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Sent: 3/11/2010 7:07:12 A.M. Central Standard Time
Subj: Letter to Judge Pauley
[Copy of this email sent by US Mail to Judge Pauley]
March 10, 2010
The Honorable William H. Pauley III
United States District Court
Southern District of New York
United States Courthouse500 Pearl Street
New York, New York 10007-1581
In re Currency Conversion Fee Antitrust Litigation MDL Docket No. 1409, M 21-95
Dear Judge Pauley,
I was an objector in this case (you may find an electronic copy of my September 2007 objection at this internet webpage
I have decided to go outside the judicial system and take my objections about this and other class action (and other "junk") litigation to candidates and voters in the 2010 elections.
In December of last year I sent emails to announced candidates for the U.S. House of Representatives and the Senate reading as follows:
From: RDShattI am going outside the judicial system in this fashion because I believe it is a closed one in which judges and lawyers are out of touch with economics, business ethics and genuine justice.
Sent: 12/__/2009 _______Central
Subj: Plaintiffs' lawyers impede economic recovery
I am an Alabama resident.
I think plaintiffs' lawyers impede the country's economic recovery. I also
think they undermine business ethics. They particularly stand in the way of
sensible medical malpractice reform as a way to lower the nation's health care
I have a blog How To Combat Plaintiffs' Lawyers
where I record my efforts to communicate with lawmakers, judges, attorney
generals and academics, among others, about how I believe plaintiffs' lawyers
ill serve societal interests. I receive no remuneration for any of my
activities. I am not a member of any tort reform organization, chamber of
commerce, or any other organization that has an interest in opposing plaintiffs'
Congress is debating more stimulus, health care reform, and other
governmental action to get our nation's economy back on track, and the country
is moving toward the 2010 elections that will be a referendum on how the current
Congress performs about these important domestic issues.
I hope you, as a United States Senator or Representative, or as a candidate
for the Senate or the House of Representatives, will look at the contribution
the plaintiffs' lawyers make to the country's economic difficulties and will
consider, advocate and propose legislative action to lessen the problem of the
I have reviewed your Memorandum & Order dated October 22, 2009, in which you approve attorneys' fees of $51,250,000, plus expenses of $3,708,072. I was particularly interested in your section captioned "Public Policy Considerations."
With all due respect, your Honor, I think the lodestar method and the percentage recovery method are mindlessly based on (mindless) precedent that woefully fail in critical thinking about "Public Policy Considerations".
Here would be my statement of "Public Policy Considerations":
In exercising its discretion as to approval of attorney fees in class actions, the court should be reasonable and not approve something thatis not reasonable.
Reasonableness is properly determined with reference to a standard based on
social utility and cost benefit principles. If there is little or no social
utility of the litigation or if it has disutility, attorney fees that are
approved should not exceed the social utility. Social utility is not subject to
hard and fast quantification, and a subjective evaluation and weighing of
factors and considerations is unavoidable.
The basic question is what is the social utility of a class
action litigation and how does its utility compare to the cost of
the litigation in terms of legal fees of all the plaintiffs' and defense
attorneys and the time burden on non-attorneys, such as defendant's employees,
who are called on to participate in the litigation.It is contended
that class action litigation frequently has little or no social
utility and, in fact, has a significant component of negative disutility.
First, class action litigation generally does not promote an
objective of the law to lessen corporate wrongdoing, and it is in fact
counterproductive to that end and it undermines the fostering and inculcation of
e thical business conduct. Argumentation in support of this contention is
set out in an article of mine entitled "Does the Civil Liability
System Undermine Business Ethics?", which you can find at this internet
Second class action litigation is frequently dubious in serving the socialIf the foregoing "Public Policy Considerations" are disregarded in evaluating social utility, and attorneys fees in excess of social utility are approved, that will continue to elicit more dysfuntional class action litigation and contribute to more mindlessness in the future.
utility of "doing justice." The main reason it is dubious is that
insufficient attention is paid to the extent to which the litigation is about
making transfers of amounts by and among parties in interest who are not
culpable of any wrongdoing. It is possible there has been wrongdoing by
corporate employees and other individuals, and as a result some innocent
parties have received a benefit from the wrongdoing and other innocent parties
have had a loss or cost imposed on them. Whether or not there has been
wrongdoing, the case should largely be considered as an unjust enrichment case
among innocent parties, and nothing more. The facts and circumstances of all the
persons who have been unjustly enriched and at whose expense they have been
unjustly enriched are likely highly variable and somewhat indeterminate,
and class action litigation is largely bereft of consideration
and investigation, or opportunity for argument, as to persons who are
contended to have been unjustly enriched, the particular facts about whether or
not he was unjustly enriched or, if he was unjustly enriched, about whether more
is being claimed from him in the litigation than the amount by which he was
In my view, under the foregoing "Public Policy Considerations," there should have been no approval of attorneys fees in excess of $1,000,000. Neither my objection in this case, nor that of any other objector, persuaded you not to approve the attorneys fees you approved in the amount of $51,250,000, plus expenses of $3,708,072.
Those (and other class action) attorneys' fees are a significant amount of economic resources, and knowledgeable, serious minded persons would want to think carefully about how those resources are being deployed, about the value (or disutility) that results from their expenditure, and alternative ways to use the resources to achieve the social objectives. I think these persons would include lawmakers, judges, academics in the legal, business and ethics fields, state attorneys general, and prosecutors. I have spent and will continue to spend a great deal of time and effort soliciting views from such persons and compiling them in my blog (which you can find at this internet website http://robertshattuck.blogspot.com/ ).
I hope I have gotten your attention.
3812 Spring Valley Circle
Birmingham, AL 35223