DID A LAW PROFESSOR PUBLISH A LIBELOUS POST? At Between Lawyers, Denise Howell seems skeptical that law professor Eric Goldman engaged in libel when he suggested that a group of plaintiffs' lawyers suing Yahoo! for breach of contract are "extortionists" whose class actions are "nothing more than a shakedown for cash."

I'm skeptical too. Goldman's remarks are silly, perhaps, but not libelous. Professor Goldman was merely expressing his opinion. Though it's arguably an uninformed opinion, that doesn't change the libel formula much.

Why uninformed? Goldman's comments were premised not only on his analysis of the plaintiffs' case, which he thinks is weak, but also on the fact that the plaintiffs' lawyers have filed in lawsuits in two federal courts. This puzzled Goldman. Since he couldn't figure out the plaintiffs' strategy, he concluded it fit in with his preconceived notion that the plaintiffs' lawyers are extortionists:

In particular, I’ve been trying to figure out why the plaintiffs (and a largely overlapping group of plaintiffs’ lawyers) filed two separate but virtually identical lawsuits. However, it does make sense as part of a shakedown. By opening up two battlefronts, the plaintiffs increase Yahoo’s defense costs, which should increase the incentive to settle (and the dollar value of a settlement).

I don't know why the plaintiffs filed in two forums either, but it wasn't to increase Yahoo's defense costs by opening up two battlefronts. That's because with two federal cases pending, Yahoo can take advantage of multidistrict litigation (MDL) procedures of 28 U.S.C. § 1407, which would have the effect of consolidating the two actions in a single court. For the rules, see here and here.

In fact, even plaintiffs involved in federal litigation can take advantage of the MDL rules. In the Yahoo! case, it's possible the plaintiffs' lawyers filed similar lawsuits in different forums because they plan to ask the MDL panel to consolidate the cases. By being in control of the majority of the transferred cases, it increases the likelihood that the lawyers will be able to control the litigation once the cases are consolidated. It's a dynamic I discussed in the context of the Vioxx litigation (back when it was barely getting underway) in this post.

Although Professor Goldman didn't ask for my opinion about his opinion, here it is. First, his analysis of the plaintiffs' strategy in the Yahoo! case was incomplete. Second, he was off the mark when he suggested that the plaintiffs' lawyers who represent the businesses suing Yahoo! have filed an "unmeritorious lawsuit" to engage in a "shakedown for cash." Though that's just my opinion, it's based on my experience as a class action lawyer who knows that the idea that class action lawyers can make easy money by filing extortionist contract actions in federal court is just plain wrong. Sorry to disappoint.

Related post: "Yet Another Post About the Federal Judges of the MDL Panel."

Comments

[Eh Nonymous]

Evan wrote that

the idea that class action lawyers can make easy money by filing extortionist contract actions in federal court is just plain wrong

But... but... but Evan! What about the Secret Local Rule 11 in the Judicial Hellholes? The one that says that although pleadings, motions and other papers filed for an improper purpose such as harassment or needlessly increasing the cost of litigation is SANCTIONABLE, even if the claims have evidentiary support ....

(that's my reading of Fed R Civ P 11(b) - the AND between (b)(3) and (4) means an improper purpose OR lack of support for contentions and allegations, or failing either of the other two prongs, mean you violate subdivision (b))

... despite all that, SLR 11 nevertheless encourages (nay, mandates!)plaintiffs' class action counsel to file as many frivolous cases as possible, without fear of 11(c) sanctions?

Inconceivable!