7th Circuit hammers Krislov in denying rehearing in Sears class action

Steve Korris Dec. 8, 2010, 9:45am



CHICAGO – Attorney Clinton Krislov has taken a second pounding from the U.S. Seventh Circuit Court of Appeals.

On Dec. 2, Circuit Judges Richard Posner, Michael Kanne and Terence Evans denied rehearing of an injunction that stopped a class action against retailer Sears.

Posner wrote that no judge responded to Krislov's request for an "en banc" rehearing in front of all circuit judges.

Posner, Kanne and Evans could have denied rehearing without comment, but they chose to respond to accusations made by Krislov.

Posner wrote that further statement would be helpful to readers of the panel's Nov. 2 opinion, "and perhaps even Mr. Krislov."

He wrote that Krislov "may wish to moderate his fury."

Krislov, of Wilmette, is a former candidate for Illinois Comptroller, U.S. Senate and state Attorney General.

Posner listed 20 lines of court decisions and law review articles on class action abuse and asked, "Want more?"

"There is plenty more, including references in Supreme Court as well as court of appeals opinions to the dangers of collusion between class action lawyers and defendants' lawyers," Posner wrote.

In response to Krislov's claim that a letter from associate Mark Boling to Sears counsel was in the best interest of both sides, Posner wrote, "This is a joke."

"Both parties know the letter is a demand for favorable settlement terms," he wrote.

Judges Michael Kanne and Terence Evans joined the opinion.

Krislov client Steven Thorogood of Tennessee originally sued in Illinois state court, claiming Sears falsely advertised stainless steel drums on Kenmore clothes dryers.

Thorogood alleged that part of the drum was made with a ceramic coat rather than with chromium that would make it stainless.

He claimed the drum rusted and the rust stained his clothes.

His lawsuit sought to represent half a million dryer buyers in 28 states.

Sears removed the suit to federal court in Chicago, where District Judge Harry Leinenweber certified it as a class action.

On appeal, Seventh Circuit judges ordered Leinenweber to decertify it.

They found no common issues of law or fact among class members.

Sears offered Thorogood $20,000 in damages and attorney fees.

Leinenweber dismissed the suit, because the offer exceeded a $3,000 limit on damages under Tennessee consumer fraud law.

Krislov and Boling then filed a similar suit for a different client in federal court at Oakland, Calif.

District Judge Claudia Wilken authorized discovery, and Boling wrote to Sears that the cost of settlement would necessarily increase.

Boling wrote that an olive branch for resolution could be mutually created.

"I trust that good business judgment will prevail by all parties," Boling wrote.

Sears sought relief in Chicago, asking Leinenweber to enjoin the proceedings.

He denied the injunction, but in November the Seventh Circuit reversed him again.

Posner called Thorogood's complaint a confabulation.

"It was well nigh inconceivable that the other members of the class had the same understanding of Sears's advertising as Thorogood claimed to have," Posner wrote.

He wrote that ceramic doesn't rust.

"The California suit here sought to be enjoined will be the precursor to other class actions materially identical to Thorogood's," he wrote.

"For lawyer Krislov is nothing if not determined, indeed pugnacious."

He wrote that specific tactics employed by class counsel included "something close to settlement extortion."

Class members are interested in relief but lawyers are interested in fees, Posner wrote.

He wrote that defendants are willing to trade small damages for high attorney fees.

He wrote that a company sued a number of times for selling a defective product will win some and lose some, so the aggregate outcome reflects the expected value of the claims.

"But when the central issue in a case is given class treatment and so will be resolved once and for all, a trial becomes a roll of the dice," he wrote.

He wrote that Wilken visited on Sears the consequences that an injunction from Leinenweber would have prevented.

"The harm it faces from the denial of the injunction is irreparable and its remedy at law against settlement extortion nonexistent," he wrote.

"If Krislov and the other class counsel are not enjoined, they will continue their state by state quest for certification and will doubtless be able to find at least one lad plaintiff in every state."

Posner enjoined the class too, to prevent plaintiffs from "popping up, class action complaint in hand, all over the country, represented by other members of the class action bar."

He directed Leinenweber to apply the injunction to state as well as federal courts.

The decision triggered an outburst from Krislov.

"The tone and rampant mischaracterizations of the opinion must be modified even if the conclusion remains, because the opinion unjustifiably portrays the case as meritless, lawyer driven litigation, an accusation thoroughly belied by the record and the distinguished careers of the lawyers involved," Krislov wrote.

"The merits of the claims, the suitability of certifying the case as a class action and the refusal to enjoin plaintiff's California only state class action have been legitimized by two independent federal district courts."

He wrote that the decision "paints with a brush so broad that it demonizes all class action attorneys as inherently motivated to sell out their clients for small recoveries, to obtain large fees."

He wrote that disparaging professional motivations of counsel ran afoul of the code of conduct for federal judges.

Krislov accused Sears of forum shopping in resorting to the Seventh Circuit rather than the Ninth Circuit, which includes California.

He wrote that Ninth Circuit standards were more favorable to plaintiff's claims.

Posner responded, "This is what is known as chutzpah."

"Only one forum offered the possibility of relief," Posner wrote.

"Because it could not appeal the interlocutory order of the California judge, the only place to go to seek relief against being sued all over the country on frivolous grounds aimed at securing a settlement was the district court in Illinois."

He wrote that the panel didn't characterize class action lawyers as inherently corrupt.

"What we said was that the structure of class actions under Rule 23 of the federal rules gives class action lawyers an incentive to negotiate settlements to enrich themselves but give scant reward to class members, while at the same time the burden of responding to class plaintiffs' discovery demands gives defendants an incentive to agree to early settlement that may treat the class action lawyers better than the class," he wrote.

He wrote that "motivation is not a synonym for action; any actual corruption or selling out is gauged case by case."

"The Boling letter is some indication that the present case is such a case," Posner wrote.

Posner added a vivid detail to his picture of Krislov, writing that in oral argument he told judges to ask their wives if they worried about rusty dryers.

"The wives unanimously answered no," Posner wrote.

"Given Krislov's challenge (ask your wives), that should have ended this litigation," he wrote.

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