Daniel Fisher at Forbes reports on the reversal of the settlement in Redman v. RadioShack Corp.:
Posner doesn’t think much of this sort of settlement. And in his decision, he instructs judges to take a much more critical look at class-action settlements, including rejecting the illogical, but nevertheless prevalent argument of class counsel that attorneys’ fees come from a separate pot of money than what they negotiate for their clients. Radio Shack’s attorney, James R. Daley, rejected that idea at the hearing for obvious reasons. Companies only care what the overall settlement costs.
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More errors: The judge allowed the plaintiff lawyers to submit their fee request after the objection period ended, hamstringing objectors including Ted Frank’s Center for Class Action Fairness, which nevertheless scored a big win here. And the judge allowed a “clear sailing clause,” under which Radio Shack agreed in advance not to challenge the fee award — strong evidence the defendant and plaintiff lawyers were working together to arrive at a settlement that benefitted them. And while Markoff maintains Redman came to him with the case, Posner expressed skepticism because this almost never happens in class-action land.
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The decision is notable for stating in clear language the conflicts inherent in class actions, which make it difficult for attorneys who claim to represent millions of individual consumers actually to negotiate a settlement on their behalf. Class-action lawyers like to compare themselves with counsel working at hourly rates, Posner said, but the analogy is flawed.
Read the full article at Forbes.