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Pella Class Action Lawsuit Hits a snag

The Seventh Circuit Court of Appeals has rejected, in scathing terms, a class-action settlement over Pella windows that was engineered by a lawyer who inserted his father-in-law as a named plaintiff and negotiated a $2 million advance on his fee before his other clients even knew the case had been settled.

It didn’t help matters that attorney Paul Weiss was in danger of losing his law license over allegations of sexual misconductas he was wrapping things up with Pella, giving him extra impetus to work out a deal that paid him a fee before he was no longer able to avail himself of the privilege. Or that the agreement he worked out would pay him and his co-counsel $11 million while class members stood to gain, at an absolute maximum, $17 million.

“In sum, almost every danger sign in a class action settlement that our court and other courts have warned district judges to be on the lookout for was present in this case,” said Judge Richard Posner in the decision of a three-judge panelchucking out the deal. “The district court approved a class action settlement that is inequitable— even scandalous.”

Posner’s decision is unsparing toward U.S. District Judge James Zagel for approving the settlement even before notice had been sent out to class members. How could Zagel have known whether the $11 million fee award was fair and reasonable, Posner asked, before he had any idea how much money Pella would actually pay Weiss’s clients? Weiss argued the settlement was worth $90 million but Posner said the combination of complex forms, provisions for arbitration of larger claims and coupons and extended warranties for many class members meant the deal was worth a maximum of $17 million and probably far less.