No good deed goes unpunished

Earlier this week, a Court of Appeals panel handed back a multi-million dollar headache to Judge Timothy Connors of the Washtenaw Circuit Court and politely told him we’re sorry, pal, but you did this to yourself.

At issue is a settlement the Michigan Department of Corrections made with a class of female inmates who claimed prison personnel sexually abused them for years.

MDOC agreed to pay $100 million dollars in installments over a six-year period paid into an escrow account and then distributed to the attorneys and class members according to an allocation plan. MDOC also agreed to waive the prohibition on prisoners maintaining accounts at financial institutions outside their MDOC institutional account.

For the record, MDOC has already paid some of those installments.

Here’s where the headache began.

The trial court … entered a protective order which prohibited the disclosure of the names of class members other than to necessary MDOC and Attorney General employees. The purpose of the protective order was to prevent retaliation against the class members.

The retaliation issue is important. Many of the class members are still behind bars. Paybacks can be rough, doubly so when made prison-style. Connors’ protective order rightfully addressed that concern.

But whenever big money is involved, there are always folks looking for a piece of the action – and, in this case, rightly so.

Some class members may owe child support, said the Department of Human Services. What about unpaid victim restitution, court costs, fines and fees, asked prosecutors and court administrators.

The government officials intervened. They collectively argued that any such obligations owed by individual class members have first priority in any settlement distribution.

So, said the intervenors, give us the names.

Judge Connors took a stab at it.

The trial court attempted to resolve the matter by having Intervenors submit a list of names of any female prisoner with an outstanding obligation who might have been a member of the class. Plaintiffs’ counsel was then to compare those lists against the names of class members and determine if any class member had an outstanding obligation.

This failed to resolve the dispute, however, because Intervenors determined that it was logistically impossible for them to generate a comprehensive list of all potential claimants. They continued to maintain that they needed the list of names of the class members to check that list against their own records. Ultimately, the trial court declined to order the parties to disclose to Intervenors the identities of the class members and this appeal followed.

Having plaintiffs’ counsel determine which class members owe an obligation and giving the intervenors those names is a bad idea, said COA Judge David Sawyer. There’s a big conflict of interest between protecting clients’ rights and the intervenors’ collection efforts.

The applicable statutes provide that MDOC can’t disburse settlement funds to class members until they have satisfied the obligations at issue in this case, Sawyer ruled. But there’s nothing in the statutes that give the intervenors a particular right to know the class members’ identities.

The intervenors’ interest in statutory compliance “does not equate with the right to receive the names of the class members,” Sawyer said.

So, Judge Connors, here comes your headache.

If the trial court is able to fashion a method to ensure that the MDOC is meeting its statutory obligations with respect to the proper disbursement of the proceeds of the settlement without the necessity of disclosing the names of the class members, it is certainly free do so. …

Our only directions are these: (1) the MDOC must comply with the statutory provisions to ensure that the restitution, fees and costs required to be paid by a class member are, in fact, paid before any disbursement to that class member, (2) plaintiffs’ counsel is not to be the gatekeeper to determine compliance or otherwise to identify which class members have such an obligation, and (3) there must be some oversight mechanism to confirm that the MDOC does, in fact, discharge its obligations. We also direct that any future disbursement of funds is to be suspended until a satisfactory method is in place to ensure compliance with the statute.

Sawyer offered some suggestions on how to accomplish all of this and acknowledged that Connors was being saddled with a difficult task.

But the trial court in essence took this burden upon itself when it entered the protective order. We do not disparage the actions of the trial court in doing so as we recognize the reasons for the protective order. But just as the unique circumstances of this case necessitated the protective order, it also necessitates greater involvement by the trial court in ensuring that the order does not impede the MDOC and DHS from meeting their statutory duties nor does it shield plaintiffs from meeting their financial obligations.

The case is Neal, et al. v. Dep’t of Corrections, et al.

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$295M settlement reached in state’s potential class action against Bear Stearns

In what Attorney General Bill Schuette is calling “good news for Michigan taxpayers,” a national class-action securities fraud lawsuit against Bear Stearns and Deloitte & Touche has been settled for $295 million.

Hon. Robert Sweet, U.S. District Judge for the Southern District of New York, granted preliminary approval to the proposed suit, in which Michigan was court-appointed lead plaintiff.

As part of the deal, the defendants will pay investors nationwide — including State of Michigan Retirement Systems (SMRS) — after being misled about the value and risks of Bear Stearns’ mortgage-backed assets.

The amount SMRS will receive as part of the settlement will be finalized Sept. 19.

In a statement, Schuette called the settlement “good news for Michigan taxpayers. … [This] demonstrates our commitment to holding accountable any bank or investment firm that violates the public trust.”

Michigan contended that Bear Stearns and auditor Deloitte & Touche misled the state’s pension fund and other investors about risky exposure to the U.S. housing market and subsequent write-downs to its assets, which led to Bear Stearns and its stock collapsing.

MSC orders amendments to MCRs

In orders released late yesterday, the Michigan Supreme Court took the following action on amendments to the Michigan Court Rules, the Rules Concerning the State Bar of Michigan and the Rules for the Board of Law Examiners:

Amendment of MCR 5.208
Notice to Creditors, Presentment of Claims

Issued: 5/17/11
Effective: 9/01/11

Staff Comment: The amendment of MCR 5.208 removes the requirement to list a decedent’s last known address on the Notice to Creditors form.

The staff comment is not an authoritative construction by the Court.
ADM File No. 2009-29

Amendment of MCR 6.005
Right to Assistance of Lawyer; Advice; Appointment for Indigents; Waiver; Joint Representation; Grand Jury Proceedings

Issued: 5/17/11
Effective: 9/01/11

Staff Comment: The amendment of MCR 6.005(H) revises the rule to clarify that appointed and retained defense counsel in a criminal proceeding either must file a substantive response to a prosecutor’s application for interlocutory appeal or notify the Court of Appeals that the lawyer intends not to submit a pleading.

The staff comment is not an authoritative construction by the Court.
ADM File No. 2008-28

Amendment of Rule 3 of the Rules Concerning the State Bar of Michigan and Rule 8 of the Rules for the Board of Law Examiners
Rule 3 Membership Classes; Rule 8 Recertification

Issued: 5/17/11
Effective: 9/01/11

Staff Comment: The amendment of SBR 3(E), submitted by the State Bar of Michigan, would clarify that an out-of-state attorney who voluntarily resigned from the Michigan bar would not be required to retake the Michigan Bar Examination if the person meets the criteria for admission without examination under Rule 5 of the Rules for the Board of Law Examiners. A similar change also is made in SBR 3(F) regarding emeritus members.

Finally, Rule 8 of the Rules for the Board of Law Examiners is amended to reflect that resigned or emeritus members who seek readmission are covered under Rule 8, which allows for recertification.

The staff comment is not an authoritative construction by the Court.
ADM File No. 2009-20

Proposed Amendment of MCR 3.501
Class Actions

Issued: 5/17/11
Action: Court declined to adopt either proposal; file closed.

The proposed amendment of MCR 3.501(B) in Alternative A would have required a change in circumstances to have occurred that would allow a party to file a supplemental motion for certification of a class within 21 days of the party’s knowledge of the changed circumstances. The proposed amendment also would have allowed a party to file a motion for revocation or amendment of the certification. The court as well would have been allowed to consider supplemental motions to recertify and revoke or amend the certification. The proposed amendment of MCR 3.501(B) in Alternative B would have clarified that only one motion for certification may be brought, and that once granted, the certification may be amended or revoked.
ADM File No. 2008-18.

Suit: PayPal shouldn’t be your exclusive eBay pal

A class-action lawsuit is accusing eBay of violating the Sherman Anti-Trust Act, reports The Detroit News.

According to the suit, filed in U.S. District Court for the Eastern District of Michigan, the online auction giant’s practice of forcing all sellers to use PayPal exclusively “is the very reason [the Act] was passed,” said Detroit-based Peter W. Macuga II, who represents six eBay sellers.

The plaintiffs seek unspecified damages and the right for sellers to accept other forms of payment from buyers.

eBay sellers must pay a 3 percent transaction fee to PayPal, which eBay bought in 2002, in addition to eBay’s fees for listings and percentage of the final sale price.

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Educators file class action suit

Five members of the Michigan Education Association have filed a class-action suit, which “seeks to overturn a provision that requires school employees who don’t retire this summer to start paying an extra 3 percent of their compensation into a fund for retiree health care …” according to the Associated Press.

However, according to the story, the “suit doesn’t challenge a provision that gives slightly higher pension benefits to school employees who retire this summer.”

Local firm sues Detroit Police Department for abuse of inmates

Troy law firm Frank, Haron, Weiner & Navarro, and Chicago firm Loevy & Loevy have filed a class action lawsuit alleging that the Detroit Police Department systematically abused and mistreated arrestees. The suit was filed June 1, 2010 in the United States Federal Court for the Eastern District of Michigan. (Read the complaint here.)

The complaint in Jonathan Brown, et al v. City of Detroit alleges that thousands of people arrested since May 27, 2007, were detained for long periods of time, in excess of 48 hours, without access to a judge. They were denied food, water and sleep during their detentions, according to the complaint.

There are three classes of plaintiffs in the suit. Class 1 consists of the thousands of people who are alleged to have been detained by DPD overnight or for more than 16 hours in a 24-hour period during which they were denied basic human needs for rest and personal hygeine.

Class 2 are plaintiffs who were arrested and detained for more than 48 hours without a judicial determination of probable cause, and the third group is made up of people detained for more than 24 hours without receiving at least two meals.

Judge rules against B93 class action status

“Judge Suzanne Hoseth Kreeger denied class action status to a lawsuit against Clear Channel and B93 for the Birthday Bash flooding in the 8th Circuit Court Tuesday,” reports the Ionia Sentinel Standard.

“Attorney John Tallman had sought class action status for the case to determine liability for the vehicles left damaged and destroyed by the June flooding of the Ionia Free Fair grounds.

“Tallman said that Clear Channel and B93 had reason to believe that the fairgrounds were going to flood and that the radio station was negligent in allowing people to park there.

“However, Clear Channel and B93’s attorney Jon March argued the case for comparative negligence, noting that over 200 vehicles left the south parking lot after announcements concerning the flooding were made.”