[AF] Posturing lawyers

[Gary Glaenzer]

you want a lawyer story ?

or several

www.overlawyered.com

Moody v Sears: Lawyers, $1M. Class, $2,402.
No, not $2,402 each. The $2,402 represents the total redemption of coupons
by a 1,500,000-member class, or $0.0016 per class member. The Illinois state
court (in the judicial hellhole of Cook County) awarded plaintiffs'
attorneys Gary K. Shipman of Shipman & Wright $1,000,000, presumably because
they represented the face value of the unlikely-to-be-redeemed coupons to be
in the millions of dollars. A North Carolina state judge was not impressed
after he forced the forum-shopping attorneys (and defendants) to reveal the
results of the settlement before dismissing a parallel lawsuit. (Moody v.
Sears, Roebuck, & Co.) (via Nick Pace of RAND Institute at CL&P Blog).

Note that the widely-publicized Eisenberg/Miller class-action study,
regularly cited for the proposition that state courts were no worse than
federal courts in terms of awarding attorneys' fees, would have erroneously
calculated this attorney fee as 14% or so of the total settlement value,
rather than the actual number of 100%. Garbage in, garbage out.

Pace mistakenly thinks that the class members were deprived of a remedy. Not
really, though consumers are certainly worse off because of such litigation.
Problems like this arise because a Sears is only willing to settle a
frivolous consumer-fraud suit for nuisance amounts, and the plaintiffs'
attorneys just want a paycheck, so Sears is willing to pay the protection
money to make the meritless lawsuit go away, since it will cost more in
litigation expense to defend itself. When neither the plaintiffs' attorneys
nor the judge cares about the class members, plaintiffs' attorneys can
extract, as here, 99.9% of the settlement amount. If, on the other hand, a
court ensures that the majority of a nuisance settlement must go to the
ostensible plaintiffs, the plaintiffs' attorneys will be less likely to find
it profitable to bring the meritless suit and try to extort a settlement,
because defendants will be more likely to find it worthwhile to defend
against the suit, and the suit won't happen in the first place. Which does
make consumers better off, because then they realize a substantial part of
the savings of doing business when there's less protection money paid off to
plaintiffs' lawyers like Gary Shipman.

The Class Action Fairness Act fixes these matters-or at least it does in the
cases where federal judges apply its rules and accept jurisdiction. First,
CAFA effectively consolidates national class actions into a single federal
jurisdiction, defendants are unable to play one plaintiffs' attorney off of
another, as happens when plaintiffs file several dozen identical and
parallel class actions. Second, CAFA requires federal judges to apply
meaningful scrutiny to class-action settlements and the award of attorneys'
fees, especially coupon settlements like this one. A $2402 coupon redemption
with a million-dollar attorneys' fee would have been impossible under CAFA.

When, however, judges misread the jurisdictional provisions of CAFA and
remand legitimate removals back to the state courts that routinely approve
such travesties, they undo the whole point of the legislation, and hurt
consumers in the bargain. That Public Citizen regularly argues for such
narrow readings of CAFA suggests their true interests lie with trial
attorneys, rather than consumers, and that the true consumer advocates are
those who support civil justice reform. (Cross-posted to Point of Law)

----- Original Message ----- 
From: "Reader" <reader at oldradio.com>
To: <af at radiolists.net>
Sent: Friday, May 18, 2007 12:40 PM
Subject: [AF] Posturing lawyers


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