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Maryland Verizon consumers to get $16.8 milion back for illegal overcharges

Maryland telephone consumers have won a major victory, thanks to a team of class action lawyers who intervened in an abusive class action settlement brought by other class action lawyers.  As a result, Maryland Verizon customers will now get $16.8 million instead of $156,000!
 
Dotson v. Bell Atlantic was originally filed in 1999 on behalf of Maryland customers who claimed that Verizon was charging them late fees in excess of the state's six-percent usury cap. Verizon and class counsel then entered into the first proposed settlement, which would have paid the consumers a total of $156,000, while the consumers’ lawyers would have received $13 million (the lawyers would have gotten 99% of the pot).
 
Trial Lawyers for Public Justice (TLPJ) and three Maryland-area law firms (including PJC Board member Richard Gordon’s firm, Quinn, Gordon & Wolf, Chtd.) then intervened in the case, representing consumers who objected to the lop sided settlement agreement.  As a result, the Maryland Circuit Court rejected the first settlement. Verizon and class counsel responded with a  with a second settlement that stipulated that Verizon would pay $26 million, of which $12.5 million would go to the lawyers (48% of the pot). The trial court approved this deal, but the objectors took it to the Court of Special Appeals.
 
The Public Justice Center’s Appellate Advocacy Project then became involved in the case.  Suzanne Sangree, Director of the Appellate Advocacy Project, authored a friend of the court brief on behalf of national experts in legal ethics. PJC’s amicus brief detailed the demonstrated ethical breaches by class counsel in this case, in particular based on their negotiation of two separate settlements that included patently excessive attorneys’ fees but little direct relief to the class.  Amici argued that the removal of class counsel in this case was necessary to preserve the integrity of the legal profession and to prevent abuse of the class action mechanism, which is vital to the protection of low income consumers.  Amici also proposed general guidelines for the Court of Appeals to adopt concerning attorneys fees agreements and cy pres awards in class action settlements.
 
The Court of Special Appeals reversed the trial court decision and sent it back for further proceedings.  The negotiations began again.  The third time was the charm: Verizon has now agreed to pay the class a total of $16.8 million, with the lawyers getting an appropriate amount of $6.1 million in attorney fees (27% of the pot, which is in line with class action settlement standards).

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