No, 2-15-0236 IN THE APPELLATE COURT OF ILLINOIS, SECOND JUDICIAL DISTRICT SHAUN FAULEY, SABON, INC., SANDY ROTHSCHILD & ASSOCIATES, INC., DEBAUN DEVELOPMENT, INC, and CHRISTOPHER LOWE HICKLIN DC PLC, Individually and as the representatives of a class of similarly situated persons, Appeal from the Circuit Court of Lake County Plaintiffs-Appellees, Case No. 14 CH 1518 vs. Judge Luis A. Berrones, Presiding METROPOLITAN LIFE INSURANCE COMPANY, STORICK GROUP CO., THE STORICK GROUP CORPORATION, SCOTT R. STORICK and JOHN DOES 1-10, Defendants, AUSTIN DISTRIBUTING, Objector ~ Appellant. BRIEF AND ARGUMENT OF OBJECTOR-APPELLANT AUSTIN DISTRIBUTING Counsel for Appellant: KIRK A. KENNEDY ROBERT J. LONG ‘The Kennedy Firm Daniels, Long & Pinsel, LLC 6855 Colfax Drive 19 North County Street Dallas, TX 75231 Waukegan, IL 60085 (832) 646-9228 (847) 623-5900 Atty, No, 6276581 Atty, No. 6180761 ORAL ARGUMENT REQUESTEDPOINTS AND AUTHORITIES OVERVIEW OF THE ISSUES AND SUGGESTION THAT CLARIFICATION OF ILLINOIS CLASS ACTION JURISPRUDENCE ON THE STANDARDS FOR ADEQUACY OF CLASS REPRESENTATION IS NEEDED Reliable Money Order, Inc. v. MeKnight Sales Co., 704 F.3d 489 (7 Cir. 2013)..... 14 APB Associates, Inc. v. Bronco's Saloon, Inc., et al., 297 F.R.D. 302 (E.D. Mich. 2013).......14 Standard of Review 75 ILCS 5/2-801. Champaign Twp. v. County of Champaign, 331 Ill. App. 34 582 (4th Dist. 2002). 16 Dunleavy v, Nadler, 213 F.3d 454 (9" Cir. 2000). il Molski v. Gleich, 318 F.3d 937 (9™ Cir. 2003).. 16 ‘Amchem Prods., Inc. v. Windsor, 52\ U.S. 591, 620 (1997).. 16 Mirfasihi v. Fleet Mortgage Corp., 356 F.3d 781, 785 (7" Cir. 2004)... 16 il ANDERSON + WANCA DID NOT ADEQUATELY AND FAIRLY REPRESENT THE CLASS, Reliable Money Order, Inc. v McKnight Sales, Co., 704 F.3d 489, 498 (7 Cir. 2013). 7 A. Class Counsel Owes a Fiduciary Duty to the Class that Includes the Duty to Disclose All Matters that Could Impact Class Counsel's Objectivity Creative Montessori Learning Centers v, Ashford Gear, LLC, 662 F.34.913 (7" Cir. 2011)......17 Lopez v. Munoz, Hockema & Reed, 22 8.W.3d 857, 867 (Tex. 2000)......+.++ pene] Romm v. Hartford Ins, Co., 2012 US. Dist. LEXIS 143578 at *12 (D. Nev. Oct. 2, 2012)......17 B, Anderson + Wanea’s Refusal to Disclose a Potential Conflict of Interest is a Breach of Duty and Proves a Lack of Adequate Representation of the Class ILL. R. PROF. COND. 1.7(b)... 19Eubank v, Pella Corp., 753 F.3d 718, 722 (7" Cir. 2014)...... 19 Reliable Money Order, Inc. v McKnight Sales, Co., 704 F.3d 489, 498 (7" Cir. 2013). =19) Inre Imming, 131 Ill. 2d 239, 259, 545 N.E. 24 715, 724 (IIL. 1989)...... C. Class Counsel’s Relationships with Sabon and C-Mart, Inc. Demonstrate it Cannot Serve as Class Counsel I CLASS PLAINTIFFS SHAUN FAULEY AND SABON, INC. WERE INADEQUATE CLASS REPRESENTATIVES Berger v. Compaq Computer Corp., 257 F.3d 475, 481 (5th Cir. 2001). Susman v. Lincoln Am. Corp., 561 F.2d 86 (7th Cir. 1977). 22) Shroder v, Suburban Coastal Corp., 729 F.2d 1371, 1375 (11th Cir. 1984 2 A. Sabon Inc. London v. Walmart Stores, Inc., 340 F.3d 1246, 1255 (11" Cir. 2003)... 22 B. Shaun Fauley Ralph K. Winter, Paying Lawyers, Empowering Prosecutors, and Protecting Managers: Raising the Cost of Capital in America, 42 DUKE L.J. 945, 984 (1993)... 123 De Bouse v. Bayer AG, 235 Ill. 544, 459 NE. 1364 (2003). m1 IT WAS ERROR FOR THE LOWER COURT TO REFUSE TO ALLOW A LODESTAR CROSS-CHECK ON CLASS COUNSEL'S $7,666,666.67 FEE REQUEST AND THE AWARD WAS EXCESSIVE IN ANY EVENT Brundidge vs. Glendale Federal Bank, FSB, 168 IlI.2d 235, 659 N.E. 909 (Ill. 1995).......++000 24T. Eisenberg and G. Miller, Attorneys’ Fees and Expenses in Class Action Settlements (1993-2008) http://scholarship.law.cornell.edu/cgi/viewcontent.cgiarticle1066&context= clsops_papers...24 Inre Insurance Brokerage Antitrust Litig., 579 F.3d 241, 284 (3° Cir. 2009)... 24 Vv THE TRIAL COURT ERRED BY AWARDING CLASS COUNSEL $7,666,666.67 IN ATTORNEYS’ FEES WHEN THOSE LAWYERS BREACHED THEIR DUTIES TO THE CLASS Inre Marriage of Pagano, 154 Ill 2d 174, 607 N.E. 2d 1242, 1249-50 (1992). Anderson v. Anchor Organization for Health Maintenance, 274 II-App.34 1001, 654 N.E. 2"! 675 (1995)... Creative Montessori Learning Centers v. Ashford Gear, LLC, 662 F.3d 913 (7 Cir. 2011).....26 Reliable Money Order, Inc. v MeKnight Sales, Co., 704 F.3d 489, 498 (7 Cir. 2013).. Eubank v, Pella Corp., 753 F.3d 718, 722 (7 Cir. 2014). 26NATURE OF THE ACTION AND THE JUDGMENT APPEALED FROM This is an appeal from the trial court’s approval of a pre-certification, nationwide class action settlement over objections to the fundamental faimess of the settlement and the adequacy of class counsel and class representatives. Because this case has had a long and unusual course in multiple courts across the United States, a broader statement of the facts is necessary to understand the nature of the case and the judgment appealed from. The nationwide class in this case consists of millions of recipients of unsolicited fax transmissions or what are known as “junk faxes.” Sending junk faxes is a violation of a federal law known as the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”). The TCPA. has given rise to many class action lawsuits against companies like the defendant in this case, Metropolitan Life Insurance Company (“Met Life”), who used facsimile to transmit written advertisements to consumers in an effort to generate sales. The legal and financial driver behind these junk fax class actions is the Illinois based law firm of Anderson + Wanca and its lead attorney, Brian Wanca. Anderson + Wanea is lead class counsel and the sole law firm representing the class plaintiffs in the ease at bar (hereinafter “Class Counsel”) Class Counsel filed this iteration of the class action against Met Life on July 3, 2014. Class Counsel then filed a motion to settle with Met Life on July 30, 2014, twenty-seven (27) days after the filing date. Before this class lawsuit was filed in Lake County, Class Counsel had filed prior iterations of the same TCPA claims against defendant Met Life federal courts in Florida, Missouri, and California. In all prior iterations of the case against Met Life, no class settlements were approved and the class lawsuits were subsequently dismissed. Given the history of this class action and the findings by two federal judges as to the adequacy of ClassCounsel, Anderson + Wanea, heightened judicial scrutiny of this pre-certification, class settlement is required.? Austin Distributing Company (“Austin”) is a class member which received junk faxes and a combined notice of certification and settlement. It filed a timely objection to the class settlement, Austin’s objections focused on issues regarding the adequacy of Class Counsel and lead class plaintiff, Shaun Fauley, the attorneys’ fees sought, and the methodology for calculating the award of those fees in the absence of any time records. After Austin filed its objections, Class Counsel waged a scorched earth litigation campaign against Austin (and other objectors) apparently in an effort to stifle any inquiry into these issues or the fairness of the proposed settlement. Class Counsel served written discovery, deposed Austin’s corporate representative, and filed a motion to strike Austin’s objection—which the trial court denied, Prior to the faimess hearing on the proposed class settlement, Austin discovered that Class Counsel, Anderson + Wanca, and Brian Wanca were being sued for millions of dollars in @ fraudulent transfer lawsuit filed in Circuit Court of Cook County, Illinois. That fraudulent transfer action against Class Counsel was filed in April 2014 while this class action was pending in Florida. Of note, the fraudulent transfer lawsuit against Anderson + Wanea and Brian Wanca settled less than sixty (60) days after Anderson + Wanea filed the motion in this case to approve settlement of the multi-million dollar class claims against Met Life. Austin sought discovery on these issues as it pertained to the adequacy of Class Counsel to represent the class. Austin subpoenaed the settlement agreement that Anderson + Wanca executed as defendants in the ' This iteration of the class action involving defendant Metropolitan Life and Anderson + Wanca as class counsel was previously pending in the Easter District of Missouri, C-Mart, Inc. vs. Metropolitan Life Insurance Co., 4:13-cv-0005-AGF, 2013 (E.D. Mo. 2013), the Northem District of California, Cadenasso 1s. Metropolitan Life Insurance Co., 3:13-ev-05491-IST (N.D. Cal. 2013) and the Southem District of Florida, Environmental Progress, Inc. v. Metropolitan Life Insurance Company et al., 12-cv-80907 (S.D. Fla.) before being filed in Lake County Circuit Court in July 2014,fraudulent transfer lawsuit. Austin also sought the deposition of lead class plaintiff, Shaun Fauley, and requested to review Class Counsel's attorneys” fee statements. Anderson + Wanca filed motions to quash Austin’ discovery efforts to obtain evidence on these issues, The trial court entered orders denying Austin’s discovery requests. ‘On March 6, 2015 the trial court entered an order approving a settlement of the class claims against Met Life arising from violations of the TCPA. Defendant Met Life agreed to pay $23 million of which Anderson + Wanca would take home $7,666,666.67 in attorneys’ fees more than double the $3,345,604.58 unpaid judgment and enough to pay the fraudulent transfers being sought against Anderson + Wanca and Brian Wanca individually. The trial court overruled all of Austin’s objections except one. No jury was empanelled and no questions are raised on the pleadings ISSUES PRESENTED FOR REVIEW ‘A. Whether Anderson + Wanca satisfied the adequacy requirements imposed on class counsel? B. Whether named class plaintiffs, Shaun Fauley and Sabon Inc. satisfied the adequacy requirements imposed on class representatives to represent the class of unnamed consumers? C. Was it error for the lower court to refuse to permit a lodestar cross-check on Class Counsel’s $7,666,666.67 contingent attorneys’ fees? D. Was it legal error to award Class Counsel $7,666,666.67 in attorneys’ fees when there is evidence that Class Counsel breached its fiduciary duty to the class? STATEMENT OF JURISDICTION This is an appeal from a final judgment pursuant to Rules 301 and 303. The trial court entered its final judgment order on March 6, 2015. (C 1574). The notice of appeal was filed within 30 days thereafter on April 2, 2015. (C 1601).STATUTES INVOLVED 75 ILCS 5/2-801: Prerequisites for the maintenance of a class action, An action may be maintained as a class action in any court of this State and a party may sue or be sued as a representative party of the class only if the court finds: (1) The class is so numerous that joinder of all members is impracticable, (2) There are questions of fact or law common to the class, which common questions predominate over any questions affecting only individual members. (3) The representative parties will fairly and adequately protect the interest of the class, (4) The class action is an appropriate method for the fair and efficient adjudication of the controversy. STATEMENT OF FACTS A. Overview “Junk fax” class actions are a cottage industry regulated only by general court rules and occasional appellate opinions. This nationwide class action lawsuit seeks recovery of statutory damages from defendant Met Life based on violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227. (C 1) Class counsel filed this lawsuit on July 3, 2014 and then settled twenty-five days (25) later on July 28, 2014. (C1, 14) Defendant Met Liffe agreed to pay $23 million out of which Class Counsel will receive $7,666,666.67 million in attorneys’ fees and $592,094.47 in expenses. (C 14-77) The class settlement with Met Life was reached before the trial court certified the class.B. Procedural History of the Class Action Litigation Against Met Life ‘This appeal is not the first, nor only class action filed by Class Counsel against defendant Met Life for violations of the TCPA. To fully appreciate the gravity of the legal and ethical issues involved in this appeal, itis important to understand the history of the class litigation with Met Life, including how and why Class Counsel, Anderson + Wanea, steered this class action litigation in and out of three different federal courts and finally into the Circuit Court of Lake County, Hlinois. 1, Anderson + Wanca Files Class Cases in Multiple Courts The class claims against Met Life were first filed in 2012 by Anderson + Wanca in federal court in Florida in the case styled, Environmental Progress, Inc. v. Metropolitan Life Insurance Company et al., 12-cv-80907 (S.D. Fla.). (C 1444) But when the Florida court denied class certification and then later issued another unfavorable ruling, Anderson + Wanca filed a second class action against Met Life in federal district court in Missouri styled, C-Mart, Inc. vs. Metropolitan Life Insurance Co., 4:13-cv-0005-AGF (E.D. Mo.)(the “Missouri Case”). (C 1444- 1445) ‘The Missouri Case was quickly transferred to Florida as the federal court in Missouri concluded that there is a “likelihood that Plaintif’s counsel Anderson & Wanca, dismissed the class allegations and the complaint in the {Florida suit] in order to find a more favorable forum.” C-Mart, Ine. vs. Metropolitan Life Insurance Co., 4:13-cv-0005-AGF, 2013 WL 2403666, at *5 (E.D. Mo. May 31, 2013). After the Missouri Case arrived back in Florida, Anderson + Wanca engaged in more procedural maneuvering by limiting the class to Missouri residents only. (C 1445) Anderson + Wanca then quickly filed yet another nationwide class action against Met Life in the Northern District of California styled as Richard Cadenasso vs. Metropolitan Life Insurance Co. et al.,3:13—CV-05491-JST (N.D. Cal.) (the “California Case”). (C 1445) The California Case was also transferred to Florida, (C 1445) The federal judge in California concluded that that Anderson + Wanca had engaged in forum shopping to “avoid bringing a nationwide class action before Judge Middlebrooks in the Southern District of Florida.” Richard Cadenasso vs. Metropolitan Life Insurance Co. et al., 3:13—CV-05491-JST, 2014 WL 1510853, at *7 (N.D. Cal. April 15, 2014). The California Case, now transferred to Florida, was jointly dismissed without prejudice on July 7, 2014—four (4) days after Class Counsel filed this class action on July 3, 2014 in Illinois state court. (C 1445) 2. The Findings by United States District Court Judge Middlebrooks ‘The Missouri Case though was still pending in Florida before United States District Court Judge Donald M. Middlebrooks (C-Mart, Inc. v. Met Life, et al., ev-13-80651 (S.D. Fla.) (the “Florida Class Action”). Judge Middlebrooks was very familiar with the claims against Met Life and the “junk fax” lawyering by Anderson + Wanca. (C596, 917, 1443) He presided over the California Case upon its transfer to Florida and the Missouri Case, also transferred to Florida. (C 596, 917). He also discovered what he called “a separate TCPA scheme alleged by Anderson + Wanea filed in the Eastern District of Michigan.” (C 1444, n.2) For more than one year, Judge Middlebrooks observed the class representation by Anderson + Wanca with respect to the TCPA claims against Met Life. (C 596, 927) On July 14, 2014 Judge Middlebrooks issued an opinion in the Florida Class Action which questioned the adequacy of class representative C-Mart, Inc. and Class Counsel Anderson + Wanea to represent the class against Met Life. (C 1443) He wrote that “it appears C-Mart is, serving as a pawn for Anderson + Wanca’s class action lawsuit.” (C. 1444) The district court made this statement based on deposition transcripts where C-Mart’s corporate representativetestified that he did not know what it meant to be a class representative and testified that Anderson + Wanea solicited C-Mart. (C 1444, n. 1) The district court stated its intention to revisit the issue of class certification as follows: [U]pon revisiting the deposition transcripts and filings at this stage, the Court has serious concerns whether this matter should have been certified as a class action. Of specific concern to the Court, as explained above, is the adequacy of Plaintiff as class representative and Anderson + Wanca as class counsel. Given these issues, the Court is inclined to revisit the issue of class certification. (C 1453)(emphasis added) Before Judge Middlebrooks could revisit the issue of class certification and hence the adequacy of class representation, Anderson + Wanca and Met Life agreed to dismiss the Florida Class Action in favor of yet another forum. (C 626) C. The Illinois Version of the Case ‘The junk fax class action against Met Life found its way to the Circuit Court of the 19" Judicial District, Lake County, Illinois on July 3, 2014 (the “Lake County Class Action”). (C 1) C-Mart was jettisoned as class representative. This time, the lead class plaintiff was Shaun Fauley. (C 1) Fauley had not appeared in the prior versions of the class action. (C 596, 927) Sabon, Inc. was also added as a class representative (“Sabon”). (C 1) Sabon, as a corporate entity, is a favorite client of Anderson + Wanca and seems to exist solely to help Anderson + Wanca with TCPA fax cases. Sabon’s corporate representative testified that (a) the entity is essentially defunct and has no regular employees, (b) Anderson + Wanca has remote access to Sabon’s incoming e-faxes, and (c) Sabon has received in excess of $10,000 for its “work” in pursuing TCPA claims with Anderson + Wanca and expects to receive significantly more in light of other pending cases. (C 789) In addition to Fauley and Sabon, three new class plaintifiswere added to the slate of plaintiffs in the Lake County Class Action. (C 1) No reason was given for this although each new class plaintiff received a separate service award of $15,000.00, well above the common class members’ distributions. (C 1578) The record is silent on what contributions, if any, the new class plaintiffs provided to this case other than their names. D. The Class Settlement Agreement On July 28, 2014, Shaun Fauley, Sabon, and the other class representatives signed a settlement agreement proposing to release defendant Met Life in exchange for payment of $23 million and awarding Anderson + Wanca $7,666,666.67 in attorneys’ fees (the “Class Settlement Agreement”). (C 23-49) The Class Settlement Agreement also proposed to pay $15,000 service awards to all of the named plaintiffs. (C 30) Interestingly, the Class Settlement Agreement also proposed to pay $15,000 to C-Mart, Inc. and $15,000 to Richard Cadenasso, class plaintiffs in the predecessor actions against Met Life, but strangers to the Illinois action. (C 30) There is no indication in this appellate record whether, or how thoroughly, each of named class plaintiffs in the Lake County Class Action reviewed or evaluated the Class Settlement Agreement before it ‘was signed and presented to the court. ‘Two days after executing the Class Settlement Agreement, Class Counsel filed a Motion for Preliminary Approval of Class Action Settlement and Class Notice (the “Settlement Motion”). (C 14-78) Nowhere in the Settlement Motion or Class Notice does Class Counsel the Florida Class Action, Neither is the mention the case history including the proceeding: basis for the $23 million settlement amount mentioned in light of the confirmed 2,792,213 fax numbers where junk faxes were sent and/or received coupled with the $500 minimum statutory damages awarded for each TCPA violation. Finally, the Settlement Motion does not disclose that when Class Counsel was pushing approval of the Class Settlement Agreement, lead counselBrian Wanca owed a money judgment of $3,610,579.90, or that Wanca and his law firm were defendants in a pending fraudulent transfer lawsuit in the Circuit Court of Cook County, Illinois. (C 14-78, 1457-1470) E. Class Counsel is Sued for Fraudulent Transfers in Circuit Court of Cook County, Illinois During the pendency of the Lake County Class Action, Anderson + Wanca and Brian Wanca were also being sued in Cook County Circuit Court in a lawsuit styled, Old National Bank vs. Anderson & Wanca et al., Cook County, Illinois, Cause 2014 CH 06229 (the “Fraudulent Transfer Action”), (C 1457-1470) In the Fraudulent Transfer Action, plaintiff Old National Bank sued Class Counsel to recover fraudulent transfers in connection with a multi- million dollar money judgment Old National had previously obtained against Brian Wanca individually. (C 1457-1469). ‘The Fraudulent Transfer Action was pending when this class action was filed on July 3, 2014. Defendants Anderson + Wanca and Brian Wanca settled the Fraudulent Transfer Action sometime in September 2014 and after the trial court in the Lake County Class Action granted preliminary approval of the class action settlement with Met Life. The terms of Anderson + Wanea’s settlement with Old National Bank were memorialized into a written agreement. Anderson + Wanca refused requests to provide any details of the settlement. Of particular concern was whether the fees sought by Anderson + Wanca in this class action had been pledged as security for payment of the multi-million dollar judgment held by Old National Bank and/or payment obligations required by the settlement of the Fraudulent Transfer Action. (C 571-588) F. Class Members Challenge the Class Settlement Agreement Austin Distributing Company filed a timely objection to the Settlement Motion. (C 141- 149) Other objections were filed too. Prior to the faimess hearing, Austin sought discovery onthree discrete matters pertaining to the Class Settlement Agreement. Austin: (a) sought to take the deposition of lead class plaintiff, Shaun Fauley; (b) requested the settlement agreement between Class Counsel and Old National Bank in the Fraudulent Transfer Action; and (c) requested the hourly time records of Class Counsel to compare against the proposed $7.66 million contingent fee award. (C 590-594) Class Counsel refused to allow discovery on any of these issues and filed motions to quash, arguing that Class Counsel’s fee statements are “irrelevant” to the fairness hearing. (C 573-698). With respect to Austin’s subpoena duces tecum for the settlement agreement in the Fraudulent Transfer Case, Class Counsel offered the affidavit of their attomey in that case, Lester A. Ottenheimer. (C 665). Mr. Ottenheimer only swears that the settlement agreement is confidential. He does not make any statements denying that the settlement terms reference the attorneys’ fees to be awarded to Anderson + Wanca in the Lake County Class Action. The trial court entered an order granting Class Counsel’s motions to quash. (C 703) G. Class Counsel Engages in Aggressive Discovery and Intimidation Tactics Against Austin and Other Class Members After Austin filed its objection, Class Counsel initiated aggressive discovery against Austin and other objectors. Class Counsel issued deposition notices to the objectors and their counsel. (C 242-247) Class Counsel issued document requests to Austin and demanded that Austin produce its tax returns. (C 244) Class Counsel asked the court to strike Austin’s objection even though it was undisputed that Austin was a class member that received at least 3 junk faxes and had timely filed its objection. (C 345-376) H. The Lake County Class Action Settlement is Approved On March 6, 2015, the trial court entered an order approving the Class Settlement Agreement. (C 1574). The final order adopted Austin’s objection to payment of service 10awards to C-Mart and Richard Cadenasso. The court overruled Austin’s other objections. Austin timely filed a notice of appeal ARGUMENT OVERVIEW OF THE ISSUES AND SUGGESTION THAT CLARIFICATION OF ILLINOIS CLASS ACTION JURISPRUDENCE ON THE STANDARDS FOR ADEQUACY OF CLASS REPRESENTATION IS NEEDED This cl ction is a case study on why class action practice needs more judicial oversight. The consumer class action device will not serve its intended purposes if the existing, relatively limited rules are not rigorously enforced. Those rules apply to class representatives, class attorneys, defendants, and objectors. The rules are intended to ultimately benefit consumers who make up the class—in this case millions of persons who received unsolicited junk faxes from Met Life. Courts and objectors are the only third-parties who monitor whether the rules have been followed. The monitoring and oversight process is for the most part post hoc and subject to tight deadlines imposed by class counsel. This is particularly true here where Class Counsel sought approval of the settlement before the class had been certified by the trial court. One of the most basic rules of class action is that class counsel and class representatives must adequately represent the class. A corollary to this is that the class representatives and class counsel owe fiduciary duties to unnamed class members. ‘These two basic rules were broken in this case by Class Counsel Anderson + Wanca and class representatives Shaun Fauley and Sabon. And, this wasn’t an isolated incident, since the class representative in the prior iterations of the case was also judicially held to be a “pawn”. (C 1444) Class Counsel was not transparent in disclosing information about the settlement of unrelated yet financially significant litigation which could have affected Class Counsel's decisions regarding the settlement of the claims ulagainst Met Life. This conflict of interest issue and the affect on the settlement is explored in detail infra at pp. 17-21. Likewise, Shaun Fauley’s efforts to block his deposition and his refusal to answer questions prior to the fairness hearing also demonstrate a lack of transparency and hence breaches of duty to the class he represents, Austin isn’t the only third-party monitor to discover rule-breaking by class representatives. When a federal district court judge in Florida uncovered facts that suggested improper conduct by class representatives, he began asking questions. He expressed “serious concerns” whether Anderson + Wanea and then lead plaintiff C-Mart, Inc. adequately represented the class of unnamed plaintiffs against defendant Met Life. (C 1453) Rather than answer those hard questions before a judge who had presided over this class action for more than a year, Anderson + Wanca sought refuge in the Circuit Court of Lake County, Chancery jon. (C 1) Once in Lake County, Class Counsel and its new slate of class representatives sought to ram through a settlement. The speed with which Anderson + Wanca filed the case, executed a settlement agreement, and then filed a motion for preliminary approval is remarkable if not alarming—27 days in all. Class Counsel argue that this Illinois version of the Met Life class action is but a mere continuation of prior “junk fax” class litigation against Met Life and so the ultra-fast pace of settlement is of no concem. This might be true under normal circumstances in a case where there are no red flags but the circumstances of this class action are far from normal, Instead, Class Counsel's forum shopping, quick-settlement strategy, apparent conflicts, refusal to disclose information and hand-picked class representative prevented meaningful review of the class settlement with Met Life in accordance with 75 ILCS 5/2-801 and Illinois ‘common law governing class actions. And, of course, the combined notice of certification and settlement itself provided only a fait accompli to class members to review and object to, despitethe convoluted case history spanning multiple forums where Class Counsel’s tactics were harshly questioned, if not condemned Class Counsel and class representatives suffer from a plenitude of conflicts and ethical problems that prevent them from adequately representing the nationwide class of junk fax recipients against Met Life. Class Counsel's strategy was clear, if ultimately convoluted in practice. First, try to find a favorable court by multiple efforts at forum shopping. When that didn’t work, go to Plan B: develop the junk fax case against Met Life in the Southern District of Florida, then, once the case was fully developed before a highly skeptical federal judge, select a much more favorable forum to obtain lightning-quick approval of the settlement, while multaneously blocking access to information germane to the adequacy of class representation and faimess of the settlement. This strategy notwithstanding, the following facts are not in dispute: (a) Former class representative C-Mart was solicited by Anderson + Wanca and demonstrated a complete lack of knowledge of the case against Met Life, leading federal Judge Donald M. Middlebrooks to conclude that C-Mart is just a “pawn” of Anderson + Wanca. (C 1444) Anderson + Wanca sought approval to pay C-Mart $15,000 from the settlement proceeds in this case even though C-Mart was not a class representative; ) Counsel Counsel, Anderson + Wanca, has paid current class representative ‘Sabon more than $10,000 from settlement proceeds in at least 5 other “junk fax” class action cases where Sabon and Anderson + Wanca collaborated (C 805); © Anderson + Wanca has remote access to Sabon’s incoming e-faxes (C 805); @ Lead class plaintiff Shaun Fauley blocked efforts prior to the fairness hearing to take his deposition and he refused to answer questions about whether class representatives conducted a meaningful review and evaluation of the settlement with Met Life and potential conflicts involving Class Counsel (C 573-698, 932); © Anderson + Wanca and Brian Wanca settled a multi-million dollar fraudulent transfer case in September 2014 while simultaneously seeking 13approval of a class settlement that would pay the firm $7,666,666.67. Although not a conflict per se, Anderson + Wanea refused to disclose the settlement terms with Old National Bank, blocked this class member's efforts to obtain the settlement agreement, and specifically refused to confirm that the settlement terms with Old National did not include a pledge by Anderson + Wanca of proceeds from this class action to fund their settlement payments to Old National Bank (C 573-698); o Anderson + Wanca blocked efforts to obtain copies of their hourly fee statements thus preventing a meaningful cross-check on the reasonableness of Class Counsel’s requested $7,666,666.67 fee award (C 573-698, 703); and () Anderson + Wanca has been cited by at least two other federal courts for lapses in professionalism and unethical behavior as class counsel in TCPA. cases.? These undisputed facts give rise to important and seminal legal issues regarding the standards for adequacy of representation by class counsel and class members in an era of increased transparency and ethical accountability in class action practice. Class Counsel Anderson + Wanea, Brian Wanca, along with class plaintiffs Shaun Fauley and Sabon, Inc, are fiduciaries for all unnamed class members and, as such, they owe class members the highest duties of loyalty and care. Here, the trial court failed to examine the adequacy of class representation using the fiduciary lens. If this Court of Appeals examines the conduct of Class Counsel and the relationships between class representatives and Class Counsel applying the fiduciary rubric, the legal outcome naturally follows: the order approving the settlement must be vacated and this case remanded with directions to release appropriate documentation and allow necessary depositions so that an independent party can investigate whether Class Counsel’s breaches of duty impacted the settlement with Met Life and/or otherwise harmed the class. 2 See, e.g, Reliable Money Order, Inc. v. MeKnight Sales Co., 704 F.3d 489, 499 (7" Cir. 2013)(Finding “lapses in professionalism” by Anderson + Wanca “which gives this court serious pause”). APB Associates, Inc. v. Bronco's Saloon, Inc., et al, 297 F-R.D. 302, 314 (E.D. Mich. 2013)(finding “ Wanca and his firm have engaged in conduct that is at least questionable from an ethical standpoint”Relatedly, Class Counsel's refusal to allow review and inspection of its hourly time records as a mere cross check on its requests for a $7,666,666.67 contingent fee and Class Counsel's assertion that hourly fee statements are “irrelevant” raise issues whether hourly fee cross-checks should be required when evaluating large, contingent fee awards — particularly where the fees sought significantly exceed the norm as measured on a percentage basis (C 1433- 1434). Given the numerous “red flags” with respect to Class Counsel, the hourly fee cross- check was particularly imperative here. Finally, there is the question whether Class Counsel should be able to collect a $7,666,666.67 attomeys’ fee when there is evidence of breach of duty. As a fiduciary to the class, Anderson + Wanca has a duty to disclose material facts and information about itself that could affect representation of the class. Here, Class Counsel did the exact opposite. Anderson + Wanea concealed information about a contemporaneous legal proceeding involving material financial matters, blocked a class member's efforts to obtain information about a potential conflict of interest, refused to allow Shaun Fauley to appear for deposition, refused to disclose i hourly fee statements, and then engaged in scorched earth litigation tactics to prevent meaningful inquiry into issues highly relevant to the faimess proceeding. The failure of a fiduciary to disclose is a breach of duty and is grounds for reduction and even forfeiture of its fee. The order awarding Anderson + Wanca $7,666,666.67 should be reversed and the Court should remand for further proceedings on this issue. Standard of Review All of the issues in this case involve the interpretation and application of statutory sections in 75 ILCS 5/2-801 to the facts underlying the settlement approved by the trial court. 15As such, the appropriate standard for reviewing each point is de novo. Champaign Tup. v. County of Champaign, 331 Ill. App. 34 582, 585 (4th Dist. 2002). The de novo standard of review is also applied to this appeal because class settlements, like this one, that are proposed prior to formal class certification require a higher standard of fairness. Dunleavy v. Nadler, 213 F.3d 454, 458 (9" Cir. 2000); Molski v. Gleich, 318 F.3d 937 (9" Cir. 2003). Where a court is confronted with a settlement-only class certification, the court must look to factors “designed to protect absentees.” Amchem Prods., Inc. v. Windsor, 521 US. 591, 620 (1997). “Because class actions are rife with potential conflicts of interest between class counsel and class members, district judges presiding over such actions are expected to give careful scrutiny to the terms of proposed settlements in order to make sure that class counsel are behaving as honest fiduciaries for the class as a whole.” Mirfasihi v. Fleet Mortgage Corp., 356 F.3d 781, 785 (7" Cir. 2004), I ANDERSON + WANCA DID NOT ADEQUATELY AND FAIRLY REPRESENT THE CLASS Class Counsel, Anderson + Wanea, does not satisfy the adequacy requirements under Ilinois law to represent the class of junk fax recipients against Met Life. Its representation during the earlier iterations of the case was questioned by federal judges in Florida, Missouri and California, ‘The primary focus of the instant objections begins at the point in time when questions started to arise regarding Anderson + Wanca’s relationships with class plaintiffs, C- Mart and Sabon, and when information surfaced about the firm’s settlement of a fraudulent transfer lawsuit during the pendency of this case, In response, Anderson + Wanca acted in a ‘manner contrary to notions of adequacy, fair play, and full disclosure. Class Counsel succeeded 16in convincing the court below to commit error by preventing inquiry into these issues. Anything pertinent to counsel's ability to fairly and adequately represent the class may be, and should be, considered by the court. Reliable Money Order, Inc. v McKnight Sales, Co., 704 F.3d 489, 498 (7 Cir, 2013). There are multiple reasons why the adequacy of representation requirement was, not satisfied here, ‘A. Class Counsel Owes a Fiduciary Duty to the Class that Includes the Duty to Disclose All Matters that Could Impact Class Counsel’s Objectivity ‘As class counsel, Anderson + Wanca owes a fiduciary duty to the class especially when the class is made up of consumers. Creative Montessori Learning Centers v. Ashford Gear, LLC, 662 F.3d 913, 917 (7 Cir. 2011) (“Class counsel owe fiduciary obligation of particular significance when the class members are consumers”). That fiduciary obligation requires the attorneys who represent the class to demonstrate loyalty, fair conduct, and disclosure, for they require “the punctilio of an honor the most sensitiv and require conduct of “inveterate honesty and loyalty.” See Lopez v. Munoz, Hockema & Reed, 22 8.W.3d 857, 867 (Tex. 2000); Romm v. Hartford Ins, Co., 2012 U.S. Dist. LEXIS 143578 at *12 (D. Nev. Oct. 2, 2012) (Even in a “general fiduciary relationship.” the fiduciary must put the beneficiary's interests above his own...”). B. Anderson + Wanca’s Refusal to Disclose a Potential Conflict of Interest is a Breach of Duty and Proves a Lack of Adequate Representation of the Class After this class action case was filed on July 3, 2014, Anderson + Wanca entered into a settlement agreement in the civil case of Old National Bank vs. Anderson & Wanca et al., Cook County, Illinois, Cause 2014 CH 06229 (the “Fraudulent Transfer Action”). In the Fraudulent Transfer Action, plaintiff Old National Bank sued lead class attorney, Brian Wanca, and his firm Anderson + Wanea to recover fraudulent transfers in connection with a multi-million dollar‘money judgment entered against Brian Wanca individually in 2011. According to the complaint in the Fraudulent Transfer Action, in 2012 Wanca initiated a scheme to transfer personal funds to his law firm and a special purpose entity that he controlled in order to avoid the $3,610,579.90 judgment owed to Old National Bank, (C 1457-1470) According to Old National Bank, these transfers caused Brian Wanea to become insolvent. (C 1461). ‘The Fraudulent Transfer Action against Class Counsel was filed in April 2014. The case against Wana was still pending when this class action was filed on July 3, 2014, However, Wanea settled the case against himself and his law firm sometime in September 2014 after the trial court granted preliminary approval of the class action settlement with defendant Met. Life. The terms of Wanca’s settlement with Old National Bank were memorialized into a written agreement (C 665-667)? Anderson + Wanca refused requests by class member Austin Distributing to provide any details of the settlement with Old National Bank. Of particular concem was whether any of the $7,666,666.67 contingent fees sought by Anderson + Wanca in this class action case were pledged as security for payment of the multi-million dollar judgment owed to Old National Bank. Given the size of the unpaid judgment against Brian Wanca and, because the Fraudulent Transfer Action and judgment against Wanea were settled after the trial court granted preliminary approval of the settlement in this class action, the terms in the settlement agreement between Anderson + Wanca/Brian J. Wanca and Old National Bank are highly relevant and should be have been disclosed. But at all times, Wanca blocked efforts to obtain disclosure of this information. (C 573-698, 703) > The Settlement Agreement was the subject of a subpoena duces tecum issued to Anderson + Wanca and. counsel {o Old National Bank. (C 669-675)That undisclosed settlement agreement quite likely contains provisions that materially impact Anderson + Wanea’s ability to represent the class. Cf ILL. R. PROF. COND. 1.7(b) (prohibiting representation where there is risk that lawyer’s personal interests materially limit the representation). No one knows whether the attorneys’ fees Class Counsel is seeking to have affirmed in this appeal must be paid to satisfy the large money judgment against Brian Wanca or the fraudulent transfer claims against Anderson + Wanca. If the settlement agreement contains such payment provisions, this would ipso facto disqualify class counsel from representing the class with respect to proposed settlement. See Eubank v. Pella Corp., 753 F.3d 718, 722 (7 Cir, 2014) (finding that financial problems of class counsel was factor that rendered him inadequate to serve as class counsel).* See also Reliable Money Order, Inc. v McKnight Sales, Co., 704 F.3d 489, 498 (7 Cir. 2013) (holding in junk fax case involving Anderson + Wanea, that any fact pertinent to class counsel’s ability to fairly and adequately represent the interests of the class is pertinent to class certification). What we do know is that a multi-million dollar judgment was centered against Brian Wanca, that he failed to pay it, and allegedly engaged in a scheme to defraud his creditors which ultimately got resolved somehow, exactly when the trial court in this case gave preliminary approval to the settlement at issue in this appeal and the fees that would flow from it. “Misconduct that prejudices the class or creates a direct conflict between counsel and the class requires the denial of certification.” McKnight Sales, Co., 704 F.3d at 498. Here, Class Counsel's failure to disclose their status as judgment debtor and as defendants in the Fraudulent Transfer Action, at the same time they were negotiating a settlement with Met Life that would yield a huge contingent fee, is a breach of the duty of disclosure and duty of loyalty to the class. + In Pella the court of appeals suggested that class counsel may have been “desperate to obtain a large attorneys’ fee award before the financial roof fell in on him.” Pella, 753 F.3d at 722. 19See In re Imming, 131 Ill. 2d 239, 259, 545 N.E. 2d 715, 724 (Ill. 1989) (attorney who failed to disclose relevant personal financial information to clients disbarred). Fiduciaries have an affirmative duty to disclose. Class Counsel's refusal to disclose the settlement terms with Old National Bank on a financial matter which likely impacted Class Counsel's decision-making and legal advice to the class plaintiffs regarding the merits of the Class Settlement with Met Life is also a breach of duty. If the settlement terms between Class Counsel and Old National Bank do not require Anderson + Wanca to pledge their $7,666,666.67 fee or otherwise affect the class settlement with Met Life, then Class Counsel should not fear disclosing those terms. If there was no such agreement, a simple paragraph in the affidavit of attomey Ottenheim would have been added to that effect. (C 665-667) Full disclosure would also have lent credibility to Class Counsel's claim that information sought “has no bearing whatsoever” on the Met Life settlement. Class Counsel’s refusal to disclose, coupled with concentrated efforts to prevent disclosure of material information leads directly to the conclusion that Anderson + Wanca did not satisfy the adequacy requirements under 75 ILCS 5/2-801 C. Class Counsel’s Relationships with Sabon and C-Mart, Inc. Demonstrate it Cannot Serve as Class Counsel When Class Counsel re-filed the nationwide class action in Lake County, Ilinois it organized a new slate of class plaintiffs. One the class plaintiff’ is Sabon, Inc. Sabon and Class Counsel have collaborated in at least five previous TCPA class actions. Anderson + Wanca has paid Sabon more than $10,000. (C 789-809) Class Counsel knew in advance of filing the Lake County Class Action and the faimess hearing that Sabon was not qualified to serve as a lead class plaintiff due to Sabon’s active, working relationships with Anderson + Wanca. ‘Nonetheless, Class Counsel filed the case and included Sabon but never disclosed its relationship with Sabon in the Motion to Approve Settlement or in the class notice. 20Class Counsel had a similar relationship with lead class plaintiff, C-Mart, Inc. that was less than arms length. Judge Middlebrooks concluded that C-Mart was a “pawn for Anderson + Wanea’s class action suit” against Met Life. (C 1443-1444) This conclusion was based on evidence that C-Mart did not know what a class action was and that Anderson + Wanca solicited C-Mart. Judge Middlebrooks began asking questions about Anderson + Wanca’s adequacy to serve as class counsel and stated that he had “serious concerns” whether class certification was appropriate. (C 1443-1455) The import of Class Counsel’s documented relationship with C- Mart and Sabon is that it demonstrates that Class Counsel will recruit and place lead class plaintiffs into their class action cases who, because of their close ties to Anderson + Wanca, cannot provide independent representation to the class, The mere act of stacking the plaintiff's deck with Anderson +Wanca insiders shows that Class Counsel is itself not adequate, CLASS PLAINTIFFS SHAUN FAULEY AND SABON, INC. WERE INADEQUATE CLASS REPRESENTATIVES, Class representatives Fauley and Sabon, Inc. did not satisfy their burden to demonstrate adequate representation of the class. The party seeking class certification (or in this case combined certification and settlement approval) bears the burden of establishing adequacy of representation. Berger v. Compaq Computer Corp., 257 F.3d 475, 481 (5th Cir. 2001) (holding district court erred by shifting burden to defendants to show that class representative were inadequate). Adequacy is for the plaintiffs to demonstrate and, as such, they are not entitled to any presumption of adequacy. Id, In Susman v. Lincoln Am. Corp., 561 F.2d 86 (7th Cir. 1977), the Seventh Circuit found that one of the named plaintiffs was an inadequate representative because his brother was class 21counsel. /d, at 95. The court noted that even though a plaintiff is not entitled to share in the attorney's fees, a plaintiff might still be motivated to maximize the attorney's fee where there is a close relationship between the plaintiff and the attorney. Jd, The Seventh Circuit explained that "[clourts . .. fear... the danger of champerty [when there is a] close relationship between the putative class representative and counsel." /d. at 91. The requirement for a stringent examination of the adequacy of the class representative is especially great when, as in this case, the attomey's fees to Class Counsel will "far exceed" the class representative's recovery. Shroder v. Suburban Coastal Corp., 729 F.2d 1371, 1375 (Ith Cir. 1984). In such circumstances, "courts fear that a class representative who is closely associated with the class attorney [will] allow settlement ‘on terms less favorable to the interests of absent class members." Jd. (emphasis added). A. Sabon Ine. ‘The record in this appeal shows that Sabon is closely associated with Class Counsel Anderson + Wanca. They work together on TCPA cases. Anderson + Wanca has access to Sabon’s fax machine and has made regular payments to Sabon resulting from TCPA cases in an amount in excess of $10,000. (¢ 789-809) The close relationship between Sabon and Anderson + Wanca creates a present conflict of interest - an incentive for Sabon to place the interests of Anderson + Wanca above those of the class. London v. Walmart Stores, Inc., 340 F.3d 1246, 1255 (11 Cir. 2003) (finding class representative inadequate due to relationship with class counsel). Given the close relationship between Sabon and Anderson + Wanea, it is simply impossible to realistically believe that Sabon’s undivided loyalty is to unrepresented class members or that Sabon would take positions adverse to Class Counsel with respect to its fees. 22B. Shaun Fauley Essentially no information is available about class representative Shaun Fauley because he refused to appear for a deposition and refused to answer questions about the settlement with Met Life. We know that Fauley was part of the new slate of class representatives organized by Class Counsel after they fled from Judge Middlebrooks in Florida and filed in Illinois state court The only other fact we know is that Fauley was on the job less than 25 days before he signed the settlement agreement with Met Life. But if Fauley was representing the unnamed cla s, it seems he should want to answer questions by class members to allay concerns rather than obstruct inquiry into issues important to the class. It is impossible to know whether Fauley was aware of the financial relationship that Class Counsel had with Sabon or whether he was aware of Class Counsel’s litigation and financial woes during the settlement process. Fauley did not raise any of these concems with the court and neither did he file an affidavit in support of the motion to approve settlement. Both Sabon and Fauley confirm the perception among many commentators that plaintiffs in class action cases are mere "figureheads,” and that the real reason for bringing such actions is “the quest for attorney's fees.” Ralph K. Winter, Paying Lawyers, Empowering Prosecutors, and Protecting Managers: Raising the Cost of Capital in America, 42 DUKE L.J. 945, 984 (1993). Here, the trial court ignored large, waiving red flags that showed problems with class representation. Class representatives Sabon and Fauley did not adequately represent the class and thus approval of the settlement was improper. See De Bouse v. Bayer AG, 235 Ill. 544, 459 N.E. 1364 (Ill. 2003) 23u IT WAS ERROR FOR THE LOWER COURT TO REFUSE TO ALLOW A LODESTAR CROSS-CHECK ON CLASS COUNSEL'S $7,666,666.67 FEE REQUEST AND THE AWARD WAS EXCESSIVE IN ANY EVENT. The Mlinois Supreme Court has held that the percentage of common fund and lodestar method are both appropriate methods for evaluating fee awards in class action litigati Brundidge vs, Glendale Federal Bank, FSB, 168 I.2d 235, 659 N.E. 909 (Ill. 1995). Here, Class Counsel sought a 33.3% contingent fee under the common fund method even though 33.3% is significantly higher than the 24% percentage norm for contingent fees in the Northern District of Illinois. See T. Eisenberg and G. Miller, Attorneys’ Fees and Expenses in Class Action Settlements (1993-2008) (hereinafter “Class Fee Study”) at p. 12, Table 3. http://scholarship..aw.comell.edu/cgi/viewcontent.cgi?article=1066&context=clsops_papers Given Class Counsel’s deviation from the fee norm, Austin attempted to conduct an hourly fee cross-check on the $7,666,666.67 contingent fee and requested Anderson + Wanea’s time records. (C 669-675) Lodestar cross checks are a useful tool to check the reasonableness of a contingent fee. In re Insurance Brokerage Antitrust Litig., 579 F.3d 241, 284 (3" Cir. 2009) (lodestar cross-checks on contingent fees must be calculated correctly), Class Counsel refused to disclose its hourly time records in response to Austin’s request to conduct a cross-check, calling the hourly time records “irrelevant.” On the eve of the fairness hearing, Class Counsel finally represented that its fees under the lodestar amounted to about a third of the amount they were seeking, i.e. $2,577,811.60. (C 958-959) However, Class Counsel still refused to provide its time records to Austin making it impossible to determine whether the amount of the hourly fees logged were reasonable and necessary and thus a reliable cross-check. We know that attorney time in this case was spent in forum shopping by filing 24multiple cases in federal courts from coast to coast, and then unsuccessfully defending motions to transfer venue. See cases cited supra. But without time records, a reliable hourly fee cross- check against the requested 33.3% percentage of common fund was not possible. A eross-check was needed because 33.3% fee request by Class Counsel exceeded the fee norms in the Northen District of Hlinois (24%) and Seventh Circuit (26%) which translates into a significant fee enhancement for Class Counsel. Thus, in line with these numbers, Class Counsel’s fees should be no more than 26% at the high end. Under the unique facts of this case, and given the other problems associated with Class Counsel, it was legal error not to allow an hourly fee cross-check on Class Counsel’s contingent attorneys’ fees and to award a fee of 33.3%. Me THE TRIAL COURT ERRED BY AWARDING CLASS COUNSEL $7,666,666.67 IN ATTORNEYS’ FEES WHEN THOSE LAWYERS BREACHED THEIR DUTIES TO THE CLASS ‘There is clear proof that Class Counsel breached their fiduciary duty to the class. Under Illinois law when an attorney breaches his fiduciary duty, the court may order fee forfeiture. In re Marriage of Pagano, 154 Ill. 2d 174, 607 N.E. 2d 1242, 1249-50 (1992) (discussing remedy of fee forfeiture for breach of duty); Anderson v. Anchor Organization for Health Maintenance, 274 IlLApp. 1001, 654 N.E. 2d 675 (1995). In the fairness hearing, the trial court did not consider whether Class Counsel’s conduct and the evidence of breach of duty warranted a forfeiture or reduction in attorneys’ fees. Instead, the trial court merely determined that the $7,666,666.67 contingent fee award was appropriate in this common fund case and thus overruled objections to Class Counsel’s fees. (C 1500-1501). ‘The trial court’s error is that it did not examine and evaluate the attorneys’ fees using the lens of 25attorney conduct and any detrimental impact on the class. When “class counsel have a lack of integrity, a court can have no confidence they will act as conscientious fiduciaries of the cla Creative Montessori Learning Centers v. Ashford Gear, LLC, 662 F.3d 913, 918 (7" Cir. 2011). “Misconduct that prejudices the class or creates a direct conflict between counsel and the class requires denial” of certification and hence attorneys’ fees.” See McKnight Sales, Co., 704 F.3d at 498. There are two reasons the court should vacate the order awarding fees and remand for further consideration of the impact of Class Counsel's breaches of duty on the class. First, the proof of Class Counsel’s misconduct and breaches in this case is palpable and pervasive. In multiple instances Anderson + Wanca failed to disclose material information about its business and financial relationships including a concurrent lawsuit where there is credible evidence that Brian Wanca engaged in a scheme to defraud his own judgment-creditor and desperately needed money to pay it off. (C 1457-1470) Anderson + Wanea knowingly included Sabon as a lead plaintiff in the Lake County Class Action not thstanding Sabon’s extensive prior dealings with Wanca in TCPA cases. (C 789-809) A reasonable inference can be made that these actions were calculated to increase Class Counsel’s control in the settlement process for its own advantage. Second, the record does not clearly show that these breaches had no adverse impact on the settlement negotiations with Met Life. We know there are other class action cases where “the articulated financial needs of [class counsel] drove settlement” of the case. E.g., In re Pella, 793 F.3d 718, 722 (7 Cir. 2014) (overruling district court approval of class action and calling settlement “scandalous”) Here, it is quite likely that the settlement amount with Met Life was much lower because of external financial pressures on Class Counsel and the need to settle quickly. Certainly theincentives were present. We know that the damages exposure to Met Life was in excess of $900 million [1.8 million faxes (x) $500 per violation]. But because Anderson + Wanca was the sole Jaw firm representing the class during negotiations with Met Life, there has been no independent verification whether the settlement negotiations were compromised. It is clear, however, that Class Counsel have an affirmative duty to prove the faimess of any transaction after full disclosure of all facts. Not all facts were disclosed. When “class counsel have demonstrated a lack of integrity through misconduct and unethical action, a court can have no confidence that they will act as conscientious fiduciaries for the class.” McKnight Sales, Co., 704 F.3d at 495. The court should vacate the award of attomeys* fees and remand the case so that the trial court can assess the impact of Class Counsel's breaches of duty on the class and then award attomeys’ fees taking into account harm caused to the class.CONCLUSION For all these reasons, it is respectfully submitted that the court below improperly approved the class settlement with defendant Met Life. The Class Counsel and class representatives in this case (Fauley and Sabon) were not adequate, Class Counsel was laboring under an undisclosed personal conflict when it was negotiating a settlement that would pay the firm a contingent fee of $7,666,666.67, and that fee was excessive and detrimental to the class As such, the order approving Class Counsel’s contingent fees must be also vacated, It is further submitted that the matter must be remanded for further proceedings to determine what, if any, fee was properly due to Class Counsel in this litigation, and for all matters flowing therefrom. Respectfully submitted, ROBERT J. LONG One of the Attorneys for Objector-Appellant Austin Distributing, Counsel for Appellant: KIRK A. KENNEDY The Kennedy Firm 6855 Colfax Drive Dallas, TX 75231 (832) 646-9228 Atty. No, 6276581 ROBERT J. LONG Daniels, Long & Pinsel, LLC 19 North County Street Waukegan, IL 60085 (847) 623-5900 Atty. No. 6180761 28CERTIFICATE OF COMPLIANCE | certify that this brief conforms to the requirements of Rules 341(a) and (b). the length of this brief, excluding the pages containing the Rule 341(d) cover, the Rule 341(h)(1) statement of points and authorities, the Rule 341(c) certificate of compliance, the certificate of service, and those matters to be appended to the brief under Rule 342(a) is LF pages. RespeetfisttyZubmitted, sss Siomiys =) panto Won ROBERT J. LOXG Attomey for Objector-Appellint 29