“A class-action suit raises questions: Does Poland Spring water come from springs? And can you drown lawyers in it? Please?” Terms of the settlement are “pretty standard: next to undetectable benefits for us — some discount coupons and whatnot — and $1.35 million in cash for the plaintiffs attorneys.” (Roger Parloff, “Springtime for Poland”, Fortune, Feb. 9)(see Sept. 10). Update Jun. 25: how much did consumers actually get? Darned if one columnist can find out.
Posts Tagged ‘class actions’
“Would it be too cynical to speculate…?”
“Would it be too cynical to speculate that what may be going on here is that class counsel wanted a settlement that would give them a generous fee and Fleet wanted a settlement that would extinguish 1.4 million claims against it at no cost to itself?” — Judge Richard Posner, writing for a unanimous Seventh Circuit panel in the class action case of Mirfasihi v. Fleet Mortgage Corp., Jan. 29 (PDF). Answering his own question, Posner continues: “The settlement that the district judge approved sold these 1.4 million claimants down the river.” (via How Appealing, whose author Howard Bashman has just announced that he’s striking out to launch his own appellate practice). More: David Giacalone is on the case.
Kerry unfairly maligned on PSLRA
An article in New Republic Online blasts the Massachusetts senator for having supported the lawsuit-limiting Private Securities Litigation Reform Act of 1995 (as did two-thirds of Kerry’s Senate colleagues, including even Ted Kennedy as well as nearly all the Republicans). Supposedly the PSLRA’s provisions, such as those requiring that charges of fraud be pleaded with particularity, encouraged misconduct like that later uncovered at Enron and WorldCom. (Jonathan Cohn, “Matter of Interest”, New Republic Online, Jan. 23). Mickey Kaus (scroll down) passes along the charges at face value, but Professor Bainbridge is fortunately on the case with a good response (Jan. 25).
Jacob Sullum on class actions
The syndicated columnist takes a look at the Schwartz v. Citibank class action, and also points out a couple of weaknesses in a much-hyped new study by Cornell law professor Theodore Eisenberg and NYU law professor Geoffrey P. Miller which found no upward trend in the average amount of settlements or fees in 370 class actions recorded in court decisions from 1993 to 2002. (syndicated/Reason Online, Jan. 9; see Jonathan D. Glater, “Study Disputes View of Costly Surge in Class-Action Suits”, New York Times, Jan. 14; “Attorneys Fees in Class Action Settlements: An Empirical Study”, Sept. 24).
Fee catfight in Microsoft case
Class-actioneers Michael Hausfeld and Stanley Chesley, already in line to collect $10.5 million in fees under Microsoft’s settlement of one of its antitrust cases filed in federal court, “say they are entitled to share in $50 million for helping lay the groundwork for the state claims [filed by other law firms].” Hausfeld and Chesley say many lawyers who filed state claims were happy to rely on the work they did in advancing the federal case, but “‘Memories are short and gratitude fleeting when attorneys’ fees are at issue.’ … In a reply brief, the law firms of Milberg, Weiss and Lieff, Cabraser, and Kirby, McInerney & Squire argue that assistance provided by Hausfeld and Chesley ‘was spotty and sometimes non-existent.’ ‘To put it most charitably, rather than being a resource to various state court counsel throughout these proceedings, Hausfeld-Chesley looked out for their own clients (and fees) in their own cases, which of course is completely proper,’ the lawyers in the state cases replied. ‘Such behavior, however, does not give rise to an entitlement for fees for other plaintiffs in other cases.'” (James Rowley, “Legal-fee fight erupts over Microsoft case”, Bloomberg/Seattle Times, Jan. 7)
Milberg’s split
The pre-eminent class action firm (see Jul. 1 and earlier coverage) has been splitting into two separate firms, and in case you doubted it, the New York and San Diego offices have taken positions adversarial to each other in securities class actions filed against the NYSE’s specialist trading firms. Lyle Roberts at 10b-5 Daily comments (Dec. 22; Jason Hoppin, “Firm at War With Itself”, The Recorder, Dec. 22). See also Sue Reinsinger, “Milberg’s Breakup Isn’t a Quickie”, National Law Journal, Dec. 16; Anthony Lin, “Milberg Weiss Taken to Task For Conduct in WorldCom Case”, New York Law Journal, Nov. 19)
Welcome Miami Herald readers
Some credit card customers got checks for as little as two cents, while the lawyers split $7.2 million. “For that reason, say some critics, the case of Schwartz vs. Citibank sent a priceless message about what’s wrong with the nation’s class-action legal system.” Mentions a certain website whose readers had a lot to say about the settlement (Gregg Fields, “No settlement? Grab your microscope”, Jan. 8).
The Lawsuits of Madison County
In 2002, Madison County (Dec. 3, Oct. 7, etc.)–where juries and judges are notorious for finding liability where no other courts will–led the nation in class actions per capita when there were 77 filed in the state courts there. In 2003, the number of class actions filed in Madison County rose to 106. The number was three as recently as 1998. (Brian Brueggeman, “Class-action lawsuits set a record”, Belleville News-Democrat, Jan. 2; Sanford J. Schmidt, “Debate renews in wake of record class action filings”, Alton Telegraph, Jan. 4; Michael Bobelian, “Congress Eyeing Major Reforms Of Class Actions”, New York Lawyer, Jan. 5).
One example of the forum shopping is a 2003 asbestos case of Whittington v. U.S. Steel. The plaintiff claimed to have been injured as a result of exposure to asbestos on the job in Gary, Indiana, and sued his former employer, U.S. Steel. A plaintiff-friendly judge let a legally frivolous argument against application of workers compensation laws go to the jury–which appears to be the first time a tort suit against an employer for asbestos exposure was permitted to get to a jury. The jury, on flimsy evidence that the asbestos exposure occurred at U.S. Steel or that U.S. Steel was negligent (helped by a ruling precluding U.S. Steel from showing the safety measures they had employees take), awarded $50 million in damages and $200 million in punitives. “I could hardly write it down,” the jury foreman said. “I’ve never seen numbers that big.” The size of the award, compounding at 9% interest, caused U.S. Steel to decide to settle for a fraction of that amount rather than take their chance with an appeal. (Paul D. Boynton, “$250 Million Asbestos Verdict Awarded Against U.S. Steel”, Lawyers Weekly USA, 2004; Peter Page, “Asbestos Exposure Cases Draw Big Awards”, National Law Journal, Apr. 10, 2003; Brian Brueggemann, “Man awarded $250 million in cancer case”, Belleville News-Democrat, Mar. 29, 2003).
“Plaintiffs’ Lawyers Seek $107M in Lucent Case Fees”
The amount would be almost one sixth of the $650 million settlement (only $148 million of which is in cash, which Lucent’s insurers put on the table early in the negotiations), working out to about 11 to 15 cents a share for shareholders allegedly injured by alleged securities fraud by Lucent. Another $5 million is set aside to administer the cost of the settlement, and Lucent shareholders surely paid hundreds of thousands of dollars defending the lawsuit, which threatened to put the company into bankruptcy. And you thought that Lucent’s share price dropped from $74 to $3 because of the Internet bubble. (Tim O’Brien, New Jersey Law Journal, Dec. 24).
New batch of reader letters
We’ve posted another batch of letters from readers. Among topics: a Pennsylvania case in which a doctor was ordered to pay for a mistake by nurses in the operating room; an outcry by consumers over the results of a class action (Schwartz v. Citibank) over late fees which is resulting in a $9 million payout in lawyers’ fees and refunds in the range of 18 cents for many credit card holders; a report from a reader that Norton Internet Security is blocking access to our site because we have too much talk about “weapons”, presumably meaning too much discussion of firearms litigation; and a letter on the prospect of lawyers’ going after the personal assets of Connecticut doctors in negligence cases after exhausting their insurance coverage.