In This Issue

Did You Know?

Class action lawyers in antitrust cases typically ask the presiding judge to award them as much as one-third of the recovery that they obtain for members of the class.

Increasingly, however, companies that have sustained large losses as a result of an antitrust violation choose to opt out of class actions and to hire their own counsel to pursue their claims.  Because of their relatively big claims, these opt-out plaintiffs can negotiate fee deals that motivate optimal efforts by their counsel while maximizing their share of recoveries by settlement or judgment.

Susman Godfrey sometimes serves as class counsel and at other times represents opt-outs.  In the Air Cargo antitrust litigation (see Air Cargo -- The Next (Price-Fixing) Big Thing), SG will team with an international law firm to investigate opt-out claims against air cargo carriers for fixing prices that shippers and freight-forwarders pay for air cargo services.

For information on the air cargo antitrust litigation, send an email to Air Cargo with your contact information. 

Hot Lunch

A lot of people think that lawsuits result from advertising on television.  In Dallas not long ago, a personal injury lawyer tried to attract clients by calling himself, on TV, the attorney who sends flowers. 

I don't recall soap opera commercials, though, for antitrust cases.  So where do they come from? 

A lot of them result from government action or threats -- subpoenas, raids, guilty pleas, and indictments.  Private lawyers capitalize on these developments by filing class action lawsuits almost as soon as the ink dries on the government's paperwork.  Then they cajole each other to get lead positions in the class actions.  The process often produces a line-up of co-lead counsel, each of whom has a constituency that he has promised to feed work to.  Some inefficiency inevitably results.

We strongly believe in the efficacy of class actions in general.  But we also advocate the right of claimants to pursue claims as opt-outs from class actions.  Opt-out cases often result in better recoveries for claimants because the non-class lawyers charge a lower contingent fee and may even pay expenses.

Arbitragation Redux

Last month I fussed about the high cost of parallel court proceedings that often attend disputes involving arbitration agreements.  The plaint struck a chord with many of you.  So let's look at how two federal courts of appeals have dealt with the phenomenon recently.

In B.L Harbert Int'l, LLC v. Hercules Steel Co.,  2006 WL 462368, at *8 (11th Cir. Feb. 28, 2006), the Eleventh Circuit pronounced itself "exasperated" at an arbitration-losing party that moved to set an arbitral award aside.  "The laudatory goals of the [federal Arbitration Act]," the court said, "will be achieved only to the extent that courts ensure arbitration is an alternative to litigation, not an additional layer in a protracted contest."  Id. at  *1.  "If we permit parties who lose in an arbitration to freely relitigate their cases in court, arbitration will do nothing to reduce congestion in the judicial system; dispute resolution will be slower instead of faster; and reaching a final decision will cost more rather than less."  Id.  Amen.

Although the loser filed its motion 80 years after passage of the Arbitration Act, the court declined to impose sanctions.  Fearing that such a step would catch arbitragationers unawares, the court instead served a "notice and warning" that it might  assess sanctions in the future.  Id. at 21.  Oh, well.  Better late than never.

The First Circuit did less to discourage arbitragation in Cytyc Corp. v. DEKA Products Ltd. Partnership,  2006 WL 475773 (1st Cir. Mar. 1, 2006).  Although noting the "extremely narrow" scope of judicial review and concluding that the loser in arbitration had shown no "legally cognizable" basis for vacating the award, the court nonetheless dutifully considered each of the loser's arguments -- that the arbitrators had misinterpreted the contract, had manifestly disregarded the law, and had refused to consider material evidence.  Id. at *1 & *5-*8.  The court did make fun of the arguments -- calling them "adscititious", "asseverational", "jejune", and "vecordious" -- but otherwise expressed no concern at the now-routine prolongation of arbitrations through relitigation in court.  Id. at *3, *5 & *8.

I don't mean to criticize the courts for putting up with weak challenges to arbitration proceedings.  They have blunt tools to work with.  No, I believe that we need to revamp the Arbitration Act to take courts out of the business of second-guessing arbitrators or revoke it altogether.  Maybe then we can slay the arbitragation monster.

Barry Barnett, Editor

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Techniques Wrap-Up

Speaking of mythical creatures (wait for it), the idea for this newsletter came from the writing of a chapter for the ABA-and-West treatise on Business and Commercial Litigation in Federal Courts (2d ed. 2005 Robert L. Haig, editor).  The chapter -- Techniques for Expediting and Streamlining Litigation -- seeks the metaphorical channel between resource-eating Scylla and progress-impeding Charybdis .  These monsters take many guises in business disputes.  And, like Odysseus and his men, you must row hard to avoid their dangers.  But safe passage awaits those who make the effort.

Which leads to some final suggestions:

• Resist answering disrespect in kind.  It may feel good, but it hurts your effectiveness.
• Focus on the (few) things that matter.  As U.S. Supreme Court Justice Jackson suggested, go for the jugular; leave the capillaries to lesser lawyers.
• Value your credibility with the judge above all else.  If the judge trusts you more than the other side, the close calls -- which usually decide who wins and who loses -- will most often go your way.
• Respect the judge's time.  The judge has many other cases and will appreciate those who don't waste this most precious resource.
• Concentrate on presenting solutions to problems.  A good judge wants to solve problems in a practical way, and you will gain credibility by suggesting a fair and sensible remedy.   

Copyright © 2005 Thomson * West.  All rights reserved.  Used with permission.

You can view the entire Chapter 55 from the ABA-and-West treatise on Business and Commercial Litigation in Federal Courts (2d ed. 2005 Robert L. Haig, editor) by visiting this page  and clicking on the Techniques for Expediting and Streamlining Litigation link.

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Air Cargo -- the Next Big (Price-Fixing) Thing

Neither mythical nor monstrous but nonetheless formidable, the U.S. Department of Justice and the European Union recently raided air cargo carriers here and abroad for the purpose of developing proof that the carriers fixed the prices that shippers and freight-forwarders paid for flying goods in the bellies of airplanes across the seas.  This $60 billion a year industry has taken to imposing on shippers and the freight-forwarders that serve them since 9/11 big fuel surcharges as well as fees for security and war risk insurance.  Apparently following up on guilty pleas to bid-rigging by several freight-forwarders, the authorities have concluded that international air cargo carriers may have colluded to inflict these surcharges and fees on their customers.

Potential defendants include American Airlines, Air Canada, Asiana Airlines, Cargolux Airlines, Polar Air Cargo, British Air Cargo, Korean Airlines, Japan Airlines, Singapore Airlines, Cathay Pacific Airlines, KLM, Lufthansa, Nippon Cargo Airlines, Scandinavian Airlines, and United Airlines.  Some of the carriers received subpoenas or less formal requests for information, and others got search warrants.

A number of shippers have already filed class action cases alleging price-fixing by the carriers.  That seems a bit premature but unsurprising.  If you would like to learn more or if have information relevant to these potential claims, please send an email to Air Cargo or call 214-754-1903.

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Copyright © The New Yorker.  Used with permission.

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