(Reuters) – There are no easy solutions for class action lawyers whose settlements have been delayed by appeals from opponents. Just ask the attorneys for the plaintiffs who won $113.5 million in settlements for buyers of lithium-ion batteries.
Last December, U.S. District Judge Yvonne Gonzalez Rogers in Oakland, Calif., approved a final round of settlements with defendants in the antitrust class action lawsuit, awarding approximately $40.5 million in fees and expenses to lawyers for the group of Lieff Cabraser Heimann & Bernstein; Hagens Berman Sobol Shapiro; and Cotchett, Pitre & McCarthy. Rogers also awarded $220,000 in costs to the Hamilton Lincoln Law Institute, which persuaded the 9th U.S. Circuit Court of Appeals in 2019 that the settlement’s award formula should take into account differences in state laws. governing recovery for consumers with antitrust claims. (The case alleges a price-fixing cartel that overcharged batteries used in cell phones, camcorders, cordless power tools and other products.)
The Hamilton Lincoln Law Institute, headed by Ted Frank, appealed the award of fees to class attorneys. Lieff, Cotchett, and Hagens Berman, in turn, appealed the award to Frank’s group. It’s fair to say that there is no love lost between these factions.
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But Frank’s appeal wasn’t the only hiccup for the class’ attorneys. A pro objector named Christopher Andrews also appealed the final approval of the lithium-ion battery settlement to the 9th Circuit. Andrews, a frequent class action opponent, had participated in both the trial court litigation and previous 9th Circuit appeals in the lithium-ion case. His “informal” 9th Circuit brief challenging the award formula in the final settlement was, by his own admission, almost entirely a reproduction of a 2018 appeal filing by Ted Frank’s group.
Andrews’ last call had almost no chance of success. The 9th Circuit has already approved the revised allocation formula which it is protesting against in another installment of settlements in the lithium case. But in the meantime, Andrews’ appeal extended a case that had been in court since 2017.
The group’s lawyers therefore agreed to a side agreement to have him leave.
In a Jan. 24 motion for approval of their settlement with Andrews, class attorneys told Trial Judge Rogers they had agreed to pay the objector $25,000 of their own money if he dropped out. his call from the 9th Circuit. The deal, they argued, was a boon to more than a million class members who are waiting to collect a share of the settlement. The class would be paid faster without Andrews’ appeal dragging things out, according to the brief. And Andrews, class counsel said, deserved compensation for helping frame the apportionment issue.
“This resolution therefore protects the common fund; expedites payment to class; and does not deprive the class of any possible further recovery,” the brief states. “It is also justified as a reward for the time and energy [Andrews] invested in the business.
Not according to Ted Frank.
Frank’s group this week filed a brief opposing the class attorney’s proposed $25,000 settlement with Andrews. The memoir said Andrews accomplished nothing for the class by simply echoing Frank’s group at the 9th Circuit. And accelerating the final resolution of the case is not adequate justification for paying an opponent to drop an appeal, the brief says, citing the Bolch Judicial Institute Class Action Guidelines. .
If class attorneys are willing to give $25,000, Frank’s group said, that money should go to the class, not Andrews. And if the professional objector believes they are entitled to fees, the brief says, they must file a claim with the court.
Class counsel did not respond to my question about Frank’s opposition to their proposed settlement with Andrews, who said he plans to file a response next week “to [Frank’s] half-truth, lie by omission, retaliatory opposition,” but declined to elaborate.
As you know, a 2018 amendment to the Federal Rules of Procedure for Class Actions was intended to address exactly this type of side agreement to end appeals by opponents. The amendment requires trial court approval of those settlements, which is why class counsel filed a motion disclosing the Andrews agreement to Rogers.
But Frank said in a phone interview that just disclosing the deals isn’t enough: Judges have to shut them down. “If you say we’re going to pay $25,000 every [objector] who files a frivolous appeal, you’ll get a lot more frivolous appeals,” Frank said.
Frank conceded that it’s a problem when band members’ recovery is delayed by appeals from convicted objectors. (His group is not challenging the underlying lithium-ion settlement, just the fees of class attorneys.) But the solution, he said, is stricter court oversight when opponents file appeals, not side payments from class counsel.
The 2018 amendment to the class action procedural rules appears to have deterred side deals between class attorneys and opponents. Brian Fitzpatrick, a Vanderbilt Law School professor who follows class action developments closely, published a 2020 study in the Fordham Law Review analyzing post-amendment motions asking trial judges to approve settlements between class counsel and objectors. Fitzpatrick found only six cases in which class attorneys offered side deals to pay objectors in exchange for dismissing appeals. Four of the settlements were approved, but two judges rejected the proposals.
Fitzpatrick hasn’t tracked similar moves since the 2020 study was published, but Frank said there have only been a handful.
Still, like Frank, Fitzpatrick told me he fears appeals from baseless objectors will proliferate if trial courts approve the deals. In an email, he said it was “pretty flimsy” to argue that objector settlements are justified simply because they eliminate any appeal risk and expedite payments to class members. This rationale, he said, would essentially neutralize the 2018 amendment.
“I have great regard for these companies and understand why they pay naysayers,” Fitzpatrick said. “It’s the path of least resistance. But it’s also short-sighted. We’re better off in the long run if we stop these side payments.”
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