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Class Action Settlement Objectors Minimizing and Defending Challenges by Professional Objectors, Government Officials and Public Interest Groups Today’s.

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Presentation on theme: "Class Action Settlement Objectors Minimizing and Defending Challenges by Professional Objectors, Government Officials and Public Interest Groups Today’s."— Presentation transcript:

1 Class Action Settlement Objectors Minimizing and Defending Challenges by Professional Objectors, Government Officials and Public Interest Groups Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. TUESDSAY, JANUARY 10, 2012 Presenting a live 90-minute webinar with interactive Q&A Bruce D. Greenberg, Partner, Lite DePalma Greenberg, Newark, N.J. Paul G. Karlsgodt, Partner, Baker Hostetler, Denver

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5 5 © 2012 Lite DePalma Greenberg, LLC All Rights Reserved 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 bgreenberg@litedepalma.com www.litedepalma.com New Jersey Appellate Law blog: www.appellatelaw-nj.com

6 6 © 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)

7 7 © 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.

8 8 © 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).

9 9 © 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).

10 10 © 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

11 11 © 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

12 12 © 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

13 13 © 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).

14 14 © 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).

15 15 © 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

16 16 © 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 (7 th Cir. 2008).

17 17 © 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.

18 18 © 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).

19 19 © 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)

20 20 © 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))

21 21 © 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 bgreenberg@litedepalma.com www.litedepalma.com New Jersey Appellate Law blog: www.appellatelaw-nj.com

22 © 2010 Baker & Hostetler LLP Paul Karlsgodt pkarlsgodt@bakerlaw.com 303.764.4013 When It’s Not Money They’re After

23 23 Baker Hostetler 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

24 24 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.

25 25 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

26 26 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.

27 27 Baker Hostetler Strategies for Avoiding Non- Greenmail 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).

28 28 Baker Hostetler Strategies for Avoiding Non- Greenmail 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).

29 29 Baker Hostetler Strategies for Avoiding Non- Greenmail 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.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.

30 30 Baker Hostetler For further study FJC Class Action Notices Page, http://www.fjc.gov/.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 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 R EV. L ITIG. 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. G EO J. L EGAL E THICS, 18 (4), 1359-1382 (2005).

31 Q&A To ask a question from your touchtone phone, press *1. To exit the queue, press *1 again. You may also use the Chat function to ask questions, or email questions to classactionlaw@straffordpub.com CLE CODE: TXWCCA

32 Tell us how we did! After you complete a brief survey of this program, we'll send you a free $5 Starbucks Gift Card. Look for our 'Thank You' email (which you should receive shortly) for details and the survey link!

33 Thanks. Strafford Publications, Inc. 1-800-926-7926 www.straffordpub.com Please join us for our next legal conference, “Litigating Class Actions Between Certification and Trial - Pursuing and Defending Pre-Trial Motions and Discovery Requests,” scheduled on Tuesday, January 31, 2012 starting at 1pm EDT.


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