The most exciting aspect thus far of In re Flint Water Cases, Case No: 5:16-cv-10444-JEL-MKM, presently before U.S. District Court Judge Judith E. Levy in the Eastern District of Michigan is the bruising battle between interim co-lead class counsel, Theodore J. Leopold and Michael L. Pitt, and co-liaison counsel for the individual cases pending before the court related to the “Flint Water Crisis,” Hunter Shkolnik.

Competitive Tensions

It is not uncommon for there to be competitive tensions between counsel in class action litigation (see Dickerson, “Class Actions: the Law of 50 States,” Law Journal Press (2018) 4.03[8] (Competing Class Actions)) or between class counsel and counsel representing individuals. For example, in some mass tort class actions the individual damages may be great enough to warrant individual representation which may result in competition with counsel seeking to represent a class. See, e.g., Askey v. Occidental Chemical, 102 A.D. 2d 130 (4th Dept. 1984) (Love Canal lawsuits; 23 non-class actions pending on behalf of 43 plaintiffs; class certification denied)]. Such competitive spirit may lead to disputes between counsel, usually over fees. See, e.g., Sternberg v. Citicorp Credit Services, 110 Misc.2d 804 (Nassau Sup. 1981)(“There is then a delicate balance to be maintained by the courts, lest the image of the class action lawyer as a champion of justice becomes tarnished and tawdry … . While there was little duplication of services, there was an abundance of time spent on barnyard scrambling for recognition.”); Campbell v. Fireside Thrift Company, 2004 Cal. App. Unpub. LEXIS 216 (Cal. App. 2004) (“This appeal calls upon us to resolve yet another internecine dispute between counsel over attorneys fees.”).

Motion for Replacement

In the Flint Water Cases, interim co-lead counsel, “with the support of the majority of counsel representing individual Plaintiffs and Executive Committee Members, bring this motion, at this time, upon becoming aware of a series of ethical issues and conflicts,” requested that the court remove and replace co-liaison counsel alleging that “Co-Liaison Counsel Hunter Shkolnik has entered into excessive fee agreements to pursue individual actions involving the Flint Water Crisis for Flint residents, utilized his status as appointed liaison counsel and knowledge obtained through that position, to influence and solicit class members and individuals with pre-existing agreements with other counsel, and failed in his obligation to be forthright in fulfilling his obligations as liaison counsel.” See Motion for Replacement of Co-Liaison Counsel for Individual Cases dated March 12, 2018 (Motion to Replace).

The Individual Cases

According to the Motion to Replace, “there are forty-seven (47) individual cases represented by nine (9) different law firms pending before this Court. The number of individuals represented in each case varies from 1 to 166 with the total of 375 individually identified Plaintiffs in the 47 cases filed. It appears that Napoli Shkolnik represents fifty-eight (58) of the individual Plaintiffs in filings pending before this Court.”

The Retainer Agreements

The Motion to Replace alleges that “the Napoli Shkolnik retainer agreements contain provisions that are contrary to the controlling ethics rules and laws of the State of Michigan (in that they provide for) a forty percent (40%) contingency fee in violation of Michigan law which caps contingent fees on personal injury matters at thirty-three percent (33%) MCR 8.121(b) (and Michigan Rule of Professional Conduct 1.5(a)). The retainer agreements further provide that the contingency percentage they claim for fees will be computed from the 'gross' settlement, as opposed to a percentage of the 'net' settlement…in violation of MCR8.121(C).”

Soliciting Clients and Class Members

The Motion to Replace alleged that “at the Town Hall meeting on February 18th, Napoli Shkolnik, persons on the panel and MC Hill Harper told attendees they should all retain counsel and handed a packet with Napoli Shkolnik retainer agreements. Although Mr. Shkolnik told people only to retain an attorney, the MC and a councilman on the panel encouraged people to sign up with Napoli Shkolnik and at one point the MC advised attendees that agreements they had signed with other attorneys were not binding.”

In addition, “attendees were also told that they were better off pursuing individual actions than remaining as class members with no discussion of the fact that the class case could toll their claims … Nor did he inform attendees that a class counsel fee might be less than the fee in an individual retainer agreement. Attendees were also told that class members would be 'stuck with' a settlement negotiated by lawyers, without any discussion of opportunities to object … Not only was there a failure to explain the process of opt-outs or objections, but the lack of neutrality in explaining the pros and cons of class participation versus individual representation was in conflict with Mr. Shkolnik's role as Co-Liaison Counsel and the duties required by this Court to act fairly with regard to all parties and counsel.”

Co-Liaison Counsel's Response

In opposition to the Motion to Replace and in Support of a Cross Motion to Discharge Interim Co-Lead Class Counsel, it was noted that the “motion is nothing but a retaliatory smear campaign against Co-Liaison Counsel … Interim Counsel's allegations of unethical conduct are a complete fabrication. They are designed only to discredit Mr. Shkolnik in the hope that Interim Counsel can gain complete control of the litigation so that they can line their own pockets. In short, the motion is nothing more than a blatant money grab.”

Interim Co-Lead Counsel Acted Improperly

Noting that “Interim Counsel … has acted improperly, not Mr. Shkolnik” the opposition papers sought to clarify three issues raised in the Motion to Replace. First, “complaints regarding … retainer agreements are not a sufficient basis for removing the firm as Co-Liaison Counsel” and in addition “the issues pointed out by Interim Counsel have been remedied and there has been no prejudice to any plaintiff.” Second, “Interim Counsel's hyperbolic account of the February 18, 2018 town hall meeting is almost a complete fabrication. The meeting was an informational session, permitted under the Michigan Rules of Professional Conduct and similar to numerous informational sessions Interim Counsel and the Flint Water Class Action Legal Team have themselves conducted.” Third, “Hunter Shkolnik's statement at the February 20, 2018 Status Conference (regarding) whether a particular order had been distributed to all plaintiffs, rather than some (was in) error (and) promptly corrected and, again, no plaintiffs or plaintiffs' counsel were prejudiced.”

Interim Co-Lead Counsel Should Be Removed

In support of its cross-motion to discharge interim counsel for “(1) “hav[ing] conflicts of interest … (2) hav[ing] provided improper notice to and coerced putative class members to sign their own retainer agreements and (3) hav[ing] demanded unethical ultimatums from Co-Liaison Counsel to the detriment of the class,” it was noted that interim counsel “have signed-up as clients, both class and individual plaintiffs, despite the clear conflicts between the two groups. They have sent out improper class notices prior to certification. Just as deceitful, they have issued ultimatums to other counsel in this case that they will essentially shut them out of attorney's fees unless they are willing to engage in Interim Counsel's deliberately opaque billing and work-assignment practices.”

Conclusion

Hopefully, the court will quickly resolve the competitive tensions between interim co-class counsel and co-liaison counsel so that the affected residents of Flint may have unified and vigorous representation.

Thomas A. Dickerson is a retired Associate Justice of the Appellate Division, Second Department of the New York State Supreme Court.