A federal judge has notified two partners in a prominent plaintiffs firm that he intends to sanction them for claiming unreasonable expenses related to a securities class action.
U.S. District Judge Justin Quackenbush of the Eastern District of Washington on May 25 notified Joy Bull and John Grant, partners at Robbins Geller Rudman & Dowd, that he intended to sanction them and the firm by formal admonition or worse for claiming expenses that included a lavish dinner and first-class airfare.
Bull, Grant and others at the firm represented a plumbers pension fund in a securities class action against Ambassadors Group Inc., a publicly traded student exchange company in Spokane, Wash. The case, in which investors alleged that the company misled them about its weak performance during 2007, settled last year for $7.5 million.
Messages seeking comment from Bull, Grant and name partners Darren Robbins and Michael Dowd were not returned.
Quackenbush wrote that because Bull and Grant originally claimed about $223,000 in expenses but revised that figure to $114,137 after he questioned the amount, he and his staff took a closer look at other expenses claimed by the firm.
Some of the more troubling expenses, according to the judge, included a $400 claim for a “pre-mediation” dinner for four that included two $70 bottles of wine and a $60 tip. It is unclear from the decision which Robbins Geller attorneys claimed those expenses.
Also of concern was a $1,676 first-class ticket for an investigator’s air travel and another first-class plane ticket for more than $2,100, for Robbins. “From personal experience, the court knows that an attorney or judge can accomplish his or her work requirements while flying in the coach section of an aircraft,” Quackenbush wrote.
“While Mr. Robbins and other members of his firm may choose to fly in the first class section, it is not appropriate for the persons who suffered securities losses to pay for first class transportation.”
Quackenbush took issue with Bull’s claims that she spent 135 hours preparing settlement documents after the settlement amount had been agreed upon. The appropriate amount of time for the task was 95 hours, he wrote. In addition, he questioned the amount of time that Grant claimed for preparing an amended complaint and reduced it to 40 hours.
In issuing the sanctions notice, Quackenbush seemed particularly irked by Bull’s in-court statement last year in which she said that, according to his ruling, trial judges usually do not inquire about claimed expenses and disbursements. Disputing that statement, he noted that an Oregon federal judge had denied expense claims made by Bull in a 2007 case.
On that point, he wrote, “I make no apologies as the facts in this case establish, to my dismay after 32 years on the federal bench, that the misleading expenses and disbursement claims by Ms. Bull in this and other cases require specific scrutiny by the court.”
He wrote that Bull, Grant and the firm should consider themselves “formally notified” that he intended to sanction them and that they had until June 15 to contest his findings. If they decide to contest, he would initiate a formal disciplinary complaint and hearing.
On a final note, Quackenbush wrote that the firm’s handling of the case overall was “appropriate” and resulted in a fair settlement.
Contact Leigh Jones at email@example.com.