Saturday, November 24, 2007

November 2004 objection to attorney fees.

I was a member of the plaintiff class in a class action lawsuit against Charter Communications in which the plaintiffs' attorneys wanted $8.5 million in fees. I tried to file an objection in November 2004. Here was the document I tried to file:



Plaintiffs, Civil Action File No.SU02-CV-0659-G





I object to the attorneys' fees and attorney costs in the proposed settlement. I request that the October 28, 2004 deadline for the postmark on the mailing of this objection be waived and that the Court consider this objection.

My full name is Robert D. Shattuck, Jr.. My current address and my billing address where I received Charter cable service is _______________________________.

I. The settlement

In this class action against the Charter cable television companies, the class plaintiffs allege that (I) Charter's wire maintenance fee (shown as $3.95 on my most recent monthly bill) was imposed on subscribers without their request or permission and that it was worthless or of lesser value than charged; and (ii) the rental fee for a converter box was imposed only when the boxes had no value and served no purpose. Under the settlement, depending on whether a class member is a present or former payer of the wire maintenance fee or a present or former renter of a converter box, a class member may receive for free one of a number of different possible benefits consisting of (a) one movie channel service for six months, (b) Charter High Speed Internet Service for six months, (c) lowest tier Digital Service for six months, (d) upgrade from Basic Service to Expanded Service for six months, (e) six Video on Demand movies, and (f) six pay per view movies. The settlement notice states that wire maintenance fee customers who believe that they did not voluntarily and affirmatively select this service, may notify Charter and terminate the wire maintenance fee service.

Under the settlement the plaintiffs' lawyers may apply to the Court for attorneys' fees and expenses, to be paid by Charter, and Charter has agreed to pay the same to the extent they do not exceed $8,500,000.

II. The attorney's fees are a perverse incentive that contributes to waste of judicial and other public resources and is counterproductive to important policy considerations

The amount of attorney fees and costs of $8,500,000, which are substantially based on the dollar amount that is at stake in this action, is excessive and a perverse incentive that contributes to and results in wasteful uses of judicial and public type resources and in judgments and settlements that fail to advance, and that in fact undermine, important social and economic policies of trying to lessen questionable, irksome and/or dishonest commercial practices and to provide meaningful compensation to deserving victims.

III. Further statement of reasons for objection

A. Questionable, irksome and/or dishonest commercial practices are very widespread

Charter's practices with respect to wire maintenance fees and converter boxes may have been questionable, irksome and/or dishonest.

In this real world we live in, there is no end or limit to questionable, irksome and/or dishonest commercial practices. Anywhere you turn, you are going to find them, and tens of millions of people are guilty of them. I could spend a day compiling a list and be just at the tip of the iceberg, but I will indicate the gamut by throwing out ten or fifteen examples.

How about this list: doctors who submit Medicaid claims for services not rendered; car repair shops that perform unneeded car repairs; lawyers who pad their time or run up time by throwing excessive legal manpower onto a case; accounting firms that charge their clients the full cost of airline tickets whereas the accounting firm has gotten a significant discount from the airlines; lawyers and accountants who charge a $.50 per page copying charge whereas Kinko's down the street charges $.15 per page; drug companies that nominally charge certain customers a higher price for a drug in order to be able to stick Medicare with the higher price, but then give a rebate to those customers; tree cutters who collect an upfront payment and then do not show up to cut the trees; plaintiffs' lawyers who make large campaign contributions to judges running for elected judgeships; politicians who do not think they are biased by electionx contributions and who think they are ethically superior to insurance brokers who receive "contingent commissions" from insurers and superior to stock analysts who are compensated based on investment banking business received by their employer from the company whose stock the stock analysts are analyzing and superior to doctors who speak at continuing medical education courses about drugs of drug companies that are paying the doctors significant honorariums; "phishers" who try to trick people by phony emails and web sites into revealing credit card numbers, bank information and Social Security numbers; spam emailers who exploit the anonymity of the Internet and burden it with billions of emails that impose millions of dollars of costs to businesses taken up by employee time dealing with spam; BMW automobile dealers that do a touch up paint job on a car and try to pass the car off as new.

I could spend a week expanding the above list to fill many pages. The point is that human nature is human nature and it is human nature to use its God given intelligence to connive and seek selfish advantage, and there are and are going to be for a long time into the future never ending questionable, irksome and/or dishonest commercial activities and practices that take place. Most of us are guilty at one time or another of engaging in such practices, and some more frequently than others, and just about all of us are victims hundreds or thousands of times over in our lives.

B. Trying to curtail questionable, irksome and/or dishonest commercial practices and to compensate victims

Society makes efforts and in various ways tries to alter human nature, to lessen and keep from increasing the quantum of questionable, irksome and/or dishonest commercial activities, and to provide meaningful remedies to deserving victims.

Portions of these efforts are outside of the law and government. Society, including through religious, educational and family institutions, tries to teach and inculcate in its members, ethical and moral standards of behavior. These are not totally successful judging by the questionable, irksome and/or dishonest commercial activities and practices that abound.

In the legal, governmental domain, society uses more coercive approaches. In such domain, there is a more "public" realm and a "private" realm.

The public realm includes the two parallel systems of the criminal law system and the governmental regulatory system that mete out penalties of jail sentences and fines to try to deter citizens from doing things that cause damage to other members of society and that also seek compensation on behalf of segments of the public who have been victims.

The private realm is that of private litigation where an injured private party sues another party alleged to have caused the injury.

In the public realm of the criminal law system and the regulatory apparatus, there are employed hundreds of thousands of police and other law enforcement agents, lawyers, prosecutors, investigators, scientists, researchers, accountants, legislators, judges and other administrative and clerical personnel. These workers first write the criminal laws and governmental regulations that intimately affect both personal freedoms and trillions of dollars of economic commerce. Ongoing policy debate transpires among democratically elected legislative bodies, government regulators, the regulated parties, and affected citizens as to what is cost effective in terms of the costs involved to achieve various levels of safety or protection in the environment, in consumer products, and in the workplace. There are those who advocate that very high levels of costs should be paid in order to achieve very small incremental improvements in the level of safety or protection. Creative ideas get proposed, such as allowing rights to pollute the air to be bought and sold in order to achieve the best cost/benefit results, and some people are appalled by such a notion. Many consumers argue that the regulators are too lax, and industry frequently thinks the regulators are too strict.

These employees also carry out the wide range of activities needed to enforce the law and regulations, including investigating whether violations may have occurred. conducting tribunals to make legal determinations as to whether violations have in fact occurred, and determining and administering sanctions.

A very salient point about criminal prosecutors and government regulators, who are entrusted with the responsibility of acting fairly and judiciously on behalf of the public in carrying out their public realm functions, is that they are not paid based on how much in fines they collect or how much jail time they get people sentenced for or on the magnitude of the dollar cost associated with the regulations they enact or the monetary transfers they obtain for victims or otherwise. The reason for this is that basing compensation in that fashion would have great potential for undermining the fairness and judiciousness with which society thinks criminal prosecutors and government regulators should carry out their public functions on behalf of all of society.

Class action lawsuits are more public than private in nature, by which "private" means where one party alone has a sufficient economic interest to bring the action, and "public" means where no one party alone has a sufficient economic interest to bring the action but, from a collective public perspective, the action is deserving to be brought. They partake of a public character in various ways that is reflected in the terminology "regulation by litigation."

The attorneys fees are in large part based on the magnitude of the dollar amount that is at stake and are very enormous when compared to the compensation of criminal prosecutors and government regulators.

The attorneys fee in this class action, and in many class action lawsuits, are excessive and a perverse incentive that is wasteful of judicial and other public type resources and that results in judgments and settlements that fail to advance, and that in fact undermine, important social and ecoomic policies of trying to lessen questionable, irksome and/or dishonest commercial practices and to provide meaningful compensation to deserving victims.

In fee driven class action cases such as this case, several important things are lost sight of. One is that of individual responsibility, and that, if you really want people to change their behavior and lessen the perpetration of questionable, irksome and/or dishonest commercial activity or practice individuals who design and/or knowlingly implement the same have to believe they will be personally punished and they personally will be made to pay. If, instead, you punish entities and make entities pay, you potentially will likely fail to punish the responsible individual and fail to make the responsible individual pay. To the extent that failure exists, all individual perpetrators and would be perpetrators of questionable, irksome and/or dishonest commercial practices will take note and very likely not be deterred about what he or she does or will do.

Related to the above aspect of seeking to punish entities and making entities pay is the result that frequently innocent individuals (such as employees, customers and stockholders) will bear the cost of the payment and they may be as innocent as the victims themselves. Attorney fee driven class action lawsuits lose sight of that, and the law as an instrument of justice loses respect in the eyes of society.

Fee driven class action lawsuits lose sight of cost/benefit principles, particularly related to whether the result achieved for amount of attorneys' fees that get paid is justifiable compared to other objectives and results that could be achieved with the amount.

C.The waste and counterproductively of the instant class action lawsuit

Let us apply the foregoing discussion to the instant litigation.

The officers and other employees at Charter who designed and knowingly implemented Charter's commercial practice of charging for the wire maintenance fees and converter box rentals in question were probably rewarded in their job positions at Charter for helping Charter get the additional revenues in question. It is doubtful these employees have been or will fired by Charter. These employees possibly will provide input into Charter's future pricing decisions to the effect that Charter will monitor how many customers terminate the $3.95 cable maintenance fee, and, if a lot do, then Charter will raise the regular cable charges accordingly. The employees may put their brains to work on other schemes to increase Charter's revenue. The next scheme they come up with may escape detection, and, if not, at least Charter's revenues will be increased in the short run, good salaries will have been continued to be received, and, just as in the instant case, the Charter employees in question will not be forced to pay anything, so in the case of detection of a future scheme, the employees will again escape scott free.

If and when these employees look for another job, you gain be fairly sure that nothing untoward will appear on their resume from their involvement with the cable maintenance fee/converter box rental practices at Charter, and, in fact, their reputation may precede them and a prospective employer may very well say, "Yes, this Charter employee made a pretty good and clever effort to increase Charter's revenues, and maybe he or she can come up with something good to enhance our company's revenues. In the short run, that could get our company's stock price up and, if we should have worries that we have been too clever by half, we just sell the stock and stick any loss with a hapless purchaser of the stock. In the meantime we and this employee form Charter will draw good salaries for awhile."

That's the story for the Charter employees who thought up and implemented the wire maintenance/converter box scheme.

Who pays and who loses? I don't know how long I have been paying the wire maintenance fee. I know I don't like the monopoly position that cable television companies are sometimes in and that I don't like the periodic increases in the cable charges. I have not investigated the satellite TV alternative. I use DSL for my high speed Internet access. I might get a savings by combining Charter's Internet and cable TV service, but I hear more bad experiences with the cable Internet than I do about the DSL Internet connection. I will say that mentioning DSL means thinking about the very irritating line item charges in my landline and cell phone telephone bills, but I don't want to get started on that.

I doubt if I will bother claiming my benefit under the settlement agreement in question. I will probably get around to inquiring of Charter about terminating my $3.95 wire maintenance fee. I assume if too many people terminate that fee, Charter, in its pricing decisions, will find a way to recoup, and there is a good chance I will wind up paying one way or the other.

The "in kind"benefits under the settlement agreement will probably not cost Charter very much and may even increase Charter's revenues by customers who claim the benefits that are temporary and they decide they like the additional services and start paying for them on a regular basis.

That leaves the $8,500,000 in attorney's fees and costs that Charter is going to pay. That is cash out of Charter's pocket. Charter has its revenue goals and maybe it will find ways to recoup the $8,500,000 out of increased cable charges of which I will pay my share. Who knows?

In my private affairs, I need to look at my many utility bills and all the other commercial transaction documents that come my way and decide whether I am satisfied with the situation. As mentioned, I don't like a whole lot of line items on my telephone bills. If some of them are dishonest, I would like them stopped. But, in my view, the proper way for that to be done is through a properly functioning criminal law and/or regulatory apparatus by a criminal prosecutor or a regulator who is not being perversely influenced by excessive compensation by how much he or she is able to get out of the company making the charge. That would go a long way to convince me that what is being done is fair and appropriate. I have no confidence that what is being done in this class action if fair and appropriate and I think there is a good chance it is a significant waste of judicial resources and it fails to advance, and in fact undermines, desirable objectives.

IV. Summary

Per the foregoing discussion, I believe the $8,500,000 in attorneys fees being awarded in this case, and "my" share of them, are being wasted, are excessive and are a perverse incentive that is wasteful of judicial and other public type resources and that results in judgments and settlements, including this settlement, that fail to advance, and that in fact undermine, important social and economic policies of trying to lessen questionable, irksome and/or dishonest commercial practices and to provide meaningful compensation to deserving victims.

I request that the parties and the Court waive the October 28, 2004 postmark deadline for this objection. My tardiness should be excused by the fact that, as indicated above, my economic interest is not sufficient to warrant the pursuit of this action and I had more important things to do in my private capacity. In my capacity as an interested citizen, however, I consider very important to file this objection and believe the deadline should be waived. If the form of this objection and request, such as line spacing or font size, is deficient and needs to be changed or corrected for the benefit of the Court or counsel in order to be accepted as a pleading the case, I will make such correction and re-serve and re-file.

Dated: November 6, 2004 _____ _____________________
Robert D. Shattuck, Jr.
Tel. no. ______________
Email ____________

I mailed this objection to the court and served this objection on the five Counsel and the Charter counsel listed in the Notice of Pendency of Class Action, Proposed Settlement and Hearing at the addresses listed therein, by depositing a copy of same, postage paid, in the United States mail on November 6, 2004, with their respective names and addresses as shown in said Notice on said envelopes
Robert D.Shattuck, Jr.

No comments: