(Reuters) - So-called professional objectors - lawyers who make a living by objecting to class action settlements in order to extract payoffs from class counsel eager to see their deals go through – are enough of a scourge in the class action process that the advisory committee on the Federal Rules of Civil Procedure has proposed a rule change that would require judges to look harder at payments to objectors and their lawyers. That’s one possible way to scare off abusive serial objectors.
Here’s another: accuse them of racketeering in federal court.
On Monday, the plaintiffs' firm Edelson filed a complaint in Chicago federal district court against notorious class action objectors Christopher Bandas and Darrell Palmer, asserting that Bandas, Palmer and Illinois lawyer Jeffrey Thut of Noonan Perillo & Thut are engaged in an ongoing scheme to extort class action lawyers via frivolous objections to proposed settlements. Specifically, Edelson claims that Bandas and Palmer demanded a payment of between $225,000 and $445,000 to drop an objection to Edelson’s $13.8 million settlement of a robocalling class action against Gannett. (The objector was represented in court by Thut, but Edelson alleges Palmer recruited him and Bandas also purported to be his counsel.) According to the complaint, Edelson reluctantly agreed to pay the objectors $225,000 in order to allow the settlement to take effect.
When the class action firm informed Bandas last Friday that it intended to apprise the judge overseeing the case about the payment, Bandas allegedly tried to back out of the $225,000 agreement with Edelson. The racketeering suit seems to have been Edelson’s response to Bandas’ threat.
The complaint quotes from my previous reporting on Bandas, who has been admonished by several state and federal judges for filing meritless objections and demanding payments to drop them. According to the website Serialobjector.com – which was created by a class action firm in response to a Bandas objection to one of its settlements – Bandas has brought at least 55 objections in the past decade. The vast majority, Edelson contends, have been dropped without prompting any improvement in settlement terms.
“Notwithstanding the impropriety and sanctionable nature of his conduct, Bandas is apparently able to profit from his abuse of the system,” the Edelson complaint said. “Bandas has likely extracted millions of dollars from class counsel in exchange for going away without providing any corresponding benefit to anyone but himself (and his fellow professional objectors).”
Palmer, whom Edelson accuses of acting as a Bandas confederate, has been suspended by the California bar for supposedly claiming in three sworn affidavits that he had never previously been disciplined, despite a 2002 Colorado suspension for failing to report sales taxes. The Edelson complaint details Palmer’s alleged history of ghostwriting objections for pro se objectors in order to evade disciplinary restrictions on his right to practice. “Palmer disregards his suspended status and continues to practice law by assisting in preparing and filing of objections to class action settlements,” the Edelson complaint said.
Edelson accused Thut of being a recent recruit to the alleged objection racket, beginning when Bandas hired him to represent an objector to a $23 million MetLife Telephone Consumer Protection Act settlement. Thut told me last year that the MetLife case was his first venture into class actions. Since then, according to Serialobjector.com, he has represented objectors in at least three other cases.
The Edelson suit alleges that Thut’s objection to the firm’s TCPA settlement with Gannett was rife with factual misstatements. When a lawyer for the class called Thut to discuss his brief, according to Edelson, Thut said the only thing he recalled about the Gannett case was the $5 million fee for class counsel – a giveaway, Edelson said, of the filing’s extortionate intention. Thut also supposedly said that Bandas actually wrote the brief, although Bandas did not register an appearance in Illinois state court, where the TCPA case is being litigated.
Cook County Superior Court Judge Kathleen Kennedy approved the Gannett settlement and fee award on Nov. 14. Edelson asserts that Bandas and the other defendants threatened to appeal the approval but said the objection “could be resolved through mediation.” In a Dec. 1 mediation by phone, the Edelson complaint said, Bandas did not request a single change in the settlement agreement but said he would drop the objection if Edelson paid a fee of between $225,000 to $445,000 – a demand Bandas allegedly made in writing through the mediator.
I left phone messages for Bandas, Palmer and Thut, requesting comment on the Edelson allegations, but didn’t hear back. Gannett’s defense counsel in the underlying TCPA class action, Matthew Fedor of Drinker Biddle & Reath, declined to comment.
The Edelson allegations certainly track with claims last year by Lieff Cabraser Heimann & Bernstein, which accused Bandas of a shakedown after he filed an objection to the firm’s $75.5 million TCPA settlement with CapitalOne. What the new Edelson complaint shows is that even judicial chastising, terrible publicity and close tracking of their activities has not deterred alleged serial objectors like Bandas and Palmer – nor has it stopped firms like Edelson from agreeing to pay them to drop objections.
Here’s hoping the proposed new federal rules end objection extortion, because nothing else has.