[I submitted the below objections in this class action: http://attmsettlement.com/ ]
Class Counsel: Bartimus Frickleton Robertson & Gorny, P.C. 715 Swifts Highway Jefferson City, MO 65109 | Class Counsel: The Huge Law Firm PLLC P.O. Box 57277 Washington, D.C. 20037-0277 | |
Counsel for AT&T Mobility: Thompson Coburn LLP Roman P. Wuller, Esq. One US Bank Plaza Suite 3500 St. Louis, MO 63101 | Counsel for AT&T Mobility: Mayer Brown LLP Evan M. Tager Archis A. Parasharami 1999 K Street NW Washington, DC 20006 |
Objections of Robert Shattuck in In Re: AT&T Mobility Wireless Data Services Sales Tax Litigation, case No. 1:10-cv-02278
PROCEDURAL
PROCEDURAL
My name, current address, which is the same address when I was charged the Internet taxes, and telephone number are Robert Shattuck, 3812 Spring Valley Circle, Birmingham, AL 35223, (205) 967-5586. These objections are being sent hard copy by US mail and are also being transmitted by email to counsel for AT&T Mobility (but not to Class Counsel because I cannot find email addresses on websites for Class Counsel). These objections contain links to Internet webpages ("cited webpages"). The cited webpages can be accessed by means of clicking on the links in an electronic version of these objections. An electronic version of these objections can be found at the following URL http://robertshattuck.blogspot.com/2011/01/objections-in-at-class-action.html and, to access the cited webpages more easily if one has only a paper copy of these objections, one can go to the foregoing URL on the Internet to view an electronic copy and clink on links in that electronic copy to go to the cited webpages.
NOTICE OF INTENT TO APPEAR:
I live in Alabama. I may appear through an attorney or other authorized representative at the March 10, 2011, Fairness Hearing. I am seeking an attorney or other authorized representative in Illinois to appear on my behalf. For reasons that are further indicated below, I am asking the Alabama Attorney General and the Alabama Department of Revenue to make appearances in this case.
PREDICATE OF MY OBJECTIONS
A. Getting rich off multitudinous small amounts
Society is well populated with self-seeking human beings. They find it very advantageous to be in a legal position, or other practical circumstance, in which they collect or have power over multitudinous small amounts of money belonging to large numbers of other persons individually. The small amounts are very significant in the aggregate from the perspective of the first party. From the perspective of the individuals to whom the small amounts belong, the individual amounts are small and provide little incentive for those individuals to challenge the taking or other use of their small amounts, including when a taking or use is illegal or wrongful, or otherwise objectionable. (In this discussion, a party who collects or controls small amounts belonging to large numbers of other persons will sometimes be referred to as an "Aggregating First Party" and the large numbers of other persons to whom the small amounts beneficially belong will be referred to as the "Multitudinous Second Parties" The multitudinous small amounts, and their aggregate, shall be referred to interchangeably as the "Multitudinous Small Amounts" or the "Big Amount" as may be reflective of, or call attention to, the two perspectives from which the same can be viewed.)
Aggregating First Parties are highly motivated to preserve the privileged position that allows them to collect or have power over Multitudinous Small Amounts from which the Aggregating First Parties can realize significant personal benefit. Aggregating First Parties may be tempted to do wrongful acts connected to the use of and benefits they gain from Multitudinous Small Amounts. The acts may result in the damaging of significant societal interests of the public at large. Aggregating First Parties frequently have special prerogatives in preserving their power and in warding off challenges that are attempted by Multitudinous Second Parties who, notwithstanding the insignificance of the small amounts to themselves individually, are moved to challenge how those amounts are taken or exploited by the Aggregating First Parties for their personal benefit..
Aggregating First Parties desire to have the benefits of control over the their respective Big Amounts, but at the same time they seek to avoid being held accountable if something untoward happens connected with their use of the Big Amount under their stewardship.
Given the above described phenomenon of Aggregating First Parties and Multitudinous Second Parties, there is significant reason for society and its citizens to be very watchful about exploitation, abuse and wrongdoing by Aggregating First Parties relative to Multitudinous Small Amounts belonging to Multitudinous Second Parties.
The foregoing phenomenon in question manifests itself in many ways in our society and the economy
One way that is very much in the public eye is that of corporations and their management. Multitudinous Small Amounts that beneficially belong to tens of thousands, or millions, of shareholders of a corporation total to an extremely large corporate asset value. Managements of corporations have command over those huge corporate values, and management can utilize and deploy the same in ways that can justify paying themselves huge compensation. That huge compensation is derived from small portions of the Multitudinous Small Amounts beneficially owned by shareholders individually. The shareholders may think management is paying themselves too much, but it is practically impossible for the shareholders to keep management from taking small portions (that add up to a lot) of the Multitudinous Small Amounts beneficially owned by the stockholders.
Recently, there has been much focus on management abuse of shareholder value. See, e.g., a March 2010 white paper of the Ethics Resource Center entitled "Ethical Leadership and Executive Compensation: Rewarding Integrity in the C-Suite" ( URL http://www.ethics.org/files/u5/execComp.pdf ).
Another example of the Aggregating First Party phenomenon, also in the public eye, is the legislative practice of "earmarks." The amount of the "earmark" is a significant amount from the perspective of both the legislator who engages in the "earmarking" and the beneficiary who receives the "earmark." The "earmark" is derived from very small amounts of taxes that are paid by millions of taxpayers. The "earmarks" are highly objectionable to virtually all taxpayers, but the amount of their individual contributions to the "earmarks" is very small, and taxpayers have found that their legislator Aggregating First Parties, and the concomitant "earmark" beneficiaries, have made the "earmark" practice seemingly impregnable by taxpayers.
Class action lawsuits and the plainfitfs' attorney fees that ultimately come out of the pockets of a multiplicity of Multitudinous Second Parties in small individual amounts make plaintiffs lawyers another class of Aggregating First Parties that society should be very watchful about. More will be said about this.
B. Collusion between corporate management and plaintiffs' lawyers
As stated, both corporate managements and plaintiffs' lawyers are Aggregating First Parties, and they have their respective Multitudinous Second Parties from which they get their respective Big Amounts. Sometimes there is overlap among the sets of Multitudinous Second Parties.
More importantly, I contend there is a significant amount of mutual accommodation, and implicit collusion, that goes on between corporate managements and plaintiffs attorneys in getting the benefits of their respective Big Amounts.
The Enron story, and the investment banks that were involved with Enron and certain ensuing class action litigation, are very revealing of this. For details, see this article I wrote http://robertshattuck.blogspot.com/2007/11/writing-i-did-about-enron.html entitled "Enron's smartest guys, crooks, victims and other saps."
Sometimes corporate management's willingness to throw in the towel to the plaintiffs' lawyers is both amazing and outrageous. A galling example of this was a class action lawsuit against Xerox Corporation of which I received notice. I wrote a letter to Judge Thompson in the case ( http://robertshattuck.blogspot.com/2008/04/letter-to-judge-thompson.html ) and complained to the Xerox board of directors (my activities concerning the Xerox case are detailed here at this webpage http://robertshattuck.blogspot.com/search/label/J1.%20Xerox%20Corporation ). Whatever throwing in the towel the Xerox board of directors did in the Xerox case, it is happening all over the place. Bloody murder, I would say; in fact I did say. See http://robertshattuck.blogspot.com/2008/11/why-arent-retirement-plan-trustees.html
From the foregoing cases and from other study, investigation and experiences, I have concluded that there should be significant societal concern about implicit collusion between corporate managements as one set of Aggregating First Parties and plaintiffs's lawyers as a second set of Aggregating First Parties. In this collusion, the chief motivation of corporate management is to avoid individual accountability and responsibility in their stewardship of the Big Amount they control, and the chief motivation of plaintiffs' lawyers is to get their Big Amounts coming out the Multitudinous Small Amounts beneficially owned by innocent shareholders and other non-wrongdoing Multitudinous Second Parties. The plaintiffs lawyers are willing to act as aiders and abetters to management in achieving the latter's objective of avoiding accountability and responsibility, in return for management not opposing the raid by plaintiffs' lawyers on the Multitudinous Small Amounts of the Multitudinous Second Parties the plaintiffs' lawyers have targeted.
Settlements in class action lawsuits are a main tool in the foregoing collusion. The settlements avoid determinations of whether there has been any wrongdoing, and thereby accommodate corporate management's desire to avoid individual accountability for wrongdoing, and the settlements spring wide open the pocketbooks of Multitudinous Second Parties for pilfering by the plaintiffs' attorneys..
If the Court does not accept the foregoing description and characterization about mutual accommodation or collusion by corporate management and plaintiffs lawyers, the Court might give fuller review of my blog How To Combat Plaintiffs' Lawyers (URL http://robertshattuck.blogspot.com/ ), and the Court may change its mind.
In all events I wish to emphasize that the collusion or mutual accommodation that I contend exists between corporate management and plaintiffs lawyers is a chief predicate for my objections in this case.
C. Societal objectives of loss compensation and deterrence
Civil law liability is supposed to serve two societal purposes, first, that of compensation where one party wrongfully injures another party, and second that of deterrence.
As to the deterrence objective, I contend that class action lawsuits undermine that objective and do not promote it. For a full statement of this contention, see my article Does the Civil Liability System Undermine Business Ethics? (URL http://robertshattuck.blogspot.com/2007/11/i-thought-this-would-be-effective-email.html ).
As to the societal objective of loss compensation, I contend that the class action litigation system as it has operated has done very poorly in serving the objective of compensation when one party wrongfully harms another party. Among other things, that system has resulted in (i) a coercive environment in which payments can be extracted without any determination that there has been wrongdoing that supports a liability (the aforementioned collusion being one contributing factor to the creation of such environment), (ii) a disregard of legitimate distinctions between intentional wrongdoing, negligent wrongdoing, and no wrongdoing or no fault, in the process of fixing liability under the law, (iii) a similar disregard of the role of the plaintiff in contributing to the harm that is properly a reasonable factor in fixing liability, (iv) inadvisable expansions of liability where there is no fault and of the types of injury for which one party is called on to compensate another party, (v) a failure to be discriminating about whether or not a defendant or other party paying for or bearing the burden of a payment for an alleged harm received a benefit, (vi) a failure to consider alternative ways of loss compensation, or reasonable substitutes, and (vii) lack of controls over administrative costs in accomplishing the loss compensation goal.
D. The augmented public impact of class action and other litigation
Much civil litigation has far outgrown the concept of the judiciary and the courts as merely a societal means of resolving disputes between two parties, in which the two parties are viewed as the only parties that have a material interest in how the dispute is resolved and only those two parties need to have their say in a court of law about how the court should decide the case under the law.
Now the effects and ramfications of much civil litigation are very widespread beyond the actual parties to litigation, and there is a legitimate question whether all the persons who will be materially affected by the outcome of a court case have been afforded a proper opportunity to be heard related to the resolution of the case before the court.
Further, the publicly widespread consequences of litigation arguably signifies there is a need for more say, input and guidance from democratically responsive legislative bodies about how this "public" litigation should get handled and disposed of.
Insofar as the Court believes it is legally obliged to hear this and similar "public" litigation before it, at a minimum the Court ought to be mindful of all the public ramifications and the extent to which persons who are not parties before the Court will be materially affected. Also, the Court should consider its discretion to provide for more persons to have the opportunity to be heard by the Court. If the Court feels it is being called on to act in ways for which the Court believes more guidance and input should be provided by democratically responsive legislative bodies, the Court should find ways to signal this, including by how it exercises its discretion in approving a settlement agreement or not.
MY OBJECTIONS TO THE PROPOSED SETTLEMENT IN THIS CASE
I object to the proposed settlement in this case because I contend it is another instance of the above referenced collusion between corporate management and plaintiffs' lawyers at the expense of innocent parties, because there is a failure on the deterrence front, because public impact and ramifications are not sufficiently taken into account, and because there are reasonable and acceptable alternatives of achieving the compensation objective that avoid the foregoing drawbacks.
The information that has been made available through the notice of the class action is that management of AT&T Mobility, either corruptly, or negligently, or in exercise of its business judgment, or ignorantly,may have caused AT&T Mobility to collect from customers the internet taxes and to pay such internet taxes over to the taxing authorities, which internet taxes were not legally owing to the taxing authoritities.
If the internet taxes were in fact not legally owing to the taxing authorities, it would further seem to be the case that the officials of the taxing authorities were guilty of corruption or negligence or incompetence in collecting the internet taxes.
The proposed settlement will avoid any determination of whether management has been guilty of corruption or negligence and thus fails in achieving the deterrence objective of civil law liability. Among other things, the proposed settlement will tend to prevent shareholders of AT&T Mobilility from getting information about any such corruption or negligence and impair them in holding management accountable.
There are alternative loss compensation routes for affected customers that can achieve reasonable loss compensation without the disadvantages of this class action litigation and the proposed settlement. These include the various refund claim routes that the lawmakers of the taxing jurisdictions provide to the customers in their individual capacities. Also customers have open to them requesting state attorney generals to seek loss compensation on their behalf, and state attorney generals are likely to proceed in ways that do not have the disadvantages discussed here about the proposed settlement.
There is a public interest of taxpayers and voters being informed about the manner and extent to which the officials of their taxing authorities have been corrupt, negligent or incompetent in collecting taxes. Approving the proposed settlement will adversely affect the investigating of the facts and publicizing what the investigation reveals.
The settlement will empower the plaintiffs attorneys in a way that will result in the imposition on taxing jurisdictions of the cost and expense in defending refund litigation and may result in the deprivation of funds from governments that will have to be made up from other revenue sources. The Court should be cognizant of this public impact and should at least consider whether the Court should require notifying the taxing authorities in question of the litigation and offering them an opportunity to make argument to the Court about whether the plaintiffs' attorneys should be armed in the fashion the Court proposes.
The settlement effectively overrides the rules and limitations that lawmaking bodies have enacted regarding refunding of taxes.
The proposed settlement agreement runs roughshod over the business judgement rule. Corporations have many dealings with outside parties, including customers, suppliers, and taxing authorities. Officers and directors are empowered to exercise their business judgment, and the shareholders and a court of law are supposed to defer to management's decision. If shareholders want to press their disagreement about business judgment decisions, they are relegated to voting their stock against directors and management whom they disagree with.
Under the business judgement rule, management may make mistakes that cost the corporation money and that lessen shareholder values, but the law considers the above shareholder vote as a substitute remedy for shareholders, or shareholders can sell their stock. By the same token, if AT&T Mobility made a mistake in collecting and paying over internet taxes that was an injury to customers, it could be reasonable for the law to say monetary damages are not needed in the case and the substitute remedy that the customers have of switching service providers is adequate.
Riding roughshod over the business judgment rule in this case is an invitation for plaintiffs lawyers to go fishing for dealings a corporation has with third parties in which the corporation may have not fully asserted legal or contractual rights available to the corporation, and get a court to vest control in the plaintiffs' lawyers over the corporation's rights so that the plaintiffs' lawyers can sue on the corporation's behalf. Based on the precedent set by the proposed settlement, the plaintiffs' lawyers would be allowed to do this without a determination of whether there was a decision by management that is entitled to deference under the business judgment rule.
There is currently in the public eye "whistleblower rules" that the SEC has proposed under a Congressional mandate. The rules have provoked significant controversy, and the rules are being subject to extensive public debate. These rules are mentioned because, to some extent, plaintiffs' lawyers act in a whistleblower capacity, and given the public interest and scrutiny the SEC rules are provoking, the Court might wonder about the extent class action litigation sanctions whistleblowing by plaintiffs' lawyers and that provides compensation to them without the benefit of legislative consideration and sanction that is subject to public scrutiny and debate about the same.
I personally think that there is jumping of the gun with the proposed whistleblower rules because the law has been and continues to be deficient in dealing with the matter of personal accountability for wrongs of officers and employees of corporations. I have submitted a comment to the SEC to this effect. http://www.sec.gov/comments/s7-33-10/s73310-252.htm
PLAINTIFFS' ATTORNEYS FEES
In evaluating the foregoing objections to the proposed settlement, the most potent discretion that the Court has is in the approval of attorney's fees. If the Court approves the settlement and requested attorneys fees, this will be an incentive for more class action lawsuits to be filed and more settlements to be entered into that may be subject to the same criticisms that are stated above about the proposed settlement in this case. If the Court does not approve the requested attorneys fees and approves a significantly lesser fee, that will tend to lessen the bringing of class action lawsuits and their attendant settlement agreements, and less prevalence of the foregoing objectionable features.
I contend the Court should only approve a reasonable fee, and in determinging what is reasonable the Court has discretion to evaluate all the factors and public impact that are discussed above.If the Court engages in the foregoing evaluation, I believe it would be reasonable for the Court to conclude that plaintiffs attorneys fees should not exceed $100,000.
ADDITIONAL CONDITIONS TO APPROVAL OF SETTLEMENT
The Court should require notice to be given to all shareholders of AT&T Mobility or its parent that management of AT&T Mobility may have corruptly or negligently caused AT&T Mobility to impose internet taxes on customers, that the settlement agreement will prevent the Court from determining the same, and shareholders ought to decide whether they should take action to make their own investigation and determination of the same.
The Court should require notice to be given to all state attorneys general and all taxing jurisdictions of the proposed settlement and invite them to submit their views on whether the proposed settlement agreement should be approved.
If and to the extent the plaintiffs obtain refunds from taxing jurisdictions, the Court should require that specified percentages of the refunds be used to publish notices in newspapers in the taxing jurisdiction that give notice to the taxpayers and voters of this litigation and its disposition and of the amounts of taxes that were collected by the taxing jurisdiction and the amounts that were refunded, plus the costs and expenses that the taxing jurisdiction incurred in defending against the refund litigation.
CONCLUSION
I consider myself one of Multitudinous Second Parties whose small amounts are taken advantage of by
Aggregating First Parties that include corporate managements, legislators and their earmark beneficiaries, and also, I contend, plaintiffs' lawyers, including the plaintiffs' lawyers in this case.
I want my taxing authorities to be competent in the collection of taxes and not collect amounts that are not legally due and owing under the tax laws. I want my service providers not to mistakenly include in charges and pay over to taxing authorities amounts that are not due and owing. If the foregoing goes on, I want to learn about it. I am willing to contribute a small amount to provide reasonable compensation to a party who makes an investigation and informs me that the foregoing is happening and to inform the taxing jurisdictions and service providers of the same. If the Court wants to require At&T Mobility to pay, say $100,000 to the plaintiffs' attorneys for having investigated the internet taxes and to pay additional amounts for the notices to shareholders and others and notices in newspapers, I would find such use of a small amount from me as one of Multitudinous Second Parties to be entirely satisfactory.
As one of the Multitudinous Second Parties in this case, I strongly object to the proposed settlement agreement. I believe the direct and indirect costs and expenses, and other disadvantages and burdens, the proposed agreement will result in, of which I will pay my small amounts, directly or indirectly, immensely exceeds (possibly on the order of magnitude of 50 times) the aforementioned $100,000 plus the cost of notices that I would be happy to pay my share of. Paying 50 times more than what I consider reasonable under the circumstances is highly, highly objectionable to me personally.
I further think the Court should be realistic about what inference can be drawn if only a few of the Multitudinous Second Parties affected by this case file an objection. The Court should ask itself, if the Multitudinous Second Parties were called before the Court and given a fair explanation of this case and the possible remedies and ramifications (including whatever part of the above objections the Court considers part of a fair explanation), what would those Multidudinous Second Parties say should be done by the Court? Whether the Court is capable of that exercise and acting on that exercise, I will find out in due course.
Respectfully submitted,
_____________________________ /s/
Robert Shattuck
January 30, 2011
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