Transcript Presenting a live 90-minute webinar with interactive Q&A Class Action Settlement Objectors Minimizing and Defending Challenges by Professional Objectors, Government Officials and Public.

Presenting a live 90-minute webinar with interactive Q&A
Class Action Settlement Objectors
Minimizing and Defending Challenges by Professional Objectors,
Government Officials and Public Interest Groups
TUESDSAY, JANUARY 10, 2012
1pm Eastern
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12pm Central | 11am Mountain
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10am Pacific
Today’s faculty features:
Bruce D. Greenberg, Partner, Lite DePalma Greenberg, Newark, N.J.
Paul G. Karlsgodt, Partner, Baker Hostetler, Denver
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CLASS ACTION SETTLEMENT OBJECTORS:
Minimizing and Defending Challenges by Professional Objectors,
Government Officials and Public Interest Groups
PLAINTIFFS’ TACTICS TO COMBAT
PROFESSIONAL OBJECTORS
Bruce D. Greenberg, Esq.
Lite DePalma Greenberg, LLC
Two Gateway Center, Suite 1201
Newark, NJ 07102
(973) 877-3820
[email protected]
www.litedepalma.com
New Jersey Appellate Law blog: www.appellatelaw-nj.com
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
“QUICK-PAY” FEE PROVISION:
Provides for payment of fees/expenses shortly after final
settlement approval by the district court, and repayment if
approval is overturned or materially altered
Removes a pressure point for objectors
See Brian T. Fitzpatrick, “The End of Objector Blackmail?,” 62
Vand. L. Rev. 1623 (2009)
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
SHIFT TO DEFENDANTS THE OBLIGATION
TO DEAL WITH OBJECTORS:
Defendants have an equal interest in terminating objections
Again, removes a pressure point for objectors. Defendants
are less susceptible to economic pressure from objectors.
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
STEAL OBJECTORS’ CLOTHES:
Encourage the judge to be “rigorous” and give the court
what it needs to do that, in contrast to often sloppy
objectors
Approval of settlement class requires review “even more
scrupulous than usual.” E.g., In re Insurance Brokerage
Antitrust Litig., 579 F.3d 241, 258 (3d Cir. 2009).
Court as “fiduciary for absent class members.” E.g., Sullivan
v. DB Investments, Inc., ___ F.3d ___, ___, 2011 WL 6367740,
*27 (3d Cir. Dec. 20, 2011).
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
EXPOSE THE TRACK RECORD OF OBJECTORS
AND THEIR COUNSEL:
Professional objector counsel often offer only boilerplate
arguments already rejected repeatedly elsewhere
Network with other plaintiffs’ counsel to get ammunition.
Get objector counsel’s prior filings.
Objectors themselves appear in multiple cases (“stable of
objectors”). Call for disclosure of their objection history. Cf.
PSLRA, 15 U.S.C. §78u-4(a)(2)(A)(v). See DeHoyos v. Allstate
Corp., 240 F.R.D. 269, 316 (W.D. Tex. 2007).
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
DEPOSE THE OBJECTOR:
Test the motives, adequacy, etc., of objector, by analogy to
deposition of class representatives as a test of their
adequacy. Fed. R. Civ. P. 23(a)(3).
Unearth any family, etc., relationship between objector and
counsel, by analogy to rules for class counsel/class
representatives
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
REQUIRE OBJECTOR COUNSEL/CLIENTS TO
APPEAR AT THE FINAL HEARING:
Written objections are largely cost-free and require no
accountability
Requiring objector counsel and/or clients to appear puts
“skin in the game”
Questioning by court can expose weaknesses and true
agenda of objectors
A full and rigorous analysis requires oral argument by and
colloquy with all counsel, including objector counsel
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
SEEK SANCTIONS:
Many objectors file late, suspicious, boilerplate, duplicative
and/or groundless objections
Monetary sanctions
Revocation of pro hac vice admission
Reduction in otherwise available attorneys’ fee
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
“SUE THE BAST@&DS!”:
On proper facts, RICO or other theories may be available.
Weigh the likelihood of success, or of specific or general
deterrence, against the time and expense of a separate new
litigation that may be viewed unfavorably by some courts.
Cf. Chrysler Corp. v. Carey, 5 F. Supp. 2d 1023 (E.D. Mo.
1998) (class action defendant sued class counsel).
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
OPPOSE OBJECTOR DEMANDS FOR
ATTORNEYS’ FEES:
The general rule is no fees for objector counsel. E.g., In re
Rent-Way Sec. Litig., 305 F. Supp. 2d 491, 520 (W.D. Pa. 2003).
Creating minor or illusory “benefits” to the class should not
earn a fee. Only “substantial benefit” qualifies. E.g., Azizian
v. Federated Dep’t Stores, Inc., 2007 WL 425850, *1 (N.D. Cal.
Feb. 8, 2006).
“Sharpening the focus” should not earn a fee. Some SDNY
cases award fees for that; others, and cases elsewhere, say
no. E.g., Martin v. Foster-Wheeler Energy Corp., 2008 WL
906742, *10 (M.D. Pa. Mar. 31, 2008).
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
DEMAND OBJECTOR COUNSEL’S DETAILED
TIME AND EXPENSE RECORDS:
Class counsel must submit time records in lodestar cases
Objector counsel come in late— no issue of voluminous
records to review
Requiring records reduces extortionate fee demands and
exposes inflated/improper billing
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
OPPOSE PERCENTAGE AWARDS TO OBJECTOR
COUNSEL; LIMIT TO LODESTAR:
Objectors often demand a percentage, up to 100%, of class
counsel’s fee
Sometimes they seek a percentage of an overvalued benefit
they claim to have created
Percentage fee demands create windfalls that fail the
“cross-check” that many circuits employ. E.g., Sullivan, ___
F.3d at ___, 2011 WL 6367740, *38.
Courts rightly label objector percentage fee demands
“chutzpah” and “preposterous.” E.g., Mirfasihi v. Fleet
Mortgage Corp., 551 F.3d 682 (7th Cir. 2008).
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
OPPOSE MULTIPLIER FOR
OBJECTOR COUNSEL:
Multipliers reward risk. Unlike class counsel, objector
counsel take little risk. But they often demand a multiplier
anyway, especially if class counsel are getting one.
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
OPPOSE INCENTIVE/SERVICE AWARD FOR
OBJECTOR OR COUNSEL:
Some objector counsel, to get around their inability to get a
fee, appear pro se and demand an incentive award
E.g., UFCW Local 880 Joint Pension Fund v. Newmont Mining
Corp., 2008 WL 4452332 (D. Colo. Sept. 30, 2008) (denying
incentive award).
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
REQUIRE AN APPEAL BOND:
Fed. R. App. 7 permits this, though some courts have
declined to do it.
Good faith objectors will not be chilled; opportunists will
fold.
Increased administration expenses, interest on settlement
fund, projected attorneys’ fees in defending objector
appeals are potential bases for bond.
See John E. Lopatka and D. Brooks Smith, “Class Action
Professional Objectors: What to Do About Them,” __ Fla. St.
U. L. Rev. __ (2012) (forthcoming)
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
AN ADVERTISEMENT:
For more on many of these topics, and others, see:
Bruce D. Greenberg, “Keeping the Flies Out of the Ointment:
Restricting Objectors to Class Action Settlements,” 84 St.
John’s L. Rev. 949 (2010) (cited in In re Kentucky Grilled
Chicken Coupon Marketing & Sales Practices Litig., ___
F.R.D. ___, 2011 WL 5599129 (N.D. Ill. Nov. 16, 2011))
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
BRUCE D. GREENBERG, ESQ.
Lite DePalma Greenberg, LLC
Two Gateway Center, Suite 1201
Newark, NJ 07102
(973) 877-3820
[email protected]
www.litedepalma.com
New Jersey Appellate Law blog:
www.appellatelaw-nj.com
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© 2012 Lite DePalma Greenberg, LLC All Rights Reserved
When It’s Not Money
They’re After
Paul Karlsgodt
[email protected]
303.764.4013
© 2010 Baker & Hostetler LLP
A “Taxonomy” of Objectors
Listed in order of concern:
• Whackos (non-class members who send
crazy letters to the judge or settlement
administrator)
• Individual class members
• Professional or “Greenmail” objectors
• Public Interest objectors
• Government objectors
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Baker Hostetler
Public Interest Objectors
• How are they distinguishable from professional or
“greenmail” objectors?
– Can’t buy them off
– Have a policy agenda
• Policy interests can vary
– Consumer advocates
– Pro-business advocates
– Class action opponents and tort reform advocates
• How they object
– They may represent objectors, often on a pro bono
basis.
– They may also appear as amicus parties.
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Baker Hostetler
Government Objectors
• Who are they?
– Individual regulators
– Attorneys general
– Groups of AGs
• What are they concerned with?
– Consumer protection
– Regulatory control
– Preserving government powers
• What types of settlements are they interested in?
– Claims that are the subject of regulatory investigation or action
– Coupon settlements or other settlements where consumers have no
opportunity for any meaningful benefit
– Cases involving acts or events that are subjects of public outcry
– Cases brought to their attention by other AGs (especially California)
– Releases that purport to curtail regulatory power
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Baker Hostetler
Considerations Common to All
Non-Greenmail Objectors
• They are not interested in extracting
money out of the settlement.
• They have limited resources, so they look
for the most egregious cases.
• A fair settlement with a good notice
program is not likely to attract either
government or nonprofit objectors.
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Baker Hostetler
Strategies for Avoiding NonGreenmail Objectors
• Avoid appearance of collusion
– Allow some confirmatory discovery or exchange information.
– Make sure to keep a record of negotiations.
– Consider hiring a mediator or using court-sponsored dispute
resolution service.
• Avoid coupon settlements
– Wilson v. DirectBuy, Inc., Civ. A. No. 3:09-CV-590 (JCH), slip
op. at 8-29 (D. Conn. May 16, 2011) (denying final approval to
coupon settlement following objections by 39 Attorneys
general and a consumer advocacy group, who argued that the
relief provided essentially amounted to a coupon settlement).
– Figueroa v. Sharper Image Corp., 517 F. Supp. 2d 1292 (S.D.
Fla. 2007) (denying final approval of a coupon settlement due
in part to objections raised in an amicus brief filed by 35
attorneys general).
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Baker Hostetler
Strategies for Avoiding NonGreenmail Objectors (cont’d)
• Don’t overreach with the release.
• Avoid unnecessary publicity.
• Have a principled basis for dealing with unclaimed
funds. Reversion – Money is returned to the
defendant.
– Pro rata – Money is paid pro rata to class members
who did file claims.
– Cy pres – Money is paid to charity.
• For a good discussion of each of the three possible
methods for distributing unclaimed funds, see Klier
v. Elf Atochem North America, Inc., 658 F.3d 468,
475 (5th Cir. 2011).
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Baker Hostetler
Strategies for Avoiding NonGreenmail Objectors (cont’d)
• Ensure reasonable notice.
– Reasonable notice and an opportunity to participate,
not the level of participation itself, should be the focus
on whether the settlement complies with due process.
– Comply with Rule 23(c)(2)(B).
– Follow FJC plain notice guidelines. See www.fjc.gov.
– Retain a qualified notice expert.
– Make sure you give proper CAFA notice in federal
court. 28 U.S.C. § 1715.
• Be honest and forthright with the court during
preliminary approval.
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Baker Hostetler
For further study
• FJC Class Action Notices Page, http://www.fjc.gov/.
• Bruce D. Greenberg, Keeping the Flies out of the Ointment:
Restricting Objectors to Class Action Settlements, 84 St. John’s L.
Rev. 949 (2010).
• Paul Karlsgodt & Raj Chohan, Class Action Settlement Objectors:
Minor Nuisance or Serious Threat to Approval? 12 Class 744, (BNA
Class Action Lit. Rep., August 12, 2011),
http://classactionblawg.files.wordpress.com/2011/09/bnaartic.pdf
• Shannon R. Wheatman & Terri R. LeClercq, Majority of Class Action
Publication Notices Fail to Satisfy Rule 23 Requirements, 30 REV.
LITIG. 53 (2011).
• Todd B. Hilsee, Shannon R. Wheatman & Gina M. Intrepido, Do you
really want me to know my rights? The ethics behind due process in
class action notice is more than just plain language: A desire to
actually inform. GEO J. LEGAL ETHICS, 18 (4), 1359-1382 (2005).
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Baker Hostetler
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