When will the madness end? Saturday I received another “Notice Of Proposed Settlement Of Class Action” package. The litigants are not important, what is is the ridiculous terms of the “settlement” and level of attorney fees being sought. The total amount of the settlement is $16,250,000 and the Lead Plaintiffs’ Counsel is seeking attorneys’ of up to 25% of the settlement plus expenses not to exceed $360,000 (any guess that attorneys’ fees and expenses will not be any less either?).

In the body of the notice it states that the claim amount per share will be the lesser of $13.17 or the difference between the purchase price per share and the average closing price per share on the date sold. Sounds like this could turn out to be substantial money. Well in Paul Harvey fashion here is the rest of the story and I quote “Based to the information currently available to Lead Plaintiff and the analysis performed by its damages consultants, it is estimated that if Settlement Class Member submit claims for 100% of the shares eligible for distribution under the Plan of Distribution (described below), the estimated average distribution per share of common stock will be approximately $0.36 before deduction of fees and expenses”. That is not a typo! So after deducting $0.09 for the 25% attorney fees and a couple of cents for expenses each share is looking at maybe $0.24 to $0.26. Hell, in todays market most stocks move more than that every day. Remember the claim amount was somewhere in the $13.00 territory. For this the attorneys are looking at over $4,000,000 in fees! Maybe the Reasons for Settlement says it: “Avoids the costs and risks associated with continued litigation, including the danger of no recovery“. (Emphasis mine) Any guess as to whether the concern was about the $0.36 or the $4,000,000?

To add insult to injury they require that claimants complete a rather involved Claim Form. Why is that necessary they obviously know I owned shares in the noticed time frame or they would not have sent me the notice.

Given the above either there was not much of a foul here or there was no case to start with. If this is not an abuse of the legal system I don’t know what is. To my mind this is nothing more than court sanctioned robbery. Any guess as to who will pay for this and other similar actions? No surprise its all of us in the way of higher prices. I don’t know what it is going to take before we see meaningful tort reform but this case might well be the poster child for why it is needed.