Clark v. Gannett Co.

• Decision Date: 20 November 2018
• Docket Number: No. 1-17-2041,1-17-2041
• Citation: 122 N.E.3d 376,2018 IL App (1st) 172041,428 Ill.Dec. 367
• Parties: Ramona CLARK and Dylan Schlossberg, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellees and Cross-Appellants, v. GANNETT CO., INC., a Delaware Corporation, Defendant-Appellee. (Gary Stewart, Objector-Appellant and Cross-Appellee; Christopher A. Bandas and C. Jeffrey Thut, Cross-Appellees).
• Court: United States Appellate Court of Illinois

2018 IL App (1st) 172041
122 N.E.3d 376
428 Ill.Dec. 367

Ramona CLARK and Dylan Schlossberg, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellees and Cross-Appellants,
v.
GANNETT CO., INC., a Delaware Corporation, Defendant-Appellee.

(Gary Stewart, Objector-Appellant and Cross-Appellee; Christopher A. Bandas and C. Jeffrey Thut, Cross-Appellees).

No. 1-17-2041

Appellate Court of Illinois, First District, Second Division.

Opinion filed November 20, 2018
Rehearing denied January 18, 2019

JUSTICE HYMAN delivered the judgment of the court, with opinion.

428 Ill.Dec. 370

¶ 1 The relationship between class counsel and objector's counsel can be a tense

428 Ill.Dec. 371

122 N.E.3d 380

and combative one. And when objector's counsel happens to be professional objectors, who impose objections for personal financial gain without little or no regard for the interests of the class members, open hostility often ensues. Objector's counsel here, Christopher A. Bandas, of Corpus Christi, Texas, and C. Jeffrey Thut, of Chicago, have provoked more than the ire of class counsel, earning condemnation for their antics from courts around the country. Yet, their obstructionism continues.

¶ 2 After the trial court overruled objector counsel's boilerplate objections to the settlement agreement and attorneys' fees, class counsel decided to expose what they regarded as a farce by moving under Illinois Supreme Court Rule 137 (eff. Jan. 1, 2018) for sanctions against objector's counsel.

¶ 3 The trial court held a hearing on the Rule 137 motion. The objector, Gary Stewart, of Cardiff, California, who had been ordered to appear at the hearing, was a no-show. The trial court held Stewart in contempt, fined him $500, and struck his objections to the settlement and attorneys' fees. The trial court also denied sanctions against objector's counsel.

¶ 4 Stewart appeals the trial court's contempt order. But, his notice of appeal is defective. The notice of appeal identifies an order that had been withdrawn and omits mention of the superseding order issued four days later. Thus, this court lacks jurisdiction to review Stewart's contempt finding, and it stands.

¶ 5 Stewart also appeals the trial court's order denying his objections to the class settlement and granting the full amount of class counsel's request for attorneys' fees. Because the contempt order stands, and that order struck his objections, we need not address his objections.

¶ 6 In the course of the Rule 137 hearing, the trial court granted a motion in limine to exclude evidence of objector's counsel's pattern of conduct in representing objectors in class action lawsuits. We reverse that ruling and remand for new Rule 137 hearing at which this evidence will be admitted to determine whether the objection was filed for an improper purpose.

¶ 7 Finally, we direct the clerk of our court to forward a copy of this order to the Attorney Registration and Disciplinary Commission (ARDC) to determine whether disciplinary action should be taken against Bandas and Thut.

¶ 8 The Parties

¶ 9 Plaintiff-Class representatives, Ramona Clark and Dylan Schlossberg, represented by Edelson PC, of Chicago, sued Gannett Co., Inc., in a class action suit alleging violations of the Telephone Consumer Protection Act of 1991 (Telephone Consumer Protection Act) ( 47 U.S.C. § 227 (b)(1)(A)(iii) (2012) ). A disbarred California attorney referred objector Gary Stewart, of Cardiff, California, to attorney Christopher Bandas, a member of the Texas state bar who is not licensed to practice law in Illinois. C. Jeffrey Thut, of Chicago, acted as local counsel for Bandas.

¶ 10 Background

¶ 11 Plaintiffs alleged that Gannett violated the Telephone Consumer Protection Act (id. ) by promoting the sale of its newspapers through unsolicited marketing calls to cellular telephones of a class of about 2.6 million individuals. Plaintiffs sought actual and statutory damages, an injunction on unsolicited calls, and declaratory relief.

¶ 12 In January 2014, Richard Casagrand and Schlossberg filed an almost identical lawsuit in the United States District Court for the District of New Jersey. About two years later, during which little

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122 N.E.3d 381

formal discovery appears to have been exchanged, the parties spent a full day in mediation with former federal Judge Wayne R. Andersen. In April, the parties held another full day with Judge Andersen. Next, Casagrand and Schlossberg voluntarily dismissed the New Jersey case, and in May 2016, Schlossberg along with Clark (in place of Casagrand) refiled the virtually identical case in the chancery division of the circuit court of Cook County.

¶ 13 By July, the parties had signed a settlement agreement establishing a nonreversionary fund of $13.8 million. Gannett also promised to initiate various measures designed to ensure compliance with the Act and prevent future unwanted telemarketing calls to consumers. On the matter of class counsel's attorneys' fees, the settlement agreement provided: "Class Counsel will petition the Court for an award of reasonable attorneys' fees," which class counsel agreed "to limit" at "no more than 39% of the Settlement Fund."

¶ 14 The following month, in August 2016, Judge Kathleen Kennedy preliminarily approved the settlement and directed notice to a settlement class. According to the parties, 99% of the settlement class of 2.6 million members received direct notice of the suit. About 50,000 members made claims to participate in the settlement. Absent from the record is a transcript of the preliminary hearing.

¶ 15 In October, class counsel moved for an award of attorneys' fees, expenses, and an incentive award for the class representatives.

¶ 16 The sole objector to the settlement was Stewart. His participation was solicited by a disbarred California attorney, Darrell Palmer, who referred Stewart to Texas attorney Bandas. In turn, Bandas contacted Chicago attorney Thut to act as his local counsel. On the last day for filing objections, Thut signed and filed an objection prepared by Bandas, which included this statement: "Objector is also represented by Christopher Bandas, with Bandas Law Firm, PC, 500 N. Shoreline, Corpus Christi, Texas 78401, as his general counsel in objecting to the settlement. Mr. Bandas does not presently intend on making an appearance for himself or his firm." At no time did Bandas file an appearance or sign a pleading.

¶ 17 Bandas's objection on behalf of Stewart argued that class counsel's attorneys' fees were excessive and class members had received insufficient information in the class notice regarding the settlement terms. After class counsel's response, Stewart added an objection to the amount of the settlement.

¶ 18 At the fairness hearing, the Edelson PC firm argued that the objection was a "cut and paste job" filed by a professional objector. Thut's total oral argument consisted of a single sentence, "We are resting on our papers."

¶ 19 Judge Kennedy affirmed the certification of the settlement class, overruled Stewart's objection, determined that class notice provided adequate information, and found the settlement agreement "fair, reasonable, and adequate." As to attorneys' fees, she found "no basis to require a net benefit analysis or a Lone Star [sic ] cross-check or to supervise the allocation of fees," and approved $5,382,000 for attorneys' fees and expenses, representing a fee of 39% of the settlement amount, as "within the range of reasonable fees."

¶ 20 Rule 137 Sanctions

¶ 21 The next month, Edelson PC moved for sanctions against Bandas and Thut under Rule 137. Edelson PC maintained that Bandas and Thut filed Stewart's objection for an improper purpose, namely, to elicit attorneys' fees without providing any benefit

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to the class or informing the court of their improper purpose. Bandas and Thut retained separate counsel for the hearing on the Rule 137 motion. On January 31, 2017, Freeborn & Peters LLP filed an appearance on behalf of Bandas, along with a motion challenging the court's jurisdiction over him ( 735 ILCS 5/2-301 (West 2016) ) and asserting the sanctions motion fails to state a claim under section 2-615 of the Code of Civil Procedure (id. § 2-615). The trial court construed the 2-615 motion as a motion to strike the sanctions motion.

¶ 22 Edelson PC argued:

"Ultimately he, you know, Mr. Bandas, got us to a mediation and basically said, ‘I'm going to—I can delay the settlement which will cost the class and class counsel money. And, in exchange for me not doing that, you can pay me’—I think his first demand was near half a million dollars. We ultimately agreed to pay him $225,000 so he wouldn't appeal this objection."

Edelson PC also argued that Bandas's "game" was to enlist other attorneys to sign documents, even though he wrote "every single document in this case," and not sign the objection. As to Thut, Edelson PC argued he was...