Class Action Settlement Objectorsmedia.straffordpub.com/.../presentation.pdf2013/01/10 · (JCH), slip op. at 8-29 (D. Conn. May 16, 2011) (denying final approval to coupon settlement

Class Action Settlement Objectors Minimizing and Defending Against Challenges by Professional Objectors,

Government Officials and Public Interest Groups

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THURSDAY, JANUARY 10, 2013

Presenting a live 90-minute webinar with interactive Q&A

Casie D. Collignon, Partner, Baker & Hostetler, Denver

Bruce D. Greenberg, Partner, Lite DePalma Greenberg, Newark, N.J.

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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

http://www.litedepalma.com/

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© 2013 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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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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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., 667 F.3d 273, 319 (3d Cir. 2011).

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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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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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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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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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“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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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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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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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, 667 F.3d at 330.

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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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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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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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,” 39 Fla. St. U. L. Rev. 865 (2012).

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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., 280 F.R.D. 364 (N.D. Ill. 2011)).

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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

http://www.litedepalma.com/

© 2010 Baker & Hostetler LLP

Casie D. Collignon

When It’s Not Money

They’re After

22 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

23 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.

24 Baker Hostetler

Government Objectors

• Who are they? – Individual regulators

– Attorneys general

– Groups of Ags • Information sharing through list serves leads to more coordinated objections

• 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

25 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.

26 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.

• Don’t overreach with the release.

• Avoid unnecessary publicity.

27 Baker Hostetler


Greenmail Objectors (cont’d)

• 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).

• Note: After this case was consolidated with others, a new settlement was proposed and the deadline for the motion for preliminary approval was January 4, 2012.

– 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 Baker Hostetler



• 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.

• Dennis v. Kellogg Co., No. 11-55674, (9th Cir. July 13, 2012) (reversing certification of a

settlement class involving false advertisement claims against a cereal product, where

the settlement agreement provided (1) a fund of $2.75 million for distribution to class

members on a claims-made basis; (2) any unclaimed portion would be donated to

“charities chosen by the parties and approved by the Court;” (3) a distribution of $5.5

million “worth” of food items to charities to feed the indigent; and (4) payment of class

counsel’s attorneys’ fees and costs up to $2 million. In rejecting the settlement, the

Court held that the cy pres award was “not sufficiently related to the plaintiff class.”)

– 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).

– For a good outline of the circumstances under which a court may approve a cy

pres distribution of unclaimed settlement funds, see In re: Lupron Marketing and

Sales Practice Litigation, Case Nos. 10-2494, 11-1329 (1st Cir., Apr. 24, 2012).

29 Baker Hostetler



• Have a principled basis for settlements with outrageously high exposure and

relatively low class recovery, such as recent data privacy class actions. – Courts and public interest objectors are watching for the following:

• Settlement funds for class members, if any.

• Settlement funds for charity that are arbitrary or unrelated to the case.

• Settlement funds for attorneys’ fees, if outrageously high and not subject to challenge.

– Two recent Facebook settlements illustrate the quandary of whether defendants should settle such cases for

an astronomical sum or not settle at all?

• “Sponsored Stories” Settlement: Angel Fraley, et al. v. Facebook, Inc., Case No. 3:11-cv-01726-RS

(N.D. Cal.) (denying settlement approval where class received no money, and $10 million to charity

was not reasonably related to any demonstrated past damages claims).

– Note: The Court preliminarily approved a revised settlement on December 4, 2012, after considering the Amicus

appearance of the Center for Public Interest Law/children’s Advocacy Institute on November 7, 2012. The new

settlement set up a $20 million fund, against which class members could make claims for $10, with any reversion

going to a charity to be approved by the court. The new settlement also provided more detail justifying the

settlement fund amount and allowed Facebook to challenge any fee request by Plaintiffs.

• “Beacon” Settlement: Lane v. Facebook, Case No. 5:08-cv-384-RS (N.D. Cal.) (settlement approved

by district court, consisting of $6 million to new charity, no money to class members, and $2.36 million

in attorneys’ fees. Court ruled that “[i]n light of [the] litigation risks and in the context of settlement

claims involving infringement of consumers’ privacy rights,” the class’s $9.5 million recovery was

“substantial” and “directed toward a purpose closely related to Class Members’ interests in this

litigation”); Ginger McCall, et al. v. Facebook, Inc., et al., Case No. 10-1630 (9th Cir., Sept. 20, 2012)

(upheld approval of settlement).

30 Baker Hostetler



• 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.

http://www.fjc.gov/

31 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).

http://www.fjc.gov/

http://classactionblawg.files.wordpress.com/2011/09/bnaartic.pdf

© 2010 Baker & Hostetler LLP

Denver

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Casie D. Collignon

Partner

http://www.bakerlaw.com/casiedcollignon/ccollignon','bakerlaw.com

Documents

Class Action Settlement Objectorsmedia.straffordpub.com/.../presentation.pdf2013/01/10 · (JCH), slip op. at 8-29 (D. Conn. May 16, 2011) (denying final approval to coupon settlement