SAN FRANCISCO (CN) - A federal judge on Tuesday considered the fairness of the proposed attorneys' fees award in a settlement of an antitrust case involving TV tubes against a group of multinational electronics firms.
The lawsuit's plaintiffs - which include Dell and Sharp Electronics - accused LG, Philips, Toshiba, Hitachi and their subsidiaries of forming a cartel to inflate the prices of cathode ray tubes used in televisions and monitors from 1995 to 2007.
U.S. District Judge Jon Tigar awarded $38 million in attorneys' fees to the lawyers for the 36 firms who represented the tubes' direct purchasers in January.
Tuesday's hearing concerned the fees to be awarded to the attorneys who represented a class of indirect purchasers.
At the beginning of the hearing, Tigar expressed concern that the proposed settlement would release claims of class members in certain states, including Massachusetts and New Hampshire.
"What is the best purported case you can cite for the proposition that a court should deem fair and adequate a settlement that releases all the claims of a class member without compensation for that class member?" Tigar said. "I do not believe that there is a case that fits the description that I just gave, but I would be happy to be corrected."
Tigar also acknowledged that there was a possibility that some of the checks mailed to the class claimants would go uncashed, which he said could be a problem even though the proposed settlement is a "claims made" settlement.
Matthew Duncan, who argued for the plaintiffs, said that the release of certain plaintiffs' claims was not an issue of consideration but "a question of allocation."
He added, "The general rule is at the allocation stage, counsel has to do what's fair and reasonable and rational."
But Tigar pointed out that "the value is perhaps highest to the defendants in this case," adding, "I think a relatively straightforward application of economics in the case is that the release of these claims had value to the defendants."
Attorneys then argued for several objectors to the proposed settlement.
Theresa Moore, arguing for four objectors, asked Tigar to reject the proposed settlement and "send it back to the negotiating table" because "the court has the duty to protect the unnamed class members."
Jan Westfall, who argued for objector Donnie Clifton, addressed the issue of potentially uncashed checks, citing research that she said supported the conclusion that an average of between two and seven percent of checks go uncashed in consumer settlements.
"We would like you to reject the settlement because there was a lack of adequate representation early on in the process," Westfall told Tigar. "It's not an insignificant issue, and there's a lot of money."
Attorneys did not disclose the proposed settlement fund amount, but Tigar used the amount of $400 million to hypothesize according to Westfall's cited research.
"If only two percent of the checks went uncashed, that's $8 million to play with," Tigar said. "Shouldn't we be thinking about that now?"
Scott St. John, who argued for objector Douglas St. John, suggested that the proposed attorneys' fees award was improperly calculated and said that the class's counsel tried to "hide the ball" by lumping firm associates with the lawyers who worked on the case.
He told Tigar the fee should be cut by 15 percent.
Tigar seemed to take the argument favorably, calling St. John's argument "a pretty effective point."
The judge did not make any tentative rulings on the attorneys' fees motion.
Duncan is with Fine Black in Philadelphia.
Moore is with Alioto in San Francisco, Westfall's office is in Menifee, California, and St. John practices in Long Beach, Mississippi.
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