Joe Cotchett, Cotchett, Pitre & McCarthy principal
Joe Cotchett, Cotchett, Pitre & McCarthy principal (Jason Doiy / The Recorder)

SAN FRANCISCO — The controversial pact reached between Hewlett-Packard Co. and Cotchett, Pitre & McCarthy in the HP-Autonomy litigation this summer could spell trouble for a smaller Cotchett-HP settlement that has been in the works for more than three years.

A Washington, D.C., group is attempting to disqualify Cotchett Pitre as plaintiffs counsel in a consumer class action targeting HP inkjet printers in the U.S. District Court for the Northern District of California. The group alleges that Joe Cotchett and his firm, unbeknownst to the court or the class, represented the printer customers while simultaneously negotiating to work for HP in another deal worth at least $18 million in attorney fees.

“It just seemed especially egregious that all along they’ve been disregarding their fiduciary duties to the class,” said Theodore Frank with the Center for Class Action Fairness. “The whole concept is just kind of jaw-dropping.”

Cotchett Pitre principal Justin Berger, head of the printer case, said Frank is wrong, there is no conflict.

“It’s really Mr. Frank who’s got the conflict of interest here,” Berger said, “because he seems to be more interested in doing away with class actions than representing the real interests of consumers and class members.”

A final settlement in the printer case is pending before U.S. District Judge Jeremy Fogel of the Northern District of California. If approved, it would grant Cotchett Pitre lawyers $1.5 million in attorney fees and almost $600,000 in costs. Class members who claim they needlessly replaced ink cartridges because of deceptive low-ink indicators would receive vouchers of between $2 and $6 toward HP purchases.

But in a motion filed Friday to disqualify Cotchett Pitre and decertify the class, Frank accused the firm of colluding with HP.

Cotchett Pitre, along with Robbins Geller Rudman & Dowd, represents HP shareholders in derivative litigation filed in the Northern District of California over the company’s botched acquisition of British software firm Autonomy Inc. The two firms reached a novel and controversial settlement in that case at the end of June; they are proposing to drop the claims and join forces with HP’s attorneys to go after former Autonomy executives. If that deal is approved, plaintiffs attorneys will see a fixed retainer of $18 million and will be eligible for an extra $30 million in contingency fees.

The promise of a huge return in the Autonomy case caused both Cotchett Pitre and HP to roll over, Frank argued, and now none of the work done on that settlement can be trusted. For example, HP attorneys didn’t fight Cotchett Pitre’s request for $2.1 million in fees and costs, he said. They didn’t file papers objecting to the sum; their only mention of it was a one-sentence suggestion that the court could consider a smaller number.

“We now know why HP put up only token resistance to fees: HP was in negotiations with class counsel to resolve larger litigation, and did not want to offend them,” Frank wrote.

This isn’t the first time Frank has attacked the HP printer settlement. The trial court first approved the deal in 2011, but two years later Frank succeeded in reversing the settlement at the U.S. Court of Appeals for the Ninth Circuit. The higher court ruled the calculation of attorney fees was not consistent with federal law because it did not base them on the redemption value of the coupons awarded to HP customers. Cotchett Pitre lawyers returned to Judge Fogel’s courtroom in May to argue once again on behalf of the settlement.

Meanwhile, a battle is shaping up over the proposed Autonomy acquisition settlement.

Sushovan Hussain, the former chief financial officer of Autonomy, has filed a motion to intervene in the deal he called “collusive and unfair.” Hussain, who HP has listed as a potential target for follow-up litigation, is represented by John Keker and Keker & Van Nest.

On Monday, HP’s attorneys with Wachtell, Lipton, Rosen & Katz and Farella Braun & Martel fired back. As someone facing a lawsuit from HP, Hussain’s interests are at odds with the company’s and he has no standing to intervene in the case, they argued.

“The notion that he should be permitted to intervene,” HP’s attorneys wrote, “and challenge the substance of a settlement designed to protect the interests of the company he defrauded is ludicrous.”

Keker declined to comment on what effect, if any, Frank’s opposition could have on the Autonomy agreement.

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