Lead Plaintiff in a class action is unhappy with settlement amount, and seeks to sue the class action attorney and sues class action attorney in legal malpractice.  Holding:  plaintiff is collaterally estopped from suing.

Hinshaw reports: "J. Michael Koehler v. Jules Brody, et al., ___F.3d___, 2007 WL 895864 (8th Cir. 2007)

Brief Summary

Two years after a court approved a class action settlement, a lead plaintiff brought suit against former class counsel for breach of fiduciary duty and misrepresentation, claiming that the settlement was too low and that it should have been paid in stock to avoid adverse tax consequences. The appellate court affirmed the dismissal of these claims on the ground that the plaintiff was collaterally estopped from suing class counsel to attack the class recovery.

Complete Summary

This case arose out of a global settlement of a number of class action cases related to the merger of NationsBank and BankAmerica into Bank of America. J. Michael Koehler was a lead plaintiff and class representative. The court appointed the firms of Green, Schaaf & Jacobsen, P.C., Chitwood & Harley, and Stull, Stull & Brody as co-lead counsel. A mediation was held in January 2002 under the direction of a former federal district judge. Mr. Koehler and some other lead plaintiffs were present at negotiations but left after two days. The mediation continued and resulted in a $490 million settlement.

Hearings were then held to determine the fairness of the settlement. Mr. Koehler retained separate counsel and objected to the settlement. He felt the settlement was too low and was disproportionately distributed among the shareholder classes. He also felt the settlement was invalid because he had not been present when the settlement agreement was reached, because he allegedly had been misled by counsel and because counsel had allegedly made false representations to the court about his approval that violated the Private Securities Litigation Reform Act of 1995 (the “PLSRA”). Mr. Koehler also alleged other ethical violations by the attorneys, and submitted an expert affidavit from a legal ethics specialist regarding the alleged breaches. Id. at *1. "