Archive for October, 2009

Joint Statement – Class Action Representatives

[Editor’s Note:  As you probably know, the Heller Ehrman LLP estate and the Unsecured Creditors’ Committee recently filed a Joint Plan of Liquidation https://hellerdrone.files.wordpress.com/2009/01/plan.pdf, that incorporates a proposed settlement of the employee Class Action litigation.  See Exhibit C to the Plan (the Compromise and Settlement Agreement) https://hellerdrone.files.wordpress.com/2009/01/plan-ex-c.pdf, especially pp. 13-23.  You should also note that Exhibit A to the Plan (Assumed Contracts) https://hellerdrone.files.wordpress.com/2009/01/plan-ex-a.pdf, while currently blank, will eventually provide details of the payout for individual class members.  We expect that Heller Ehrman LLP’s law firm, Pachulski Stang Ziehl & Jones LLP, will be transmitting shortly to each class member his or her individual proposed payout details.

The Class Action counsel at Blum Collins will shortly post here at Heller Highwater some answers to FAQs related to the proposed settlement.  In the next few weeks, each member of the class will receive more information by mail about the plan and the settlement.

The following article was jointly authored by the four class representatives, who express some thoughts on their involvement in the litigation.]

* * *

Why We Support the Proposed Settlement

by Debora Biggers, Carl Goodman, Marjorie Norris and Anna Scarpa

As the four named plaintiffs in the employee class-action matter triggered by the collapse of Heller Ehrman, we’d like to provide our views on the proposed settlement.

Background

We each relished working at Heller Ehrman.  We felt blessed to be associated with such talented attorneys and staff.  Heller Ehrman’s culture really did seem to distinguish itself from other law firms.  We worked hard, believed in our product and our clients, and we were proud of the significant commitment Heller Ehrman made to a wide variety of pro bono matters in the United States and abroad.

Our tenures at the firm ranged from a few years to more than two decades.  The demise of Heller Ehrman was a shock.  But even more shocking was the way in which the firm violated basic state and federal employment statutes, including the payment of accrued vacation and adherence to WARN Act regulations.

We haven’t been shy about asking questions.  Participating as the named plaintiffs in this class action has required having a bit of backbone.  The excuses offered by management for its inability to pay wages could not be taken seriously.  How could a law firm with a notable 118-year history suddenly collapse and then deny the payment of statutorily mandated staff wages?

The Class Action

Back in the fall of 2008, most employees were clearly reluctant to challenge publicly the pronouncements of the Heller Ehrman Executive and Dissolution Committees, as they feared that so doing could jeopardize their future employment prospects.  But, out of a sense of conviction, each of us did raise our hands and became known as the named plaintiffs in an attempt to secure the wages owed to us and to every other member of the class.  We were definitely of the opinion then, and remain convinced of the view now, that facing the cadre of attorneys representing the Heller Ehrman estate without our own counsel would not produce a favorable result.  We did not think that the mere act of filing a proof of claim with the bankruptcy court would provide either corporate accountability or a just result.

Our class includes all special counsel, associate attorneys, and non-attorney professional staff – that’s a pretty varied bunch.  As it turned out, no attorney volunteered to serve as a named class rep, resulting in all of the named class reps being non-attorney staff members.

Reading through the large number of comments posted on the Heller Highwater blog over the past year, a lot of self-righteous ire about the firm’s demise has been expressed (anonymously) by attorneys and staff members alike, with much denigration directed at the final set of shareholder leaders at Heller Ehrman.  Our motivation to become the public face of the litigation was premised not on ire but on a more straightforward desire simply to recover our statutorily mandated wages.  So we stuck out our necks as class reps and tried to engage in a fairly basic dispute-resolution process with the Heller Ehrman estate.

Blum Collins

Working at Heller Ehrman, we naturally didn’t have much personal familiarity with plaintiffs’ law firms.  But now we were in need of hiring one.  We were fortunate to find and select a terrific one:  Blum Collins.  Each of the four principal attorneys who has worked on our matter has had considerable prior litigation experience at large and prestigious law firms.  In fact, one of them, Steve Blum, got his professional start at Heller Ehrman in the 1980’s after graduating from Yale.  Among his co-workers at that time was a stalwart Heller Ehrman secretary, who remained at the firm until its October 2008 demise and who serves now as one of the named plaintiffs.  Another of our core counsel, Doug Thorpe, was for many years the managing partner of the L.A. office of Perkins Coie.

Over the past year, Blum Collins gave each of us an intensive tutorial in employment, class-action, bankruptcy, and partnership law.  Without a doubt, that tutorial, combined with a real sense of unity and fellowship among the named-plaintiff group (who previously did not know each other), was the best thing about our sometimes-stressful involvement as named reps in a class-action lawsuit.  We think we’ve put that knowledge and cohesiveness to good use to collaborate closely with Blum Collins, resulting in the achievement of the current proposed settlement.

The Reality of 100% Recovery

Throughout our involvement in this matter, we think we’ve taken a pragmatic approach.  Given our understanding of the context of the players arrayed against us and our developing knowledge of bankruptcy law, we never expected to achieve 100% of what we are owed.

Among other things, Blum Collins educated us on the politics of the Unsecured Creditors’ Committee.  Blum Collins tried mightily to obtain Committee representation by a non-shareholder employee, but did not succeed.  Membership on that Committee could have provided insight on what was being done to collect debts owed to Heller Ehrman.

In addition to what are now very old accounts receivable, we understand that other significant sources of potential revenue for the Heller Ehrman estate include the reversion into the non-priority bucket of some of the $50 million paid to Bank of America after its UCC security interest lapsed; funds from potential malpractice claims against Greenberg Traurig and Ernst & Young; monies potentially recoverable from various Jewel v. Boxer successor-liability arguments; and theories such as piercing the corporate veil to achieve independent shareholder liability.

Of course, we don’t know how successful, if at all, the estate or the Unsecured Creditors’ Committee will be in achieving revenue from any of these sources.

Simultaneously, we also understood that hundreds of non-employee creditors also have valid claims against the estate, and that our employment priority amounts can reach a maximum of only $10,950, leaving us to fight with the various landlords, vendors (e.g., Williams Lea), retired shareholders, and others for the remainder.  Some of us felt that our litigation would drag out for numerous years and, ultimately, we’d end up receiving perhaps 10 cents on the dollar.

The Proposed Settlement

We feel that Blum Collins has succeeded in reaching a richer and much quicker settlement for the employee class than we originally expected.  Significantly, because of our involvement as named plaintiffs representing California, New York, the District of Columbia and Washington state, Blum Collins negotiated hard and won the estate’s agreement to pay the class several million dollars of WARN Act damages.  And, as we all know, we’re fighting over wages that should have been paid in 2008.  Each additional month that we wait for an eventual payout reduces the present-day value of that payout, and bankruptcy court does not assess interest on any awards that it orders to be made.  The rapidity of our settlement helps us all.

While we still don’t have the exact figures for the individual payouts we should be receiving under the proposed settlement, the estimates we’ve seen reinforce our belief that we achieved a significant victory in the face of long odds.  The proposed settlement will result in a good number of us and our former co-workers, especially those who did not have that many hours of accrued-but-unused vacation and whose annual salary was in the lower half, receiving close to 100% of their owed wages (excluding any waiting-time penalties given that the proposed settlement treats those as subordinated claims).

Others of us won’t fare as well percentage-wise, but will receive larger overall awards.  Bankruptcy court treats employment claims in excess of $10,950 as non-priority.  Given that, when the final distributions from the non-priority buckets are made, some of us in the highest income brackets and with lots of hours of accrued-but-unused vacation still will have received tens of thousands of dollars, even if such awards won’t be much more than 20-30% of our respective entitlements.

But like a progressive taxation scheme, it seems equitable that some of our lower-paid brethren will receive a higher percentage of their wages under the proposed settlement.  Further, and highly significantly, in our proposed settlement, we achieved payment of the Blum Collins fees and costs from the estate, rather than from the employee class, meaning that we won’t have to discount our individual payouts to pay for our attorney representation.

Conclusion

We hope you share most of our sentiments and agree that the proposed settlement is a decidedly positive development and worth accepting.  We have been truly impressed by the advocacy and talent devoted on our behalf by our counsel at Blum Collins and feel that the proposed settlement provides us with much more timely relief, and with a richer payout, than we had expected.

As you read through the Plan of Liquidation and companion documents, as well as the upcoming FAQ that Blum Collins is preparing, feel free to address any questions directly to either Steven Blum or Craig Collins at blum@blumcollins.com or collins@blumcollins.com.

Compromise and pragmatism are not always thought of as virtues, but in this instance, we feel that our voices have been heard and that we have achieved a significant victory, not just for the four of us but for our former colleagues as well.  We’re at the threshold of concluding our battle and we hope you join us in celebration of that feat.  Best of success to all in your post-Heller Ehrman endeavors!

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Proposed Class Settlement – Timeline and Process

[Editor’s note: We’ve received the following information from Blum Collins as to the timeline and process involved with the pending class action settlement which is part of the Plan of Liquidation.]

The proposed Class Settlement and Plan of Liquidation in bankruptcy court are proceeding together on two simultaneous tracks.

The Class Action Settlement

For the proposed class settlement, the Court will hold a hearing on October 29, 2009 at 1:30 p.m. to decide several things, including whether to give preliminary approval to the Class Settlement and to approve a notice to the Class regarding the preliminarily approved settlement.

As soon as the Court approves the Notice to the Class, you will receive notice by mail of the terms of the proposed settlement and how the general terms apply to you specifically.  You will then have a fixed period of time, which will be included in the Notice, to consider whether to share in the settlement or go it on your own.  You will also have the option to object to the settlement before it receives final approval.

The dates for those events also will be included in the Notice, and you do not need to do anything with respect to the settlement until you receive the Notice.

The Plan of Liquidation

For the Plan of Liquidation, the first step will be for the Court to approve a disclosure statement, which explains the plan and gives creditors information to help them decide how to vote on the plan.  The Court will hold a hearing on November 9, 2009 to consider approving the disclosure statement to be sent to creditors with the plan.  Objections to the adequacy of the proposed disclosure statement must be filed with the Court by November 2, 2009.

At the November 9, 2009 hearing, the Court will not make any decision about whether the plan should be approved; the Court will only decide what information must be sent to creditors with the plan.  Once the disclosure statement is approved, you should receive a copy of the plan, the disclosure statement, a ballot, and information about your particular treatment under the plan.

You do not need to anything with respect to the plan until you receive these documents; the disclosure statement will tell you the deadlines for returning your ballots and voting on confirmation of the plan.

The Court-approved disclosure statement will be the official explanation of the plan.  The draft disclosure statement and plan that you may have already read will be revised before the Court approves their distribution.  As soon as the final documents are distributed, we will address the benefits and disadvantages of your options.

Thank You

Thank you for your continued patience as we move forward as promptly as possible to obtain compensation for all former Heller employees.

© 2009, copyright Thomas MacEntee

Update on Plan of Liquidation and Settlement

I know many ex-Heller Ehrman employees are waiting for more information on the Plan of Liquidation and Settlement.

First, Judge Montali issued a 7-page letter concerning the plan (see below).  It appears that there are still some minor issues to be tweaked.

Second, Blum Collins is working on two vital pieces of information to be post:

– Process and Timeline which will map out how the process will work and important dates and deadlines

– FAQ which will take many of the questions from the comments and others that I’ve received via email and answer them as best as possible.

Third, the Name Plaintiffs in the Class Action will be posting a statement concerning settlement shortly

Finally, thanks for your patience.  There are no immediate deadlines to be met – we’ve been pretty good in the past about giving everyone a heads up as to dates and deadlines.

Judges Letter Tentative re Plan

© 2009, copyright Thomas MacEntee

Photos from October 9, 2009 Heller SF Reunion

Thanks go out to Nancy Bagwell for the great photos she’s posted over on her Flickr account.  And to everyone who stopped by – we had roughly 100 people during the course of the evening and it was a great get-together!

http://www.flickr.com/photos/megablasto2000/

Job Posting: Litigation Legal Assistant – SF

There is a litigation legal assistant postition available at Arnold & Porter in San Francisco:

The San Francisco office has an opening for an experienced Litigation Legal Assistant.  Candidate will be responsible for trial preparation, discovery, document management and other litigation activities. Please send cover letter, resume, school transcript, list of references, and brief writing sample to Linda Witter-Lobban.

http://www.arnoldporter.com/jobs.cfm?u=LegalAssistant&action=view&id=243

QUALIFICATIONS:

  • Candidate must be highly organized and possess outstanding communication and interpersonal skills and should have at least 3 years of experience in a large law firm.
  • Heavy analytical and technical skills required, as well as the ability to work independently to complete time sensitive projects.
  • Requirements include a high school diploma; a bachelor’s degree preferred.
  • Additional requirements include flexibility to work overtime and travel, if necessary.

Arnold & Porter LLP is an equal opportunity and affirmative action employer that does not discriminate on the basis of race, religion, color, national origin, sex, veteran’s status, age, disability, sexual orientation, gender identity or any other characteristic protected by federal, state or local laws. Our Firm’s policy applies to all terms and conditions of employment. To achieve our goal of equal opportunity, Arnold & Porter maintains an affirmative action plan through which it makes good faith efforts to recruit, hire and advance in employment qualified minorities, females, disabled individuals, and covered veterans. EOE M/F/V/D

Updates on Settlement and Plan of Liquidation

Just a quick note to say that I will be working with Blum Collins and the feedback from others to try and develop an FAQ posting or section about the settlement.

There are lots questions which must be answered, both for those who have signed on with Blum Collins and those who are uncertain as to whether or not they should opt out during the class certification process.

I just ask for your patience since I want to make certain that the information is as comprehensive as possible as well as accurate.

My goal is to have this information available by Tuesday or Wednesday this week.

Over and out.

© 2009, copyright Thomas MacEntee

Thoughts On Plan Of Liquidation

I apologize for not getting this post together sooner – with all my genealogy endeavors and trying to make a living that way, I’ve been backlogged as of late.

Disclaimers

First, readers should know that the thoughts in this post are my own and that I don’t speak for any group – the Class Action group, Blum Collins, the Named Plaintiffs, etc. – just me.

Second, I am willing to share what the settlement would mean for me (if approved) with my own financial figures – this is based on my best estimate in terms of vacation accrued, hourly wage and my interpretation of the settlement terms.

Third, I understand that many have not signed on with Blum Collins or the Class Action and I express no opinion on that – it’s a free country and ex-Heller employees have every right to pursue whatever legal means necessary to recover money owed to them by Heller Ehrman LLP.

What I do want to convey is that this group, especially the Named Plaintiffs worked very hard in pursuing claims with Heller Ehrman LLP and last week came to an agreement that a settlement was in their best interests.

For matters of transparency, I have participated in conference calls with the Class Action group and have been aware of issues – many confidential at the time – and have tried to use Heller Highwater in the best way possible to further the interests of the ex-employees as a whole – not just the Class Action group.

* * *

Given the above statements, while the settlement terms could be better, I think they could be much worse if the bankruptcy were to work its course or worse yet fall into Chapter 7 the way it has for the Thelen Reid ex-employees.  Ideally the shareholders would do the right thing, as they should have all along, and make certain that their ex-employees were paid the wages to which they are entitled.

But with the bankruptcy filing on December 29, 2008, certain provisions kicked in such as limitations on payment for vacation accrual etc. that not even a settlement agreement (as I understand it) could circumvent.

Vacation – Priority

I had maxed out on vacation accrual at 236.5 hours.  Under bankruptcy provisions only the vacation earned during the 180 days prior to either the bankruptcy declaration date or the cessation of business is entitled to priority status.

In the settlement terms, from what I understand, the date of October 31, 2008 is being used which must mean the cessation of business rather than the December 29, 2008 date.  This is a good thing since it buys me about two months more accrual as priority.  The priority claim is $3,352.00 of which 100% will be paid as part of the settlement.

Vacation – Non-Priority

The balance of vacation earned before the 180 day period is given Non-priority status.  Unfortunately for me that is about $8,017.00.  It does not matter that there is a $10,950 limit on priority claims, it is the 180 day limit that prevails.

In addition there is approximately $1,020.34 in vacation that would have accrued during the WARN Act period when I should have been paid (see below).  This is not included in the priority calculation and this is non-priority.

While Heller Ehrman LLP may agree that I am entitled to that amount, it cannot be made a priority claim.  So it becomes a non-priority claim and (as discussed later) is one of the last claims to be paid based on collections and how other creditors are paid.

WARN Act – Priority

The same 180 days provision is used for the WARN Act payments.  Since my priority vacation payment (above) does not exceed the $10,950 cap, it appears I will get 100% of the WARN Act payment to which I am entitled – $3,798.00.

What is unclear to me is how this amount is calculated – is it only October 10, 2008 until the cessation of business date, October 31, 2008? Or is it through November 26, 2008, the date used in the e-mail communication of September 26, 2008 announcing the dissolution of Heller Ehrman?

WARN Act – Non-Priority

In the Page 13 of Plan Exhibit C, there is $1.5 M allocated for priority WARN Act claims and $2.35 M listed as non-priority.  I am assuming this amount is tagged as non-priority because certain employees exceeded the $10,950 priority cap with accrued vacation or accrued vacation and partial WARN Act payments.

Waiting Time Penalties

All waiting time penalties (applies to California employees only) will become subordinated claims under the settlement terms – meaning they will be paid last after all other claims.  In reading the documents, Heller Ehrman LLP feels that this (and other points) would be litigated and consume more attorneys fees so it is in the best interests of all to allocate roughly $7 M towards waiting time penalties but the claim become subordinated.

FICA and Other Taxes

As part of the settlement, Heller Ehrman LLP agreed to pay the employer portion of FICA and unemployment taxes.  While I am not certain, I believe that in a normal bankruptcy proceeding, the employee would need to take care of this – someone may need to clarify.  If so, this is a plus.

Summary

While there is more to discuss such as the fees paid by the estate to Blum Collins, I need to save that for another post.  Overall, if I accept the settlement and the Plan of Liquidation is approved, I could see 39% of my original claim paid – perhaps as soon as January 2010.

The remaining 61% would be paid depending upon the claim and where it stands in the pecking order of other claims but it could be anywhere from 20 -80% of that amount.  And I would only receive payment as major blocks of money come into the estate, as I understand it.

* * *

Is this the best resolution?  No.  Am I happy? Not really.  But having been involved in previous lawsuit settlement negotiations (one in which I was able to secure a five figure settlement for years of harassment from a neighbor), I had to give up something to get something.

I’d like to think that we would all get the money to which we are entitled as former employees.  I truly believe that in a universe which bends towards justice that is how it would be.  Actually, I feel that truly responsible people would make a gesture for restitution on their own and not hide behind the bankruptcy provisions.  It’s called doing the right thing.

But there is a time to move on.  For some of us who have still not secured employment, this settlement could mean the difference when it comes to staving off foreclosure or personal bankruptcy.  For others, we just want to put this whole thing behind us and keep the faith that karma will take care of those who took care of themselves.

to pay the employer
portion of the FICA taxes and required federal and state unemployment taxes

Over and out.

© 2009, copyright Thomas MacEntee


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Remember the words of Rev. Frank Scott (Gene Hackman in The Poseidon Adventure):

". . . sitting on our butts is not going to help us either. Maybe by climbing out of here, we can save ourselves. If you've got any sense, you'll come along with us."

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