ALBANY, NEW YORK, Sept. 21 (Reuters) - Lawyers in New York
who successfully challenge class-action settlements on behalf
of individual plaintiffs could be entitled to attorneys' fees,
if Gov. Andrew Cuomo signs a bill currently before him.
The measure, which would reverse a 1975 law, would allow
courts to award fees to anyone whose work benefits an entire
class -- for example, a lawyer who negotiates an increase in
the total amount of a settlement. It passed both houses of the
state legislature in June after being drafted by an advisory
The current law reserves attorneys' fees only for
"representatives of a class," which courts have interpreted to
exclude lawyers who represent "objectants," those class members
who disagree with specific terms of the settlement, such as the
amount of the settlement or attorneys' fees.
Proponents say the new law would encourage members of a
class to raise objections, and thus make it harder for
class-action defendants to craft "coupon" settlements, in which
they provide plaintiffs with a token award, such as a gift
coupon, without addressing their grievances.
"You want to give an incentive to the objector to come
forward and say, 'This isn't right,'" said George Carpinello, a
partner at Boies, Schiller & Flexner in Albany and the chair of
the advisory panel that requested the bill.
A 2010 ruling by the Court of Appeals highlighted the issue
and generated the push for the proposed legislation. In the
case, Flemming v. Barnwell Nursing Home, which involved a class
of 242 plaintiffs with claims of wrongful death or medical
malpractice, the defendant nursing home settled for $950,000,
$448,000 of which was pegged for attorneys' fees and expenses.
After the executor of one class member's estate objected to the
fees, an appellate court reduced them to $425,000. But when the
executor applied for fees for negotiating the reduction, the
Court of Appeals denied him, citing the 1975 law.
"Simply put, although a class may at times benefit from an
objectant's actions, the Legislature did not provide recompense
for those efforts," Judge Eugene Pigott wrote in the 5-2
In dissent, Judge Robert Smith wrote that the court was
promoting "bad policy" that contradicted common law, and noted
that objectants' arguments often benefit entire classes,
particularly when the attorney for the class is seeking an
unreasonably high fee.
"No one disputes the need to control class counsel's fees,
and nothing furnishes so effective a check on those fees as an
objecting lawyer," Smith wrote.
Michael Gruen, the Manhattan attorney who represented the
objectant in Flemming, said he expected to be awarded fees
because both federal and common law expressly allow it. Echoing
Smith, he said the current rule is a disincentive for lawyers
to represent objectants.
"No sane attorney, unless he has some non-monetary
motivation, would dream of taking on representation of an
objectant under the current circumstances," Gruen said.
Following the ruling in Flemming, an advisory panel
previously appointed by the state court administration drafted
the bill now under consideration.
FEARS OF COURT-CLOGGING
There is some concern that the new legislation, if passed,
could clog up the courts with spurious objections, particularly
in high-profile class-action suits.
"There could be more objectors coming out of the woodwork
and trying to muck up a settlement process," said Terry Jesse,
the executive director of the Chicago-based National
Association of Legal Fee Analysis.
But Jesse also noted that because the measure would
preserve the discretion of judges in doling out awards, it
could keep unreasonable objections to settlements in check.
Gov. Cuomo's office does not comment on pending
legislation, and a spokesman would not say when the governor
would make a decision on the bill.
(Reporting by Dan Wiessner)
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