Ameet Sachdev of the Chicago Tribune reports that Cook County Circuit Judge Nancy Arnold has delayed approval of a three-year-old stockholders class action against Boeing because of the federal court indictment handed down against lead plaintiffs’ counsel Milberg Weiss Bershad & Schulman. After the settlement had been submitted for her approval, Judge Arnold required that the six named plaintiffs appear in court and testify as to how they became plaintiffs in the case, including when the became Boeing stockholders and the amount of stock that they owned. Sachdev explains that while there is nothing overtly improper about the plaintiffs’ behavior, “the judge’s suspicions were aroused this summer after one of the plaintiffs’ law firms, Milberg Weiss Bershad & Schulman, was indicted on federal charges of paying kickbacks to people to serve as plaintiffs in class-action lawsuits, just weeks before a settlement was proposed in the Boeing case.” While the firm and its indicted named partners, Bershad and Schulman, have denied any wrongdoing, one of its clients has pleaded guilty to receiving $2.4 million in kickbacks. Judge Arnold may reject the settlement if she concludes that such misconduct occurred in this case.
Sachdev reports that this is but one more blow to the once-powerful class action plaintiffs law firm. “The fallout from the indictment is being felt in courtrooms around the U.S. In Minnesota, a federal judge removed Milberg Weiss from a leadership role in cases accusing Medtronic Inc. of selling faulty heart devices. [¶] In New York, the state’s comptroller fired the firm, which was representing New York’s public employee pension fund as lead counsel in a case against pharmaceuticals giant Bayer AG. Ohio’s public pension fund also axed Milberg Weiss.”
Ameet Sachdev’s article, entitled “Milberg case put on hold: Judge orders review of Boeing suit after law firm indicted,” may be found in the Business Section of the November 13,. 2006 edition of the Chicago Tribune.