“A judge considering a proposed settlement of a class action lawsuit against a popular DVD rental service, Netflix, retreated yesterday [Thursday] from his threat to sharply cut the fees awarded to lawyers in the case.” Netflix had increased its estimate of the number of customers it expects to take advantage of the settlement. (Josh Gerstein, “Netflix Judge Changes Mind On Lawyer Fees”, New York Sun, Mar. 31). Earlier: Mar. 23, etc.
Posts Tagged ‘class actions’
Update: Maine jury hammers Hagens Berman
Seattle’s best-known plaintiff’s firm gets a huge black eye and is told to pay $10.8 million : “The jury unanimously found Wednesday that lawyers from Hagens Berman Sobol Shapiro LLP violated their duty of loyalty to three small water bottlers that in 2003 were close to settling a claim with Nestle Waters North America, the owner of Poland Spring Water Co.” For more about the case, see Mar. 20 and links from there. “Jurors will return to federal court next week to settle the issue of punitive damages.” (“Jury awards more than $10 million in water bottlers’ lawsuit”, AP/Boston Globe, Mar. 23; Vanesso Ho and Mike Lewis, “Seattle law firm told to pay $10.8 million”, Seattle Post-Intelligencer, Mar.24; Lattman, Mar. 24).
Update: Netflix settlement attorney fees likely to be cut
So indicated San Francisco Superior Court Judge Thomas Mellon Jr., who indicated he will not allow fees to reach the $2.53 million previously indicated. Objectors’ fees will be cut as well as the original attorneys, however, which could deter future attempts to intervene in unfair settlements. (Michael Liedtke, AP/Washington Post, Mar. 22; Josh Gerstein, “Judge Seeks To Sweeten Netflix Pact By Cutting Fees to Plaintiff Lawyers”, NY Sun, Mar. 23). We covered the Netflix class action extensively: Nov. 3, Jan. 11, Jan. 21, Feb. 21.
Lawyers’ reputations soaked in Poland Spring fight
“Mutually assured character destruction”: that’s what Boston Globe columnist Alex Beam says to expect from a trial that started March 7 in Portland, Me. federal court that pits some of the country’s better-known members of the plaintiff’s bar against each other. Among the cast of characters: Jan Schlichtmann, of “A Civil Action” fame, Steve Berman of Seattle-based Hagens Berman Sobol Shapiro LLP, and Massachusetts tobacco litigator Thomas Sobol of the same firm, and Alabama’s Garve Ivey. At issue is whether lawyers breached legal ethics or sold out the interests of class members in their sharp-elbowed maneuvers to control the process of litigation and reach a lucrative settlement with Poland Spring’s parent company, Nestle. Also testifying is celebrity enviro-pol Robert F. Kennedy Jr., who had signed up a water company he controls as one of the plaintiffs — gee, who knew RFK Jr. was tied in with hotshot plaintiff’s lawyers? (Alex Beam, “An uncivil action in Maine”, Mar. 8; Gregory D. Kesich, “Water bottlers in court to recoup lost settlement”, Portland Press Herald, Mar. 8; “Law firm’s handling of Poland Spring case at issue in trial”, AP/Boston Globe, Mar. 8; Gregory D. Kesich, “Water case puts lawyers’ ethics on trial”, Portland Press Herald, Mar. 10; “Witnesses tell of how Nestle case fell apart”, Mar. 17). The trial is expected to conclude this week. For more on the Poland Spring class actions, see Sept. 10, 2003, Feb. 2, 2004 and Jun. 25, 2004.
Help wanted (Calif. shakedown practice)?
Three years ago California’s notorious Trevor Law Group was found to be mass-mailing demand letters to small businesses alleging violations of the state’s ultra-liberal s. 17200 unfair business practices act, then settling the complaints for cash. A major furor ensued, and the state bar and Attorney General Bill Lockyer made gestures toward reforming the law to prevent law firms from running “shakedown” practices. But did it work? Mike Cernovich notices that a law firm has placed an employment ad on Craigslist seeking “additional counsel” to handle an “expanding workload”. What kind of workload? Well, it’s “primarily in the practice of wage and hour law inclusive of class actions … almost all [of our] cases are settled and are rarely tried.”
That business about settling rather than trying “almost all cases” got Cernovich’s suspicions up, and then he “saw something that made my jaw drop:”
In assessing the nature of the work and return on time spent it is helpful to keep in mind that the burden of proof is always on the employer to establish that he has paid the correct wages. The law requires that the employer keep accurate and timely maintained records that show hours worked and amounts paid. Failure to maintain such records is almost always at the heart of the case ….
Furthermore the employer will be liable for our legal fees if he is unable to defense the case. These two elements [the inability to prove us wrong and threat of attorneys fees] provide our clients with extraordinary leverage to resolve the matter.
Cernovich reads this as amounting to: “we sue employers knowing that it’s unlikely they’ll be able to produce records that will prove us wrong. … In other words, let’s just sue someone, hope he can’t produce any employment records to contradict us, threaten him with attorneys fees, and then settle the case post haste.” Or is he being too suspicious? (Mar. 8). (Updated/corrected shortly after posting to fix a mistake on my part about who placed the Craigslist ad; also retitled next morning.)
More on Trevor Law Group here and here. More on wage and hour law: Mar. 10, Jan. 9 and links from there.
Update: Grand Theft Auto suits
Now the shareholder lawyers are piling on: class-actioneers Milberg Weiss and Stull, Stull & Brody would like to represent “people who owned Take-Two shares between Oct. 25, 2004, the launch of ‘Grand Theft Auto: San Andreas,’ and Jan. 27, 2006, the day that Los Angeles’ city attorney sued Take-Two for selling pornographic video games to children.” (“More legal woes for ‘Grand Theft Auto’ maker”, Reuters, Feb. 15). Earlier coverage: Jan. 28, Jul. 27, etc.
Future sexually-frustrated-fan celebrity class actions
1) Ever since a tabloid story broke claiming that former American Idol runner-up Clay Aiken was gay, there have been rumors that fans would file a class action lawsuit alleging consumer fraud. To date, noone has been that ridiculous (though the suit would be no more ridiculous than many successful consumer-fraud class actions), but the New York Post reports that gay-bashing fans have filed an FTC complaint alleging that they were misled as to the star’s sexuality by record-company promotions. If the theory holds water, celebrity magazines could use consumer-fraud-class-action civil discovery to uncover whether maverick movie stars have been engaging in risky business in the closet, with the firm chance that a few good men could suffer collateral damage to their privacy. (Other discussion of civil discovery and privacy: Feb. 9.)
2) The Smoking Gun has published correspondence from Jessica Alba’s attorneys threatening Playboy with suit over using her image on the cover. Without getting into the merits of her claim, I was entertained by the argument that Alba’s presence on the cover implied falsely that she would appear nude within the magazine (in fact, the magazine merely had a publicity still of Alba inside). One wonders if, should Alba fail to win an injunction against magazine distribution, there will be a creative class action from readers alleging consumer fraud by the failure to meet the implicit promise of photos of a naked Alba. (h/t to Slim)
Selling short, then suing
At Point of Law’s “Featured Discussion”, Moin Yahya and Larry Ribstein are debating whether the government can or should do anything about the practice of lawyers’ (or their clients’ or confederates’) selling short the stocks of companies they plan to sue, then cashing in on the resulting drop in the stock price. See May 5, 2005; PoL Feb. 6.
Bloggers Challenge Class-Action Settlement
Charles Burck writes about the reaction to the Netflix class-action settlement. (Charles Burck, “Bloggers Challenge a Class-Action Settlement”, Corporate Board Member Magazine, March/April 2006). The opponents of the settlement cite two problems with the settlement: 1) Only the lawyers got cash, and 2) the coupons Netflix is sending to customers are really a low-cost marketing program for them, like locking you into a magazine subscription with a free first month, and doesn’t really punish Netflix or compensate customers at all. So, either there was no harm, and the suit was a big frivolous mess, or there was harm to customers, in which case the settlement utterly failed to redress it.
Apparently, there is a website to protest the settlement which announces a hearing set for tomorrow (Feb 22). Ted and Walter have been all over this on Nov 3, Jan 11, Jan 21
Home Depot: I Couldn’t Do It Today
Bernie Marcus, who founded the Home Depot chain as a “regular guy” starting from one store, says that he couldn’t have done it in today’s legal environment.
…one share valuekiller lawsuit can kill a startup company. Back in 1978, those lawsuits were rare. Today, all you have to do is pick up a newspaper and read about one after another.
(IBD staff, “The Home Depot’s Bernie Marcus On Why He Couldn’t Do It Today”, Investors Business Daily, Jan 30 pdf). Mr. Marcus dedicates a lot of his philanthropy to tort-reform. When asked why, he said “I’m concerned for the next generation of entrepreneurs whose creativity, risk-taking and innovation are stifled by the current legal and regulatory climate. Will they be able to create the next Home Depot?” As one of those entrepreneurs, thanks! (see also Jan 15).