Lawyer: 'Reverse auction' in competing Sprint class actions is plaintiff shopping

Steve Korris Feb. 5, 2009, 10:23am



NEWARK, N.J. – Richard Burke and Paul Weiss settled a class action against Sprint in New Jersey for less than their former teammates at LakinChapman Law Firm would have obtained with the same case in Madison County, a New Jersey lawyer claims.

Anthony Coviello of Bloomfield, N.J., challenged a Sprint Nextel settlement in U.S. district court at Newark on Jan. 29, calling it a "reverse auction."

On behalf of Madison County plaintiff Jessica Hall, he asked District Judge Jose Linares to disqualify Weiss and Burke.

He quoted a professor defining a reverse auction as a race to the bottom.

A reverse auction occurs when competing lawyers file the same suit against the same defendant in different courts and the defendant settles with the weakest lawyers.

Defendants have prodded weak lawyers to run reverse auctions, according to scholars Coviello quoted.

"Counsel in the instant case is clearly the weaker counsel and more likely to get 'shopped' by Sprint," he wrote.

Sprint agreed to pay $25 each to most class members and $90 to the rest, but members can pass up the cash and activate new service for free with 100 bonus minutes.

Weiss rushed a reverse auction through preliminary approval because he knew Illinois attorney regulators would charge him with misconduct, Coviello wrote.

"It suffices to say that Weiss's continuing ability to practice law in the very near future appears to be very much in doubt, as he is now facing imminent suspension or even permanent disbarment," he wrote.

The Illinois Attorney Regulatory and Disciplinary Commission filed charges against Weiss on Dec. 4, alleging acts of misconduct toward female employees.

The commission suspended him 12 years ago for similar misconduct toward women.

Weiss failed to disclose the suspension in a certification to the federal court in New Jersey, Coviello wrote.

He credited Magistrate Judge Esther Salas with challenging the certification.

"Only after being caught, Weiss filed an amended declaration," he wrote.

Weiss also failed to tell Linares about the new charges, according to Coviello.

"Here, the timing of the purported settlement in this case is highly suspect given the apparent rush for preliminary approval at about the same exact time as charges against Weiss were filed," he wrote.

He wrote that probable disbarment "creates a very real risk that he placed his own self interest in short term monetary gain ahead of the interests of the settlement class."

Coviello questioned whether local counsel James Cecchi, who sponsored Weiss for admission from another state, knew that charges against Weiss were imminent.

"Mr. Cecchi previously admitted to this Court that the initial Weiss 'pro hac vice' declaration was faulty because it did not disclose Weiss's previous disciplinary sanctions," he wrote.

"Mr. Cecchi is Weiss's sponsor in other cases and he has been litigating ten to twenty additional class actions with Mr. Weiss in New Jersey," he wrote.

A footnote listed suits against Hertz Equipment Rental, Verizon Wireless, Vonage America, Lycatel, Friendly Telecom, Roslyn Telco, Locus Telecommunications, Federal Insurance, American International Insurance, Allstate, Farmers Insurance, MetLife Auto and Home, Travelers, and GEICO.

According to Coviello, the Lakin firm and Sprint would have soon settled the class action that Hall filed in 2004.

She claimed Sprint charged improper fees for early termination.

Retired circuit judge Nicholas Byron certified her as class representative in 2005.

Byron appointed the Lakin firm as class counsel, with Weiss as co-counsel.

Sprint and Lakin lawyers mediated from last March to June, Coviello wrote, and they kept negotiating after that.

"On November 26, 2008, Hall counsel learned for the first time 'that Sprint has been in talks' with counsel in the New Jersey case," he wrote.

The same day, he wrote, Weiss indicated by e-mail that the Lakins would soon receive a settlement notice in an unidentified class action.

On Dec. 3, he wrote, Sprint counsel confirmed that they were engaged in talks.

The same day, he wrote, the Lakins learned that Weiss planned a reverse auction in another Lakin class action.

On Dec. 4, at an emergency hearing, Brad Lakin asked Madison County Circuit Judge Dennis Ruth to freeze the New Jersey settlement.

Ruth suspended the hearing, called Linares, and decided not to interfere.

Lakin, having failed to block preliminary approval, aims to prevent final approval.

Coviello found a single precedent, from 1975, for a federal appeals court remanding final approval of a class action settlement.

In that case, Third Circuit judges held that an objector wasn't afforded an adequate opportunity to test the weaknesses of a settlement.

He wrote that a secret compromise and a surreptitious reverse auction constitute misconduct that requires further discovery.

Coviello sprang a different attack from another direction, pointing out that Weiss never withdrew as co-counsel for Hall.

Burke didn't withdraw either, he wrote, although Brad Lakin fired him.

As a result, Coviello painted Weiss and Burke not only as sneaky competitors but also as traitors selling out a class they promised to protect.

They violated their ethical duty to advise Hall and they shouldn't profit from a conflict they created, he wrote.

"Hall's interests are in direct conflict and at odds with the outcome of the proposed settlement in this case," he wrote.

"Burke seeks to settle Hall's claim for less than she seeks, without her consent, and over her objection," he wrote.

Coviello wrote that Sprint could have raised these questions but didn't raise them.

Chicago attorney Phillip Bock, who often teamed with Weiss and the Lakins in class actions, placed his name on Coviello's disqualification motion.

So did Bock's partner, Robert Hatch.

They crafted an impressive case, but it hangs by a thread because LakinChapman may lose Hall as a client.

Former Lakin lawyer Jeff Millar has asked Judge Ruth to discharge LakinChapman as class counsel and appoint him as substitute.

Millar submitted to Ruth a letter Hall signed, choosing him over LakinChapman.

Ruth set a Feb. 20 hearing on Millar's motion.

Linares has not set a hearing on disqualification.

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