By Dwight Burdette (Own work) [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons
About three and a half years after a federal appeals panel led by former Judge Richard Posner smashed a $90 million settlement agreement the judges described as “scandalous,” a new set of lawyers have introduced a new, smaller deal once again intended to a nearly 12-year old class action lawsuit against window and door maker Pella over allegedly defective windows.
On Feb. 8, attorneys representing 10 named plaintiffs and potentially more than 700,000 others who purchased Pella windows since 1991, filed a motion in Chicago federal court, asking U.S. District Judge Sharon Johnson Coleman to sign off on a nearly $35 million deal, which would earmark $25.75 million to Pella customers who file eligible claims and another $9 million to the plaintiffs’ attorneys whose legal teams have worked on the case for the last three years.
“Without question, the proposed settlement agreement is a significant accomplishment,” the plaintiffs’ attorneys wrote in their memorandum supporting their motion for approval, noting the case’s litigation tortured history and the potential for yet more cost and delay from continued court fights and legal proceedings.
Attorneys representing the plaintiffs in the case, and requesting the settlement approval, included lawyers from the Clifford Law Offices, of Chicago; the Lang Law Office, of suburban Crystal Lake; Morgan & Morgan Complex Litigation Group, of Tampa, Fla.; the Rhine Law Firm, of Wilmington, N.C.; and the Moor Law Office, of Chicago.
The litigation against Pella first landed in federal court in 2006, when plaintiffs filed suit over the window manufacturer’s ProLine Series of windows. They claimed the windows allowed water to infiltrate the house, damaging wood frames around the window and eventually, the structure of the house itself.
That lawsuit was initially brought by Leonard Saltzman, a dentist whose son-in-law, Paul Weiss, was the founder and senior partner of Complex Litigation Group, of suburban Hinsdale. Weiss served as lead counsel for the plaintiffs on the case. At the time, Saltzman’s daughter and Weiss’ wife, Jamie E. Weiss, also served as a partner at Weiss’ firm.
Other plaintiffs were later added to the action.
In 2013, U.S. District Judge James Zagel approved a settlement agreement, ostensibly worth $90 million overall, and worth $11 million to the attorneys then working on the case.
However, other plaintiffs objected to the settlement, saying a long-running contract conflict between Weiss and his former partner, Eric Freed, and ongoing disciplinary proceedings launched against him by state regulators, had rendered him unable to serve as effective counsel for the class and his decision to use his father-in-law as the lead plaintiff in the case simply allowed him to run up the amount of the fees he and his wife would earn, without securing adequate promises of payment for the plaintiffs and the class members Weiss was representing in the settlement talks.
On appeal, judges with the U.S. Seventh Circuit Court of Appeals sided with the objectors, saying Zagel simply ignored the objections and purportedly obvious improprieties by the plaintiffs’ lawyers.
Posner, who authored the Seventh Circuit’s 2014 opinion in the case, also blasted the settlement’s “asymmetry” in awarding plaintiffs’ lawyers $11 million in fees up front, while securing no guarantee class members would receive any real benefit from the settlement.
“The settlement should have been disapproved on multiple grounds,” Posner wrote in the 2014 opinion.
“Only a tiny number of class members would have known about the family relationship between the lead class representative and the lead class counsel – a relationship that created a grave conflict of interest; for the larger the fee award to class counsel, the better off Saltzman’s daughter and son-in-law would be financially – and (which sharped the conflict of interest) by a lot.”
The appeals judges threw out the settlement and slammed shut the door on any further involvement in the case by Weiss, his firm or his family members.
The Illinois Supreme Court later disbarred Weiss in 2015.
When the Pella case was sent back to Chicago district court for further proceedings, the court appointed the Clifford and Lang firms to serve as new lead counsel for the plaintiffs, and essentially compelled all parties to resume litigating the case from scratch, according to the Feb. 8 settlement filings.
The case had been scheduled to head to trial in the fall of 2017, but that was forestalled by settlement talks, which the plaintiffs’ lawyers said resulted in the settlement request they presented to the court Feb. 8.
Under the terms of the new settlement, Pella would pay nearly $26 million into a settlement fund, to pay eligible claims from class members, which could include as many as 743,000 eligible claimants, according to the Feb. 8 motion. Should all class members submit eligible claims, it would amount to about $35 per class member. By some estimates, such as a study completed by the law firm of Mayer Brown, and cited in a 2015 discussion on class action settlements published by Duke University School of Law, in such claims-based class action settlements, fewer than 10 percent of eligible claimants actually submit claims.
Should 10 percent of the estimated eligible claimants submit claims, they could receive about $350 each from the fund.
The motion notes $23.75 million of the $25.75 million claims fund is “non-reversionary,” meaning no amount of that $23 million payment can be refunded to Pella, should fewer people submit claims than expected.
According to the Feb. 8 motion, plaintiffs’ lawyers would notify potential class claimants by direct mail; advertising in Good Housekeeping, People and Reader’s Digest magazines; and online through advertising and the establishment of a settlement claims website.
The plaintiffs’ lawyers said the new notification process remedied problems from the previous settlement deal, which the appeals judges had pilloried for including an overly complex claims form and submission process.
Plaintiffs’ lawyers in the Pella case would receive $9 million in fees, or about a quarter of the total settlement, according to the Feb. 8 motion.
“The case’s lengthy docket report speaks for itself,” the plaintiffs wrote in their motion. “Simply put, this has been a heavyweight fight, which took the plaintiffs’ new legal team nearly three years to prosecute.”
Pella is represented in the action by attorneys with the firm of Faegre Baker Daniels, of Chicago and Minneapolis.