flexner for the white jeopardy in this case i'd like to reserve five minutes of my time for a bottle of your honor's this appeal has its origin in the two thousand and nine ethical breach of the settling council when they attempted to coerce the class representatives to approve the settlement by offering them a conditional five thousand dollars fee as being representatives of the class this settlement in that case and remained the issue then became whether the settling counsel who had committed the ethical violation or white counsel should be appointed as class counsel in that context to send out to the class and that new notice would have to be sent if there were new settlement the settling counsel when was that offer made that offer was made in before that before the district court during the oral argument as to whether settling counsel or white counsel should be appointed and this court specifically noted as  district court let me quote this court what this court said the district court quote noted that hernandez counsel that is the settling counsel had taken extraordinary steps to neutralize the effect of the ethical violation including important quote agreeing to accept the cost of re notice now if settling counsel had done that and had agreed to pay the cost of re notice either by out of their pocket paying the cost of the notice or saying to the court deduct the cost of notice from whatever reasonable fee you determine and then deduct  notice we would not be here who would be know here saying they should have taken eight million fees and deducted six million dollars from and no no i'm saying no i'm i'm saying that whatever fee whatever fee the court court determined in the eight million dollars was kind of the district judges compromise because he took something off the fees taking something off their fees afterwards of course does not resolve the conflict because the conflict was that they went into the negotiations in a conflicted status by bice by making they made a can they didn't actually make an offer to pay the six million dollars they made an offer to make made a conditional offer that will get the class will try to get a settlement that is equal to the six million dollars that we have taken from the class that that created the st time and haven't been given a nd chance they committed yet another ethical violation it's as if your honor it's as if a class council had said to the class i guarantee you that will get twenty million dollars in this case i think do i asked the court to reverse and as radcliffe one held that this class settlement is infected by a conflict a clear conflict because the settling council had a clear financial interest in the outcome as i was about to say whenever whenever council puts their own financial interest into the mix they are clearly conflicted and what what settling council actually said and they admitted this was we're not going to pay the six million dollars we're going to make the class pay the six dollars we're going to take six million dollars out of the pop out of the fund and we're going to try to get the defendants to come up with six million dollars more which they didn't do by the way which they didn't do but any every dollar that they get from the defendants belongs to the class it doesn't belong to them well let me let me just play out the practical consequences of this so if it goes back what if the current class council were to be substituted with someone else that wouldn't necessarily defeat their claim for attorney's fees would it in terms of what they have done to date i think if it goes back if new council is appointed and there's either settlement or a trial the district court will then determine did the settling council add anything to the case and should they get some share of the resulting fees recognizing of course that they have now cost the class thirteen million dollars in notice costs i asked us more simpler simpler question and that is just hypothetically if the class council were to be substituted it wouldn't mean that they wouldn't be eligible for some portion of fees for their contribution that's correct ok and if that were to happen then there will as such fairest said if there's a renegotiation of the settlement there will then have to be a reno to the cation of the class correct correct which appears to be around six million dollars according to all the record correct ok but and i think it's i think it's important why we have to go through this process is critical to explain why you have to go through this process when we understand that ok well they are going to go back to my original example it's as if it's as if let's say let's say count class counsel and said i guarantee you that we will settle this case for twenty million dollars and i will make up the difference that that attorney is now conflicted that attorney could not in good conscience represent that class the negotiations because let's say for example that a and conflicted attorney would recognize that really ten million was a great settlement that attorney's not going to settle for ten million dollars because they now with a class ten million dollars from their guarantee these people of the class six million dollars and they they were under the they were under the burden they were on the overhang of trying to come up with six million dollars now they obviously didn't do that if if the rabbis sat on my moneys were significantly in excess of what the prior settle on was would we be here yes we would again because the car you cannot cure the conflict and judge carter tried to do that when afterwards at the at towards the end he said i'm going to take a couple o million dollars off your fees that doesn't cure the conflict because the conflict was that when he went into the negotiations in a cut they were conflicted when they went into negotiations because their goal was not to get the best of the class their goal was to get out from the six million dollars commitment and you can see this because when the negotiation started after the remained there was thirty seven million three hundred thousand dollars in the bank that's what was left over from the st settlement  less administrative costs and notice when the negotiations ended and at that time when they when they start negotiations settling counsel had a six million dollars obligation to the class which this court quoted a six million dollar litigation there was more money available for the class than there was after was glued to the true there was more money in the st yes yes if i understand your question going over is a month amount of money available to the members of the class was here it's going down and now if we do what you want to do it's almost certain to go down to not the defense but that depends on what happens when they go to trial as judge carter said the case judge carter said in this case is the defense liability is literally in the billions of dollars which is the whole other issue is the inadequacy of the settlement where they're paying less than a penny on the dollar which would you also has to do with somebody is opinion that maybe this glass was too large in sort of i don't release but i don't know nobody no way on the good doesn't make that determination determinations already made but when you look what what i think we have to do is we look at you before they see what is happening to the class because that's who other get the money from the settlement and what we see is that the amount of money available is being dissipated well no your honor i disagree because literally there's no money the class has the class absent class has no money this is money the defendants put in the bank as a result of a settlement that was determined to be invalid and then they added another one million dollars to the defendants and one million dollars and put that in the bank and said that's also available but if we go back in the settlements out we're back to square one we have a we're back to school we're back to the beginning of the case and if other than the discovery that's taken place we have new counsel appointed and we try the case the class never literally had the money or that we know is that this settlement doesn't give them all we know is that these the fent these settling council took literally took sis six million dollars from the class to pay their debt and we know they were conflicted because we look at the result the result is is that they have five million dollars less than they would have had under the original settlement and they have to come up with some way to say we got our six million dollars so what do they do they come up with all kinds of gimmicks which were part of the st settlement like a free credit report which judge carter in this case said had absolutely no value in his decision in the apostasy when the cost to class trying to get certified he's that has no value website and said you can read about credit scores and everything by paying ten dollars how many people would literally sign up they got fifty thousand dollars people to sign up from the class could have been the one people used and sorry i think seventy one people used to write well there was more than that but they didn't tell the people who opted for that instead of the money that they could get a free credit report anyway they get three free credit reports from each of the defendants so what so so then so so so they write a brochure they put it on a website and they charge the class literally two million dollars for that product literally because that's two million dollars less they have to now put in and then they're still not up there they're still they're still only at three million five hundred thousand dollars they've got to come up with six so in in the opinion they write for the judge inconsistent with this court's stand decision they assign they charge the class two five one million dollars for the st notice can you explain that to me i was having some trouble understanding what the practical lessons o not explained it's not explained now they do argue ask them they do argue that we've got more people in the nd notice well that's not surprising when you set out a whole several one million notices you're going to get more people but the main reason they got more people is because they cured the defect that we told about in the st class when they sent the st notice out they contrary to what we had urged the judge to do that required the members of the class to certify that nick incorrect credit report had been issued most people don't know that there's incorrect credit reports they have no idea how their score is valued and we said you make people certified to that no one's going to certified to that that if under if they if they were not sure that that's in fact case so in the nd notice the judge and s counsel did what we said they should have done the st time they took it out they got more people big surprise but why should the class have to pay two million five hundred thousand dollars for that the bottom line is here your honour's is they recognize judge carter recognizes no one has disputed anywhere in their brief they had a six million dollars obligation a class they should've paid it they should have said to the judge whatever reasonable for you determine at the end of the case take all six million dollars or they should have said to that they should have paid the mailing out of their own funds out of their own pocket we wouldn't be here but instead they said we're going to take the six million from what we can get from the club where you think literally take the classes money we're going to make the class whole by negotiating with the defendants any of you every dime they got from the defendants belong to the class not to them if they've got a better settlement that should've gone to the class they owed to six million dollars not the class but they charge the class the six million dollars thank goodness get it from the defense then why did carter approve the settlement if you keep mind mentioning these issues that he has raised with the conflict and the problems your honor i think in all fairness i think judge carter one of the case settled and i also have to say  candor that judge carter felt that the that the injunctive relief that the class had agreed that the class got in two thousand and eight was enough and he felt he actually literally said that he thought in some instance the class was unworthy because some people weren't but but their own actually their own also armor their own expert which they've cited several times their brief says clearly people are harmed by an incorrect credit and it doesn't matter whether the score goes up and down because you can't get a mortgage with it with a charge off or on your credit report they're clearly and they're harmed as a matter of law because it's an incorrect it's like a common law at the family tory claim but as a as a practical matter in their pocketbook they are harmed and the insidious thing is most of the people don't even know it do you want to say very many yes i do rather think you good morning if it please the court paul bland public justice here representing the hernandez plaintiffs in the case mr mcluhan who represents one of the defendants has five minutes of our time but he has generously said that if the main issues are ones relating to these issues of representations and ethics and so forth i should take it all he's here to say essentially the case isn't worth a one billion dollars so you heard ten times or twenty times there that we allegedly represented to the district court that we would pick up the six million dollars cost of the original notice what we said to the district court on this remained was when we go back and look at the record that's not what we said we made several commitments i'll describe what those commitments are in a nd but if the court believes that we did make a commitment to pay the entire cost to notice then the court should reduce our fee by that and we will not appeal that said it in court we said it in pleadings we since we don't agree that we made that commitment made different commitments and we set those out court would strike down the settlement and have our clients who have been waiting for fifteen years nine hundred thousand of whom have gone through this process before the court would remain and and say start the whole thing over again and see if they can get a one billion dollars and have nine hundred thousand dollars people who want their money just wait and wait and wait to see if they can do it and how this case proceed forever if the court believes that we made that commitment then destructed district court to approve the settlement and to shift whatever would match the commitment from attorneys fees to the class well after radcliffe won when you're remained there's a conflict at that point you could have been punted off and it says judge carter's opinion and this court's other panel definitely factor in both of their statements in allowing you to stay on that you were doing this magnanimous act of agreeing to pay for this nd notice c motion to have the hernandez counsel because counsel for two reasons once was that they had taken a number of extraordinary steps and one of those steps it was a list of was the cost of a notice of talk about where that comes and it was a factor that they that they they'd used in their analysis of saying you can stay on board as this is accurate right yes and that the language the customary notice came from language in judge carter's opinion and so on right and after that and they made an argument which has been repeated here as if the nd panel didn't exist which is that because there was supposedly this conflict over the notice that we had to be barred and be thrown out completely and this court did not accept what you probably like four minutes that's essentially asking to overturn radcliff two but let me if i can talk about what the commitments that were made your honor pleased so there were there were three commitments in judge carter goes through them and this was briefed extensively and his findings of fact you know we're being asked now to essentially decide what commitments were made and in lengthy court hearings remained where he's made finding of fact as we look at for abuse of discretion but there are three commitments the st was that we were asked a hypothetical question if the set if there is no settlement in the cases continues and note in class in litigation the class will have to be notified would you not a counter factual like what would have happened if the germans won world war two kind of situation we know what happened that didn't happen the nd commitment that was made was and judge carter states as very clearly in his order the commitment was there we would make sure that the class was not harmed that the class was in no way punished by that by the ethical mistake that was made in two thousand and nine this cast plus has not been punished by the ethical mistake in two thousand and nine judge carter goes through and evaluates the current settlement pending in front of this court in great detail provision by provision by provision and makes factual findings about the value of each of those terms is and what he finds is is that the settlement is actually better than the previous class than the previous settlements in two thousand  settlement is larger and better for the class and you several reasons why that's true the final commitment was there was a notice that was given to the people who claimed actual damages and the people who had actual damages claims  there was no at the station requirement originally and then what happened is a ton of people make claims so the defendants object and say well we think this is these are too many claims here so the claims administrator went back and question a number of people and they found that there were a lot of false claims so then there was an additional notice the cost five hundred and sixty seven thousand dollars to go back to the people who made out of stations and say you can have to come or who had made clear actual damage claims and you have to begin to come with more information and judge carter said well this is you know you should've known that they're going to be false charges they're going to mistakes you know i think you should pay for it and we agree so we pay for that those are the three dollars commitments now the same that he's talking about which i argued with unbelievable energy i'm high volume and so forth to the district court again and again a judge carter spent hours going through the record going to the transcripts of hearings that he'd conducted that go back years and he found they just simply never made that and what he there's a particularly a finding of fact that said counsel here mischaracterize point the commitments that we made to the court and what's happening here is rather than deal with judge carter's finding of fact that they mischaracterize hearings the judge carter presided over which is subject to an abuse of discretion review you're just hearing basically told again and again that is that this is what happened so where in the record would we look on that finding of fact to say you're saying that the mischaracterization is the around the i'm looking for my notes about the notes the sites of the records i'm sorry to be suppling papers what you're talking the commitment was in response to a hypothetical question having trouble finding  there was no commitment to pay the six million dollars we notice copyright we believe that there was not i described what the three commitments that were made not blind why then does everyone go through the gymnastics of trying to make the saddle mount look like it's equal or better well the sentiment it's i don't believe that there gymnastics i don't believe we were engaged in something dishonest the judge card not saying it things up just in the making out but that's the that's kind of where everything is being characterized to try to make it come out part of it is a ministration so there are nine hundred thousand people at this point who made claims seventy eight percent of those claims resulted from the st notice so that's nine hundred thousand people you know all the twenty two percent of both the nine hundred thousand are from the convenience claims the twenty dollars and all of those are seventy eight percent of those are from the st noticed so judge carter said the st notice was not without value this isn't stating versus boeing where there was the exact same notice twice the st notice actually reached a lot of people and i'm going to can and he said he was conservatively valuing it two and a half one million dollars and this idea that we wrote this and just some of them with time and we were like pulling the strings on you know this person's been on the district court for many many years i crazy we had a court hearing in front of him which we propose in order and judge carter came in and we spent most of the day and just a very powerful forceful presence and he said i'm not happy with this in this and then he gave us a ton of guidance and unlike some people we actually listened to judge hart and respected him so he gave us very clear guidance of what he wanted we went and rewrote the order based upon his guidance and then submitted to another order which had tons of his language and ideas in it and then he changed that he didn't give us a number of provisions in change  off plus or minus but i am i guess my question is this maybe it's not just one of the arithmetic but the fact that st noticed when out and garnered some subset of people who were able to make monetary claims i'm not quite sure how that dissipates the fact that you still because there's a nd notice you have to pay extra money so so that there is some additional from the defendants one thing that happened as judge carter reduced the attorney's fees from by two million eight hundred thousand dollars from what they were in the st settlement so the lodestar for counsel is much higher you know have a negative multiplier but nonetheless judge try to reduce the attorney's fees by just a little south depose or question our witness they sit there silently in hearings while while the other testimony is describing argued about and discussed and from the district court and then they just are court finds as a matter of fact that settlement website was really are tailored in ways for people who are trying to improve your credit so yes you can get one free credit report on your own but if you're having problems with your credit and you're trying to fix it it helps to be able to get through credits get several credit scores in a row this is new credit reports but then also get the vantage score is cost money and so our expert actually points out that to get this product from a from a company who sells it cost at least twenty dollars more over fifty thousand dollars people had a choice would you want the twenty dollars or more in the convenience charts convenience fee or would you prefer to have this this relief and fifty thousand dollars people said that they thought that the two scores in the report were more valuable to them and so well posing countesses sitting here paternalistically saying oh well fifty thousand people are rude who did this stupid thing and they all got nothing for their value their fifty thousand people who thought that this product would actually sells on the market for twenty dollars had value so when judge carter goes through a lengthy analysis and he assigns economic value of three million dollars which he describes as being conservative to the non monetary relief i think that the heap scorn on his factual findings here based upon upon a few minutes of oral argument seems very unfair there was expert testimony judge carter had of valid reasons for reaching that figure it's not it's not looser and it's not pulled out of the air before use that what do you want this school to do i think that you simply approve affirming judge carter's order i think that the settlement is fair reasonable adequate is an improvement over the previous settlement and to pay the cost of the st noticed or if the court finds even if we didn't make a commitment they were legally required to do it it's going to create a new law to say that that there's now a new ruling that says a ruling of law that says that whenever there are two settlements in the st settlement is falls through because an ethical bias that the new or ethical issue is you can never that the council always have to pay the cost of the notice from the st settlement if the court's going to have a rule like that then what will the court you do is approve the senate meant but give instructions to judge carter to adjust the attorney fees by the amount of the e the white objectors say that there's like a flat rule that of course has to be true none of the cases they cite come within a one million miles i understand so and i also think it's very hard to figure out exactly how you define a rule that's not going to just poor back into the facts of this case and i do feel that we're coming to you of a very very detailed robust set of factual statements from from the district court and your position about this not being any kind of one billion dollar case includes all of those defenses that you don't think they'll be able to looked at that and said we actually think this favors us i have to be a realistic man and see that a realistic lawyer and see that there are a lot of good cases have been thrown out that i think shouldn't have been so there's a huge risk there i don't i do not want to represent to the court that i think that we have a losing  share with our you know beaten this is that this is the nd largest fair credit reporting act settlement in history the statute this is this is not a this is not a negligible settlement the other thing but the thing that i think is particularly risky and what's my when they just got this is a one billion dollars case and said it's simple math you just extremely lengthy and it had a series of proposed findings of fact you know if this was a if this if we lived in a world in which i could show up in the th circuit and just give my opinion about the facts he's totally wrong in the case should be certified and in fact a number that's the number of final points that  tonight plus sort of occasion we are in a world of trouble and so d i think that there's a lot of things in that that are wrong with what we went back on remained after after radcliffe to we'd listen to judge harden we attempted to propose to much more narrow classes would've been much easier to going to really long time i'm not going to allow you to amend the complaint so we would be in the situation in order to get a class we can sort of coming up and appealing judge carter on a scheduling issue and i think i think i think that i would have preferred to see joe carter allow us to amend the complaint we've had and there are classes they have been more certify all they've been stronger this has been and i think that would have been great but that the court i think has a strong argument that he's within his rights and controlling his dokken issues scheduling order so some of that some of the  imaginative views that come from the other side about how this is a one billion dollars issues multiply it all out there's not sort of a terrific respect that the district court actually has some power in some decision making authority over what facts the court's going to enter and how the court's going to control its own schedule and getting money in all likelihood now we would fight like crazy we're not i'm not i do not come in and say we agree this is this case doesn't have value but realistically the risks are huge here and you have nine hundred thousand dollars people who after fifteen years would like to have their money the idea of throwing this case out because we imagine we supposedly made this commitment that judge carter said we didn't make so that this case can persist can proceed at fifteen years we're just getting started now you know this case can't be resolved until it's you know old enough to drink i don't know what it would take for them to be happy with how many proceedings you would have but our class would like to actually have a settlement in which they receive the relief that they've asked for and bank you if you did you want to add anything you please i don't want to preclude your opportunity it i think the court has seen our briefs is to emphasize the points that counsel was just addressing how many litigation risks this class faced i think the most significant one was the risk that the class wouldn't have very powerful responses to all of them but in order for this class to succeed on the litigation basis they have to prevail on every single one and the risks as counsel just pointed out to the class are huge so that what the court had to decide in deciding whether or not this supplement was fair or reasonable and adequate for the class was given all of those risks this is really a one billion dollars case and i don't think it's really arguable that it's anything close to a one billion dollars there are such large problems with the manageability of this class as as judge ferris pointed out it's a huge class and trying to address you know even within the settlement class members fell into different categories some people had applied for mortgages some people have applied for jobs trying to figure out you know fifteen million people how they would allocate some judgment that got entered would just be a huge manageability problem now the appellant's response in the reply was well there's no problem certifying this class because judge carter certified a settlement class but of course that's not true the criteria in the evaluation when you take a liability determination out of the rule twenty three analysis is fundamentally different for settlement purposes the defendants have chosen to take the liability question out of the class the twenty rule twenty three dollars analysis but in the litigation context of course we would be heavily disputing that i appreciate the time is almost up but at the other points that i think we raise them just to repeat them briefly they're there in our brief there will be a huge problem establishing a willful violation even if you conclude that our procedures were reasonable in order for the class to succeed they have to prove willfulness and the safeco decision clearly sets a pretty high barrier now they think they can clear it they say they can clear it easily but we think there is a real issue on that point and judge carter took three days before issuing a tentative ruling denying our summary judgment on that point it is a close question and the case all that has evolved since this that have largely favored been much more favorable for the defendants than they were at the time the settlement was reached so the question of being able to establish a willful violation when there was no clear authority addressing the situation let me just explain briefly what what the particular circumstance was never in the history of credit reporting industry was a credit reporting agency held responsible to take one piece of information reported from one reliable source viewed as being reliable and comparing it to other information being reported by another reliable source and trying to figure out if there is some conflict between them that concept had never been imposed on a credit reporting agency as by any court and it was something that we chose voluntarily to do was part of the injunctive relief settlement which is part of the reason the judge carter said the judge the injunctive relief settlement was so monumental because it was doing something that had never been done by the industry before and never been required of the industry before but in order to get a willful violation the plaintiffs would have to persuade the trier of fact that it was obvious that we had an obligation to do something that had never been done before and i submit there is a huge risk that the plaintive class would be able to prevail on the willfulness point no willfulness no payment to any class member if we're going to litigate the case because there be and it would really be impossible because it was only a negligence claim you'd have to prove individual lies damages you wouldn't be able to rely upon statutory damages so as a practical matter if they can't prevail willfulness there's no recovery for anybody in the class thank you i think we have your point in mind thank you i think the courts indulgence that i have a moment to respond to the merits argument just made as well as mr bloom's point st don't take my word for what the case is worth judge carter said it's a one billion dollars case said they knew that they were not adding accurately recording bankruptcy's why because the survey done by mr john tika showed that sixty five to seventy five percent of their reports on bankruptcies were inaccurate and they knew it and they decided not to do anything about it judge carter said that with regard to the argument about what what mr condell promised down below our case is not about a breach of a promise goodell was very careful we acknowledge mr because i was very careful to make a contingent promise but that's the problem he made a contingent promise he said we'll make up the difference if we don't get it from the defendants that cause the conflict they were under that why you already said why all the gymnastics to get the six million because they told judge carter if we don't get it from the defendants will reach into our pocket that caused the conflict so they had to come up with some cockamamie group of  if we can get a bigger settlement or bigger settlement we will if we decide however that the settlement is in the best interest the class and because of the current state of the war whatever and we can't get additional money then what i'm telling you is your honor we will not penalize the court that he says class if that means we will reduce our attorneys fees then we will do so that was the contingent promise if we don't get a settlement of six million dollars or more we're going to reach into our own pocket and deduct it from our fees and that caused the conflict and you can't cure a judge byte by reducing six dollars us my adversary how about if he takes the six million dollars off the eight that doesn't cure the conflict because they negotiated a settlement with the conflict overhanging them that can't be cured even if they got one hundred million dollars settlement they were in a conflict situation as the example i gave your honor just before if you make if you put it if you put your own financial stake at issue in the negotiations you class was not harmed how was the class harmed because they took six million dollars of the thirty seven million dollars that was sitting in the bank and they paid the use that they're using it to pay they noticed cost that was the classes money or album but i don't it's not a question of fact let's see if you believe the question of the law that is before whether what they did the promise that the contingent promise that they made created an inevitable conflict in their representation the class that's a question of law there's no there's no factual issue here is to what happened contradict what mr bland said we don't disagree with the facts mr goodell said what he said and his statement and his promise and his commitment that this court held in radcliffe one to accept the cost of notice yes and i think this court should declare once and forever that these council are conflicted and should not be reappointed well i know you telling us what we should rule i'm saying we should rude and that's one of the questions whether they were yes and i think and again i say i think it's i think it's in a net the ethical rules have said forever that a lawyer should not have a financial interest in the case these lawyers had a six million dollars financial interest in this outcome and we saw what happened we actually saw the result that this is a case where the conflict wasn't that we actually saw what happened because they came up with three non monetary benefits which when they st settled the case  not they did they they didn't talk about free credit reports because they told the judge they were worthless it's on the record they told the judge heard reports are worthless they didn't come up with a website and charge a class two million dollars none of those appear in the st seven because they didn't have to but they had six million dollars debt to the class so they had to come up with these non monetary things because they were going to get them from the defendants thank you thank you thank all council for the argument and also the extensive briefing case of redclyffe versus hernandez versus