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If there’s a class action settlement that provides no money for the class, is it really a settlement? Not according to a Florida judge who rejected a deal tentatively struck between Milberg Weiss Bershad Hynes & Lerach and Florida Progress Corp., which faced a shareholder suit filed in state court over its 1999 merger with another power company. “All of the evidence suggests that class members are in precisely the same financial and legal position today as they would have been had this litigation never been filed,” wrote W. Douglas Baird, a circuit judge in Pinellas County, Fla. “This action appears to be the class litigation equivalent of the ‘squeegee boys’ who used to frequent major urban intersections and who would run up to a stopped car, splash soapy water on its perfectly clean windshield and expect payment for the uninvited service of wiping it off.” The deal might have gone through if a member of the class didn’t happen to be retired University of Arizona securities law professor Junius Hoffman. He persuaded his colleague, Arizona law professor Elliott Weiss — whose ideas helped shape 1995′s Private Securities Litigation Reform Act — to pen an objection to the proposed settlement. “We do this, I would say, as a public service, as a matter of principle,” Weiss said last week. “The whole thing is a holdup.” Weiss said the problem with the proposed settlement was not just that class members obtained no recovery, but that Milberg Weiss did. The deal called for the firm to receive as much $375,000 in fees and expenses. “Whatever you do, don’t give them a fee,” Weiss said, summing up his client’s objection. Furthermore, the deal not only contained a broad release from any future liability for Florida Progress, but language from Milberg Weiss partner Abraham Rappaport approving of the merger. That language may come back to haunt Milberg Weiss, Weiss said. Now that the firm has spoken favorably of the merger to the court, can it continue to claim a breach of fiduciary duty by the company? Rappaport did not return a phone call seeking comment on Fruchter v. Florida Progress, 99-6167. LeBoeuf, Lamb, Greene & MacRae partner Ellen Dunn, who represented Florida Progress, said it is her firm’s policy not to discuss pending litigation. The merger between Florida Progress and Carolina Power & Light Co. was announced in August 1999, and approved by 96 percent of the shareholders a year later. In between, Milberg Weiss filed suit alleging that the board of directors of Florida Progress breached its fiduciary duty by not finding the best value for shareholders. However, before Florida Progress answered the complaint, it acquired four synthetic fuel plants and amended the proxy statement in a manner that had the potential to sweeten the deal for shareholders should the plants turn a profit. One of the bones that seemed to stick in Judge Baird’s craw was the broad release of liability for the company, which he wrote includes “defendants and every other individual or legal entity who has ever been or will ever be connected to FPC or its successors both now and in the future” and, he emphasized, covers not only the merger but may include “any other conduct regarding the ownership, control and management of FPC.” Baird also found that Milberg Weiss’ client, Lisa Fruchter — the proffered lead plaintiff in the case — did not give the court enough information for it to rule on whether the case should be given class certification. “The resolution of the issues of commonality and typicality both suffer from the lack of vigorous adversarial advocacy,” Baird wrote. “In this case, the court is presented with vague generalities regarding the breadth of the defendant’s conduct that is to be the subject of the action and a stipulated settlement that includes a comprehensive release of class members that appears to reach well beyond the issue of the share exchange agreement.” Furthermore, the judge found that Fruchter — also represented by Milberg Weiss in a recent class action over the merger of Abbott Laboratories and ALZA Corp. — had been an inadequate representative of the class. Not only is Fruchter’s failure to show she is a member of the class an issue, Baird wrote, but there is also “the more troubling issue of vigor, or lack thereof, with which the case has been prosecuted.” Baird said the court file and subsequent documents he requested portray a “troubling picture” in which there appears to be “no good-faith basis for commencement of the action,” “a pattern of unusually close cooperation between class counsel and defendants,” and an amended complaint said to be based on 25 months of investigation which “contains the same general allegations set out in the original complaint.”

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