*1 729 of a newspaper article printout ternet ex rel. PLANTERS STATE UNION to that appendix of his and cited brief BANK, al., Relators, N.A. et argument for different
article in his two argues newspa- The points. state that the v. the record per article is matter outside Larry KENDRICK, L. Honorable for in this improper consideration Judge of St. Court Circuit (rule governing See Rule appeal. 30.04 County, Missouri, Respondent. Louis ap- in criminal contents record proper No. 85473. SC peal). Missouri, Supreme Court of ap- “The information in the contained En Banc. neither in the trial pendix introduced proceedings part nor made a of the appel- 24, Aug. 2004. by stipulation of court late record or order to Modify Motion Denied correcting procedures for prescribed under 28, Sept. appeal.” on supplementing transcripts (Mo. Lee, 25, n. 3 State v. S.W.2d 1977) (vacated grounds
banc on other Missouri, v.
Lee U.S. S.Ct. (1979)). This de-
58 L.Ed.2d Court
clines to consider the and the refer- article Strong’s it in claims of evaluating
ences to Tokar, v.
error. See State 918 S.W.2d (Mo. 1996); Burrington, banc State (matters (Mo.1963)
371 S.W.2d 320-21 on transcript
not included or record ap-
appeal improper on consideration
peal).
This motion is The refer- sustained.
ences to the article the article itself Strong’s ordered stricken from brief appendix.
IV. Conclusion judgment of af- the trial court is
firmed.
All concur. *3 Clithero, Rasp,
John C. A. Michael Geof- Gerber, frey Plegge, G. Brian R. Carrie A. Wrisberg, Robyn Fox, Susman, G. Frank Newman, Dillon, B. D. Kenneth Andrew Butsch, Green, M. Martin David T. Allen Press, Louis, MO, P. St. for Relators. Greiman, Conlisk, Gerald P. Daniel V. Louis, MO, T. McLaughlin, Patrick St. Respondent. PRICE, JR., Judge.
WILLIAM RAY prohibition Relators seek writ or- dering Respondent de-certify the class Relators underlying allege matter. adequately repre- that class cannot counsel sent because members accepted class counsel funds from lawsuit defendants to finance the “implicit parties, other with an un- derstanding” would that class counsel Additionally, sue them. two of the class representatives are or have ties these potential defendants.
A preliminary prohibition writ made granted, which is now absolute as modified. Background
I. out, paying generally handling them business affairs Trust. I. Factual allegations signed Purchasers of the bonds a sub- This lawsuit allegations by involves indi- broker, scription agreement with their viduals purchased who a series of bonds gave their broker check for the face issued the Arch Leasing Corporation bonds, money amount and then the (“the Trust”). Trust orga- Trust was agent. was sent to an Throughout, escrow nized principals of St. Louis Leas- periodic there were closings at which *4 (“SLLC”), ing Corporation with the assis- the Trust opinions was to deliver certain Jerry Liss, tance of the of principal officers, owner from its Robert Chlebowski and Company, J.E. Liss & an Lynne Frownfelter, counsel, investment and its Doster (“Underwrit- banking and firm brokerage Doster, P.C., to R. Phi- Underwriter. er”), (“Underwriter’s up to issue to million lipp, worth of Philipp $50 of Krantz & counsel”), money bonds to raise for opera- required SLLC’s give was also to certain opinions tions. closing, at each an including opin- ion Prospectus as to whether the for the proceeds Bond to pay were be used to any had misleading bonds false state- part for a of the purchase price of new in ments it. After closing, each the escrow computers that were then to be leased to agent money Arch, sent the to and UPB large companies for varying periods of was to directed issue The the bonds. time. The part purchase other of the $14,011,000 Trust issued bonds fifteen price paid towas for bor- using funds 19,1995, increments May between and No- pay- rowed from various banks. The lease 30,1995. vember repay ments were to be used to the funds that, allege during Plaintiffs Arch from the banks and some of the interest up allowéd to million SLLC use to of $3.6 due on actually the bonds. SLLC oversaw proceeds the purposes bond for other than purchase computers the and mar- purchase computers. of Plaintiffs keted them to the lessees. claim of money by that use SLLC was The bondholders were to receive an event of default under the indenture of payments interest years, for three after trust, any making issuance additional principal which the to paid was in full. improper bonds until the situation was cor- money principal payoff for the towas rected. Plaintiffs allege also that Under- come from the “residual value” of com- writer’s counsel called the UPB officer puters. Stevens, Inc., Marshall & towas handling him the account and informed provide appraisal an or estimate of the that the financial statements that showed computers residual value of the as each being improperly monies were used lease was entered into. SLLC, though suit was not filed Nonetheless, him. the Trust issued (now Magna Bank, Bank Planters Union $8,995,000 July worth of bonds after “UPB”) was indenture trustee. UPB’s duties, default, prior to were to act as the allege Plaintiffs further that Doster & paying agent. Doster, P.C., Delaware Bank give opinions continued to statutory Leasing trustee. Arch that Corpora- the financial statements did (“Arch”), tion an affiliate of that SLLC tain misleading fraudulent or informa- shared its offices and personnel, spite was the tion in its knowledge the diver- day-to-day with managing respon- Finally, trustee sion plaintiffs allege of funds. UPB, sibility collecting proceeds, knowledge the bond diversion Counsel”) (“Class investigate the funds, possi- in the participate continued bonds, behalf bility filing a class action on issuance and sale of additional exploration of trust. The initial in breach indenture the bondholders. of suit was funded possibility into the the last half of financial SLLC’s $20,000 retainer remainder worsened, January on condition Action. Un- paid brokers had filed for bankruptcy. SLLC agreed loan derwriter and the brokers paid first to have been off on bonds were $100,000, $60,000 of which an additional 19, 1998, May but the Trust had insuffi- Liss, to retain Class Counsel came from cient funds to do so. Consequently, action.2 Underwriter pursue compel Trust filed suit UPB distrib- provided assistance ute funds to all on available bondholders together the facts about piecing Counsel (the Action). rata basis UPB pro in the trans- alleged wrongdoing bond sold all the collateral and continued un- action, “implicit consequently, make to the after payments bondholders *5 Counsel derstanding” arose that Class the The 1998 Action conclud- default. was any Un- against not claims pursue would in discharged ed and the court UPB the or the brokers on behalf of derwriter from further duties as indenture trustee. firm had point, At that the bondholders. 2. The initiation the class action law- class, no no clients to form the and bond- of
suit agree- about the holders were consulted ment.3 Bax, August of David William Glaser, Myers, and for William brokers resolved, funding of was After the issue (hereinafter certain bro- bondholders “the began to Class Counsel assist kers”), initially Gerald P. to hired Greiman identifying might bondholders who in to represent objecting them in the sale serving representa- interested in as class collateral in the 1998 Action. firm’s letter engagement tives. The first official $20,000 paid fees out of a retainer were concerning matter not sent the instant was provided exclusively by the bro- was July until 1999. That letter was sent kers.1 in- representatives, several Dueommun, Deuver, 18, 1998, cluding
On the and Norma Susan December brokers Earle, Dorothy Baptist Liss his firm East Maine met with Greiman to hire time, proceeds, of the bond 1. At that was a member of aware the diversion Greiman Osterhold, LLP, Dankenbring likely they Greiman & they were to be sued believed merged Spencer & which Fane Britt represent lawyer the class hired LLP, January Browne effective (other) potential with the un- defendants derstanding that the underwriter brokers ways two at the facts and 2. There are look regardless poten- sued of their would not be the motives of the underwriters and brokers. culpability. tial way to consider that these charitable investors, persons in- sold bonds various Septem- a letter in 3.Class Counsel had sent families, cluding members of their own Glaser, one of the 1998 to Donald R. ber recipients of the bond were troubled when the represented Class Counsel bondholders proceeds proceeds to unautho- diverted Action, po- offering analysis any whole, purposes. rized To make their clients claims, but there is no tential class action they lawyer to who hired a sue defendants at- accepted that he the offer evidence they purchasers believed cheated the pursue a tempted Counsel to to retain Class bonds. suit at that time. class action that, interpretation is The less charitable and brokers became when underwriter Church, Hodes, Penny Rona Hogfeldt and persons unidentified who contributed to Anthony D’Agostino of Commercial Mort- “the for fund” would be reimbursed their gage and Finance Company, first, John Sehul- contributions before recovery theis, Gary and Jeane Yamine. would be distributed to the class. had
Hodes a Series 6 NASD license that engagement After first letter was Underwriter, was held com- received sent, telephone Counsel had conver- bonds, missions from the sale of the was Gary Hodes, sations with Yamine and dur- employed by Underwriter as a registered ing which “in Liss discussed some representative during peri- and broker 6, 1999, disparaging context.” On October lawsuit, od at part issue and is engagement Class Counsel sent a second group agreed brokers Class Counsel individuals, letter same which stat- to sue. ed: stated, engagement
The initial letter As in the engagement stated letter [of part: relevant 6, 1999], July not in a position we At the representation, pursue any outset our consider or bondholders, certain selling as well as certain various brokers involved bonds, bonds, in selling brokers involved including but not limited J.E. pay contributed a fund to certain & Company, Liss are as- expenses our fees and as set forth sisting provided with this case and have $120,000. above. That aggregates fund it. funding some *6 to a letter also alluded class action funding parties While the third not will Underwriter, filed in Wisconsin clients, be our to expect ongo- we obtain but not the did indicate that class action ing from in pursuing assistance them than concerned different transaction the your claims. Accordingly, it present bond at in the matter. sale issue necessary at privileged times to share Mortgage Compa- Commercial & Finance otherwise confidential information with Ducommun, Duever, ny, Earle, East them, and your ap- we assume we have Church, Hodes, Baptist Schultheis, Maine proval Similarly, light to do so. of the agreed initially the Yamines serve ongoing anticipate, assistance we as well as plaintiffs represen- the named and class contributed, funding they we tatives. position will be in not consider or S. history Procedural lawsuit pursue any potential against any claims any entity such parties or with which This lawsuit filed as a class action was any of them is affiliated. assume We dropped in November 1999. The Yamines your approval meets with as well. sought out of the suit when Relators Subsequently, take their deposition. The letter advised class members petition second class action independent that were free to obtain amended was filed, which investigate counsel to Donald R. Glaser added against Un- brokers, plaintiff derwriter as a named representa- but noted and class and/or that expenses purchased the “fees and associated tive. Glaser had his bonds son, Glaser, retaining with individual their from his who is one of bondholders William separate quite initially own counsel could be sub- who hired . poten- Finally, stantial.” the letter asked Counsel and is bro- part group plaintiffs approve agreed tial arrangement kers that Class Counsel sue. (“Plaintiffs”) whereby, any recovery, made a plaintiffs the event of the These then
735 16, Analysis certification on June III. motion for class objected to certifica- Relators 2000. general 1. Class actions tion, conflict of counsel had a alleging class with Un- relationship to his interest due action governs class Rule 52.08 Prior to and and the brokers. derwriter designed action is A class proceedings. some during process, the class certification economy by permitting judicial promote third defendants also filed named questions common litigation against Underwrit- party defendant claims in a individuals fact of numerous law and Financial, and Red Oak one Under- er Yamasaki, single proceeding. Califano affiliates, filed but no claims were writer’s 2545, 2557, 701, 61 682, S.Ct. 442 99 U.S. After dis- the brokers.4 extensive (1979); Massey-Fer Fox v. L.Ed.2d evidentiary covery hearings, and three 653, guson, certifying an order trial court entered (E.D.Mich.1995).5 action Because a class 12, time, May At Re- class on of absent class rights determines the “relevant cir- spondent directed that 52.08(a)(4) members, as a requires, Rule un- regarding cumstances” Class Counsel’s certification, that the prerequisite to class derstanding with Underwriter representative parties trial court find “fully in the notice brokers be disclosed” the in fairly adequately protect will class, “any and that class member Clark, 106 at of the class. S.W.3d terests strategic deci- may disagree who applies both to the prerequisite 486. This representatives and sion made the class and to class representatives named opt out of plaintiffs’ counsel elect Prod., Inc. v. See Amchem counsel. subsequently filed class.” Relators Windsor, n. 521 U.S. in this petition prohibition for a writ of (1997); L.Ed.2d 689 Cul S.Ct. Court. Milwaukee, City 277 F.3d ver v. Cir.2002). evaluating the ade II. Standard Review courts determine quacy representation, *7 repre named ac counsel or the
“Determination of whether an whether class interest conflicts of proceed tion a class action under sentatives have should as the interests adversely affect ultimately Rule 52.08 rests within will v. Elms City Springs class. Excelsior sound discretion of the trial court.” State of (Mo. Clark, 53, 59-60 Family Corp., v. Redev. 18 S.W.3d ex rel. Am. Mut. Ins. Co. 2003) Corned, (Mo. v. 619 F.2d 483, (citing App.2000); Davis 106 486 banc S.W.3d 588, Cir.1980); Co., Stavrides v. Ralph Family v. Am. Mut. Ins. 835 593-94 Co., 522, Mellon Nat’l Bank & Trust (Mo.App.1992)). 523 Howev S.W.2d (W.D.Pa.1973). 634, require “This er, if 636 the trial court abuses its discretion because the class, may particularly important certifying “prohibition ap a be ment is absentee class mem unnecessary, rights incon due of prevent process propriate they may implicated are bound venient, See bers be expensive litigation.” and Calvin, a judgment a final suit where 57 State ex rel. Linthicum v. (Mo. 2001). represented by the 855, inadequately were S.W.3d 857 banc Emmons, S.W.3d Koehr v. 55 the third Rule 52.08. 4. Underwriter's motion dismiss 10, May party (Mo.App.2001); State ex rel. claims was overruled 7 864 n. Chadwick, (Mo. 378 Byrd S.W.2d Rule 52.08 Federal 5. Because Missouri’s App.1997). parallel, interpretations federal of Rule 23 interpreting may be considered in Rule Co., named plaintiff.” Key v. 782 that the lawyer provide Gillette will able be (1st Cir.1986) (internal F.2d citations adequate representation to one or more of omitted). clients,” the conflict can not be cured
by consultation and consent. Geoffrey C. Hazard, Hodes, 2. The basic law Jr. interest & W. William The Law of conflicts of (3d Lawyering Supp.2004) sec. 10.8 ed. of An attorney duty has a of loyalty to (citing Lawyer- Restatement the Law A his client. conflict of “any interest is (2000)). “[wjhere ing is, sec. That ... substantial risk that a lawyer’s representa loyal diligent provid- service cannot be tion of a client materially would be client, ed to each affected then consent adversely affected lawyer’s because sought.” should Id. As was stated countervailing interests or duties.” Geof Snyder, in In re “Some conflicts interest frey Hazard, C. Hodes, Jr. & William W. are to compromise considered the client’s (3d Lawyering The Law sec. 10.7 ed. per interests strictly prohibit- se Supp.2004). Consequently, attorneys have (Mo. 2000). ed.” 35 S.W.3d banc duty representation a to avoid of clients representation may when that be affected specifically Rule 4-1.8 addresses the due to attorney’s relationship to other conflict interest that arise because, parties. This is lawyer “when a when party paying attorney a third is laboring under this kind conflict of to represent the client: interest, the conflict in effect forecloses (0 lawyer A accept shall not com- alternatives that would otherwise be avail pensation for representing client able to the (quot client.” Id. at sec. 11.8 from one other than the client unless: ing Model Rules of Profl Conduct Rule 1.7(a)(2) (2002)). cmt. 8 (1) the client after consents consul- tation; Missouri, concept gov (2) is no there interference with the 4-1.7, erned Rule which states: lawyer’s independence professional (b) lawyer A represent shall not judgment client-lawyer or with the re- representation client if the of that client lationship; and materially limited the law- yer’s responsibilities to another client or (3) relating information to repre- person, or by lawyer’s to third own sentation of a is protected client *8 interests, unless: required by Rule 1.6. (1) lawyer reasonably believes the 4-1.7, provides As with Rule rule representation adversely will not af- be potential to a conflicts of interest due third fected; and party be funding litigation may cured (2) each client consents after consul- under certain If the circumstances. law- tation. yer’s independent exercise his her or professional judgment and the client-law- added). (emphasis When a conflict of in- yer are and the relationship preserved, terest materially arises that limit the per client’s confidences are maintained as client, lawyer’s representation of the 1.6, attorney may Rule then the seek the provides rule that the conflict none- cured, circumstances, informed consent each client waive theless be in certain 4-1.7, However, by the conflict. as with Rule informed consent of each client. However, not reasonably likely any when “it is consent should not even sought be cannot be met.6 satisfy this condition because Counsel
these conditions
acknowledges that
letter
engagement
3. Class Counsel’s conflict
“not
in position
be
class counsel would
The
of interest suffered
conflict
against
claims
pursue”
or
consider
ac
Counsel
clear. Class Counsel
defen-
parties
potential
who are
funding
money
cepted a substantial amount
in the action.
dants
to initiate
potential
from
defendants
only
other de
against
Similarly,
class action lawsuit
Rule 4-1.8
attor-
prohibits
was and is not
fendants. Class Counsel
from
ney
accepting compensation
from
independent professional
able to exercise
third
unless “there
no interfer-
parties
judgment on
of the class
consid
behalf
lawyer’s independence
ence with the
ering
a claim should
asserted
whether
with the client-
professional judgment or
the brokers.
against Underwriter and/or
Again,
lawyer relationship.”
Class Coun-
clearly
inability
reflects
sel’s letter
underlying
complex.
facts are
judg-
independent professional
exercise
sixteen
petition
amended
contains
second
of claims
regarding
ment
the assertion
against six
counts
defendants. Several
the brokers
against Underwriter
third
and/or
party
the defendants have filed
and ex-
who have
fees
stated,
contributed
alleges
Simply
claims.
the lawsuit
penses of the lawsuit.
against
existing
defendants
cerning the
monies and
misuse
bond
maintains that the named
Class Counsel
Plaintiffs
continued bond sales thereafter.
and the members of
representatives
allege
specifically
that Underwriter’s coun-
clients,
counsel’s
not Under-
misuse,
knowledge
alleged
sel had
However,
writer or the brokers.
Under-
misuse,
other defendants of the
informed
have to be
writer and the brokers do not
that bonds continued to be sold.
but
to have a
clients in order for Class Counsel
Class Counsel realized that a
es-
It is sufficient to
conflict
interest.
might
claim
be asserted
Under-
a conflict of interest
that Class
tablish
in-
writer
brokers but did not
and/or
independence of professional
Counsel’s
vestigate
any
claim
consider
such
relationship
as counsel’s
judgment as well
Underwriter and/or
potential clients were affected
with his
ongoing
“in
an-
light
assistance we
funding
“implicit
and the
understand-
ticipate,
funding
well as the
ing” that resulted.
arrangement
This
was
contributed.”
prior
being
made
to Class Counsel
re-
that the financial
significant
It is
to note
by any
of the class.
tained
member
“un-
arrangements
corresponding
and the
single
were reached before
derstanding”
arrangement
comply
with
This
does
representative of the class was identified.
pro-
Rule 4-1.7
4-1.7
or Rule 4-1.8. Rule
not made after con-
arrangement
This
was
“may
representation
hibits
of a client that
“client,” but
made
sultation
lawyer’s
re-
materially
limited
*9
with the Under-
solely
Class Counsel
sponsibilities to another client or to third
precon-
and the brokers and was
interests, writer
lawyer’s
the
own
person or
attorney-client
(1)
subsequent
any
dition to
reasonably
lawyer
the
believes
unless:
the
class counsel and
adversely
relationship between
representation
will not be
”
impossible
representatives.
It
for
class
is
affected....
states,
4-1.6(a)
consents after
lawyer
of a
unless the client
6.
"A
shall not
client
Rule
relating
representation
consultation....”
reveal information
is particularly
This
in two
Toyota
Litigation,
troublesome
Mid-Atlantic
Antitrust
First,
(D.C.Md.1982).
respects.
Class Counsel acknowl-
edges that he
not investigate
did
or consid-
acknowledged
It should be
that
some
er the
that might
claims
have
type
problem
extent this
is inherent in
been asserted
Underwriter and/or
all class action lawsuits. There is often a
Thus,
the brokers.
is
for
impossible
it
disparity
wide
between the financial inter-
Class Counsel to ascertain or
adequate-
ests
the individual clients and the finan-
ly consult with his subsequently acquired
cial interests of
A
class counsel.
class-
clients whether the amount of the financial member
may
client’s individual claim
be
$5,000.
worth
or
lawyer,
and other
who
appropriate
assistance was
has
$50
many
advanced
thousands of
dollars
liti-
for
filing
sideration
claims
Un-
however,
gation expenses,
may hope for
derwriter
brokers in the class
and/or
compensation
In
in the millions.7
such
lawsuit.
situations,
lawyer’s
may
interests
own
Second,
timing
arrangement
of the
greatly
any
exceed those of
claimant. 7A
absolutely
makes
clear that
it is Class
Kane,
Wright, Miller &
Federal Practice
brokers,
Counsel and Underwriter and the
(Civil
ed.1986).
sec. 1769.1
2nd
That is
not the class representatives,
that are con- why
gives
responsibility
Rule 52.08
overall
They,
trolling
lawsuit in fact.
not the
to the trial
judge
protect the members
representatives,
have determined the
of the class. “A trial court has a continu-
dispute
manner
which the
being
is
liti-
ing duty in a class action case to scrutinize
gated:
pays
who
the class
ex-
fees and
attorney
the class
or
see
he
she is
penses
who
and who is not sued.
adequately protecting
the interests
This shift in the control of the lawsuit is
Conte,
Newberg
class.” 4 Herbert
& Alba
situation,
inappropriate
any
but espe-
Newberg on Class Actions sec. 13:20
ed.2002).8
cially
ain
class action context. See
re
(includes
‘‘[S]ome courts
noted that
class at
it
whether
is to
so maintained
torney’s agreement
expenses
adequate representation
to advance the
determination
re-
litigation may present
52.08(a)(4))
prob
quired by
of the
an ethical
evaluating
lem that should be considered in
adequacy
representation
[A]ny
(d)
of the
...
Orders in Conduct Actions. In the
suggests
may
conduct that
that class counsel
ap-
conduct of actions to
Rule
which this
engaging
have been
plies,
unethical behavior
appropriate
the court
make
or-
determining
adequacy
relevant in
ders:
representation_
au
[S]ome courts have
discovery by
opposing party
(2)
thorized
requiring,
protection
for the
of the
determine whether class counsel's behavior
members of the class or otherwise
action,
Wright,
satisfies all ethical standards.”
Mil
fair conduct of
that notice be
r Kate,
le &
Federal
given
Practice and Procedure:
the court
in such manner as
also,
Civil 2nd sec. 1769.1. See
Eisen v. Car
direct to
all
members of
some or
action,
Jacquelin,
lisle &
417 U.S.
94 S.Ct.
step
proposed
in the
or of the
extent
(1974).
simple. In class any seri concerning and consent sultation autonomy the client primarily not is difficult, if not extremely ous conflict lawsuit, right to control the and the client’s Missouri, in or In to obtain. impossible, aas class. the interests of the clients but valid, a consent to be for informed der designed are to vindicate These lawsuits his clear lawyer prove by proof “must they are rights persons; class of client to the interest was disclosed adverse particular motivations rarely by driven In re understood.” perfectly and was of an client. See id. at sec. 3:40. individual (Mo. Weier, 554, 558 banc 994 S.W.2d 1999). conflict, each In order waive the cannot cure Consultation consent U. “know give would class member Class Counsel’s conflict voluntary” consent. intelligent, and ing, judge counsel and the trial (Mo. 1, 3 banc Schaeffer, re S.W.2d record, shown, on this to have been are 1992). require This Class Counsel would acutely posed the ethical issues aware the conflict of interest fully disclose They litigation. po this believed that the of the class. Giv member each individual could a full tential conflicts be resolved poten approximately en that there are It is in the notice to the class. disclosure class, simply tial members of this likely that this decision was influenced speak is unrealistic impracticable. “[I]t opportunity a desire to allow num large of individual consultation present pursue unrealistic class members and bers of might named defendants that otherwise truly give could imagine that each client have been lost. Disclosure and notice Hazard, Geoffrey C. informed consent.” cure, however, fol an insufficient for the Hodes, Law Law- Jr. & W. William lowing reasons. (3d see Supp.2004); yering sec. 11.12 ed. Tele-Communications, First, do not allow for this our rules Palumbo (uniden (D.D.C.1994) type of conflict to be cured consultation 4-1.7(b)(1) only poten and consent. Rule allows class members cannot waive tified interest); lawyer In re Mid-Atl. and consent if “the tial for consultation conflict 485, 491 Toyota Litig., Antitrust F.R.D. reasonably representation believes the will (D.Md.1982) (full and consent 4- disclosure adversely affected.” Rule in a extremely to obtain 1.8(f)(2) difficult and would be allows for consultation interest conflict of class action should a is no interference with consent “there itself); Produc Chateau de Ville present lawyer’s independence professional Tams-Witmark, tions, F.Supp. Inc. v. Here, the structured judgment.” attorney (when (S.D.N.Y.1979) a conflict of 223, 227 could not consider the situation where he counsel, con involving de- arises interest bringing suit certain the class is attorney of all of the members fronted the sent fendants because given directs. compromise shall be to all members as the court class in such manner *11 required, practical which is not a possibili- duty The trial protect court’s the ty). remedy The “class notice” contem- absent class members plated by and the trial Class Counsel court The court has an enhanced inadequate duty.9 to fulfill this duty in proceedings class action to safe Third, contemplated Class Counsel’s guard the interests of the class members remedy separate of a possible against suit participate who did not the formation by Underwriter other and/or the “It class. must be ... remembered attorneys inadequate and antithetical to primarily that what the court is concerned the concept of class litigation. action It is with is not the here interests the named uncertain if such actually suit would plaintiffs attorneys and their but the inter were, If it require filed. it would of the ests members of the Kro class.” very duplicative expenses same fees and Clinton, nenberg v. Hotel Governor all parties that class designed actions are (S.D.N.Y.1967). F.Supp. 625-26 addition, In avoid. the inevitable third “constantly The court must therefore scru defendants, party among already tinize attorney the class see that he is action, preclude initiated this a such adequately protecting the interests strategy from working. class.” Acceptance Corp. North Am. Sec. Finally, present scheme has an un- Amall, Cases v. F.2d appearance avoidable of impropriety that Cir.1979). cannot A potential be sanctioned. defen- plaintiffs’ assessing ability dant fronting expenses fees and to direct a fiduciary to carry counsel out his duties class action lawsuit other de- think absent class we members fendants, representative a before class has court should use its broad administra- identified, even been a smacks of defense tive, well as adjudicative power, as not strategy, independent prosecution guardian rights the absentees plaintiff interests class. It is represent- to see that the absentees are being obvious the action is controlled by ed ethically counsel who is as well as by Underwriter, brokers, and Class Counsel, intellectually competent represent by the class. See In re Mid- Toyota Atl. Litig., Antitrust 98 F.R.D. at them. 490. To proceed allow the lawsuit to Stavrides v. Nat’l Bank & Trust Mellon posture would invite a situation where Co., (W.D.Pa.1973) (in- F.R.D. culpability of Underwriter and the bro- omitted). quotations ternal The court also
kers, any, if would be borne the other duty has to the defendants in paying defendants too much proceeding litiga- action ensure that the receiving Plaintiffs too little. comply process tion will due and the brokers Underwriter binding achieve a final resolution liability. They acting no also dispute. Family See Am. Mut. Ins. Co. v. faith, subjective good attempting to see (Mo. Clark, 106 S.W.3d 495-96 banc that all of the bondholders are made 2003) (Wolff, J., concurring). But, whole. they cannot be allowed 6. Class certification avoid responsibility, any, their own Often, when or the named merely funding causing class counsel action lawsuit to be filed have a of interest representatives others. conflict engagement 9. Class Counsel's letters reveal sent. "assuming" inadequacy obvious
741 in and the defendants protect the class engaged prohibited have in conduct will or in- action, preserve the and that will rules, to courts have either refused our procedures. tegrity efficiency class certify de-certified the class.10 or have remedy, a possible decertification is While by a conduct allegedly If unethical case court determined that the trial or is shown plaintiff class counsel named litigated on appropriately could be most or members prejudicial to class be determination was not class basis. This results in irreconcilable otherwise fact, claims of abuse of discretion. interest, many courts have ruled flicts of similarly situated 650 investors that otherwise meets that class of these and administrators bonds sellers of Rule 23 should not be requirements types of claims that class precisely for ethical consider- denied class status just- proceedings designed were resolve Instead, cor- ations. courts used Nonetheless, an ly efficiently. appro- measures such as substitution rective remedy effective must be priate and plaintiff or and reme- counsel the named as a adopted proceed for this matter to avoid dial notice to class members class action. reaching preju- the merits and delay
dicing plaintiffs rights. remedies 7. Possible Conte, & Alba New Newberg 5 Herbert range berg The trial court Class Actions sec. 15:1 has broad on omitted).11 ed.2002) (internal quotations remedy in which to craft a discretion Co., Co., (1st 5, Key F.R.D. 7 Cir. v. Nat'l Bank & Trust 60 v. Gillette 782 F.2d Mellon 634, (W.D.Pa.1973) (class 1986) (class per action status decertified due unethical 636 counsel); by class E. Schermer be counsel’s unethical formance Trust, Irvin should denied where Equities Corp., prejudicial v. 116 or to the inter Kline Sun has been conduct 332, (D.Minn.1987) (certification class, creating a F.R.D. 338 con ests of the results correctly con attorney denied due to class counsel’s interest between flict of Glickman, 210, *1, interest); Goodyear class); flict v. Tire and WL Taub v. 1970 Kuenz Co., 474, (E.D.Mo. (S.D.N.Y.1970) (West) Rubber 104 F.R.D. 477 R. 847 14 Fed. Serv.2d 1985) (if representatives' (class interests will an due class counsels’ status denied interests, class); tagonistic prereq adequately represent the class's inability to 3481, 52.08(a) Franchard, *5, Rule class uisite of is not met and Fed. v. 1970 WL Korn denied); 92,845 (S.D.N.Y.1970) (CCH) certification Guild Rep. will Dirs. L. P Sec. Am., Bros., Inc., (class denied, v. 2 R. part, attorney Inc. Warner Fed. due status (certification (C.D.C.1985) misconduct). Serv.3d de 1429 representa inadequacy nied due to of class Tele-Communications, tives); Toyota re Li 11. See also Palumbo v. In Mid-Atlantic Antitrust (class 129, (D.D.C.1994) 485, (D.Md.1982) (court tig., 133 157 F.R.D. 93 F.R.D. 491 plain disqualified pre-certification, ar counsel denied certification due unethical fee days pri- given sixty counsel rangement tiffs to substitute between class counsel and named certification); ruling Hawkins plaintiffs); In or to court on re Commonwealth Oil/Tesoro Inns, Inc., 1750, Holiday WL *14 tig., F.Supp. 265 v. 1979 Petroleum Sec. Li 484 (counsel (W.D.Tenn.1979) (W.D.Tex.1979)(because ordered dis class ceded con had interest, counsel, but class qualified due to conflicts counsel trol to class class dismissed); interest, case was not decertified nor was have conflicts of class certification Bluhdom, Andes, denied); 78 F.R.D. Lowenschuss v. C.G. Charal v. (S.D.N.Y.1978), appeal in Low (E.D.Pa.1979) (where on representatives class affm'd Bluhdom, (2nd denied); interest, F.2d 18 v. C.G. enschuss had conflicts of certification Kenosha, Cir.1980) (class served also as F.Supp. counsel who Conway City for, (E.D.Wis.1975) (certification disqualified and or representative was denied alia, conflicts); all of class dered to notice to members Stavrides send inter class counsels’ First, Disqualification allege of class counsel Relators that Donald R. such can protect integri inadequate circumstances is an representa- Glaser *13 ty litigation process personal without frus tive due to relationship his trating plaintiffs’ opportunity seek of one the brokers. Relators note that justice. “Only egregious purchased son, the most Glaser his miscon bonds from his Glaser, on part plaintiffs’ lawyer duct of could William who of is one arguably justify ever of sta initially denial class who hired Class Counsel and is tus.” Halverson v. part group Convenient Food of brokers that Class Mart, Inc., (7th 927, F.2d 932 agreed 458 Cir. not to Counsel sue. 1972). “The disposition better should be Second, allege Relators that Rona
to substitute counsel to de unduly avoid inadequate Hodes is an class representa- laying reaching prejudicing merits and relationship tive due to her with Under- the plaintiffs’ rights.” In re Nissan Motor writer. had a 6 li- Hodes Series NASD 166141, Corp. Litig., Antitrust 1975 WL Underwriter, cense that held by was was *3, (West) (S.D.Fla. 22 Fed. R. Serv.2d 63 employed by registered Underwriter as a 1975). representative during peri- and broker lawsuit, od at issue in the complete disqualifica- part
Remedies short of might group tion that agreed also be ex- brokers Greiman appropriate.12 For allege it ample, might be determined sue. Relators further that Hodes that exist- ing bought the counsel bonds while she was a broker represent continue Co., at J.E. Liss & and that she received parties certain individual or certain sub- from litigation commissions the sale those bonds. might classes or there addition, they In appropriate allege role for she served on the existing counsel committee However, bank- relative to creditors for the SLLC the entire class. at least, ruptcy. very new counsel must be re- evaluate, and, investigate, ap- tained allege Relators that two are inade- these propriate, prosecute class claims representatives quate of the class because Underwriter the brokers.13 and/or personal people their ties to the Class agreed Counsel not to make in- sue their representatives potential 8. Class antagonistic terests interests conflicts Comed, 588, class. Davis v. 619 F.2d (6th Cir.1980) (class In addition potential representa- Counsel’s 593-94 interest, alleged conflicts of Relators tives must be free of interest which that at least two of the named class repre- influencing holds the their litigation sentatives also have conflicts of interest duct of the in a manner inconsis- class). inadequate them repre- could make tent with the interests of appropriate- sentatives the class. trial court should examine the seeking representative; pre-approve any a partic- substitute once 12. The Court does not certified, representative class new then remedy. ular grant disqualify the court would motion counsel); Indus., class Hawk v. & Inc. Bausch are free different coun "[P]laintiffs to seek Lomb, Inc., (S.D.N.Y. thereby dispel any possibility sel and of a 1973) (where co-counsel was found to have Am. conflict of interest.” Susman Lincoln interest, cer conflict was nonetheless 1977). Corp., 561 Cir. F.2d had tified because co-lead counsel no such adequately repre conflict and could therefore class). sent steeped judges trial serving as Missouri’s of these individuals ness They justice discretion. Mishkin, tradition See Tedesco v. representatives. ar- rulings certification (S.D.N.Y.1988) not make class do F.Supp. 1337-39 case, ex- bitrarily. judge the trial (one representative named class was re- careful discretion. great deal of moved, continue); hibited but class was allowed principal opinion acknowledges, Shelter, As the Runion v. U.S. F.R.D. “[ajfter ex- (D.S.C.1983) (in certified the class context, trial court pre-certification evidentiary discovery and three tensive inadequate representative court removed *14 certification). ar- hearings.” trial court oral The heard to pursue but allowed class lengthy sub- gument considered briefs and IV. attorneys reputable from mitted fine only sought decertification Defendants trial court concluded that firms. The law explored al- parties not below. appropri- certified with the class would be remedies that are less harsh. ternative for protections the class members. ate done at the trial court. This can best be that full disclosure The trial court decided Only remedy if another can appropriate the class members and in the notice to not be found must the class decertified. opt out of the class were suffi- freedom to problems discussed cient remedies made absolute as modified. writ is A as to principal opinion. decision a remedy appropriate what is is difficult WOLFF, STITH, LAURA DENVIR left within the appropriately one-and one LIMBAUGH, JJ., and concur. trial court. The notice to discretion J., TEITELMAN, yet or separate dissents is to be drafted class members filed; WHITE, C.J., reviewing opinion yet concurs a issued. This Court is TEITELMAN, opinion plaintiffs may J. win or lose full record. The of factors that depending variety on a TEITELMAN, Judge, RICHARD B. or or not be related to class counsel dissenting. is from but that result far representatives, early stage. at this clear I respectfully dissent. “The discretion its trial court abuses a prohibition. Relators seek writ of logic of clearly against the order is writ, discretionary a “Prohibition is circumstances, arbitrary unreason- no right
there is have the writ issued. able, of carefid consid- indicates lack only lie prevent Prohibition will ex rel. Ford Motor v. eration.” State discretion, judicial irrepa to avoid abuse of (Mo. Messina, banc S.W.3d party, prevent rable harm to exer 2002). far from such a case. This is extra-jurisdictional power.” cise of State why these compelling There no reason Calvin, rel Linthicum v. 57 S.W.3d ex appeal on direct cannot be raised issues (Mo. 2001) (citations 855, 856-57 banc great clarity. deal more omitted). Interlocutory review of trial prohibition “should court error writ of quash I would writ. extraordinary circum occur Chassaing ex v. Mum
stances.” State rel (Mo. 1994).
mert, 573, 577 887 S.W.2d banc law,
“If one the error is reviewable prohibition is not appeal,
on a writ of
appropriate.” Id.