Verizon customers across Maryland will now receive
$16.8 million in compensation for illegal late fees charged by the
company because Trial Lawyers for Public Justice and a team of consumer
advocates challenged a proposed class action settlement that would have
given them $156,000, and their lawyers $13 million. This relief will be
paid within the next few weeks.
The Circuit Court for Prince George’s County,
Maryland, has now approved the revised settlement in Dotson v. Bell
Atlantic-Maryland, a consumer class action charging that Bell
Atlantic-Maryland (now Verizon) billed its customers excessive late
fees. The Court’s order ends a three-year battle in which objecting
class members represented by TLPJ and a team of leading consumer
attorneys defeated one proposed settlement and then forced significant
improvements to a second proposed settlement, which is now final.
Under the first proposed settlement, Verizon would
have paid only $156,000 to a small number of class members who submitted
claim forms, while paying $13 million in attorney fees to class counsel.
Under the second settlement now approved by the Court, Verizon is paying
approximately $16.8 million to all of its current customers, while class
counsel receive $6.1 million in attorney fees.
"This case is a textbook example of how class
actions can hold companies accountable and win justice for consumers –
if the courts and lawyers do their job," said TLPJ Staff Attorney
Michael J. Quirk, lead counsel for two of the objecting class members.
"Before our clients objected, the lawyers for the class would have
gotten nearly all the money. Because of our objections, the class
members are now being fairly compensated for their claims."
This case was originally filed in 1999 on behalf
of approximately two million current and former local telephone service
customers who alleged that Bell Atlantic was charging them unlawful late
fees in excess of the Maryland Constitution’s six percent usury cap. In
December 2002, class counsel Beins, Goldberg & Gleiberman of Washington,
D.C., and Verizon entered into their first proposed settlement. That
settlement required each class member to fill out and mail in a claim
form to receive, in most cases, $6 in relief. Verizon would have kept
all available money not claimed by class members, while class counsel
would have been paid $13 million regardless of how much money the
In April 2003, TLPJ and three Maryland-area law
filed objections to the proposed settlement on behalf of 12 class
They argued that the settlement was unfair to the class because
virtually all the money being paid would go to class counsel’s attorney
fees. They proved that only 18,000 customers out of a class of several
million had claimed a total of $156,000 in relief. On November 13, 2003,
the Circuit Court
issued an opinion rejecting the settlement and
objections to the excessive attorney fee award and the failure to
disclose these fees in the notice to the class.
In June 2004, class counsel and Verizon entered
into their second proposed settlement.
It increased the total amount Verizon had to pay
to $26 million, but allowed class counsel to claim almost half of this
fund ($12.5 million) for their attorney fees. The settling parties tried
to justify this excessive fee award by saying that the settlement was
really worth $52 million because the settlement prohibited Verizon from
getting back the money it was paying out to customers by seeking
regulatory approval to raise its rates to cover the payout.
objections to this second settlement, TLPJ and the objectors
argued that (1) the parties’ claim to have doubled the settlement’s
value through the "recoupment waiver" was a slight of hand that created
the phony appearance of extra value; and (2) the settlement should be
rejected because its allowance of a 50 percent attorney fee award was
illegal and unfair to the class. The Circuit Court approved this
settlement in November 2004. When the objectors appealed, the Maryland
Court of Appeals granted review, questioned the inflated measure of the
settlement’s value, and sent the case back to the Circuit Court. The
final settlement agreement followed.
"After three years of fighting for the interests
of Maryland consumers and against the best efforts of the class’s own
lawyers to enrich themselves to the detriment of their clients, we
achieved a result we are proud of. Essentially, both Verizon and the
class’s lawyers tried to throw a fastball by the court," said Kieron F.
Quinn of Quinn, Gordon & Wolf, Chtd.
in Baltimore, lead counsel for ten of the objectors. "Class actions
exist so aggrieved citizens can hold big institutions accountable for
serious wrongdoing. We made sure that happened in this case."
In addition to Quirk and Quinn, the objectors in
this case were represented by TLPJ Staff Attorney F. Paul Bland, Jr.;
Richard Gordon and Martin Wolf of Quinn, Gordon & Wolf, Chtd.; Philip
Foard of Foard, Gisriel, O’Brien & Ward in Towson, Maryland; and Philip
Friedman of the Law Offices of Philip Friedman in Washington, D.C.
Copies of TLPJ’s objections, the court’s
decision rejecting the first proposed settlement, and the court’s
approving the final settlement in Dotson v. Bell
Atlantic-Maryland, are available online at www.tlpj.org. TLPJ’s work
in this case is part of its