U.S. District Judge Lorna Schofield of Manhattan issued an unusual order this week in a giant antitrust class action over alleged manipulation of the foreign exchange market. The judge instructed Quinn Emanuel Urquhart & Sullivan and Bernstein Liebhard to produce memos they sent to institutional investors that are deciding whether to opt out of a $2 billion settlement with several of the bank defendants in the forex case, as well as the firms’ follow-up email exchanges with a few of those institutions.
Judge Schofield’s order came in response to a motion to compel from class counsel at Scott & Scott and Hausfeld. The class lawyers accused Quinn Emanuel and Bernstein of spreading false information about the settlement in order to bait big institutions to bail on the class action and hire Quinn and Bernstein to bring individual opt-out cases.
As Quinn partner Daniel Brockett told me in a phone interview Thursday, class members have a right to independent advice about whether to participate in or opt out of a class settlement and that Quinn did nothing wrong in sharing its analysis of the class settlement with large, sophisticated institutions.
Quinn Emanuel, according to its opposition to the motion to compel, sent its original memo to eight such institutions, six of which are already Quinn clients. Stanley Bernstein of Bernstein Liebhard additionally distributed the Quinn memo to 15 of his clients. None of the Bernstein clients, according to Brockett, have hired Quinn.
One of them, however, apparently shared the Quinn memo with Scott & Scott, which led to a fight over whether to compel disclosure of the document and its progeny. Ostensibly, class counsel’s motive is to assure that class members are receiving only accurate information about the proposed settlement. Quinn Emanuel’s original memo, according to the motion to compel, was sprinkled with inaccuracies, including the incorrect assertion that the opt-out deadline is in June. (It’s been indefinitely postponed.) Overall, class counsel told Judge Schofield, the memo’s untrue implication was that they had rushed into settlements without adequate leverage against the banks.
Quinn, of course, said it didn’t mean to disparage class counsel but only to highlight the strength of the case against forex defendants. Either way, according to the firm, it would have been within its rights to question the strategy of lawyers for the class. “Sophisticated entities weighing the opt-out decision are entitled to hear candid and confidential views from independent counsel,” Quinn’s filing said. “There is no need for class counsel to intervene to ‘protect’ such entities from hearing any such criticism.” (Quinn Emanuel’s filing also said the firm corrected its mistake about the opt-out deadline in subsequent communications with prospective opt-outs and was committed to providing only accurate information to class members.)
Judge Schofield will be able to figure out whether Quinn was falsely bashing class counsel when she sees the documents in camera. But it seems to me that the real story of the fight over the opt-outs memo is how viciously firms are fighting to represent financial services clients in Europe.
Yes, Europe. The spat over Quinn’s memos to prospective opt-out clients took place in the U.S. forex class action – but if you believe Quinn Emanuel, the subtext is that Scott & Scott, in particular, is hoping to play a big role in forex litigation for clients with European claims. (As you may recall, the U.K. recently changed its laws to make it possible for plaintiffs to band together in antitrust actions like the forex case.) Quinn claims Scott & Scott may actually be on a fishing expedition for contact information on Quinn clients abroad.
By its own admission, Quinn Emanuel is encouraging multinational institutions with big forex damages to seek a “global solution” instead of risking the release of claims in the U.S. class action. It is also scouting for European clients, whose statute of limitations isn’t up for a while. Among its competitors, the firm said in its brief in the U.S. case, is Scott & Scott. “Class counsel (particularly Scott+Scott) has engaged in a sweeping media campaign to market themselves and solicit individual plaintiffs in Europe,” Quinn said in its opposition brief. “The court should not discount the notion that class counsel’s demand for years’ worth of attorney-client communications and work product has less to do about protecting of class members, and more to do with their effort to compete with Quinn Emanuel for business.”
Scott & Scott didn’t deny the competition for European clients in its response to Quinn’s filing, but said the European angle is beside the point. “This dispute is, and always has been, about the misrepresentations made to U.S. class members about the U.S. litigation and settlements,” the brief said.
For now, Judge Schofield is allowing Quinn and Bernstein Liebhard to redact identifying information about client contacts from the communications they turn over to Scott & Scott and Hausfeld. She has called for briefing on whether the firms must disclose followup emails to class counsel and on what the consequences, if any, Quinn and Bernstein should face for contacting prospective opt-outs.
Christopher Burke of Scott & Scott declined a request to comment.