(Reuters) - In the class action system, we rely on lead plaintiffs and their lawyers to act in the best interests of everyone else whose interests are at stake. It’s the whole point of class actions! The class mechanism streamlines the process to enable the vindication of claims by hundreds or thousands or even millions of people that might otherwise be too small to justify litigation.
For the system to work, all of those people are entitled to know if those who purport to be representing their interests – lead plaintiffs and class counsel – are fulfilling that responsibility. Federal judges overseeing class actions are supposed to protect the interests of absent class members. But in the end, it’s class members themselves who release claims when class actions settle. Their interests are at stake.
I’m making these basic and perhaps obvious points because class counsel in a Florida class action against Walmart are arguing, along with Walmart, that the public – including absent class members – should not have access to a document that raises questions about a proposed $9.5 million settlement in the case. In a joint brief filed Friday, Walmart lawyers from Greenberg Traurig and class counsel from Morgan & Morgan asked U.S. District Judge Jose Martinez of Miami to seal an objector’s declaration that, in turn, reproduces a troubling declaration from the class action’s lead plaintiff. Judge Martinez struck the lead plaintiff’s declaration from the public case docket in September.
In Friday’s brief, Walmart and Morgan & Morgan argued that the objector, a disbarred California lawyer named Steven Helfand, is violating Judge Martinez’s previous sealing order. In a Nov. 9 brief, Helfand responded that millions of class members should not be denied access to a document that calls into doubt the legitimacy of the settlement – and the adequacy of the lead plaintiff and class counsel to protect the interests of the class.
This is all easier to understand if you know the specifics of the case, which I first wrote about last month. The lead plaintiff in the case is a Florida man, Vassilios Kukorinis, who noticed a few years ago that Walmart appeared to be overcharging him for certain items whose price was based on their weight. Kukorinis traveled around to Walmart stores in Florida to document these alleged overcharges. He brought his evidence to Morgan & Morgan, which, in February 2019, filed a class action complaint against Walmart with Kukorinis as the prospective lead plaintiff.
Walmart denied the allegations but last summer agreed to settle the case for a minimum of $4.5 million and as much as $9.5 million, depending on the volume of class claims. The settlement called for Morgan & Morgan to be paid as much as $2.375 million in attorneys’ fees. Class counsel moved for preliminary approval on Aug. 2. Judge Martinez granted the motion two weeks later.
Then Kukorinis sent a stunning letter to the judge. The lead plaintiff’s 25-page, Sept. 22 letter asserted that Morgan & Morgan had reached the settlement with Walmart without Kukorinis’ knowledge or consent. Kukorinis said he hadn’t heard from his lawyers in months and only found out that his case had settled because he happened to Google the case caption. “I don’t want to participate to this fiasco/cover up and betrayal to all class action members, orchestrated without my knowledge,” Kukorinis told Judge Martinez.
As I told you in my previous report on Kukorinis’ letter, John Yanchunis of Morgan & Morgan told me by email that his client was “was always informed of the progress and status” of the case. Kukorinis, he said, traveled to a November 2019 Walmart mediation alongside class counsel. In response to my specific question about whether Morgan & Morgan sought Kukorinis’ consent before moving for preliminary approval of the settlement, Yanchunis said by email, “Yes, of course we did.”
Kukorinis’ letter was docketed on Sept. 25. The judge ordered it struck from the docket three days later, scheduling a hearing on the matter for early October. Before the scheduled hearing, Morgan & Morgan submitted a new declaration from Kukorinis, who said he had misunderstood the scope of releases in the proposed settlement but had received an explanation from Yanchunis that satisfied his concerns. Kukorinis’ new declaration did not address his initial assertion that Morgan & Morgan did not obtain his consent before asking Judge Martinez to approve the settlement.
Kukorinis’ original letter to the judge remained publicly available, despite being struck from the docket. I was able to download the letter from a docket monitoring service in late October. My Oct. 27 story about Kukorinis’ dispute with his counsel included a link to the lead plaintiff’s letter.
The Walmart objector, Helfand, has been trying to get Judge Martinez to unseal the Kukorinis letter since it was first struck. Helfand asked last month for permission to attend the scheduled conference about the letter, Walmart and Morgan & Morgan opposed his participation. In a joint brief filed on Oct. 5, Walmart and Morgan & Morgan argued that regardless of Helfand’s participation in any conference before Judge Martinez, the objector should be barred from accessing Kukorinis’ letter because it “inadvertently divulged privileged attorney-client communications and attorney work product, as well as privileged mediation communications protected by Florida, federal and local rules.”
With no ruling from Judge Martinez on the public disclosure of the letter, Helfand short-circuited the process on Friday. In a filing styled as a “declaration in support of mootness,” Helfand argued that Kukorinis’ letter is publicly available, whatever the docket says, so it doesn’t make sense to continue to “cloak the document with secrecy.” To underscore that point, Helfand attached the letter to his filing – and it’s still publicly accessible on the docket of the class action.
Walmart and Morgan & Morgan, as I mentioned, immediately moved to seal Helfand’s declaration. By attaching the Kukorinis letter, they said, Helfand’s filing, “plainly reveals information protected by the attorney-client privilege and work product doctrine, as well as confidential and privileged mediation communications.” The joint brief contended that disclosure of the Kukorinis letter by outside websites does not constitute a waiver of the “sacred” attorney-client privilege.
Helfand’s Nov. 9 response is his best-yet explanation for why class members deserve to see the letter. Kukorinis’ letter, he said, asserted that Morgan & Morgan did not obtain his consent to settle the case filed in the name of the lead plaintiff. Morgan & Morgan said that it did. Those accounts, Helfand said, cannot be reconciled – and the disparity means that either the lead plaintiff or class counsel is not adequately representing the class.
Helfand also said that Morgan & Morgan’s Yanchunis breached privilege by selectively disclosing his communications with Kukorinis, including in Yanchunis’ response to some of my email questions. Because class counsel had “ventured into the public debate to make partisan commentary favorable to Morgan & Morgan,” Helfand said, “the complete file must be fully divulged and this court should not participate in secrecy efforts or rancor instigated by the settling parties.”
A Walmart spokesman said the company had no comment beyond its filing Friday. Yanchunis did not respond to my detailed email query, which, among other things, sought his comment on Helfand’s argument that the irreconcilability of accounts provided by him and his client is evidence that one or the other of them is not protecting the class.
Helfand is an imperfect messenger, as Walmart and Morgan & Morgan have told Judge Martinez. He was disbarred in February after defaulting in a disbarment case in which the California State Bar alleged that Helfand committed numerous violations of the California business code and rules of professional conduct in his representation of objectors to a class action against J.C. Penney.
But Helfand told me by email that his history doesn’t diminish the merits of his argument. “The messenger is, in fact, ultimately, irrelevant,” he said. “The only thing that matters, at the final approval stage, is whether the settlement, as proposed, is fair, adequate and reasonable and whether the protective order requirements of Rule 23 are met. The settling parties should welcome and invite criticism, from any class member, no matter their background or, alleged, flaws.”
As of midday Monday, Helfand’s declaration, and with its attached version of the otherwise sealed Kukorinis letter, remains in the public docket.
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