different view, saying that class certification was inevitable and that the case was handled throughout from a class perspective. “It defies any bounds of ethical decency to view class counsel’s actions as anything but a flagrant breach of fiduciary duty,” said Judge Juan Ramirez, writing for the court. In a concurrence, Judge Angel A. Cortiñas was if anything more severe in tone. “Plainly and simply, this was a scheme to defraud. It was a case of unchecked avarice coupled with a total absence of shame on the part of the original lawyers. The attorneys manipulated the legal system for their own pecuniary gain and acted against their clients’ interests by attempting to deprive them of monies to which they might otherwise be entitled. More unethical and reprehensible behavior by attorneys against their own clients is difficult to imagine.” (Billy Shields, “Fla. Court Calls Law Firm’s Role in Fire-Fee Deal ‘Reprehensible'”, Daily Business Review, Aug. 9). More links on the Miami fire-fee scandal here.