Breaking NewsLaw.com and associated brands will be offline for scheduled maintenance Friday Feb. 26 9 PM US EST to Saturday Feb. 27 6 AM EST. We apologize for the inconvenience.

 
X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
KPMG and Sidley, Austin, Brown & Wood have reached a $225 million settlement with plaintiffs in a class action suit that charges the firms with having sold bogus tax shelters. The settlement, in Simon v. KPMG LLP, 05-3189, is subject to approval by U.S. District Judge Dennis Cavanaugh in Newark, N.J., who will hear the matter on Friday. It would end litigation lodged by KPMG clients who, in the late 1990s, bought tax shelters that R.J. Ruble, a partner for Sidley Austin’s predecessor firm, Brown & Wood, helped develop. Ruble wrote more than 600 letters to clients declaring the shelters would withstand Internal Revenue Service scrutiny. But even while the shelters were being sold, KPMG officials wrote memos expressing doubts about their validity, the plaintiffs claim. Sale of the shelters was discontinued after the IRS disallowed them. The parties reached the agreement after a year of mediation with former U.S. District Judges Nicholas Politan of New Jersey and Daniel Weinstein of California. Plaintiffs counsel Melvyn Weiss asked Cavanaugh to give preliminary approval to the settlement Sept. 27. Weiss said in a declaration that the pact, which provides $195 million for the class and $30 million in plaintiffs counsel fees and costs, would give claimants more than the payouts in settlements of individual suits filed against the two firms. Weiss asked the court to certify the class, appoint his firm, Milberg Weiss Bershad & Schulman of New York, as lead class counsel and appoint Politan and Weinstein as special masters to carry out the settlement. Milberg Weiss faced a challenge from another class action firm, Bernstein Litowitz Berger & Grossman, which had brought a similar action in federal court in Arkansas. Intervening in the New Jersey case, Bernstein Litowitz accused Milberg Weiss of conducting a “reverse auction” — negotiating with defendants before filing suit. The federal court in Arkansas denied class certification. Two other putative class actions were filed in the Southern District of New York in August and September of this year. Weiss asked Cavanaugh to grant an order giving preliminary approval to the settlement, which he said would enjoin class members from continuing with prosecution of other suits. On Sept. 29, the plaintiffs in one of the New York class actions, Kottler v. KPMG, moved to intervene in the New Jersey case, asking Cavanaugh to stay the settlement pending the outcome of a transfer motion before the Multidistrict Litigation Panel. The plaintiffs also sought to have Milberg Weiss disqualified as class counsel, claiming a conflict of interest. Milberg Weiss had represented lead plaintiff Mark Kottler in Florida state court while the firm filed its class action in federal court in Newark.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.