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June 9th, 2014

7th Circuit Serves Harsh Ethics Lesson on Chicago Shyster, Father-in-Law

The U.S. Court of Appeals for the Seventh Circuit tossed out a “scandalous” settlement stemming from a Pella window consumer protection class action suit that would have paid the plaintiffs’ attorneys $11 million up front, with $2 million going to the ethically-challenged lead counsel. Writing for the panel, well-respected Judge Richard Posner chastised the plaintiffs’ lawyer for conflicts of interest and ethical wrongdoing for negotiating a hefty paycheck for himself at the expense of the class members.

The underlying Pella class action lawsuit implicates Consumer Protection Acts (CPAs) from several states, including the #1 Hellhole, California. The 7th Circuit, in a prior ruling, affirmed the lower court’s certification of the class but noted that consumer protection class actions are fraught with difficulties that a court must carefully consider before certification.

State CPAs began as a reasonably calculated step for allowing state attorneys general to intervene on behalf of consumers in a direct merchant-consumer relationship, but have since morphed into a consumer-harming behemoth – private, no-injury litigation enablers giving rise to an entire class of plaintiffs lawyers building careers, and private wealth, by drumming up cases ripe for abuse. An example of the abuse CPA suits can lead to was addressed by the Judge Posner in this Pella lawsuit.

According to The National Law Journal and the Chicago Daily Law Bulletin, Judge Posner characterized the plaintiffs’ lawyer, Paul Weiss, as selling out the class. The problems began when Weiss selected his father-in-law as the sole named plaintiff in the class – whose daughter is a partner of Weiss’ firm, Chicago’s Complex Litigation Group. Their former firm has sued this litigious Bonnie-and-Clyde for misappropriating assets before they left to start their own group. Weiss, himself, has been recommended for a 30 month licensure suspension for alleged sexual harassment and indecent behavior involving seven women.

Judge Posner chastised Weiss, stating that he “may have been desperate to obtain a large attorney’s fee in this case before his financial roof fell in on him.” To avoid scrutiny for having only his father-in-law as a named plaintiff, Weiss added four other plaintiffs to the suit. When all four of the added plaintiffs’ objected to the settlement, Weiss had them removed in favor of four other plaintiffs who would go along with the settlement. Weiss’s settlement math tried to show $90 million available for class members, but Judge Posner did his own calculations: at most $22.5 million would be available for the class, but more likely only $8.5 million, giving attorneys’ more than half of the class settlement.

The 7th Circuit panel reversed the district court’s approval of the settlement, and remanded the case with instructions to remove Weiss, his father-in-law, and Weiss’ Complex Litigation Group, while reinstating the four named plaintiffs who objected to the settlement and were originally removed by Weiss for doing so.

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