Hp: The Enemy Of My Enemy Is Now My Lawyer

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Hp: The Enemy Of My Enemy Is Now My Lawyer
HP Says Cotchett Deal No 'Side Agreement' To Settlement
By Michael Lipkin
Law360, Los Angeles (August 18, 2014, 4:06 PM ET) — Hewlett-Packard Co. fought back on Friday against efforts to derail a proposed settlement of claims that it deceptively marketed printer ink cartridges, saying accusations that it colluded with class counsel Cotchett Pitre & McCarthy LLP to inflate lawyers’ fees are baseless.

Objectors to the settlement moved last month to decertify the class or disqualify Cotchett, arguing that the firm represents HP in litigation concerning the company's $11.1 billion acquisition of Autonomy Corp. The objectors claimed HP didn’t put up a fight over the fees because of its relationship with Cotchett and failed to disclose their “side agreement” retaining Cotchett.

But HP countered that the inkjet settlement had nothing to do with its deal with the firm, which has not yet been executed. Cotchett represented shareholders in a derivative suit against HP and, as part of a settlement, agreed to help the company in potential suits against former Autonomy executives.

“These future services have no conceivable connection to the Inkjet settlement and the letter cannot in good faith be called a side agreement to a class action settlement that was reached almost four years ago,” HP said in a motion opposing the objectors.

HP’s first proposed settlement in the inkjet case was already scuttled by the Ninth Circuit, which found the trial judge’s award of $1.5 million in attorneys’ fees was incorrectly calculated under the Class Action Fairness Act. After making the changes the appeals panel ordered, the plaintiffs and HP have proposed a new settlement, again featuring $1.5 million in attorneys’ fees.

 

One of the changes made after the Ninth Circuit’s rejection of the first deal was the removal of a clear-sailing clause, under which HP waived objections to attorneys’ fees that do not exceed a negotiated limit. The objectors say Cotchett’s side agreement with HP for the Autonomy work suggests that the removal of the clause was a sham, pointing to HP’s “token” resistance to the attorneys’ fees request.

The objectors claimed HP’s litigation conduct, in failing to actually oppose the fees, suggests that the clear-sailing clause was removed from the settlement only on paper, and that there was an undisclosed side agreement not to make any serious effort to challenge class counsel’s fee request.

But HP countered that the objections were not made in good faith and that there was no evidence to back up claims of a secret side agreement. HP also said it did seriously contest the fee award, seeking to cut $1 million.

“These are serious charges, and the Federal Rules of Civil Procedure demand more than the baseless speculation offered by the objectors,” HP said.

Cotchett itself also opposed the objections, arguing that because its engagement letter was still pending court approval, it had not been signed, and the firm had not done any legal work for HP. It also claimed that it did not start discussions with HP until a month after it had resubmitted the inkjet settlement to the court, so it could not have had any impact on the $1.5 million fee request.

“These circumstances come nowhere close to constituting a conflict. And any such future conflict is so removed form the decisions of this nine-year-old case that claiming a conflict exists belies logic and common sense,” Cotchett said.

Ted Frank of the Center for Class Action Fairness, representing the objectors, told Law360 that California ethics rules disqualify Cotchett without exception.

"Not only do the parties' oppositions fail to identify a single class action in history where the defendant's retained counsel was allowed to represent the class suing the defendant, they fail to even mention the California Rules of Professional Conduct," Frank said. "That pretty much concedes the ballgame."

Attorneys for HP and Cotchett did not immediately respond Monday to requests for comment.

The objectors are represented by Theodore H. Frank of Center for Class Action Fairness.

The class is represented by Niall P. McCarthy and Justin T. Berger of Cotchett Pitre & McCarthy LLP, Brian S. Kabateck and Richard L. Kellner of Kabateck Brown Kellner LLP and Steven N. Berk of Berk Law PLLC, among others.

HP is represented by Christopher Chorba, Samuel G. Liversidge and Zathrina Perez of Gibson Dunn.

The case is In re: HP Inkjet Printer Litigation, case number 5:05-cv-03580, in the U.S. District Court for the Northern District of California.

–Additional reporting by Juan Carlos Rodriguez, David McAfee and Keith Goldberg. Editing by Christine Chun.

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August 21, 2014 at 12:52 PM