User:Toocostly/draft article on class action lawyers

Introduction
Plaintiff's class action lawyers (hereinafter, "PCALs") are lawyers who repeatedly file class action lawsuits that challenge various aspects of companies' business practices and procedures in order to receive a payment of money in exchange for the dismissal of the lawsuit.

The power of PCALs in the American legal system is unrivaled. It is no more clearly demonstrated than in their ability to have the word "professional" given a negative connotation by our country's judiciary when applied to counsel representing class members who object to proposed class action settlements and/or attorneys' fee requests – the so-called "professional objector," when they themselves are "professional" plaintiff's class action lawyers. Equally troubling has been PCALs' ability to have the judiciary cast aspersions on objectors' counsel for engaging in a litigation/business strategy not dissimilar from the litigation/business strategy of PCALs upon whom they heap the greatest praise. Although the mainstream judiciary fails to appreciate this tactical congruity, at least one prominent observer of class action industry practices, Professor John C. Coffee Jr. of Columbia University Law School, has noted the irony of PCALs' accusations regarding the predatory nature of so-called "professional objectors." To deflect attention from objectors' efforts to expose inadequate settlements and excessive attorneys' fee requests, PCALs have unleashed an unprecedented and unfortunately successful effort to discredit lawyers who represent objectors willing to challenge class action abuses. PCALs want to insulate their settlements and attorneys' fee requests from thorough judicial review by eliminating objectors and thereby preventing a truly adversarial hearing on the fairness of the proposed settlement and the amount of class counsel's fee. They don't want objectors trying to convince judges to reject bogus class action settlements and lower typically excessive attorneys' fee requests.

In fact, there is an arsenal of litigation tactics that PCALs employ – with judicial complicity – to marginalize those who seek to expose the class action industry for what it really is.

Unfortunately, the judiciary doesn't want to fix the class action problem. Judges do not want to be reminded of the unfairness, inadequacy, and unreasonableness of a settlement they are prepared to approve as fair, adequate, and reasonable or the excessiveness of an attorneys' fee request that they are prepared to approve as reasonable. The judiciary is happy to accommodate attacks on "professional objectors." They provide a smoke screen with which to further cover-up the real judicial class action operating principle that a "bad settlement (and, it could be added, an attorneys' fee large enough to encourage PCALs to agree to settle (and, invariably, find someone else to sue) is almost always preferable to a good trial." None of the participants  is anxious to have this big shakedown racket exposed, but is anxious to distract the public's attention by focusing on the similar business tactics of the enemies who seek to expose them - "professional objectors."

Section Two
The practices of plaintiffs' class action lawyers (PCALs) have been the focus of attention of numerous courts, legal commentators, and legislators, including the U.S. Congress – but not the editors of NEWBERG ON CLASS ACTIONS. It should come as no surprise that while there is a chapter in NEWBERG entitled "Abusive Conduct by Counsel Objecting to Class Action Settlements," there is no chapter entitled "Abusive Conduct by Counsel Representing Class Members in Class Action Settlements."

The treatise is presently co-edited by Professor William B. Rubenstein. "Professor" Rubenstein, in addition to editing the class action treatise, is also a law professor at Harvard Law School, and moonlights as a "professional expert witness" on behalf of PCALs. He regularly tells judges that their proposed class action settlements are fair, adequate, and reasonable, and that their requests for attorneys' fees are reasonable. In fact, "Professor" Rubenstein, perhaps inspired by the size of the attorneys' fee requests that he regularly testifies in favor of, also moonlights as a PCAL.

The NEWBERG treatise fails to observe that (the tort litigation business of which class actions are a major component) has eclipsed being merely a big business and has become an industry that rakes in almost $40 billion per year in revenues – 50 percent more than Microsoft or Intel and twice those of Coca-Cola. The treatise also ignores the following observations regarding the litigation-business strategies of PCALs:

So-Called Attorneys' Fees Payments Are a Disguised Form of Ransom
PCALs seek out companies to sue in order to extract a payment, which the legal system obligingly calls a "reasonable attorneys' fee." The U.S. Congress, on the other hand, has used several less flattering terms to describe these payments, such as ransom and extortion. Class members who, in theory, are supposed to be the main beneficiaries of the class action system are, in reality, merely an excuse to shake down payoffs from corporations with large treasuries or insurance policies in exchange for dismissing their class action lawsuits.

Meritless Class Action Lawsuits
The filing of unmeritorious class action lawsuits or strike suits is well known. PCALs regularly file class actions which, were the lawsuits to proceed to decision, would be found to be without merit. The standard of frivolousness by which the legal system screens cases leaves much to be desired and allows many unmeritorious lawsuits to be settled for substantial attorneys' fees. PCALs' business plan requires courts to review countless claims against companies merely to determine whether the claims meet legal standards such as plausible or of colorable merit. In the class action industry, once class action lawyers sink their teeth into a defendant, even weak legal claims can have substantial settlement value. The standards for the lawyers to keep their foot in the courthouse door (or, more appropriately, foot on the throat of the defendant), i.e., "plausible" and "colorable," are like pornography – often in the eye of the judicial beholder.

In fact, PCALs file their lawsuits with the expectation that the legal merits of the alleged claim will never be adjudicated. Rather, they hope instead to be able to dismiss the lawsuit in exchange for a large payment of money for themselves. Such is the class action system in that even dismissals of their lawsuits by trial court judges still leave open the possibility of a significant payment of money to class counsel, so that a defendant can avoid the uncertainty, cost, and delay of an appeal.

===Inadequate Settlements === Class members often receive trivial sums of money or useless coupons or unnecessary extended warranties, or payments that typically represent a small a fraction of what class members lost, any of which are dwarfed by the amount of attorneys' fees that is negotiated by the plaintiffs' lawyers for themselves. Such lawsuits are of "little benefit" to class members but of enormous value to PCALs.

For example, in the settlement of the Ford Explorer SUV class action, the lawyers received $25 million in attorneys' fees because they told the judge the class was receiving a benefit of $500 million. However, what class members received were coupons for $500 towards the purchase of a new SUV. Only 148 people redeemed the coupons for a total value of $74,000. So the entire class actually received $74,000, while the class action lawyers received $25 million. Another example of this phenomenon is the IPO securities litigation, in which the plaintiffs' lawyers were awarded $170 million in fees while class members got 1¢ for every $1 of damages claimed!

Miniscule Numbers of Class Members Receive Actual Benefits
Compounding the problem of inadequate settlements is the problem of claiming by class members, which is typically quite low. One claims administrator used the figure of one in ten, but that estimate is probably quite high. This is due in part to the fact that the parties can create cumbersome requirements that class members must follow in order to file claims.

Class Action Lawsuits That Injure the U.S. Economy
Courts have noted that class actions can "wreak enormous economic harm" and can "leave a state economy in shambles." Indeed, one class member said it best when he compared PCALs to sharks and America's business community to an impending feast.

The Supreme Court itself has acknowledged that the class action device was being used to injure "the entire U.S. economy." PCALs manipulate their own clients – the class members they are supposed to be representing – with this simple formula: target deep-pocket defendants; file a standard or an "adventurous" or a "creative" class action lawsuit; make abusive discovery requests to delay and obstruct the business affairs of a defendant, and thereafter obtain a (so-called) attorneys' fee for dismissing the lawsuit.

Class Action Lawsuits That Actually Harm Class Members
As if lawsuits that: were not bad enough, the legislative history of CAFA shows that Congress was concerned about the harm of class actions to class members themselves. In other words, class actions that make the clients' situation worse!
 * request attorneys' fees that amount to ransom and extortion
 * are without merit
 * offer minimal, if any benefits to class members
 * provide a miniscule percentage of class members with an actual benefit
 * injure a local and/or our national economy
 * 1) Class action lawsuits that pervert justice.
 * Courts have noted how class actions can actually promote the settlement of unjust claims. Such is the upside down world of class actions:  a legal procedure that overcompensates the uninjured and undercompensates the injured.
 * 1) Class action lawsuits that punish those who are themselves innocent victims.
 * The unfortunate reality is that securities class actions in particular result in settlements that "do not comport with the most elementary notions of justice and morality" because, in the end, it's the innocent victims – shareholders – who pay the costs of the litigation. U.S. District Court Judge Jed S. Rakoff refused to approve the $33 million SEC class action settlement with Bank of America.  The reason for Judge Rakoff's concern was that the Bank of America shareholders were being ripped off by a dysfunctional class action system in which shareholder victims were the defendants who were paying for the settlement and attorneys' fees, in spite of the fact that it was the shareholders that the corporation's executives were accused of lying to!
 * 1) Class actions that hurt consumers.
 * Courts and the federal government have admitted that consumers lose because many class actions can leave consumers worse off than if there had been no lawsuit at all. The class action system increases the cost of doing business, which in turn hurts consumers through a mixture of higher prices, lower quality, and poorer service.

Other Abuses
Other abuses by PCALs that NEWBERG ON CLASS ACTIONS fails to mention, but that were there a chapter entitled "Abusive Conduct by Counsel Representing Class Members in Class Actions," would certainly include:


 * 1) Boilerplate lawsuits.
 * The filing of boilerplate class action lawsuits that merely substitute the name of one defendant in the place of another and amount to fill-in-the-blanks canned complaints.
 * 1) Unnecessary class action lawsuits.
 * Unnecessary class action lawsuits can take several forms. One type is when the lawsuits are filed after the defendant has already begun to remedy the problem, so that the only persons left to gain from the lawsuit are the PCALs.
 * Another form of unnecessary litigation is when dozens of law firms file dozens of class action lawsuits, each seeking to represent the same class in order to cash in on the class action attorneys' fee bonanza.
 * 1) Copycat lawsuits.
 * Yet another abuse is the copycat lawsuit where law firms copy then file a duplicate of a complaint already filed by another law firm. This adds nothing  to the litigation other than giving the law firms the ability to participate in a fee award.
 * 1) Delaying settlement negotiations.
 * PCALs delay settlement negotiations, even where the parties are in agreement, in order to increase their time in the case and thereby justify higher fees.
 * 1) Overlawyering.
 * Overlawyering is the polite way of saying featherbedding cases with unnecessary work and personnel in order to increase the bill to the client class. The level of lawyer duplication is astounding.
 * 1) Abusive use of experts.
 * Another fertile area for PCALs' abuse is their (mis)use of experts and purported experts in order to influence judges to approve questionable settlements and excessive attorneys' fee requests.
 * Experts that are not expert in the field in which they testify.
 * In a recent $400 million class action judgment against DuPont, West Virginia Supreme Court Justice Menis Ketchum issued a powerful dissenting opinion highlighting the injustice of the defendant's settlement based on the testimony of an unqualified expert witness hired by class counsel.
 * Experts that are bought.
 * In the same DuPont case, the expert witness charged nearly a million dollars (before the trial even started).
 * Experts that are used for the prominence of their credentials.
 * In retaining law professors and retired judges as experts, class action lawyers seek to (mis)appropriate the appearance of impartiality, which scholars or retired judges possess.

You be the judge :

What is the bigger swindle: the alleged misconduct of the defendants, or the conduct of the PCALs who are suing them? Here is how one class member described his choice:


 * Dear Judge ______:


 * I am writing to voice my extreme objection to the settlement in [this] class action case. I have tried to understand what has occurred in this case, but that is quite difficult. What I do know, is that I lost about $40,000.00 in this fund, and my notice of settlement indicates I will now get $269 bucks.  Don’t bother.  The only persons making anything of substance in this are the attorneys, of course....  In fact, this litigation is almost "protective" of the interests of [the defendant].  By paying people like me a pittance, I presume I am now cut off from pursuing any other remedies against them.  It is a joke.  A bad joke.  One would think this suit is to protect the aggrieved consumer.  But it really protects [the defendant] corporation from legitimate claims....  As usual, the little guy, the consumer, takes it up the wazoo....  If I get $200 bucks for my $40,000.00 loss, that is a half cent on the dollar, I believe.  I don’t even have words to describe how disgusting that is.  This settlement is worse than what the [defendant] did to us in selling us this debacle of an investment with their misrepresentations....

Quiz on Section Two
Who is being referred to: PCALs or "professional objectors"?
 * 1) They pursue litigation to delay and complicate business affairs of the defendant, hoping to be paid a ransom in order to avoid further litigation.
 * 2) They provide inadequate settlement recoveries to their clients – pennies on the dollar of damages, useless coupons, unnecessary extended warranties.
 * 3) They file copycat pleadings.
 * 4) They overlawyer the case in order to obtain higher attorneys' fee awards.
 * 5) They raise unmeritorious claims.
 * 6) They settle their cases, but a very low percentage of class members actually receive a benefit.
 * 7) Their lawsuits can injure the U.S. economy.
 * 8) Their lawsuits can harm class members.
 * 9) Their lawsuits can hurt consumers.
 * 10) Their lawsuits pervert justice.
 * 11) Their lawsuits punish innocent victims.
 * 12) They file unnecessary lawsuits.
 * 13) They file lawsuits alleging boilerplate claims.
 * 14) They delay settlements in order to increase the amount of their attorneys' fees.
 * 15) They misuse purported "expert" witnesses.

Who is the real problem? "Professional plaintiffs' class action lawyers" or "professional objectors"?

Section Three
Professor Rubenstein has been quoted as saying that the record of professional objectors "has been less than stellar," but never mentions that the record of plaintiffs' class action lawyers (PCALs) has been even less than "less than stellar." Congress, courts, both state and federal, and legal commentators have noted the following less than "less than stellar" practices of PCALs: A "less than stellar" record for professional objectors – Really! Congress, courts, both state and federal, and legal commentators have exposed the schemes of PCALs, yet Professor Rubenstein has written nothing about the "less than stellar" performance of the PCALs. Here is what various courts and commentators have said about PCALs being, "more interested in coercing a fee than in correcting a wrong" :
 * 1) They seek out companies to sue in order to extract a payment called "attorneys' fees," which should be more accurately described as ransom.
 * 2) They negotiate inadequate settlements.
 * 3) They file unmeritorious class action lawsuits.
 * 4) They file duplicative class actions asserting similar claims on behalf of essentially the same people.
 * 5) They file copycat lawsuits.
 * 6) They file class action lawsuits, using boilerplate allegations.
 * 7) They file class action lawsuits to delay and complicate the business affairs of a defendant corporation in the hopes of receiving a payment of money (mis)labeled "attorneys' fees" to go away.
 * 8) They delay settlement negotiations in order to increase their billable time.
 * 9) They spend excessive and unnecessary time litigating class action lawsuits.
 * 10) They abuse the use of experts or purported experts in order to influence judges.
 * 11) They file class action lawsuits that hurt consumers.
 * 12) They file class action lawsuits that injure the U.S. economy.
 * 13) They deceive the courts by representing their own interests rather than those of the class.
 * 14) They file class action lawsuits that pervert justice by punishing those who are themselves innocent victims.
 * 15) They ignore fundamental due process rights of class members.
 * Litigating "for the sake of generating attorneys fees."
 * Postponing settlements in order to rack up more billable hours.
 * Convincing judges to grant "class members illusory nonmonetary benefits….while granting substantial monetary attorney fee awards."
 * "[E]ssentially forc[ing] corporate defendants to pay ransom to class attorneys by settling – rather than litigating – frivolous lawsuits."
 * Using the class action mechanism to transfer large fees to themselves, with little or no benefit to class members.
 * Becoming "overnight millionaires" by "seeking large-dollar recoveries rather than acting as objective servants of the law."
 * Focusing on opportunism rather than service.
 * Filing class action lawsuits against companies that have already remedied or begun to remedy the alleged harm.

The attitude of the legal "profession" towards class action "attorney-felons" is demonstrated by the fact that neither academic professional expert witnesses, who would like to be thought of as protectors of the integrity of the class action process, nor any other professors from our nation's law schools nor the American Bar Association have even suggested that Congress investigate the assertion of Attorney William Lerach (once considered a prominent class action attorney, whose misconduct in class actions landed him in a federal penitentiary), that the conduct for which he was imprisoned was a common practice among the plaintiffs' class action bar.

The silence of the legal profession in light of Mr. Lerach's accusation was so deafening as to cause one class action observer to lament: "Despite the highly publicized travails of what was once America's leading class-action law firm, there has been little public discussion of whether other firms may have emulated the secret payment scheme Lerach and other Milberg lawyers devised."

The power of the PCALs is so immense that despite prison sentences for its most prominent practitioners, the plaintiffs' class action bar still has enough influence in the halls of Congress to suppress any Congressional investigation to determine which other plaintiff's class action lawyers were guilty of the crimes that warranted Mr. Lerach's imprisonment.

Is there a link between Congress' unwillingness to investigate the alleged illegal business practices of the plaintiff's class action bar and lawyers’ campaign contributions exceeding those of every other industry or profession over the last two decades?

Quiz on Section Three
Who should Professor Rubenstein be referring to when he talks about attorneys' "less than stellar" performance, and attorneys "more interested in coercing a fee than in correcting a wrong"? "professional plaintiff's class action lawyers" or "professional objectors"?

Section Four
The adverse perception of plaintiffs' class action lawyers (PCALs) [not professional objectors] has led the United States Congress to pass two major pieces of legislation to curb the abuses of the plaintiffs' class action bar: the Private Securities Litigation Reform Act of 1995 (PSLRA), and the Class Action Fairness Act of 2005 (CAFA). The legislative history of CAFA shows that Congress' intent was to address the problem of self-interested PCALs who settle class actions in which they secure large attorneys' fees for themselves, but class members are left with little or nothing.

The Federal Judicial Center had the following warning for federal judges about "self-interested" PCALs: In addition, the Manual for Complex Litigation warns judges to be aware of the self-interested PCALs trying to manipulate them into:
 * Among the "abuses that threaten to undermine" the utility of class actions are excessive attorney's fees.
 * "Most settlements [prohibit] the parties and attorneys from opposing…stipulations about attorney fees."
 * Judges should "prevent unnecessary litigation and overstaffing."
 * Judges cannot rely on class counsel to shape the issues that the judge must resolve.
 * "granting class members illusory nonmonetary benefits....";
 * "settling attorney fees based on a very high value ascribed to nonmonetary relief awarded to the class....";
 * "assessing class members for attorney fees in excess of the…damages awarded to" individual class members.

An example of what PCALs try to get away with in our courts is reflected in the decision by United States federal district court judge William H. Alsup, Northern District of California, in In re Zoran Corporation Derivative Litigation. He admonished the following actions of class counsel: But the aforesaid irregularities merely scratch the surface of the abuses in class action litigation that judges should be aware of as they review proposed settlements. Both the Federal Judicial Center Center and the Manual for Complex Litigation warnings are accurate, but they could and should extend their warnings to judges to include the following well-documented abuses of "self-interested" PCALs who:
 * Failing to disclose to the court and the class "the true date the options were repriced."
 * Exaggerating to the court and the class the value of the repriced options.
 * Passing off to the court and the class as a benefit to the class something the defendant had already done.
 * Misrepresenting to the court and the class purported settlement benefits which had in fact been agreed to by the defendant before the settlement negotiations had even begun.
 * "Try[ing] to slip a weak or collusive settlement past the judge…"
 * Not trying hard enough "to meet their obligations as officers of the court."
 * 1) seek out companies to sue in order to extract a payment called "attorneys' fees," which should be more accurately described as ransom;
 * 2) negotiate inadequate settlements;
 * 3) file copycat lawsuits;
 * 4) file duplicative class actions asserting similar claims on behalf of essentially the same people;
 * 5) file unmeritorious class action lawsuits;
 * 6) file class action lawsuits to delay and complicate the business affairs of a defendant corporation in the hopes of receiving a payoff to go away;
 * 7) file class action lawsuits that injure other class members;
 * 8) file class action lawsuits that injure the economy;
 * 9) spend excessive and unnecessary time litigating class action lawsuits;
 * 10) abuse the use of experts or purported experts in order to influence judges;
 * 11) ignore class members' constitutional due process rights.

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