OAKLAND, Calif. (Legal Newsline) - A federal judge rejected a proposal by plaintiff lawyers to pay a man $25,000 to drop his objection to a $114 million antitrust settlement, saying she didn’t want to set a precedent for similar “objector blackmail” in other cases.
Law firms led by Hagens Berman and Lieff Cabraser agreed to pay Christopher Andrews the money in exchange for ending his objection to the settlements in long-running litigation over lithium-ion batteries. The court awarded plaintiff lawyers more than 30% of the settlement fund, well above the pattern in similar “megafund” settlements of more than $100 million.
The Hamilton Lincoln Law Institute, a nonprofit that frequently objects to settlement agreements it sees as providing an unfair split between class members and their lawyers, objected to the settlement and the fees, arguing Hagens Berman had agreed at the outset of litigation to charge a lower percentage. Plaintiff lawyers also spent much of the time they wanted to bill the class for fighting Hamilton Lincoln’s ultimately successful efforts at the Ninth Circuit to obtain an agreement that better reflected the higher value of claims with stricter antitrust laws, the organization said.
Andrews, representing himself, had far less success but pressed an appeal at the Ninth Circuit that threatened to delay final approval of the settlement. Hagens Berman agreed to pay him $25,000 – more than twice as much as class representatives were paid – to go away.
In a March 24 ruling, U.S. District Judge Yvonne Gonzalez Rogers in Oakland, Calif., rejected the agreement, while holding forth the promise Andrews could be paid something.
“At the heart of the pending motion is the concept of `objector blackmail’ and whether it exists under the facts of this case,” the judge wrote. Changes to Rule 23 of the Federal Rules of Civil Procedure in 2018 required judges to approve any payments in connection with objection, she noted, including in exchange for “forgoing, dismissing, or abandoning an appeal.”
The rules were changed to address the longstanding practice of objectors who claimed to be seeking a better deal for class members but were willing to drop their objections in exchange for money for themselves. Andrews is a frequent class-action objector, mounting challenges to settlements in litigation against Equifax, Blue Cross and others.
Some factors argued in favor of approving the payoff to Andrews, the judge said, including the fact the class lawyers were paying him out of their own fees and not the class recovery, the agreement was public, and because the $25,000 was miniscule compared with the $33 million in fees the class lawyers were paid.
On the other hand, the court said, Andrews provided little evidence for the 600 hours he claimed to have spent on the case, other than efforts to collect his own fee. His own objections failed at the Ninth Circuit, while Hamilton Lincoln succeeded. Perhaps most importantly, the court said paying him to drop his appeal “would set precedent that distribution could be tied up by appeals that are very likely to fail in exchange for consideration.”
“Andrews could abandon his appeal without consideration,” the judge wrote. “Instead, he holds onto his appeal with the potential for payout to shoehorn in compensation for his entire participation in this litigation with little factual support.”
The judge voiced displeasure with Hamilton Lincoln as well, at one point saying the organization didn’t have standing to challenge the payment and there might be a conflict of interest because objector Frank Bednarz, a Hamilton Lincoln employee, was represented by the group that employees him. She noted that Bednarz had earlier said it might be reasonable for Andrews to receive $6,250 and that it suggested “some amount may warrant approval.”