Federal Court Rebukes Attorneys For Misleading Class Action Plaintiffs

A federal court in Alabama has ruled that attorneys were misleading class action plaintiffs about the terms of a settlement. The case highlights the importance of transparent and accurate communication between attorneys and their clients, as lawyers from Duane Morris wrote in a recent post on the firm’s website.

The ruling was triggered by a squabble between rival plaintiffs’ attorneys in a class action. The case, Braswell, et al. v. Bow Plumbing Group, Inc., resulted in a $8.025 million settlement and an opt-out and objection period.

Shortly after the settlement was reached, two attorneys who represent the same plaintiffs in separate but related class actions against the same defendant, emailed eligible class members and urged them to opt out. The emails contained misleading information about the terms of the settlement, and a false statement claiming that an administrator who was paid out of the settlement would determine the class action plaintiffs’ eligibility to receive any funds.

The Court determined that the emails “materially interfere[ed] with the Court’s order to effectuate a notice plan which fairly, accurately, and reasonably informs the settlement class members of the proposed settlement terms and associated procedures to resolve their claims.”

Undaunted, the same attorneys sent another email to their clients less than a week later. This one claimed that rival counsel was colluding with other class action attorneys to delay individual claims; claims that the email’s authors continued to pursue. The Court found that this email portrayed its efforts to facilitate the settlement falsely.

In reply, the rival attorneys sent another email suggesting that class members should not speak with class counsel, despite the Court’s order expressly saying that such communications are permissible. Ultimately, 319 class members opted out. At that point the judge threw out the opt-outs, and partially reopened the objection period.

The authors suggest that corporate counsel should take note of the Court’s interpretation of Rule 23, which requires “that class members be given information reasonably necessary for them to make a decision.” A sound understanding of the rule will allow companies to be better equipped to effectively handle class action litigation.

The Court’s order, they say, demonstrates how important accurate attorney-client communications are in the context of Rule 23.

Read more of Today’s General Counsel‘s coverage of class action lawsuits, here, here and here.