BlogsAll Blogs

Lite DePalma Greenberg Law Blog

Search our blog posts

The Pirates of the Class Action WorldSteven J. Greenfogel

Most often, when anyone thinks about class actions (to the extent that anyone ever does), scorn is heaped on plaintiffs’ lawyers for receiving huge fees and getting little for the parties who were actually injured by the illegal acts of defendants. Quite often the reality is rather different. Many lawyers studiously avoid class action practice for the very reason that it is extremely difficult, requires extensive investments in time and costs and returns nothing in the event that the case is not won or settled. Even when a case does get resolved favorably, it doesn’t end there. The professional objectors then come out in force to tax the settlement and any potential fees that may be awarded.

To be sure, there are meritorious objections to some class action settlements and an extensive body of appellate case law has developed in that regard. However, it has become common practice for certain enterprising attorneys (the same individuals seem to appear over and over) to find a class member to object to a settled class suit, no matter how meritorious the settlement. Rather than run the risk of a reversal on appeal, plaintiffs’ counsel often pay part of their fees to these lawyers to get them to abandon their objections. The logic behind this willingness to pay off objectors is the delay factor built into any appeal of a settlement, as well as the potential that some appellate court might find something in a district court’s ruling that would result in a remand or an outright reversal. At this point, many courts have become fed up with this type of attack on settled litigation and have begun putting strictures on such behavior.

Most recently in the Polyurethane Foam Litigation in the Northern District of Ohio, Judge Zouhary found none of the five appealing objectors’ arguments against the settlements to be well founded and, in fact were made vexatiously and in bad faith. In an effort to stop this type of behavior, the Court imposed, jointly and severally, a bond in the amount of $145,463.00 stating that “[T]o now have Objectors file frivolous appeals in pursuit of a payoff is not simply a detriment to the settling parties – it is an insult to the judicial system.”

Hopefully, more appellate courts will adopt Judge Zouhary’s logic and put a stop to these buccaneers, perhaps through the use of judicial ethics violation charges, while still allowing legitimate and meritorious objections to settlements to be heard. Perhaps one way to accomplish this goal would be to prohibit class counsel from making any payments to objectors’ without specific court approval, as ordered by Judge Zouhary in Polyurethane Foam, thereby ending the legal extortion being promoted by these freebooting attorneys. Between halting the easy money, imposing appeal bonds and the potential for ethics violations, the courts should be able to cut down significantly on such bogus objections which do nothing other than waste judicial resources and delay payments to class members, while enriching a small group of attorneys who have found an unscrupulous way to game the system.