Legal News

Have Class Actions Become Like the Wild Kingdom?

By Brian Harris

Is there a natural order among the lawyers in a class action?  If we extrapolate from the recent comments of two federal judges, there is.  In April, U.S. District Judge Faith Hochberg of the District of New Jersey described plaintiffs lawyers jockeying for position as class counsel in terms evoking images of sharks in bloody water.  At a status conference in Franco v. Conn. Gen. Life Ins. Co. et al., Hochberg warned that she wanted plaintiffs? counsel to cooperate and that she would not ?tolerate this becoming an attorney feeding frenzy for fees.? Hochberg?s comments might not cast the kindest light on the plaintiffs? counsel in the case, but at least her comments suggests that she sees them at the top of the food chain.

 A more recent decision, by Judge James Rosenbaum of the U.S. District Court for the District of Minnesota, assigned objectors? counsel in a class action a much lower rank on the food chain.  In In re UnitedHealth Group Inc. PSLRA Litig., Rosenbaum, on Sept. 4, denied a fee application from counsel for several class members who objected to a settlement. Rosenbaum?s opinion opens by noting that the ?remoras are loose again.?  For those who missed that day of biology, a remora is a type of suckerfish that clings to sharks and other large fish for transportation.  In his opinion, Rosenbaum likens four objectors? counsel to remoras for their request for more than $225,000 in fees, which they claimed based on Rosenbaum?s earlier decision to reduce class counsel?s requested fees from $110 million to $64.8 million.  Rosenbaum described the request as ?laughable? and paraphrased Winston Churchill:  ?Seldom in the field of securities litigation was so little owed by so many to so few.?  Ultimately, Rosenbaum held that the objectors? counsel were entitled to an award ?equal to their contribution ? nothing.?

Rosenbaum?s decision is a warning to lawyers everywhere who plan to file objections to class action settlements: Just because a court reaches the same outcome as that advocated by an objector, there is no guarantee that the court will conclude that the objectors, rather than the judge himself, caused the outcome.  Thus, objectors? counsel who see a settlement term that seems patently unfair should not presume that they will get paid for pointing out that unfairness to the court.  No doubt, sharks and other creatures at the top of the food chain were appropriately appreciative of Rosenbaum?s decision. 

Joshua D. Wolson is a member of the litigation department at Dilworth Paxson.  He can be reached at 215-575-7295 or jwolson@dilworthlaw.com.  This posting is for informational purposes only and should not be construed or interpreted as legal advice on any matter.

Full post as published by The Legal Intelligencer Blog on September 22, 2009 (boomark / email).