October and November doings

In addition to our Supreme Court amicus and our MagSafe appellate brief, we've kept busy over the last two months.

• We had oral arguments in the Second, Sixth, and Ninth Circuits on the Blessing v. Sirius XM, Pampers Dry Max, and HP Inkjet appeals. Only Inkjet is available online.
• The district court ruled against us in Johnson & Johnson after some additional briefing; we've appealed, and (assuming that the court orders more than a token amount of attorneys' fees; the fee award has not yet been made) will raise the question of first impression of whether securities lawyers who regularly rely upon the efficient market hypothesis can ask a court to rely upon an expert opinion contradicting it when it is inconvenient for their theory of attorney-fee recovery.
• We filed our reply brief in the Online DVD appeal.
• We filed our reply brief in the Texas Frontier Oil appeal over a $0 settlement, which has gotten some press attention. Oral argument is scheduled in Houston in January 16. I was a Bellaire debater, but this is my first time in a Texas court.
• $2.7 million was paid to class members $3.93 at a time in the Classmates case. This is paltry, but more than the $56,000 or so class counsel was going to be happy with had we not successfully. objected. [Ars Technica]

We filed interesting objections in two new cases in California federal courts over the last few days, and I'll discuss over the course of the week.

September doings

• Groupon settlement rejected on cy pres grounds last week after our objection. The attorneys would have received $2.125 million, the class maybe a twentieth of that.
  
• I argued the Baby Products case in the Third Circuit, and am cautiously optimistic for a good precedent in a case where the attorneys collected over $14 million and the class was due less than $3 million. Briefing.
  
• The fairness hearing in Johnson & Johnson has been postponed until October 18. We filed two expert reports demonstrating that the plaintiffs had failed to present Daubert-satisfactory expert evidence in support of a claim that the $0 settlement provided "substantial benefit" to shareholders.
  
• The Ninth Circuit, relying on opinions from two CCAF victories, struck down a settlement on cy pres grounds in Dennis v. Kellogg September 4, also holding that an attorneys' 38.9% share of a settlement ($2 million in this case) would be "clearly excessive."
  
• The Center filed with the IRS for stand-alone 501(c)(3) status. I'd like to express tremendous gratitude to everyone at Donors' Trust for all they did to incubate us.

In re Johnson & Johnson Shareholder Derivative Litigation

Alison Frankel recently asked whether it's the end of "money-for-nothing" class actions; Ronald Barusch asks a similar question. The Center for Class Action Fairness is putting that question to the test in In re Johnson & Johnson Shareholder Derivative Litigation by asking the District of New Jersey to dismiss shareholder litigation that makes cosmetic changes to corporate governance, and then presents a $10.45 million bill to shareholders—150% of the already high "lodestar"—for the involuntary consulting arrangement. As in Robert F. Booth Trust v. Crowley, the suit "serves no goal other than to move money from the corporate treasury to the attorneys' coffers.... It is an abuse of the legal system to cram unnecessary litigation down the throats of firms ... and then use the high costs ... to extort settlements (including undeserved attorneys' fees) from the targets." As I noted then:

Under FRCP 23.1(a) and its state-law equivalents, a shareholder derivative suit isn't supposed to proceed unless the shareholders bringing the suit adequately represent the shareholders. If the suit is meant to profit the plaintiffs' lawyers at the expense of the corporation (and thus the shareholders), how can the bringers of a strike suit be adequate representatives of the shareholders? I've thus argued that the correct role for courts in such situations is to throw these cases out entirely (or approve the settlement but award only a token amount in attorneys' fees).

Good coverage at Forbes.com (noting that the lawsuits themselves are free-ride piggybacking off of J&J self-disclosure and government investigations) and Reuters (quoting plaintiffs' lawyers calling the motion "frivolous").