Better suited to sackcloth and ashes than backslaps and raised drinks, Aug. 18 is nonetheless an anniversary — the first to mark USDA's announcement that a Bayer GM trait had been found in the U.S. rice supply. A year on (following lost markets, state regulatory wrangling and rice variety bans), many questions remain unanswered.
But a proposed class-action lawsuit remains on track and many long-grain rice farmers are taking part. Increasingly, others are being courted and signed up for individual suits by attorneys outside the proposed class.
“A lawyer is always free to speak to a potential client at this stage of the case,” says Adam Levitt, class co-counsel and attorney with Chicago's Wolf Haldenstein Adler Freeman & Herz. “But what we've seen and heard is some information being imparted to (rice farmers) that's both inaccurate and, frankly, misleading.
“It creates a negative impression of what's going on, it oversells, it ignores the process and effect of the class certification ruling in the case (which hasn't happened yet), it overstates potential recoveries and puts the farmers in a position of making a decision without having all the information … If all the facts aren't being given, that helps no one except the lawyers themselves.”
Asked why rice producers should listen to class attorneys who have an obvious leaning in the legal scrum, Levitt says he isn't trying to sign anyone up but trying to keep farmers from being painted into a legal corner.
One group of lawyers has trolled for clients in at least three rice-producing states. Their pitch usually occurs over dinner at an “informational meeting.”
The lawyers “advise farmers of rumors they've heard of potential settlement ranges in the class action case being ‘X.’ And how, by (litigating) individually, they can get a lot more.”
Levitt, along with class co-counsel Don Downing (see http://deltafarmpress.com/rice/070528-class-action/index.html) are the only court-appointed lawyers authorized to speak with Bayer about settlement of the class-action cases. Both say any claim to impending settlements or big decisions are untrue.
“The fact we're hearing rumors about settlements that have occurred is laughable,” says Downing of St. Louis law firm Gray, Ritter & Graham. “If they'd occurred, we'd know about them!”
Another concern: many farmers aren't being told that until class certification is resolved (expected in spring 2008) the farmers are essentially in legal limbo.
“If the court certifies the classes,” says Levitt, “(rice farmers) will receive a printed notice of class action in the mail. The notice will also be in farming papers, including Delta Farm Press. (At that point), each farmer wanting to remain in the class doesn't have to do anything. If he wants to opt out, just send in a post card or letter by (a certain) date.”
If a farmer chooses to opt out, he has several decisions to make. He can retain a lawyer of his choosing and proceed individually. Or, “he can say, ‘I don't want any of this,’ and sit on the sideline and not be included in the case in any way.”
Regardless, a class action notice isn't the only chance a farmer has to opt out or retain his own counsel.
If the case is ultimately settled — either before or after verdict — a second notice, a settlement notice, will be sent out. At that point, “every rice farmer will have the right to stay in the class and accept the settlement. Or, they can opt out or object to the settlement.
“If they opt out, they can retain a lawyer on their own. Or, they can object to the settlement saying the … fees are too high, the settlement isn't enough, whatever — any one of 100 things.”
If rice farmers wait to make legal decisions, “it isn't like they'll lose anything,” says Levitt. “There's a false urgency a lot of these lawyers are creating.”
“We don't believe that benefits the farmers for a second,” says Downing. “Any such solicitation is for the benefit of the lawyers. If they really cared about the farmers' interests, they'd explain what we (just covered).
“Why would a farmer want to commit to a lawyer or firm outside the class when the class settlement may be something they want?”
Also potentially adverse to farmers are proposed fee agreements. “The percentages (between 40 and 45 percent) are substantially higher than have been granted in any class action in … the last 15 years,” says Levitt.
In recent class actions, courts typically granted fees substantially lower than the cited percentage. The court closely monitors fees and expenses in class cases.
“That's because the court is a fiduciary of the absent class members and is cognizant of their interests,” says Levitt. “As a result of that, the court must review and approve any fees and expense reimbursements we seek.”
That's unlike an individual case where once a 40-45 percent retainer agreement is locked in, “the court has no control. In contrast, with class counsel, the oversight is constant and fees generated are completely transparent. At the end of the case, we must submit a fee affidavit saying, ‘We believe we're entitled to so-and-so fees for these reasons. All our records are attached.’”
One set of retainer agreements the class co-counsels have seen not only cited a 40 percent fee, but also contained a 10 percent expense markup.
“So not only are these farmers being induced to give up almost half of any recovery but, on top of that, every photocopy, every phone call, every cup of coffee bought in conjunction with the case makes the lawyer a 10 percent profit! That's a nice margin to operate from.”
One scenario has Levitt particularly concerned. “Say a farmer decides to sign up with one of these law firms to proceed individually. And after the class is certified he decides he wants to stay in the class and (later) he wants to partake in the settlement.”
Any award a class member receives in the settlement is net of the court-awarded fees and expenses off the top of any fund created. Once the class member receives his portion, “the lawyer he signed the private contract with can come back and say, ‘Okay, I now get 45 percent of what you got.’ That's a real problem.”
Are some rice farmers already in peril? “I believe each of these lawyers should be obligated to give an explanation on that point. And they should be obligated to confirm, in writing, that if their clients decide to remain in the class the lawyer isn't entitled to any fee obtained through the class action litigation. There's no reason for a lawyer to be permitted to essentially double-dip.”
One group of lawyers trying to sign up rice farmers has represented that the expense fees in individual actions “would be approximately $1 to $3 per acre,” says Levitt. “In other words, if the average rice farmer has 500 acres … he's promised expenses should be, at most, around $1,500.
“Let me tell you something, you're going up against Bayer. You'll need experts at deposition and trial. You'll need travel to trial. You'll need your own deposition. I will bet you $1,500 that the expenses are exponentially higher for each farmer.”
It's unlikely a non-lawyer who has never been involved in serious litigation would know that. “So when farmers hear, ‘stay with us, your expenses will be low and your recovery will be high,’ it sounds like green grass and high tides forever. But that isn't the case. Those are false promises. And when you float numbers in a room and talk about class action lawyers who will get ‘X’ and we'll get you a more attractive ‘Y,’ a lot of people are taken in.”
Such representations have been made repeatedly, charges Downing. “Any time you start comparing what (a client) might get if you do this versus that, it's inherently misleading. No one could know at this point. It's just a guess. That's why there are strict ethical prohibitions on lawyers projecting what a result will be in a case.”
How long has the solicitation been going on? “We'd heard of lawyers signing up farmers over the last several months,” says Levitt. “Before leadership was appointed in the class action case, there were a lot of lawyers signing people up in their hometowns and home states.”
Since then, three or four firms in particular have stepped up efforts to sign farmers.
“It's concerted and we know it's happened in at least four of the five long-grain, rice-growing states. For all we know, for every incident of this we've heard of, there may have been 15 we don't know about.”
Levitt says he's open to speaking not only with farmers but any lawyers they might bring to the arena. If rice farmers “are unsure about something they've heard and want to ask about it, call me. I'll even (phone conference) with the farmer and his lawyer and advise the lawyer of the exact things I've told the farmer.”
Levitt and Downing are in the process of sending written discovery requests to Bayer. At the same time, “Bayer has asked all farmers to fill out a plaintiff fact sheet that basically lists details of their operations,” says Downing. “We're in the process of producing all the farmers' documents for Bayer. And Bayer is gathering their documents for us.”
Once that process is finished, depositions will begin and testimony of Bayer representatives and non-party witnesses will be taken.
“Bayer will also be able to take depositions of our people under oath and a transcript is made of that testimony.”
The next step will be in November when plaintiffs will file a motion for class certification. “We'll also file an accompanying brief that will set forth all the legal and factual reasons why the class should be certified.”
Bayer will have until next February to marshal evidence and legal arguments on why the court shouldn't certify the class. Plaintiffs will have until late April to file a brief in response.
“Those briefs will be extensive and there will be, no doubt, citations to evidence and deposition transcripts and, perhaps, expert testimony.”
In May 2008, both sides will argue their cases before the court in St. Louis. The court will then decide if the case should proceed as a class action.
“The court has a schedule that would take this through a trial date of early 2009. So there will be discovery and depositions going on during that whole time.”
With such a long timeframe, are the lawyers trying to sign up rice farmers promising a speedier resolution through individual cases?
“They are promising that,” says Levitt. “Some are saying, ‘Our goal is to get your money as fast as possible — unlike the class action lawyers who aren't working as fast.’
“Frankly, if they're suing Bayer, their cases will ultimately be removed from state courts to federal court and wind up in the proceeding in Missouri. There may be an exception, but it's highly improbable.”
Likewise, if a small law firm is to sign up “50 rice farmers and they must try each case individually, the likelihood of being able to do so efficiently and expertly this decade seems very slim. There are only so many hours in the day and only so many trial dates available in a given court or county.
“They're creating situations where they'll be physically incapable of keeping promises they're making. Also, they'll be incapable of keeping the monetary promises they're making.”