Thursday, January 17, 2013

CCAF objection in Citigroup

The Center for Class Action Fairness also has filed an objection in the Citigroup securities class action litigation.  See this link and this link.

The latter link says:

"There are a lot of important issues in this case that the Center for Class Action Fairness hasn't previously addressed.

  • The question of compensation for first-tier document review has been poorly handled by the courts, in part because no one has ever submitted the right evidence to challenge it. No paying client would agree to $550/hour attorneys doing first-pass document review; the law firm here claimed that the style consultants moonlighting as temp attorneys working for a third party and getting paid less than a tenth of that were firm attorneys. (That's before the question of whether the document review is intentionally conducted in an inefficient manner to inflate the hours, which won't be challenged since the scanty billing records are going to be inscrutable in the week that class members have to look at the Rule 23(h) fee petition.) This issue has been covered by Lester Brickman and, sadly, no one else.

  • The PSLRA freezes discovery until the motion to dismiss is resolved; if the plaintiffs survive the motion to dismiss, 82% of securities cases settle. Given that nearly all the investment is after it becomes very likely that the attorney is going to be paid, why is a 1.8 multiplier necessary to attract competent legal counsel?

  • Lester Brickman has also written about the "bless these fees" experts who rubber-stamp every fee request. The experts here were no different: they cherry-picked empirical evidence; one used boilerplate to assert that the "risk" meriting a multiplier and accounting for the small size of the settlement included the threat that Citigroup would go bankrupt because of the litigation; they bald-facedly called a $0.09/dollar nuisance settlement a "success." A really shameful performance. I hope to be able to depose them.

  • The PSLRA requires the fees and expenses to be a reasonable percentage of the amount the class actually receives. Few fee petitions follow the law; neither this one, nor either of the expert reports even mentioned it. Of course, the amount the class will actually receive is not disclosed in the notice or in any of the papers.

  • Brokers regularly take two months to provide lists of names to settlement administrators. It's happened in every securities case I've been involved in. Settlement administrators know this, dawdle in requesting the names, and then point fingers when the notice is late. How is it possibly acceptable to send reasonably foreseeable late notice instead of establishing a schedule that accounts for the inevitable two-month delays? Again, no one has ever made the right argument challenging this problem."

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