Illinois Appellate Court Rules That Class Settlement Objectors Engaged In Fraud On The Court

Author:Mr Gerald Maatman Jr. and Michael L. DeMarino
Profession:Seyfarth Shaw LLP
 
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Seyfarth Synopsis: Professional class settlement objectors can be a thorn-in-the-side for employers and class counsel attempting to settle class actions. Their M.O. is often the same — frivolously object, appeal its denial, settle out of court, and withdraw. It is already hard enough to obtain court approval of a class-based settlement without adding into the mix such tactics undertake by objectors. But the good news for employers is that courts are closely reviewing conduct of objectors to determine if sanctions are appropriate.

That is exactly what happened in Clark v. Gannett Co., No. 1-17-2041 (Ill. App. Nov. 20, 2018). Clark is a good reminder for employers who are seeking class settlement approval to not lie down for serial objectors. Rather, employers should take the fight to objectors, who are increasingly being met with skepticism and ire from courts around the country,

Background

In Clark v. Gannett Co., No. 1-17-2041 (Ill. App. Nov. 20, 2018), the plaintiff alleged that Gannett Co. violated the Telephone Consumer Protection Act by making unsolicited phone calls. The parties reached a $13.8 million settlement, of which $5.4 million went to class counsel. Before final approval, however, Gary Stewart (the sole objector) filed an objection to the settlement, claiming that class counsel's fees were excessive. The trial court overruled Stewart's objections.

A month later, class counsel moved for sanctions against Stewart's counsel, arguing that they filed Stewart's objection for improper reasons — namely, to elicit attorneys' fees. The trial court declined to grant class counsel's motion for sanctions and found that the objection was not filed for an improper purpose. In the course of that ruling, the trial court excluded evidence of counsel's pattern of conduct in representing objectors in other class action lawsuits. Class counsel appealed the trial court's denial of sanctions to the Illinois Appellate Court.

The Decision Of The Illinois Appellate Court

On appeal, the Illinois Appellate Court reversed the trial court's decision to exclude the pattern of conduct of Stewart's counsel. The Illinois Appellate Court explained, "[t]he pattern of conduct engaged in by [Stewart's counsel] is relevant to the objection's possible improper purpose of seeking attorneys' fees with the bare minimum of effort, expense, and time." Id. at 17. In reaching that decision, the Illinois Appellate Court noted that Stewart's counsel has used this strategy...

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