Hinshaw reports this case:

"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. The court looked at two other similar cases in which plaintiffs were collaterally estopped from suing representatives because implicit in the lower court’s approval of the settlement was a finding that the class had been adequately represented. See Laskey v. UAW, 638 F.2d 954 (6th Cir. 1981) and Thomas v. Powell, 247 F.3d 260 (D.C. Cir. 2001). Mr. Koehler could not establish injury without relitigating an issue already decided by the class action court. The same rule applied whether the allegations were of malpractice or breach of fiduciary duty and related claims of aiding and abetting a conspiracy. Although Mr. Koehler tried to allege newly discovered evidence to get a “second bite of the apple,” the court noted the issue is not whether the district court was aware of every fact alleged when it approved settlement, but whether the earlier judgment prohibits Mr. Koehler from litigating his claim that the alleged misconduct was the proximate cause of injury to him. Id. at *7.

The court concluded that Mr. Koehler was effectively trying to renew his old arguments that the settlement was too low. When the district court approved the settlement over Mr. Koehler’s objections and awarded attorney fees, it determined the attorneys had provided “more than adequate representation and that the very favorable settlement was ‘fair, reasonable and adequate.’” Id at *7. Mr. Koehler could not establish a breach of duty and a causal injury without relitigating an issue already decided, and therefore the dismissal was affirmed.

Significance of Case
This decision affords class counsel some protection against plaintiffs with “buyer’s remorse” who may try to sue counsel for malpractice or breach of fiduciary duty to get another chance to reopen the issue of the settlement amount. "