iThe broad right of any class action objector to appeal a district court’s final judgment approving a settlement has given rise to what are referred to as professional objectors―attorneys who file specious objections for the sole purpose of using appellate delay to hold a class action settlement hostage in order to extort self-interested payments. Unlike legitimate objectors, who help police the class action settlement process, professional objectors engage in what courts and commentators have characterized as “objector blackmail.” One tool that can be used against such serial objectors on appeal is the motion for summary affirmance, which asks the appellate court to affirm the final approval of the settlement quickly, without the delay that normally accompanies full appellate briefing and argument.
Proceedings following a recent settlement of three class actions against Clearwire, which was approved by the United States District Court for the Western District of Washington, demonstrate the effectiveness of the summary affirmance procedure. The Clearwire settlement resolved three cases filed as class actions alleging that Clearwire had misrepresented the speed of its Internet service and/or wrongfully charged early termination fees (“ETFs”). In the face of steep legal hurdles that could have precluded any recovery whatsoever and after months of arm’s-length negotiations under the supervision of an experienced mediator, class counsel negotiated a settlement providing significant monetary relief and important non-monetary prospective relief in the form of enhanced disclosures about Clearwire’s network management policies and required changes to Clearwire’s ETF practices.
Out of approximately 2.7 million class members, only eight filed objections. One of those objections was filed by an attorney named Christopher Bandas on behalf of two class members, Gordon B. Morgan and Jeremy De La Garza. The “form” nature of their objections—which appeared to be a cut-and-paste from previous court filings—strongly suggested that Bandas and his clients were merely engaged in a wrongful attempt to leverage delay into unwarranted paydays. Recognizing that class counsel had “demonstrated legitimate concerns regarding whether the objections made by Morgan and De La Garza were serious and whether their attorney is a so-called ‘professional objector,’” the district court granted class counsel’s request to depose Morgan and De La Garza prior to considering their objections. See Dennings v. Clearwire Corp., 928 F. Supp. 2d 1270, 1271 (W.D. Wash. 2013). After considering those depositions, the district court concluded that “Mr. Morgan had no personal objection to the settlement, neither [Morgan nor De La Garza] had read the settlement agreement or their own objections to it, and both have worked with the same attorney on other class action cases.” Id. at 1271.
This was hardly the first time that attorney Bandas had filed questionable objections to a class settlement. As one court explained, “Bandas routinely represents objectors purporting to challenge class action settlements, and does not do so to effectuate changes to settlements, but does so for his own personal financial gain; he has been excoriated by Courts for this conduct. In re Cathode Ray Tube (CRT) Antitrust Litig., 281 F.R.D. 531, 533(N.D. Cal. 2012). In the Clearwire litigation, however, class counsel was able to promptly address the objections filed by Bandas by (1) obtaining summary affirmance from the Ninth Circuit without the delay and expense of full appellate briefing and (2) securing an order requiring Bandas to file an appeal bond, which he repeatedly ignored, ultimately leading the district court to impose sanctions barring Bandas from practicing in the U.S. District Court for the Western District of Washington. Class counsel’s dealings with Bandas in the Clearwire case should prove instructive for other attorneys unwilling to make extortionist payments to these judicial system pariahs.
Following the depositions of the two Bandas clients, the district court granted final approval of the Clearwire settlement, concluding that it was fair, reasonable, and adequate, and overruling all objections. Once the claims filing period closed, the district court also granted class counsel’s motion for attorneys’ fees and expenses. See Dennings v. Clearwire Corp., No. C10-1859JLR, 2013 WL 1858797 (W.D. Wash. May 3, 2013). Bandas, on behalf of his objectors, promptly appealed both orders. Because the settlement would not become effective until appellate review had concluded—meaning that during the pendency of any appeals, none of the more than 80,000 class members who filed claims would receive any relief—the very threat of an appeal, regardless of its merits, placed Bandas and his clients in a powerful position to demand a “nuisance payment.” Class counsel thus aggressively moved forward on two separate fronts.
First, rather than engaging in costly and time-consuming appellate briefing, class counsel moved the Ninth Circuit for summary affirmance of the district court’s orders. Ninth Circuit Rule 3-6allows an appeal to be summarily disposed of “any time prior to the completion of briefing” when “it is manifest that the questions on which the decision in the appeal depends are so insubstantial as not to justify further proceedings. . . .” Citing to the objectors’ deposition testimony, Class counsel argued that summary affirmance was not only warranted by operation of law, but necessary to prevent Bandas and his clients from being in a position to hold up the settlement or extort unearned money. The Ninth Circuit agreed, granting summary affirmance on the ground that “the questions raised in this appeal are so insubstantial as not to require further argument.” Dennings v. Clearwire Corp., No. 13–35038 (9th Cir. Apr. 22, 2013).
In the meantime, class counsel moved the district court for an appeal bond under Rule 7 of the Federal Rules of Appellate Procedure, which was also granted. Bandas, however, ignored this order, failing to post an appeal bond even after petitioning for a rehearing of the Ninth Circuit’s first summary affirmance order of the settlement. Class counsel thus moved to hold the objectors in contempt, at which point Bandas voluntarily dismissed his first appeal only to file a second notice of appeal hours later, this time of the district court’s fee order. In addition to seeking summary affirmance of this order, class counsel again moved for an appeal bond for this second appeal, which the district court granted with a warning that if the objectors did not post this bond or withdraw their appeal, they would be subject to sanctions. See Dennings v. Clearwire Corp., No. C10-1859JLR, 2013 WL 3870801, *1 (W.D. Wash. July 26, 2013).
Bandas nevertheless continued to ignore the appeal bond order, instead filing “emergency” motions to stay with the district court and the Ninth Circuit. The district court thus sua sponte ordered the objectors’ attorneys “to appear in court and show cause why they should not be sanctioned” for failing to post the appeal bond. Although Bandas posted the bond a few days later, the district court proceeded with the hearing, providing notice to Bandas and his clients that they stood “accused of bad faith conduct, not merely unreasonable conduct.” Dennings v. Clearwire Corp., No. C10-1859JLR, 2013 WL 3892818, *1 (W.D. Wash. July 30, 2013). At the hearing, the district court admonished Bandas for “game playing.” Finding clear and convincing evidence that Bandas had disobeyed the bond order, the district court then took the extraordinary step of barring Bandas from practicing in the Western District of Washington as sanctions for what the court described as “vexatious” and “deplorable” conduct. Thereafter, the Ninth Circuit again granted summary affirmance of the district court’s fee order, finally and fully resolving the case. Dennings v. Clearwire Corp., No. 13–35491 (9th Cir. Sept. 9, 2013).
In a matter of months, class counsel was thus able to effectively dispose of the objections raised by Bandas and his clients without expending significant resources or incurring substantial delay. Perhaps most importantly, class counsel’s dealings should serve as deterrence against future professional objectors given the Ninth Circuit precedent created for obtaining summary affirmance of a class action settlement and fee order, as well as the case law developed at the district court level supporting the ordering of appeal bonds and sanctions against serial objectors.
