Settlement Shopping
Not too long ago, AOL-Time Warner negotiated a settlement in a nationwide securities fraud class action. Previously, AOLTW had settled with the SEC and DOJ. These settlements totalled more than $2.5 billion. The national regulators and the private litigants were happy and the nation got back to growing GDP.
Except it wasn’t quite that tidy. Some Pennsylvania plaintiff groups (including the Pennsylvania Tobacco Settlement Fund) took a different route. They wanted some more money. They opted out of the class action, got the state AG involved, brought a separate action in a Pennsylvania court, and wrangled another settlement. With the extra leverage of the state at their disposal, these groups got another $23M for themselves.
The moral of the story: federal law and federal agencies set the pace of national securities fraud litigation, unless Pennsylvania decides otherwise and things fall apart.