The attorneys representing 80,000 retirees of Sears, Roebuck and Co. thought they deserved $5.4 million for their four years of work in a lawsuit over life insurance benefits that was recently settled.
Sears thought they deserved $1.
Earlier this week, U.S. District Judge James Moran sided with the retirees’ lawyers, awarding them the maximum fee of $5.4 million. And that isn’t welcome news for Sears, which is paying the legal bill.
Three weeks ago, Moran approved a settlement that partially restored company-paid life insurance benefits for retirees. It also guaranteed that Sears would never reduce the policies below $5,000.
Both sides agreed the value of the benefits exceeded $28 million. But the agreement was far less than the full restoration of life insurance benefits that many retirees had hoped for.
In a March 25 memorandum about his fee decision, Moran noted the retirees’ attorneys, which included a dozen law firms, had devoted 12,000 hours of work to the “hotly contested” case.
Sears argued that it only settled the case to mend the riff with its retirees, not because it was concerned about losing the suit. The retailer further asserted that the attorneys didn’t deserve a big fee because they hadn’t really won that much.
That argument cuts both ways, according to Moran.
“The amount of the settlement is a reflection of the legal difficulties facing the plaintiffs and the consequent risks of nonpayment assumed by their counsel,” the judge wrote.
Without the settlement, Sears faced the prospect of thousands of trials over a period of years. “Sears could have lost some or all of them,” Moran said.
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Not surprisingly, Michael Mulder, lead attorney for the retirees, was pleased with Moran’s decision. “After four plus years of litigation, it was nice to have the judge award us the fees in the amount we sought. This is just another way the settlement benefits the class members,” he said Friday.
Sears could not be reached for comment.
Losses stomped shoemaker: The Chapter 11 filing on March 4 by Florsheim Group Inc. lets you know what kind of year the firm had. The actual numbers came out Friday in a 10-K filing by Florsheim with the Securities and Exchange Commission.
The Chicago-based shoemaker and retailer lost $59.9 million last year, or $7.05 per share, compared with a loss of $30.8 million, or $3.63 cents per share, in 2000.
Sales slid 10.6 percent to $183.5 million from $205.2 million in 2000.
Florsheim’s top managers, who only arrived last year, aren’t being blamed for the demise of the company by its largest shareholders, Leon Black’s Apollo Management LP and an affiliated company.
Chief Executive Peter Corritori received a $100,000 bonus on top of his $485,000 salary. Likewise, Florsheim’s chief financial officer and president of retail also received bonuses.
Weyco Group Inc., a Milwaukee-based footwear firm run by descendants of the Florsheim family, has agreed to acquire Florsheim’s assets for a total of $47.3 million. That proposed deal awaits approval of the U.S. Bankruptcy Court in Chicago.