Articles Posted in Settlements

The law firm of Williams, Bax & Saltzman P.C. represented Cole Goesel and his parents in a personal injury lawsuit that settled before trial. Because Cole was a minor, the law firm needed judicial approval to finalize the settlement. The parties’ contingent-fee agreement entitled the law firm to one-third of the gross settlement, while all litigation expenses would be covered by the Goesels’ share.

The U.S. District Court judge refused to approve the settlement unless litigation expenses were deducted off the top and one-third of the net settlement was allocated to the firm. The judge also rejected the firm’s attempt to count the cost of computerized legal research as a separately compensable litigation expense rather than rolling it into the fee recovery. The law firm appealed the judge’s order limiting its fees. The Goesels declined to participate.

The U.S. Court of Appeals reversed the district court judge’s decision. The appeals panel stated that although the district court enjoys substantial discretion to safeguard the interests of minors in the settlement of litigation, this discretion is not boundless. In this instance, the trial judge criticized aspects of the firm’s contingent-fee agreement that have received the expressed blessing of Illinois courts. The trial judge’s analysis of what the Goesels would receive, that being 51% of the gross settlement amount rather than 42%, was insufficient to justify discarding a reasonable contingent-fee agreement.

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The issue before the Illinois Appellate Court was whether the parties’ high-low agreement was a settlement agreement and if so, whether interest pursuant to Section 2-1303 of the Illinois Code of Civil Procedure accrues on an award that is predetermined by that high-low agreement. Mark Pinske thought he was entitled to 9% post-judgment interest on $100,000 of the $194,000 arbitration award he received against Lawrence White.

The arbitration award was made under a hybrid mediation/arbitration contract that also contained a high-low agreement. Pinske and White’s automobile insurer, Allstate Property & Casualty Insurance Co. agreed that Allstate would pay at least $50,000, but no more than $100,000 for injuries, that Pinske suffered in an automobile crash with White. The agreement asked a retired Cook County judge to mediate and that if the mediation effort failed, then to arbitrate the dispute for a binding result.

When Pinske sued for judgment on the award, he relied on Section 2-1303 of the Illinois Code of Civil Procedure. That section starts by saying “judgments recovered in any court shall draw interest at the rate of 9% per annum until satisfied.” The section also provides that “when judgment is entered upon any award, . . . interest shall be computed at the above rate, from the time when made or rendered to the time of entering judgment upon the same, and included in the judgment.”

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A 33-year-old elevator mechanic’s helper (known only as C.E.) was working on top of a traction elevator in an apartment building in Broward County, Fla. Before starting, the elevator mechanic‘s helper engaged a safety stop switch to prevent the elevator cab from moving. When C.E. was holding onto a guide rail with his right dominant hand and preparing to cross to an adjacent elevator, the elevator cab which he was standing on moved upward, suddenly and at a high rate of speed. Three wheels that move the elevator ran over C.E.’s hand.

C.E. suffered crushed injuries to the right hand, including partial severance of his ring finger and injuries leading to amputation of his pinky finger. C.E. underwent more than a dozen surgeries to repair the damage to his hand. He later developed complex regional pain syndrome that was diagnosed to be permanent and caused swelling, burning and electric-shock-like pain and required pain medication. Worker’s compensation paid approximately $750,000 in past medical expenses and earnings.

C.E. retrained himself to use his left hand. He returned to work about 4 ½ years after the incident and became an elevator inspector. He was later laid off. He since has obtained work as a security guard.

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Pilot Flying J, a truck stop fueling and restaurant chain that is common along Illinois and U.S. highways, has agreed to pay $92 million in fines to the federal government for a scheme to cheat truck drivers out of agreed-upon diesel fuel rebates. The agreement was reached with the U.S. Attorney’s Office for the Eastern District of Tennessee and Pilot Travel Centers, LLC d/b/a “Pilot Flying J.”

It was alleged that the scheme cost the company’s truck driver customers more than $56 million. The agreement came after 10 Pilot Flying J employees pleaded guilty to involvement in the plot to defraud Flying J customers.

Pilot Flying J is one of the largest trucker diesel suppliers in the United States. Flying J offered rebates and discount programs to encourage loyalty among its trucking customers. The discounts offered by Pilot Flying J varied among its numerous truck stops making it difficult for customers to know whether they were getting their agreed-upon discounts. The U.S. Attorney’s Office stated that in some instances, Pilot Flying J instructed its sales staff how to reduce the rebates in order to make some discounts more profitable.

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In 2000, Boston attorney Richard Brody took a case that seemed at the time to be an obvious, straight-forward liability case that would most likely settle quickly — maybe without even filing a lawsuit. The case involved serious injuries suffered by another trial lawyer, Odin Anderson.

On Sept. 20, 1998 Anderson was crossing an intersection in a crosswalk after a long lunch in which he drank alcohol, when a bus, turning left, hit him before he reached the middle of the street. Anderson suffered a fractured skull and stopped breathing. Fortunately for him, the bus, owned by Partners Healthcare, was transporting a group of doctors. Several of the doctors acted on Anderson’s injury and administered CPR. Anderson, however, suffered a traumatic brain injury that required rehabilitation to walk, speak and perform daily activities.

Today he still has memory loss, a decreased sense of smell and problems with executive functions and higher-level thinking. He did return to practice law, but he must refer complicated cases to other attorneys. The insurance company for the bus company, American International Group Inc. (AIG) instead of settling this obvious liability case, concocted a new set of facts, suppressed evidence and fought payment of a judgment until it was ordered to honor a jury verdict 8 years later.

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In a variety of cases that end in settlement, the parties often agree to make the settlement agreement confidential. When the parties agree separately that the terms of the settlement remain confidential, it’s a different story than the one in which the court is required or asked to seal the settlement agreement.

In the case of Goesel v. Boley International, there were two court-sealed settlement agreements that were the subject of an appeal to the 7th Circuit U.S. Court of Appeals in Chicago. The appeal asked to keep the settlement agreements sealed. Judge Richard A. Posner ruled that a confidential agreement between the parties was an insufficient basis for the settlement documents to be sealed.

The Goesel case was a personal-injury lawsuit brought on behalf of a minor. Because of the status of the plaintiff, that being a minor, the plaintiff was required to obtain a district judge’s approval of the settlement. The trial judge reduced a portion of the settlement proceeds that were payable to the plaintiff’s law firm for attorney fees and costs and approved the settlement as then revised. The appeal in this case is by the law firm that challenged the judge’s modification of the settlement terms, which included attorney fees.

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