CEI Objects to Unfair Petrobras Settlement that Groups U.S. and Foreign Purchasers Together, Attorneys Overbill Class by $100M
Yesterday evening, the Competitive Enterprise Institute’s (CEI) Center for Class Action Fairness objected on behalf of a class member to an unfair settlement and an excessive attorneys’ fees request in In re Petrobras Securities Litigation, pending before the U.S. District Court for the Southern District of New York. The class action alleged violation of U.S. securities law by Brazil’s state-controlled oil company in connection with a multi-billion dollar bribery and kickback scheme.
The proposed settlement includes class members who purchased Petrobras securities through foreign transactions. Because these purchasers are not eligible to recover damages under U.S. law, they unfairly dilute the recovery of U.S. purchasers.
“By including foreign purchasers with no claim in the class, the plaintiffs’ attorneys reduced the recovery for U.S. shareholders with valid claims,” said CEI attorney Anna St. John. “On top of that, they will take away even more of class members’ recovery if the court grants their fee request based on nearly $100 million in overbilling for contract attorneys whose market rates are a small fraction of the excessive rates attorneys charged the class. We are asking the Court to return more than $194 million to class members.”
According to CEI, the plaintiffs’ attorneys inflated their fees and overbilled class members for “project attorneys” earning $325-$625/hour for what is relatively risk-free litigation, following widespread government investigations. These exorbitant billing practices are similar to what launched investigations in the Anthem and State Street cases.
If the court approves the settlement, U.S. purchasers will see their recovery reduced further by the attorneys’ excessive $285 million fee request, in which the attorneys overstated the value of the time they spent on the case by at least $96 million.
See CEI’s objection and learn more about the case here.
ABOUT: The Competitive Enterprise Institute’s Center for Class Action Fairness represents class members against unfair class action procedures and settlements. Originally founded by Ted Frank in 2009, the center has secured millions of dollars for consumers and shareholders and won landmark precedents that safeguard consumers, investors, and the courts.