For Paul Weiss Client, Time Runs Out to Opt Out

For Paul Weiss Client, Time Runs Out to Opt Out Yanik Chauvin

SAN FRANCISCO — It’s many a lawyer’s worst nightmare—when one missed deadline washes an entire case down the drain.

That’s what happened this week to a team of Washington, D.C. lawyers with Paul, Weiss, Rifkind, Wharton & Garrison. They’ve spent more than a year litigating individual price fixing claims on behalf of client Sharp Electronics Corp., only to inadvertently miss the deadline to opt out of a class settlement in the case.

U.S. District Judge Samuel Conti in the Northern District of California denied their motion requesting more time Wednesday, and now the attorneys are stuck sharing in a $46.5 million class settlement and likely raking in far less money than they had anticipated. Sharp, represented by Paul Weiss partners Kenneth Gallo, Joseph Simons and Craig Benson, sued Samsung SDI Co. and Hitachi Ltd. in March of last year, accusing the companies of fixing the prices of cathode ray tubes used in TV and computer monitor displays. The firm teamed up with San Francisco firm Taylor & Company Law Offices.

Class claims against Samsung and Hitachi on behalf of direct purchaser plaintiffs then settled for $33 million and $13.5 million, respectively. The deadline to opt out of the settlement was June 12, but Sharp Electronics said it failed to forward notice of the deadline to its counsel. Furthermore, the settlement administrator’s website didn’t update its “dates to remember” page with the opt out deadline, Paul Weiss attorneys wrote in their motion to extend the deadline.

The company’s lawyers argued it was evident Sharp never intended to be part of the settlement.”It would not be reasonable for Sharp to be included within the settlement class due to Sharp’s harmless oversight,” the Paul Weiss team wrote. “Rather, including Sharp in the settlement class would harm the actual class members as their share of the settlements would be unexpectedly reduced.”

But Conti disagreed.

“Sharp has offered no explanation as to why it missed the applicable opt-out deadline aside from mentioning that notice was ‘inadvertently not … sent to outside counsel for the Sharp plaintiffs,’” he wrote. “Inadvertence and miscommunication are insufficient excuses.”

Conti was more lenient with Dell Inc., another plaintiff that missed the opt-out deadline. Dell’s attorneys with Alston & Bird in Georgia and Kerr & Wagstaffe in San Francisco told Conti they regularly checked the settlement administrator’s website for the opt-out deadline, but it was never posted. As proof, they provided the court with records of their Internet browsing history.

“The court finds this explanation shows an appreciable level of diligence and rises above the vague assertions of miscommunication and inadvertence other courts have rejected,” Conti wrote, granting Dell’s request for an extension.

“We’re very pleased on behalf of Dell,” James Wagstaffe of Kerr & Wagstaffe said. “Everyone has always known Dell was opting out.”

Conti’s ruling was a partial win for Hitachi and its lawyers at Kirkland & Ellis. They argued that retroactively extending the time limit would “undermine deadlines and certainty in this complex case.”

Samsung, represented by Sheppard, Mullin, Richter & Hampton, did not file an opposition.

Lawyers from Saveri & Saveri, who represent the class of direct purchaser plaintiffs in the suit, sided with Dell and Sharp Electronics. The class settlement was not negotiated with those corporations in mind, and “their enormous claims will materially dilute the recoveries of other class members,” the Saveri & Saveri lawyers wrote. Purchases by Dell and Sharp Electronics exceed $1.6 billion, according to the plaintiffs’ brief.

Lawyers from Saveri & Saveri, as well as Paul Weiss, did not return calls or emails seeking comment.

The final fairness hearing for the Samsung and Hitachi settlements is scheduled for Friday in San Francisco.

Contact the reporter at mkendall@alm.com.

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