Friday, May 20, 2005

Highlights From Today's Reply Brief (Part 3)

Regarding our argument that plaintiffs still refuse to show that the settlement is reasonable:

The plaintiffs still do not present any information to show that the $18 million settlement falls within the range of reasonableness. They simply do not respond to the authorities in this Circuit which say that the Court must consider the settlement against the maximum possible recovery. So that the Court can appreciate that this is not a theoretical issue, the accompanying declaration shows that one of the association plaintiffs, the American Society of Journalists and Authors ("ASJA"), published an estimate by another association plaintiff, the National Writers Union ("NWU"), that the damages would be "$2.5 billion to $600 billion."... This was in mid-2001, well after both plaintiffs had commenced their class action.

The plaintiffs provide a justification, but it is not one that can substitute for the requirement established by this Circuit's authority. Kenneth Feinberg, the mediator, says in essence that the $18 million was all the defendants would offer in settlement.... Mr. Feinberg is an attorney in private practice. The mediation part of his practice depends on plaintiffs and defendants both being willing to engage his services. Thus, he furthers his own economic interests in rising to enthusiastically support the settlement. But his interest may actually be more direct, and more problematic, than that. The Settlement Agreement indicates he has received, or will receive, a "mediator's success fee."... That sounds like an incentive payment, based on settlement success. If that is correct, it seriously calls into question his attempt to support the settlement with his opinions about value or other issues.

No one is yet discussing one of the most unusual features of this case. While Mr. Feinberg says the defendants were not willing to pay more, he fails to note that they were never under the usual pressure to settle. Litigation forces defendants to settle because a case proceeds. It costs them money to fight the case, and the case draws ever closer to a reckoning in which their obligation will be determined by a judge and jury, not by their own willingness. The old saying of settlement on the courthouse steps reflects the reality that every experienced litigation attorney knows. This was never a real litigation. While complaints were filed in 2000, and a consolidated complaint was filed in 2001, the defendants have never filed any response. They have not answered. They have not denied infringement, which everyone knows is essentially a conceded issue in this case. There have been no motions to illuminate the issues or to inform this Court of the merits. There has been no formal discovery. There has been nothing motivating the defendants to take the case seriously. If for some reason the case does not settle, it will be years before this complex case involving many defendants is ready for a trial.

The full brief can be viewed at Comments can be posted here or emailed to me at


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