Judge: Lawyers might have padded expenses in class action

John O'Brien Mar. 6, 2012, 2:31pm


SPOKANE, Wash. (Legal Newsline) - A federal judge is skeptical of the expenses being requested by a group of class action lawyers and is threatening to impose sanctions on them.

Judge Justin Quackenbush, of the Eastern District of Washington, wrote in a memorandum filed Feb. 28 that the law firm of Robbins Geller Rudman and Dowd that he has several problems with the firm's motion for attorneys fees. He gave the firm until March 19 to respond.

Attorneys are seeking 25 percent of a $7.5 million settlement with Ambassadors Group, a publicly traded student-travel company. The attorneys were also seeking $224,211.21 in expenses in a motion filed Oct. 27.

Declarations by two of the firm's attorneys, Joy Bull and John Grant, said they paid $125,935 for an investigation conducted by retired police officer Steven Peitler. The expenses provided an hourly rate of $445.

Bull and Grant later changed the amount to $31,710.15 in late November, reducing Peitler's hourly wage by 75 percent.

"Further review of the claimed 'expenses' and 'disbursements' by the Robbins firm in this case have raised additional questions as to the reasonableness and appropriateness of other expenditures which the Robbins firm proposes to have the members of the class pay for," Quackenbush wrote.

One of those was a $402 dinner for four the night before a mediation session. Included were two bottles of $72 wine and a $60 tip for the waiter.

Also, there was $285 for one night in a hotel in Spokane that included a $50 late checkout fee. The firm also paid for three hotel rooms before the mediation that combined to cost more than $1,100.

"The airfares that the Robbins firm allegedly incurred include a seemingly excessive charge of $1,676 for a round-trip ticket from New York to Spokane for the investigator Peitler," Quackenbush wrote. "Also included in the amounts requested from the shareholder's recovery is an apparently excessive charge of $2,169 for air transportation from New York to San Diego for Darren Robbins."

At the mediation session, the attorneys say they spent more than $15,000, even though the mediator's charge was to be equally divided between the plaintiffs and defendants. "This was a one-day mediation and surely the mediator's fee could not have been some $30,000," the judge wrote.

"While some, and certainly those making expense claims as herein, may scoff at what they may consider nit-picking, the court, in its fiduciary capacity, is required to view these matters in that capacity and this court has done so," Quackenbush wrote.

"As this court stated at the Nov. 30 hearing, the inaccurate or false statements of 'disbursements' and 'expenses' are at a 'minimum inept and at a maximum smacks of fraud.'"

He said that a judge in California previously found that statements made by Bull regarding expenses in a class action were misleading.

Quackenbush said that the expenses situation causes him to view the claim for attorneys fees with skepticism.

"One would expect that the prior experiences of this law firm and its attorneys, when known under its former name of Milberg Weiss, et al, and Lerach, Coughlin, Stoia, et al, including Mr. Robbins as a name partner, would dictate that members of the firm would conduct themselves in representations to the court, with its avowed 'highest level of integrity,'" Quackenbush wrote.

Four former Milberg Weiss partners pleaded guilty to a scheme in which the firm paid portions of its legal fees to plaintiffs in exchange for their filing suit. Among them were Melvyn Weiss and William Lerach.

Bull is seeking fees in the amount of $96,525 even though she was not involved in the case until after it settled. The firm is seeking payment for paralegals at the rates of $265 to $295 per hour.

"If conduct of the type referenced is found, the court must consider imposing appropriate sanctions, including at a minimum written admonition," Quackenbush wrote, adding that he may be forced to initiate disciplinary proceedings.

"In its 32 years of experience on the federal bench, this court has not previously initiated such disciplinary action. However, Mr. Grant and Ms. Bull, and the Robbins firm, are advised that the court is considering either or both of the foregoing actions."

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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