Law.com

Critical Mass

Class Actions | Mass Torts

Amanda Bronstad

Feb 09, 2018

Welcome to Critical Mass, Law.com’s new briefing on class actions and mass torts. I’m Amanda Bronstad in Los Angeles. Wrapping up this week, a judge tossed a case against a "professional objector" even though she found his conduct "inconsistent with the ethical standards of the legal profession." Also, envelopes with windows prompted lawsuits between Aetna and a settlement administrator. And I've got a preview of the latest SCOTUS briefs in China Agritech v. Resh.

Send your feedback to abronstad@alm.com, or find me on Twitter: @abronstadlaw

Judge Tosses Case Aimed at 'Professional Objectors'

In a case challenging so-called “professional objectors,” a federal judge in Chicago has dismissed racketeering claims brought by plaintiffs attorney Jay Edelson against objector lawyer Christopher Bandas and his firm, The Bandas Law Firm.

But U.S. District Judge Rebecca Pallmeyer didn’t exactly endorse the actions of defendants, who in addition to Bandas included objector attorneys Darrell Palmer and Jeffrey Thut and their firms. Here’s Law.com’s Scott Flaherty with the report.

Pallmeyer wrote: “The alleged conduct appears to be in bad faith, to have no genuine social value, and to be inconsistent with the ethical standards of the legal profession. Gaming the rules of the legal system solely for personal self-enrichment wastes the time and money of courts and attorneys, wrests funds away from deserving litigants, and tarnishes the public’s view of the legal process.”

But, she said, she couldn’t conclude that the defendants had violated the U.S. Racketeer Influenced and Corrupt Organizations Act.

So what could the ruling could mean for the class action bar? Here’s what Scott told me:

“Judge Pallmeyer seemed vexed by the notion that Edelson might not have a clear way to challenge this type of conduct in court," he said. "The Edelson case, and the judge's ruling, seem to indicate mounting frustration among judges and class action lawyers, and it stands to reason that these kinds of objectors will continue to face criticism and heightened scrutiny.”

Class Notice Rift Erupts Over Envelopes


Aetna has sued a claims administrator for sending settlement checks to HIV patients in an envelope that revealed their health condition. Here’s the story from Law.com’s Kristen Rasmussen.

A little bit of background: Claims administrator Kurtzman Carson Consultants sent settlement checks to class members in two cases involving Aetna’s procedures for filling HIV medications -- but in envelopes with glassine windows (here’s a pic of the actual envelopes). Last month, Aetna paid $17 million to settle a privacy class action that stemmed from the debacle, and now it’s seeking $20 million in damages from the claims administrator.

But get this: The claims administrator has also sued Aetna, insisting that it gave the health insurer and its lawyers, Gibson, Dunn & Crutcher, samples of the envelopes (the law firm isn’t named as a defendant).

So who's to blame? The "devil is in the details," notice expert Todd Hilsee told me. But he said the incident reveals how low bidding among claims administrators has resulted in low-cost notices. A windowed envelope, after all, is cheaper than having addresses printed, he said.

Even so, Hilsee told me, windowed envelopes were a “colossally bad idea” in such a case.

“It is somewhat shocking that that kind of a notice can get stuffed into that kind of windowed envelope and sent out the door without anyone questioning," he said.

 

Defense Bar Again Urges SCOTUS to Trim Class Actions

Even as the Dow dropped more than 1,000 points on Thursday in the midst of a turbulent week, the defense bar has lined up once again in a U.S. Supreme Court case to dial back investor class actions.

In June, the Supreme Court in California Public Employees’ Retirement System v. ANZ Securities barred investors from using a U.S. Supreme Court decision called American Pipe & Construction v. Utah to toll the filing of individual shareholder cases. Now, the tolling debate is over class actions. The case is China Agritech v. Resh, and the defendant is appealing a 9th Circuit decision. It’s set for March 26 oral arguments.

Amici for the defense filed briefs last month. Here’s what they had to say:

-- DRI-The Voice of the Defense Bar (Bowman and Brooke) said the 9th Circuit ruling, if upheld, “would significantly add to the burden of litigation uncertainty.”

-- The U.S. Chamber of Commerce (Gibson Dunn) cautioned against the possibility of “stacked class actions.”

-- The Washington Legal Foundation (Cooley) said it would “result in the increased filing of meritless securities class actions."

-- The Securities Industry and Financial Markets Association (Cleary Gottlieb) said “plaintiffs are free to hit (and re-hit) the replay button until they find a court willing to see things differently.”

 

Here's what else you need to know as we head into the weekend:

➤ Alabama Joins Opioid Case: In the opioid crisis, most of the lawsuits have been brought by cities and counties while state attorneys general have been a little late to the game. But this week, Alabama Attorney General Steve Marshall filed a lawsuit against Purdue Pharma with the help of Alabama law firms Beasley Allen and Prince, Glover & Hayes. Here’s Law.com’s story. The case was brought in federal court, so it’s expected to be transferred to the multidistrict litigation in Cleveland.

➤ Girardi in Court: A lawyer who has sued Tom Girardi several times for allegedly misappropriating funds from class action settlements is asking the 9th Circuit today to reinstate his RICO case. Here’s my story. Peter Dion-Kindem claims Girardi, whose wife stars on "The Real Housewives of Beverly Hills" reality TV program, charged excessive costs as part of $130 million in toxic tort settlements involving former Lockheed Martin employees -- then used the proceeds to pay other lawyers or “personal and unrelated business debts.” Girardi’s lawyer, Martin Buchanan, says the claims are time-barred.

➤ Diabetes Docket: The U.S. Judicial Panel on Multidistrict Litigation has sent 84 cases brought over diabetes drugs Onglyza and Kombiglyze to Eastern District of Kentucky Chief Judge Karen Caldwell. AstraZeneca, Bristol-Myers and McKesson had fought consolidation, but the panel wrote that "does not seem feasible.” The panel noted that Caldwell was overseeing the first filed federal case, brought by Alex Davis of Jones Ward in Louisville, Kentucky.

➤ Final Trump Card: The 9th Circuit affirmed approval of the $25 million Trump University settlement. Here’s my story. The panel found that objector Sherri Simpson, a bankruptcy lawyer in Florida, had standing to object to the deal (reached by Robbins Geller and O’Melveny & Myers) but disagreed that the notice sent to class members promised a second chance to opt out. Simpson lawyer Gary Friedman told me he won't pursue en banc review. “If there’s a silver lining, it’s all the victims will receive payments without further delay,” he said.

And for President Donald Trump, that’s one less legal problem to worry about.



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