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Circuit Court upholds settlement; $43 million in attorney fees

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The 7th Circuit Court of Appeals has upheld a $180 million settlement and grant of $43.5 million in attorney fees in a dispute between retirement plan participants and their former employer. Some class members objected to the amount of attorney fees, but the 7th Circuit saw no reason to disturb the lower court’s decision.

This appeal comes nearly eight years after the original action began. A class-action lawsuit was filed in 2002 against the Rohm and Haas Co. Retirement Plan on behalf of all plan participants and beneficiaries who took a lump sum distribution after Jan. 1, 1976. Recipients believed they should have received payments that included the present value of future cost of living adjustments that would have been included had they chosen to receive pensions as an annuity.

The District Court and 7th Circuit concluded that a COLA is an accrued benefit, and the 7th Circuit remanded for a determination of damages. Then the issue arose regarding whether the early retirees were entitled to damages. The two sides reached a settlement that provided that each early retiree would receive roughly 3.5 percent of his or her original lump sum, unless the COLA on a normal-retirement-age-based annuity outweighed the early-retirement subsidy. Several groups objected, including the “Adamski Objectors,” who are a part of the appeal before the 7th Circuit in the instant case. They argued that early retirees should have received separate counsel and that the settlement was blatant discrimination. They also objected to the request for $43.5 million in attorney fees, which was nearly 25 percent of the total settlement of $180 million.  

The District Court had a fairness hearing and approved the settlement and attorney fee request. It also determined objector Mark Jackson was not allowed to opt out.

In Gary Williams and Nancy Meehan v. Rohm and Haas Pension Plan, Nos. 10-1978, 10-2175, 10-3713, the 7th Circuit found that the District Court adequately addressed the expected value of the early retirees’ claims, and it recognized that at the time, the early retirees’ claims rested on unsettled law. The District judge concluded that the early retirees’ success was uncertain and that the settlement reasonably compensated them for their claims.

“That conclusion was not so clearly erroneous as to make approval of the proposed settlement an abuse of discretion,” wrote Judge Michael Kanne.

The District Court also didn’t abuse its discretion by not creating a separately represented subclass of early retirees or by finding that the class counsel had adequately represented the early retirees. It also affirmed the denial of Jackson’s opt-out request.

Regarding the attorney fees, the appellate court found the District judge assessed the amount of work involved for the attorneys, the risks of nonpayment, and the quality of representation. The judge found that a pure percentage fee approach best replicated the market for ERISA class-action attorneys, and the objectors haven’t shown this finding to be an abuse of discretion, wrote Judge Kanne.

Regarding the risk of nonpayment, the objectors argued that rulings from District Courts in other circuits paved the way for the class’s victory on the COLA issue, thus minimizing the risk in this case. While those prior decisions bolstered the class’s argument that the plan’s damages calculation would violate ERISA, no appellate court had addressed the issue before the District Court approved this settlement.

“The district judge has become intimately familiar with this litigation over the past eight years, and we are confident that she properly assessed the litigation risks facing the early retirees. Although the Adamski Objectors urge us to remand and instruct the district court to perform a more thorough risk analysis, we recognize that the best we can hope for in awarding attorney’s fees is rough justice,” he wrote. “Accordingly, we see no reason to disturb the district court’s assessment of fees.
 

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  1. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  2. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  3. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  4. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  5. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

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