For Immediate Release: June 10, 1998

For More Information Contact: TLPJ, 202-797-8600

Opposition to Motion for Bond
Appellate Brief
Previous Press Release

Class Counsel Seek to Force Own Class Members to Post $1 Million Bond to Appeal Coupon Settlement

Also Seek Probe of Clients' and TLPJ's Finances in Effort to Prevent Review of Bank United Deal

In a stunning example of class action lawyers turning on their own clients, the class counsel in Cusack v. Bank United of Texas are seeking to force two class members to post a $1 million bond or forfeit their right to appeal a coupon settlement of their claims. The class counsel – Charles "Bucky" Zimmerman and Barry Reed of Zimmerman Reed in Minneapolis – are also seeking to probe the finances of the class members and Trial Lawyers for Public Justice (TLPJ), which challenged the proposed settlement on the class members' behalf. United States District Court Judge James B. Zagel of Chicago approved the settlement on March 4, 1998, but the class members have appealed that ruling to the U.S. Court of Appeals for the Seventh Circuit.

"This is a blatant attempt to prevent appellate review of a questionable coupon settlement," said TLPJ Foundation President Fred Baron of Baron & Budd in Dallas. "If these class counsel did not think the settlement could withstand appellate review, they should not have agreed to it. Their efforts to quash the appeal by forcing the class members to post a $1 million bond and probing their finances are simply outrageous and wholly contrary to law."

The Cusack class action alleges that Bank United cheated approximately 350,000 of its mortgage customers out of less than $10 of interest each by maintaining excess "cushions" in their escrow accounts. The settlement in the case would provide those customers with coupons redeemable for a $175 discount only if they refinance or obtain a new mortgage from Bank United. It would pay $400,000 in fees and costs to class counsel. The settlement also contained a one-way gag order barring all class members and class counsel -- but not Bank United or its counsel -- from talking to the press about the deal, but that provision was dropped when TLPJ filed its challenge on behalf of class members James B. Ragan and Timothy W. Monsees.

TLPJ's brief in opposition to the $1 million bond motion, filed today, emphasizes the unprecedented and dangerous nature of the motion, which could effectively eliminate appellate review of all class action settlements, since class actions, by their nature, involve individual claims worth little compared to the aggregated claims of the class. "The intended purpose and inevitable effect of the motion, if granted," the brief says, "could not be more obvious: to prevent the Ragan Objectors from appealing. No economically rational person, allegedly cheated out of less than $10, would agree to post (and potentially forfeit) any significant sum -- much less $1 million -- to appeal even the most outrageously inadequate class action settlement of his or her claims."

The brief also reviews the applicable law and says: "No court in U.S. history has ever required a class member to post any bond – much less a $1 million bond – to appeal a class action settlement affecting his or her rights. This Court should not be the first."

"We understand that class counsel would like this settlement to be final, but their efforts to stop this appeal go beyond the pale," said TLPJ Staff Attorney F. Paul Bland, Jr., who co-authored the brief with TLPJ Executive Director Arthur H. Bryant. "If they are proud of this settlement, they ought to defend it to the Court of Appeals. If they aren't, they at least ought to respect their class members' rights, not try to harass and intimidate them into submission."

The Cusack class action is one of two similar class action settlements reached by the same class counsel and challenged by TLPJ as part of its Class Action Abuse Prevention Project. In the other case, Robinson v. Marine Midland Mortgage Company, the defendant has agreed to alter the settlement to satisfy TLPJ's objections. In Cusack, however, the defendant - and class counsel - have apparently decided to fight.

"Someone has to stand up for class members and make sure their rights are protected," said TLPJ's Bryant. "That's why our Class Action Abuse Prevention Project was created. We would rather be fighting to hold the defendant accountable, but if class counsel will not respect the class members' rights, then, regrettably, we'll have to fight with them, too."

Class counsel have until Monday, June 15, to file a reply brief in support of their motion for a bond. Oral argument on the appeal in Cusack has not yet been scheduled.

In addition to Bland and Bryant, TLPJ's legal team in the case includes TLPJ Foundation President-Elect Joseph A. Power, Jr. of Chicago's Power, Rogers & Smith.