I started this series because I kept seeing errors about law in fiction. But bad journalism about law irritates me even more.
One of the unfortunate things about the way the digital world has changed journalism is that a lot of articles on legal issues are written by people who lack a complete understanding of what they are covering. It’s bad enough when this happens in your local weekly, where the reporter is probably just out of school and making only a little more than minimum wage.
It really shouldn’t happen in The New York Times.
In a recent article on the settlement of the big class action alleging the major tech companies had a private (and illegal) agreement not to hire each others’ employees, the Times reporter, while getting the facts right, left the reader with the impression that the case was being settled for too little and the lawyers were making too much money.
This does appear to be the opinion of one of the named plaintiffs, who is objecting to the settlement, but the story doesn’t balance his point of view with any explanation of why the settlement might be a good idea. Given the facts in this situation, there are definitely good arguments for the settlement, and they should have been mentioned.
Here’s what happened: Some tech workers sued, claiming that Apple, Google, Intel, and several other high tech companies had an illegal agreement not to “poach” each others’ employees – that is, hire them away. The plaintiffs said this kept their salaries lower. The case became a class action, with a class of some 60,000 people. The class alleged damages of about $3 billion.
A judge certified the class last fall, meaning that it could go to trial as a class action. That left the defendants, rich as they are, at risk of some very substantial damages. However, going to trial is always risky for plaintiffs.
So the parties reached a settlement for $324 million. The lawyers are due to get $75 million. The Times article said that the settlement, by comparison with the companies’ net worths, that is “chump change.”
Now the objector may be right. This settlement may be too low. It’s certainly an argument worth making. But the article didn’t discuss any reasons why the settlement was a good idea. Perhaps neither the reporter nor his editor know much about class actions.
It happens that I do. For eight years, I was the senior legal editor on a publication covering class actions. One of the things I learned was that there are some lawyers out there who will settle a case for their own benefit without taking into consideration the real needs of the class of people they are representing.
There have also been some situations in which defendants, knowing they were going to be sued, recruited some plaintiffs’ lawyers to bring a class action against them, settling the case before the suit was even filed.
I deplore this kind of behavior.
I also noticed that, after the recent recall of some GM cars for an ignition problem, all the major class action firms filed class actions. My first thought was, “Where were they ten years ago when this first cropped up?” There were a couple of lawyers who brought suits over these cars ten years ago, but they weren’t the big names. I suspect the big firms didn’t think there was going to be enough money in the cases, since the cars hadn’t been recalled then.
So I’m not uncritical of class action lawyers and I’m fully aware that a lot of lawyers decide whether or not to take cases based on how much money they think they can make from them.
But I also learned that successful class actions require many highly skilled attorneys doing a lot of hard work. They’re difficult to win – just getting the class certified can take years. And Congress and appellate courts have limited the scope of class actions in recent years.
Besides, sometimes the best thing a class action can do is get a policy changed. For example, in this case, it should get rid of the no-poaching agreements, making it possible for skilled people to play Apple off against Google. That’s a significant value.
I know the article says the lawyers declined to comment, but while trying to get a comment from all sides is what every responsible journalist does, that’s not the kind of balance I would like to see. I’m sure the plaintiffs’ lawyers would have said this deal is going to stop the bad practices and the defense lawyers would have said they were settling to avoid the expense of trial. They always say things like that and it rarely tells you anything except that the reporter called the lawyer.
But I bet there was some expert out there not involved in the case who would have defended the settlement.
Here are four factors that should have led the Times reporter to look for another opinion on the settlement:
- The lawyers representing the class have an excellent national reputation. That doesn’t mean they might not be settling the case too low, but it does indicate that they know how to evaluate a big case.
- Antitrust litigation – in this case, claims that companies conspired to limit the rights of their employees to seek other jobs – is complicated and difficult.
- Although this case apparently doesn’t raise any claims under employment law, it does involve employees, and those employees work in a number of different jobs. Suits over employee situations are often difficult to win. I note that the class certification ruling distinguished the U.S. Supreme Court’s decision in Dukes v. Wal-Mart, which tossed out class certification in a suit over pay issues at the retailer. That doesn’t mean a higher court might not find the workers didn’t have enough in common to be a class.
- And actual damages would be difficult to calculate. The court in its certification order agreed with the plaintiffs’ experts that classwide damages could be shown, but that is the kind of issue that could get challenged successfully on appeal.
By the way, if you read the class certification ruling – it’s 86 pages long – you will get some idea of just how much hard work the lawyers have done in this case.
Now I’m not saying this is a good settlement. I don’t know nearly enough about the case to evaluate that. The objector makes good points. $324 million is a lot of money, but as the story says, Apple has $150 billion and Google has $80 billion in reserves. No doubt they could pay a lot more without hurting their bottom lines. And the settlement is about 10 percent of the amount of damages sought in the original action.
I just think there are good arguments to be made in defense of the settlement and the reporter should have sought them out.
It’s very easy for reporters who don’t know a lot about law (and antitrust class actions are a very rarified area of law) to fall back on the oft-told tale that lawyers are more interested in their fees than in their clients’ well being. Everybody who ever heard a lawyer joke knows lawyers are like that.
It’s easy for fiction writers to fall back on that stereotype, too. But it shortchanges your readers.