Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘class actions’

U.S. capital market regulation: a view from “Red Ken”

From a report in London’s Evening Standard Dec. 12 on the controversy over NASDAQ’s interest in buying the London Stock Exchange:

Critics such as Mayor Ken Livingstone warn that the takeover could have very serious implications for London’s position as the world’s pre-eminent international finance centre.

In a letter to the Office of Fair Trading, Mr Livingstone says the proposed takeover risks the traditionally free-wheeling City being throttled by US-style regulation [emphasis added] and warns that investment in the Stock Exchange could be curtailed.

Note to the New Yorker, Fortune, and other press organs who claim Mayor Bloomberg and Sen. Schumer are being excessively alarmist about capital market flight: when even the Castro-fêting “Red Ken” says we’re overregulating in this country, maybe we’re really overregulating (cross-posted from Point of Law).

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“Plaintiff strikes out in lawsuit over Angels bag giveaway”

“A judge tossed out a sex and age discrimination lawsuit Thursday against Angels baseball that claimed thousands of men and juveniles were wronged during a promotional giveaway at a Mother’s Day game. The gift – a red nylon tote bag – was offered free only to women age 18 and older.” (Erik Ortiz, Orange County Register, Feb. 2; Lex Icon, Feb. 1). For more on the action by attorney Alfred Rava and his client Michael Cohn, see May 11, May 23, and Aug. 19, 2006.

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Milberg Weiss Nortel fee award

Plaintiffs’ attorneys led by Milberg Weiss received only $710/hour for their work transferring $1 billion from current Nortel shareholders to past Nortel shareholders (and, of course, their attorneys) in a securities lawsuit, for a total of $34 million (plus $3.7 million in expenses). They had been seeking nearly three times that amount. While Judge Berman found that the fee request of 5.8 times regular hourly billing rates was excessive, he did not inquire into whether the law firms’ claim of 47,846 hours billed was reasonable. Indicted Milberg Weiss attorney Steven Bershad had been lead counsel until he was voluntarily substituted by another Milberg Weiss attorney shortly after his indictment. (In re: Nortel Networks Corp. Securities Litig., No. 01-cv-1855 (Jan. 29, 2006); David Glovin, Bloomberg, Jan. 29). Update: WSJ Law Blog has the ruling on line.

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“Not about the money” files: Dickie Scruggs edition

“It was never about the money for me, this litigation,” said Dickie Scruggs, who stands to collect between $26 million and $46 million from a settlement accomplished by the use of the state attorney general, Jim Hood, to extort State Farm with the threat of criminal proceedings for daring to enforce their flood exclusion clauses in their contracts. [Lattman] Many many posts on the subject at Point of Law.

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Litigation double standards

Class action attorney allowed to tell Iowa jury that the named plaintiffs are “just regular people who bought software” who volunteered to step forward to sue Microsoft; Microsoft is not allowed to question plaintiffs (who stand to recover a few dollars) about whether they were actually recruited by their attorney friends who stand to make millions if the case succeeds. (David Pitt, AP/Houston Chronicle, Jan. 22). How the class even got certified under these circumstances is also questionable.

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Update: Fountain Diet Coke class action

We mentioned the lawsuit over the absence of Nutrasweet in fountain versions of Diet Coke in 2004. In a typical “harm-less” class action, plaintiff Carol Oshana did not see any advertising for Nutrasweet in Diet Coke, knew that fountain Diet Coke tasted different than bottled Diet Coke, and continued to buy fountain Diet Coke after she learned it had saccharin, but demanded to be the representative of a class of all Diet Coke purchasers in Illinois on a “consumer fraud” claim. Via Howard Bashman, the Seventh Circuit affirmed federal jurisdiction and the district court’s refusal to certify a class. Oshana did get a $650 nuisance settlement, which would buy 1000 liters of Diet Coke at my local grocer.

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More on the Exxon Valdez punitive damages story

Following up on my post the other day about the lawyers’ share of the possible $4.5 billion Exxon payout — the WSJ Law Blog discussed this yesterday, and provided some additional and interesting numbers. The lawyers’ share of the award has been set at 22.4% of the final judgment, including interest. That’s smaller than the percentage in many contingent-fee agreements, but results in a lot of dollars here.

According to the WSJ, there are 62 law firms representing plaintiffs. Each firm’s share depends in part on how many clients it represents, and there is a three-percent “bonus” for the most-active firms. So each lawyer’s share of the $1 billion+ is a little hard to calculate, but partners at both Faegre & Benson and Davis Wright Tremaine estimated that their firms would each clear over $100 million. Faegre, for example, has 262 partners, so that would be $381,679 each — just $22,451 for each of the 17 years that the case has been pending, but on the other hand there were almost certainly long stretches where little if any work was being done.

Oops — almost forgot the actual plaintiffs. There are 32,677 of them, who will be splitting the other three or four billion (depends on the final interest award). Assuming it’s $3.5 billion, and assuming everybody has an equal share (which isn’t true), each plaintiff would recover $107,108, or $6,300 for each of the 17 years he or she has been waiting. Is it fair that each lawyer on the case will end up with three or four times the cash that an injured party is getting? Let the comments begin.

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Nintendo Wii wrist strap class action

Nintendo has already begun shipping a stronger strap and has offered free replacements to those who bought the hit game with the original strap, but that didn’t save it from a would-be class action suit filed by the law firm of Green Welling LLP, claiming to represent all buyers of the device. (Marcus Yam, “Lawsuit Filed Against Nintendo For Defective Wrist Straps”, DailyTech, Dec. 20; Consumerist, Dec. 20; Eric Bangeman, “Nintendo sued over Wiimote straps”, ArsTechnica, Dec. 19). ArsTechnica previously published a three-part series on class actions and problems with their workings, with an emphasis on tech cases (Nate Anderson, “A look at class-action lawsuits”, May 2).

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“Odometer Settlement May Earn Class Lawyers $9.5 Million in Fees”

It seems Honda odometers, until recently at least, were what you might call conservative — they registered a slightly higher mileage than actually driven, by perhaps 2 or 4 percent. Given that the best known consumer-protection hazard in the odometer world has long been the danger of unscrupulous tampering with the devices so as to underestimate mileage with an eye to resale, one way to interpret the Honda settings is that they effectively leaned over to protect buyers of used vehicles. However, class action lawyers did not interpret the phenomenon that way, instead hinting at a plot to 1) get owners to come in for scheduled service slightly more often than otherwise and 2) run out mileage-triggered warranties slightly faster than otherwise. Reader James Ingram, referring to the handsome fee haul, writes: “I’m sure I am happy to pay $9 1/2 million to know that my Honda odometer which reads 10,200 to 10,400 really should read 10,000. If I drive it, say, 150,000 miles it might cost me an additional $30 oil change.” (Mary Alice Robbins, Texas Lawyer, Nov. 13).

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Daniel Edelman vs. subprime lenders

The Chicago class action lawyer, vividly remembered for his role in the notorious BancBoston Mortgage case, among others (Nov. 15, 1999, Feb. 7, 2000; see also Dec. 15, 2004 for his involvement in junk-fax litigation) is now filing suits against lenders who solicit persons with poor credit histories for more loans. The Northwest Indiana Times kindly quotes me on the subject (Joe Carlson, “Lawsuits targeting credit scams”, Nov. 27).

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