All-blog edition:

• Judges overheard chatting in coffee shop about sweetheart class settlement [WageLaw via Paul Karlsgodt's weekly class action blog roundup]
• More attempts to sue/uncover anonymous blog commenters: “I was subpoenaed for a discovery deposition about one of my posts on this blog.” [Medblogger Dr. Wes]
• Thoughts prompted by the latest (NYC) round of litigation over “ladies’ nights” at drinking establishments [David Giacalone, f/k/a]
• Head of state (Bolivia’s Morales) to his lawyer: “If it’s illegal, go ahead and make it legal. That’s what you went to school for.’” [Cato at Liberty]
• Everybody run! Perennial Overlawyered mentionee Steve Berman has a blog [Class Action Law Today via his P.R. guy in Kevin O'Keefe comments]
• When infamous NYC lawyer Burt Pugach calls, hang up [Greenfield]
• Colleague described as “a soap opera doctor” elects to spend more time in the courtroom than in the operating room [Throckmorton]
• Dear Interagency Autism Coordinating Committee: “Please resist the efforts of vaccine-injury plaintiffs’ advocates to define themselves as representatives of ‘the autism community.’” [Kathleen Seidel, Neurodiversity]

MDL Judge Eldon Fallon orders plaintiffs’ attorneys’ fees in the $4.85 billion settlement to be capped at 32%. Hooray, right? Certainly, the trial bar is capable of arguing for itself that the ruling is wrong and it is entitled to a couple of hundred million more, but I might just have to take their side here.

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Does class actioneer Stephen Tillery really want to call renewed public attention to his settlement with Sears, in which the settling lawyers made out so well ($17 million) given the somewhat elusive benefits to the class of consumers? (Madison County Record, Jul. 30, and editorial, Aug. 2). Our earlier coverage of the case appeared Jan. 31.

I’m quoted at length in a National Law Journal story about criticisms of cy pres awards, the ostensibly charitable contributions demanded in class-action settlements that actually serve to inflate attorneys’ fee awards without requiring actual payments to actual class members. Plaintiffs’ attorneys are using the device to try to get around the requirements of the Class Action Fairness Act, which made it more difficult for attorneys to inflate the nominal value of settlements through coupons, the pre-CAFA means by which plaintiffs’ attorneys inflated settlements. (I’m actually misquoted in one sentence: I said “putative class” to the reporter, and it was written in the article as “punitive class.”  Update: corrected in on-line edition.) (Amanda Bronstad, National Law Journal/law.com, Aug. 11).

Readers may recall the landmark case in which laptop maker Toshiba agreed to a notional $2 billion settlement (and a very crisp and real $147 million in plaintiff’s legal fees) to resolve charges that its laptops could under certain extreme conditions result in loss of user data, although no real-world customer appeared to have experienced the problem. Copycat lawsuits followed against other laptop makers, the supposed glitch being by no means unique to Toshiba, and at last report (May 11, 2001 and Aug. 14, 2004) Compaq had enjoyed much success in beating suits of this sort filed by Texas lawyers.

Apparently its luck didn’t hold up forever, though, because in May Judge Tom Lucas of the Cleveland County, Oklahoma District Court approved a nominal $640 million settlement of laptop glitch claims against Compaq and its parent, Hewlett-Packard, with $40 million in attorneys’ fees to various attorneys, including Reaud, Morgan & Quinn, the Beaumont, Texas firm of Wayne Reaud. (Tom Blakey, “Local court OKs $640M class settlement in computer lawsuit”, Norman Transcript, May 16)(settlement website).

According to a paper by Anthony Caso for the Washington Legal Foundation (PDF), the change in fortunes owed much to some successful forum-shopping. It seems plaintiffs in the first rounds had attempted to form a nationwide class action on the premise that the consumer law of Texas, Compaq’s home state, could properly be applied to the claims of customers in all 50 states. The Texas courts, however, wound up rejecting that premise.

…instead of taking no for an answer from the Texas Supreme Court – the final arbiter of Texas law, the class action attorneys convinced an Oklahoma court to rule that the case should be a nationwide class action, and that class action status could be premised on the idea that Texas consumer law applied to all of the claims. Ignoring the ruling of the Texas Supreme Court, the Oklahoma courts agreed with this argument and certified the case as a nationwide class action.

Unfortunately for all of us, the United States Supreme Court declined to review the case.

And the $40 million in fees? Reaud & co. would have nothing but the best talent in to bless the fees, per the Norman Transcript account:

Testimony at the April 29 hearing in Cleveland County District Court included that of Arthur R. Miller, a renowned legal scholar and commentator on civil litigation, copyright and privacy laws. Miller, a professor to the faculty of the New York University School of Law and the NYU School of Continuing and Professional Studies, estimated the coupon redemption rate would be as high as 30 percent — more than double the average redemption rate in settlement cases.

And if actual coupon redemptions come in far below a 30 percent rate — not that we’re necessarily ever going to find out — Prof. Miller’s reputation will suffer, right?

More: Beck & Herrmann call attention to an automotive class action case (Masquat v. DaimlerChrysler, alleging defect in rack and pinion steering systems) that also took advantage of Oklahoma’s willingness to apply manufacturer’s-home-state law to fuel nationwide class actions. They write that because of that distinctive handling of choice of law, “class action plaintiffs’ counsel now gravitate to Oklahoma as moths to light.”

Yesterday, Judge Shirley Wohl Kram filed a 58-page decision in the Grand Theft Auto class action. How did she decide?

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Two readers have written to alert us to this settlement (PDF), including frequent commenter Todd Rogers:

I received notice in the mail [this month] that I’m party to a class action suit against VW USA. I drive a Passat with a “Smart Key.” According to the suit, VW has been naughty because they did not make the key duplication apparatus available enough to locksmiths, third party key duplicators, and the like, in the event that I (we) want to make another key. What would my settlement be? I’m the benefactor of “greater communication” from VW USA.

What do you know…owners of Mercedes Benz suffered the same injury and it was the same firm, Lurie & Weiss, who helped make them whole, as well. Who’s next?

Objections and requests for exclusion must by filed by the end of August, and a fairness hearing is scheduled for Sept. 22 in the courtroom of the Hon. Audrey B. Collins in federal court in Los Angeles.

Craig Newmark dissects a class action settlement notice he recently received, and finds the classic gimmick/ploy in which the contrite company agrees to give certain free services to customers who file claims, but then will begin billing them monthly if they forget to cancel the services after a short trial run. (Newmark’s Door, Jun. 30).

By popular demand, here is my first-hand account of arguing at yesterday’s Grand Theft Auto fairness hearing:

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The hearing is in a New York City courtroom this morning, and the NY Times is there, complete with a photo of me.

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Objections might slow down the approval of a class action settlement on behalf of black retail brokers against Morgan Stanley: “Linda Friedman, an attorney for about 30 brokers, claimed that James Finberg and other class counsel fished for a lead plaintiff after they already negotiated the settlement with defense lawyers at Morgan, Lewis & Bockius.” (Dan Levine, “Objections Interrupt Morgan Stanley Settlement”, The Recorder, Jun. 17).

Class-action lawyers pursuing an options-backdating suit against digital-media chip maker Zoran over options backdating “arbitrarily picked a stock price in the past that made the deal look more valuable than it was,” thus showing themselves willing to “engage in a little backdating themselves,” reports Daniel Fisher in Forbes. Lawyers at Seattle’s Keller Rohrback

portrayed themselves as having achieved $1.6 million in value and wanted $1.2 million in fees for their work. Using the stock price on the day the settlement was filed with the court, however, U.S. District Judge William Alsup said, the settlement would be worth perhaps $200,000 and possibly nothing at all. …

The lawyers painted the value of the package as $1.6 million, based on a Dec. 3, 2007, stock price of $21.99 a share. When Alsup asked how they arrived at that date, lawyers first indicated that was when they had signed a memorandum of understanding, but when Alsup ordered a copy of the memorandum, it turned out to have been signed Dec. 21 and wasn’t filed with the court until Feb. 26. By then Zoran’s stock was down 50%, and the options concessions were worth far less.

Faced with a tongue-lashing from Judge Alsup over the “collusive settlement” — and the prospect of few or no fees — the lawyers went back and returned with what appears a considerably enriched settlement offer from Zoran. (”Fee Fixers”, Jun. 9; Zusha Elinson, “Federal Judge Rejects Easy Options Deals”, The Recorder, Apr. 25). Update Jun. 18, from Recorder: judge approves revamped settlement.

The editors at Conde Nast Portfolio were kind enough to invite me to contribute a rebuttal, which is now online, to William Lerach’s egregious apologia pro crookery sua. The allotted space permits me to address briefly only a couple of Lerach’s worst howlers, in particular his bald assertions that his concealed kickbacks did no harm to class members or to competing lawyers. (It’s true that named class representatives do a very poor job at their intended mission of standing in for other class members’ interests, but secretly aligning their incentives with the size of fee awards, rather than the value of the settlement to the class, is a corruption meant to keep them from ever living up to their theoretical watchdog role.)

For a more extended look at what’s wrong with Lerach’s article, let me recommend Joseph Nocera’s excellent column a week ago in the Times:

In the article, Mr. Lerach expresses zero remorse, positions his crimes as having hurt no one while serving a greater good and makes the absurd claim that he was railroaded by his political opponents.

It is a brazen, shameful piece of work — and it must infuriate the prosecutors who made the plea agreement with him, and the judge who accepted it, especially since Mr. Lerach wrote his own remorseful letter to the judge ahead of his sentencing. It also ought to infuriate anyone who cares about the law. Plenty of criminals head to prison still believing they’re above the law, but Mr. Lerach takes the cake.

Ted Frank has some further thoughts on that point. And note (from Nocera) that Lerach’s “everyone did it” swipes at his colleagues — which many, including we, have read as grounds for an investigation — are by no means passing without contradiction from colleagues:

Mr. Lerach’s statement has infuriated other plaintiffs’ lawyers. “It would just be unthinkable” to give kickbacks to lead plaintiffs, said Max Berger, of the firm Bernstein, Litowitz, Berger & Grossman. Added Sean Coffey, another Bernstein, Litowitz partner: “It is bad enough that this confessed criminal cheated for years to get an unfair advantage over his rival firms. But for this guy, on his way to prison, to say that everyone does it is just beyond the pale.”

(cross-posted from Point of Law; & welcome San Diego Union-Tribune blog readers).

P.S.: For another example of just how slippery Lerach’s careful phrasings can be, check this Roger Parloff post from an earlier point in the scandal. And Stephanie Mencimer, whose writings are nearly always criticized in this space, deserves due credit for seeing through Lerach’s “liberal folk-hero status” to the “pretty sleazy” realities beneath in this February article.

Full proof that I don’t think all pro se representation is a bad thing: Following up our previous discussion of the GTA class action settlement and my objection: This morning, Friday, June 6, I filed this brief (which unlike the previous brief, I wrote myself), in opposition to the plaintiffs’ motions for court approval of the settlement and attorneys’ fees, in the Southern District of New York and served it upon counsel. With luck, I didn’t file the wrong brief.

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This weekend’s post on my objection to the Grand Theft Auto “hot coffee mod” class action settlement drew commentary and link-love from GamePolitics, Escapist, and Above the Law.  Sadly, no one has updated the Wikipedia page.

We now know how many people signed up for the Grand Theft Auto: San Andreas class action settlement out of the millions of members in the purported class.

Tier 1 (up to $35.00) (no exchange required): 416
Tier 2 (up to $17.50) (exchange required): 22
Tier 3 ($10.00) (exchange required): 131
Tier 4 ($5.00) (no exchange required): 2,050
Disc Exchange w/o cash: 57

2676 total claimants, receiving a total cash value of at most $26,505, though likely even less than that, given that the plaintiffs’ attorneys record no actual cash distribution.

The seven “representative” class members are asking for approval to receive another $24,500, or nearly half of the total cash recovery.

Of course, as we’ve discussed, none of these people had a legitimate cause of action or suffered any legally cognizable injury. But how much are the plaintiffs’ attorneys (from thirteen different offices of twelve different law firms!) asking for for this travesty of a lawsuit and settlement–one that was entirely redundant of the taxpayer-funded investigation conducted by the Los Angeles district attorney? They claim their time devoted to the litigation was worth $1,317,433, but are “generously” claiming a 28% discount for a total fees-and-costs request of $1 million.

Recognizing that this 3774% contingent fee looks fishy to the least scrutinizing of judges applying Rule 23 review, the plaintiffs have sought to inflate the appearance of accomplishment through a $870,000 cy pres award to the National PTA and ESRB. (As I’ve discussed, cy pres awards that do not directly benefit class members should not be used to justify fee awards.) They also inflate the award by claiming that the costs of notice, administration and disk replacement should be attributed to the size of the accomplished result, thus puffing matters up to over $2 million, consisting nearly entirely of empty calories for the plaintiffs they purport to be representing.

Alas, I was the only class member to docket a formal objection to this rip-off. (While it was my idea to object, I can take no credit for the objection brief, which was written by my attorney, Larry Schonbrun.) On Thursday, the plaintiffs’ attorneys filed a brief defending the settlement, with many cites to Overlawyered as ad hominem attacks on the objection. The court’s hearing is June 25.

• Telemarketers working for lawyers and chiropractors “line up every day” at police and public records offices to buy car-crash records [Dallas Morning News]
• Nice work if you can get it: Bernardine Dohrn’s terrorist-to-lawprof career track [Kass, Chapman @ Chicago Tribune, Ed Morrissey/HotAir, PoL, Horowitz/DtN, Daily Northwestern/FrontPage, Malkin, Power Line]
• Mystery of embattled Florida debt-relief law firm Hess Kennedy (Mar. 6) deepens as whereabouts of lawyer Edward Kennedy are questioned [ABA Journal]
• Criticism mounts of Calif. AG Jerry Brown’s lawsuits using global warming theories to force higher-density development [Stewart/LA Weekly, Walters/SacBee, via Kaus, scroll]
• Kevin Pho (KevinMD.com) on defensive medicine [USA Today]
• Colorado firm says lawsuit’s “settlement mill” allegations are concocted “by a competitor who doesn’t like (Azar’s) advertising.” [Colorado Springs Gazette]
• Hey, you can rig up a disposable camera to give you a little shock; it might also give you a D felony record under school zero tolerance [WTNH via Greenfield]
• One good thing about those anonymous snitchlines for domestic abuse, you don’t have to worry about bogus calls or anything like that [Colorado Springs Gazette on Texas polygamist raid backstory]
• Lawyers get $2 million in fees in Netflix class action [WSJ law blog; earlier]
• Supreme Court refuses cert on that very curious $112 million (originally $1 billion) land-contamination verdict from Louisiana [Exxon v. Grefer, Dow Jones/Fortune; CalPunitives link roundup; earlier; more background at Laura Hart/Louisiana Law Blog]
• Cow-pie bingo event falls victim to liability fears [three years ago on Overlawyered]

The lead plaintiff had claimed losses of $25 million, but settled for zero plus some corporate-governance changes that, as a Rutgers professor notes, probably would have happened anyway. But a settlement approved by a New Jersey federal judge in a shareholder suit against Schering-Plough awarded $9.5 million in attorneys’ fees, even applying a multiplier to lodestar hourly rates. [New Jersey Law Journal/law.com; In re Schering-Plough Corp. Securities Litigation, Case No. 2:01cv829 (D.N.J.)] Paying for those fees: shareholders, who also paid for what were likely multi-million dollar defense costs of litigation. Judge Katharine Sweeney Hayden, when certifying a single class in 2003, rejected arguments that there was an inherent conflict between class members that had already sold their stock and class members who continued to hold stock; she was appointed by Clinton in 1997.