On The Case

New Utah SG dogged by judge's criticism of class action objection

(Reuters) - This was not how Melissa Holyoak, a longtime lawyer with Ted Frank’s Center for Class Action Fairness and Hamilton Lincoln Law Institute, envisioned the first day of her new job as the Solicitor General of Utah.

On Wednesday, Holyoak’s first day in office, the state’s two biggest newspapers ran stories about a show-cause order last week from a Florida federal magistrate who harshly criticized Holyoak for raising a “patently false” objection to a class action settlement involving the registration of newly sold tires. The Salt Lake Tribune told readers that the new state SG was “facing potential court sanctions.” Deseret News highlighted the Florida judge’s finding that Holyoak had made “false statements and representations.”

“It was a fun way to start,” Holyoak said ruefully in an interview Thursday.

A spokesman for Utah Attorney General Sean Reyes said in an email that the AG is standing by Holyoak, who, he said, told the AG’s office straightaway about last week’s show-cause order. “Her extraordinary experience in the courtroom as a litigator and prosecutor make her the clear choice to serve the office and the State of Utah as Solicitor General,” the AG’s statement said.

Holyoak, as I’ll explain, told me she made a mistake in her initial reading of the settlement agreement in the tire registry class action, apologized when class counsel told her about the error and quickly withdrew assertions based on the erroneous interpretation. She was taken aback, she said, by the anger U.S. Magistrate Judge William Matthewman of West Palm Beach showed at a Zoom hearing in July over her objection to the injunction-only settlement and, though she told him she was sorry for misreading the settlement, did not have a chance to explain that she’d made an honest mistake.

Holyoak said she’s embarrassed by the error, but will argue in her response to Judge Matthewman’s show-cause order that she should not be sanctioned because she was not acting in bad faith and did not intend to delay the case.

Holyoak’s former colleague Ted Frank said in an email that her mistake was “not up to our high standards,” but that the magistrate had “inferred nefarious motives despite our immediate confession of error.” In response to the judge’s show-cause order, he said, “we’ll indicate our chagrin and embarrassment and contrition, voluntarily make restitution that the law doesn’t obligate us to make and hope for the best.”

Plaintiffs’ lawyers Robert Shelquist of Lockridge Grindal Nauen and Jordan Chaikin of the Chaikin Law Firm did not respond to my email query. Nor did Daniel Blouin of Winston & Strawn, who represents defendants National Tire and Battery and TBC Corporation.

So what was the error that trailed Holyoak to her new job? The class action alleged that National Tire, a Florida-based independent tire dealer, had breached a federal consumer safety law requiring tire sellers to register the sale of new tires with manufacturers. The proposed settlement before Judge Matthewman provided cash payments of $7,500 to the two named plaintiffs in the case and $645,000 in fees to class counsel. The defendants agreed to inform consumers at the time they purchased new tires that the company would maintain sale records, including their names and addresses, and would provide that information to tire manufacturers in the event of a recall. The agreement provided no cash recovery from any class members except for the two named plaintiffs.

The proposed settlement agreement said that “class plaintiffs” would release their claims for monetary damages. Holyoak, who said she had bought tires from National Tire and was therefore a member of the class, read that phrase in the settlement agreement to mean that the deal required all class members to release claims for money damages. She argued in her initial objection that the broad release was proof that class counsel and the named plaintiffs had put their interests ahead of those of absent class members.

But Holyoak was wrong: The agreement defined “class plaintiffs” only as the class representatives slated to receive $7,500 payments, not all class members. In their response to Holyoak’s objection, class counsel said her erroneous characterization of the settlement agreement “shows that she is a professional objector who is ideologically motivated and barely familiar with this case, and her objection here is unfounded.”

Holyoak withdrew her objection to the injunctive part of the settlement, acknowledging her misreading of the agreement. But she maintained in a July 6 brief that the settlement should not receive final approval unless class members shared in the money slated for class counsel and named plaintiffs.

Judge Matthewman vehemently disagreed. He not only approved the deal but also questioned whether Holyoak should be sanctioned. “It would have been obvious to Ms. Holyoak — indeed, to a first-year law student — that her strenuous objections were inapplicable had she simply taken the time to actually read the settlement,” the judge wrote. “The court is concerned that Ms. Holyoak may have intentionally attempted to mislead the parties and the court on a material matter in a case of national importance.”

Judge Matthewman ordered Holyoak to file a brief by Sept. 16 explaining why she should not face sanctions, including fees class counsel incurred in responding to her “false statements and assertions.” The judge also said there was “ample evidence” to conclude that Holyoak and her colleagues are “serial” objectors whose arguments should be treated less credibly than those who seek only to benefit class members.

To back that assertion, Matthewman cited the 2019 opinion in which U.S. District Judge Thomas Thrash of Atlanta granted final approval to Equifax’s $380.5 million class action settlement of data breach claims. You may recall that Ted Frank and Hamilton Lincoln waged an ultimately unsuccessful campaign to find out if Judge Thrash’s opinion – which sharply criticized Frank, in what Frank considered a mischaracterization of the case record – was ghostwritten by class counsel. Frank told me it was “frustrating” to see Judge Matthewman rely on the Equifax opinion to cast doubt on his group’s credibility.

Holyoak will presumably get a respite from class action politics in the Utah AG’s office after the National Tire sanctions flap is resolved. If nothing else, the headlines on her first day in office were a pointed reminder of what she’s leaving behind.