Outrageous Settlements

Frivolous Lawsuits and Class Action Lawsuits

Sunday, September 16, 2007

Most recent one picked up off the web...

High-dollar settlements mark class action cases

Class action abuses may have been "substantially reduced by the Class Action Fairness Act of 2005," said James Copland, director of the Center for Legal Policy at the Manhattan Institute.

But that doesn't mean outrageous settlements have become a thing of the past. Class action lawsuits remain among the favored big-ticket paths to fame and riches for trial lawyers. Attorneys fees can range anywhere from 15 to more than 30 percent of a settlement, and courts have tremendous discretion in awarding both fees and allowable attorneys costs in a case, which means a sympathetic judge can be the key to a lucrative outcome.

Here are some of the worst examples:

TrialLawyersInc.com reports that the 1998 tobacco settlements "were nothing but egregious (as) some 300 lawyers from 86 firms will pocket as much as $30 billion over the next 25 years." That's taxpayer money, the site reports -- "enough to hire 750,000 teachers."

The year 2006 saw record levels in securities' class action settlements, according to separate reports from Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, which reported the amount surpassed $18 billion.

Among the firms taking the lion's share of those settlements were Coughlin, Stoia, Geller, Rudman & Robbins, with more than $7 billion, and Milberg Weiss, which netted $1.6 billion, New York Law Journal reported in March.

Since the 1970s, lead paint levels in children's blood has been dropping -- but what's not is the dollar amount affixed to suits against paint manufacturers. "After years of unsuccessful efforts, the litigation industry's hopes of extracting money from paint makers began to look promising when the trial bar won a major victory last year," TrialLawyersInc.com reported in July.

Though lead paint for interior walls hasn't been manufactured in this nation since the 1950s, a Rhode Island court ordered three leading companies to clean the offensive material from roughly 240,000 buildings, at an estimated cost of $3 billion. The South Carolina-based Motley Rice law firm will collect settlements of at least 16 percent on the cases that result.

The Halliburton Company settled about 300,000 cases of asbestos claims by setting aside a $4 billion fund after it purchased a new engineering company and inherited the legal challenges.

"Asbestos cases really are high-dollar," said Copland. Trial lawyers raking in the millions include Ronal Motley, of Motley Rice; Peter Angelos, of the Maryland firm bearing his name, and Fred Baron, founder of the Texas Baron & Budd.

Class action suits targeting the fen-phen diet pill initially cost Wyeth, formerly known as American Home Products, $14 billion. But that amount has since climbed to $21 billion, TrialLawyersInc.com reported.

Fen-phen cases have been extremely lucrative for trial attorneys: Elizabeth Cabraser helped bring in millions for her California firm, for example, and Stan Chesley of Cincinnati collected more than $20 million, even though he had little-to-no direct contact with case clients, according to the Louisville, Ky., Courier-Journal.

Related to tobacco suits are class action suits against the makers of smokeless tobacco products like Copenhagen and Skoal. Lawyers and Settlements reports a Sept. 3 update on the antitrust suit brought by a competitor of the Copenhagen maker, Conwood Company, that resulted in an initial damages award of $350 million, and a final finding of more than $1 billion under federal antitrust laws.

The settlement calls for UST, Inc., the maker of Copenhagen and Skoal, to dole out $816 coupons for each claimant to make future purchases of the smokeless product, at an estimated total cost of $65 million -- and $17 million more in legal fees.

"Lawyers Gone Wild" is a series of special reports by The Examiner looking at the cost and consequences of class action lawsuit abuse in the United States. Read the latest articles in the series.

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