Glad to see the bar’s priorities are in order. “At least one suit was filed in the last week, and plans were being sketched out for many more. The targets include real estate agents, insurance companies and federal agencies. The potential damages being sought range from a few thousand dollars to billions of dollars.” One plaintiff’s law firm is suing a real estate agency under price-gouging statutes because a homeowner raised the price of his Baton Rouge house over the old list price, which can’t be a comforting thought for anyone who owns real estate in a rising market. Others, including the infamous Dickie Scruggs, seek to sue insurers in “thousands of suits,” arguing that flood exclusions in policies do not apply because a house totallly destroyed by a flood was partially damaged by wind, and that the insured should get the full amount. A Houston Chronicle article underplays the risk. (Joseph Menn, LA Times, Sep. 15; Brett Martel, AP/Seattle Post-Intelligencer, Sep. 14; Mary Flood (!), “Storm lawsuits a long shot”, Houston Chronicle, Sep. 15).
Posts Tagged ‘class actions’
“$16.3 million in lawyer fees OK”
Waving big fees through the gate:
A Denver District Court judge overseeing a $50 million class-action settlement from Qwest Communications shot down a shareholder group’s request to limit plaintiff attorney fees to $10 million.
Judge John Coughlin gave short shrift to arguments presented by the Association of U S West Retirees, which asked the court — at the very least — to delay settlement approval until attorneys submitted detailed documentation of their hours and expenses.
At a fairness hearing [Aug. 30], the judge ruled the class counsel, led by Los Angeles law firm Lerach Coughlin, was entitled to $15 million, or 30 percent of the settlement, plus an additional $1.3 million in out-of-pocket expenses….
[The retiree association] wanted proof of each firm’s time records and questioned several six-figure expenses, including $176,000 for meals, hotel and travel and $105,000 for photocopying.
“That’s 25 cents a page using your own office copy machine,” Denver attorney Curtis Kennedy, representing the retirees, said Tuesday after the hearing. “Don’t we at least get a discount for volume? Why not 5 cents a page?”
…[L]ast month, the association filed its objections over attorney fees, complaining that the more than $16.3 million Lerach had requested would leave just $33 million to be distributed among the thousands of plaintiff shareholders they represented….
[Kennedy] said the blanket $15 million contingency award represented 2.3 times what the plaintiff lawyers actually put into the case. Paralegal time alone would be compensated at the rate of more than $400 an hour.
“Times are changing,” he told the judge. “Shareholders are beginning to feel they need to step up and object…that these attorney fees are getting out of hand.”
How often will they feel it worth objecting if, as here, they get the back of the judge’s hand for their troubles? (John Accola, Rocky Mountain News, Aug. 31).
“Ghost blurber” suit: lawyers got $458K, clients $5K
The Washington Post follows up on the class action filed against Sony over its use of a non-existent blurber to promote several movies (see Aug. 3, 2005, Mar. 13, 2004, Jun. 12, 2001) and finds that only 170 customers filed verified claims, resulting in a payout of $5,085 by the studio. Meanwhile, according to court papers, “the attorneys for the plaintiffs got $458,909. Sony paid an additional $250,000 for administrative fees and costs associated with alerting moviegoers to the settlement and processing the claims,” and donated to charity nearly all the $500,000 that had been set aside to pay consumers. As it happens, “news of the settlement went out on the news wires a month after the deadline to sign up as a claimant had passed”. California appellate judge Reuben Ortega, dissenting from his court’s decision to let the case go forward, had written: “This is the most frivolous case with which I have ever had to deal” and called it a “disgrace” and “farce”. (William Booth, “Big Payday for Lawyers In Sony Fake-Blurb Deal”, Washington Post, Sept. 10). More: Larry Ribstein comments (Sept. 10).
Investor soaked on WorldCom stock, sues NASDAQ
“Steven Weissman is suing Nasdaq because, he alleges, ‘advertisements by Nasdaq influenced his decision to purchase more than $600,000 of stock in WorldCom Inc.'” Bruce Carton of Securities Litigation Watch pages us (Sept. 7) and Prof. Bainbridge is “left speechless” at the suit’s presumption (Sept. 7).
Teacher’s pet barracuda
Via Lyle Roberts at 10b-5 Daily (Aug. 29), we learn of the latest advance in methods guaranteed to bring us a more ruthless legal profession: “Christopher Waddell, general counsel of the California State Teachers’ Retirement System, said that he uses both bounty and sliding-scale fees in order to ‘incentivize’ his outside counsel to go after personal assets. CalSTRS, the nation’s third-largest public pension fund, has promised its lawyers a 2.5 percent bounty, plus an undisclosed fee, in a pending suit against the former directors of WorldCom.” (Sue Reisinger, “Securities Fraud: Attorneys Are Receiving Bounties for Pursuing Officers and Directors”, Corporate Counsel, Aug. 24). For the reasons most other countries’ legal systems consider contingency fees for lawyers to be unethical, see Chapter 2 (“A Piece of the Action”) of The Litigation Explosion (PDF).
Sneak previews as securities law violations
The Securities and Exchange Commission is apparently looking into the question of whether for a movie company to hold prescreenings of upcoming movies for stock analysts “constitutes disclosure of material information to a group of select people”, thus potentially running afoul of public disclosure regulations. Bruce Carton (Aug. 26), Larry Ribstein (Aug. 26) and Tom Kirkendall (Aug. 29) comment.
Milberg’s donations
Ill. high court tosses aftermarket auto parts verdict
By a unanimous vote, the Illinois Supreme Court has decertified and thus nullified a $1.2 billion class action verdict, much criticized here (Oct. 8, 1999) and in other places, which held that State Farm’s practice of specifying generic aftermarket parts after auto crashes had defrauded consumers. Among the many problems with the verdict were that the court had lumped together consumers holding a wide range of insurance policies applying different language to the handling of the aftermarket parts issue, that it had ignored wide variations among consumers in what if any harm they had suffered from the practice, and that it had applied Illinois law to policies issued mostly to consumers in states other than Illinois, some of whose regulators had specifically contemplated and approved (or even required) the use of generic parts after crashes. Martin Grace and Ted Frank comment at PoL, and discussions elsewhere include those of (again) Martin Grace and Larry Ribstein. More: Amy Joyce, “State Farm Wins Reversal of $1 Billion Suit”, Washington Post, Aug. 19.
The Overlawyered iMix
On August 25, a San Mateo County court will hold a fairness hearing over a nationwide class action settlement over iPod batteries that will provide $50 coupons for class members and $2,768,000 in fees for the attorneys. Because the lawsuit was filed before the Class Action Fairness Act took effect, the state court does not have to comply with the new federal requirement that attorneys’ fees reflect the actual redeemed value of the coupons, rather than the face value, one of many sensible provisions of the Act that trial lawyers, the New York Times, and dozens of prominent Democrats (including leading 2008 presidential contenders Hillary Clinton, John Kerry, and John Edwards) opposed. In honor of this fairness hearing (as well as in honor of a pending lawsuit alleging that Apple is monopolizing the music market by selling music in a proprietary format), Overlawyered presents the Overlawyered iMix:
Class actions: the “reverse auction”
Something about class actions that gives pause to even their most enthusiastic cheerleaders is the frequency with which they end in “reverse auctions”. “In big cases, defendants facing multiple suits can pit plaintiff firms against each other in hopes of getting the cheapest — and most comprehensive — settlement.”
Ethical gray areas in class action law have allowed reverse auctions to become a trend, said Joseph McMonigle, an ethics expert and partner at Long & Levit in San Francisco.
He said that competing filings can allow defendants to pick the plaintiff with the weakest case. With weaker opposition, he said, defense lawyers have more leverage to reach a cheap settlement.
There is the danger that a lawyer in that position might be tempted to cut a worse deal for his clients just to make sure he gets paid. Since there are few clear rules on the duty a plaintiff lawyer has to a prospective class that hasn’t been certified, there’s some ethical wiggle room. “It certainly isn’t something that makes the legal profession shine,” McMonigle said.
(Justin Scheck, “Reverse Auctions Lack Class”, The Recorder, Jul. 20).