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The attorney for a plaintiffs’ class reached a settlement agreement with Sears Roebuck and Co. whereby the attorney, Gary K. Shipman, would receive $1.1 million, while the plaintiffs would get less than $3,000 in cash and coupons. Fortunately, a North Carolina court stepped in to stop this grossly unreasonable settlement.

Not only did Shipman and Sears come up with this agreement, they apparently tried to hide it from the North Carolina court by going to Illinois to have it approved by a court. While lawyers are generally ethical, an unfortunate handful of high profile attorneys give the rest of us a bad name.

Because a ruling in a class-action applies to all potential class members, Federal and State Courts have rules requiring the class’s attorney to find class members, keep them informed at all stages of the case, and provide them an opportunity to opt out the case. Here, the attorney allegedly didn’t try to find class members, did not keep those he found informed, and tried to hide the final settlement.

After an Illinois judge approved the settlement, following a hearing where Shipman and Sears misrepresented the case, claiming there could be 1,500,000 class members (only 337 were found), the North Carolina court stepped in. The Court declared it would not be bound by the Illinois approval of the settlement, dismissing the case in a way that would allow the plaintiffs to bring the case again, hopefully without needing protection from unethical attorneys.

I would expect the lawyers will take this matter to the Federal courts to argue whether a North Carolina court can overrule the Illinois court’s judgment.

This entry was posted on Thursday, May 24th, 2007 at 4:18 pm and is filed under Attorneys and Legal Practice, Current Legal Issues. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.