Back when I was a young reporter in Little Rock at the Arkansas Democrat-Gazette many years ago, we had a wonderful editor who had a very smart rule: When writing about an ongoing lawsuit, don't repeat the claims by plaintiffs' lawyers about how much money they're seeking in damages. They can make up any number they want. So it's meaningless and not worth reporting.
What triggered this flashback was the news yesterday about a settlement in a class-action lawsuit against some of Silicon Valley's biggest companies over allegations that they had agreed not to poach each other's workers. The plaintiffs' lawyers had said they were seeking $3 billion in lost wages, and perhaps $9 billion in total damages. Those numbers dutifully got repeated in the news media over and over again while the suit dragged on.
Lo and behold, the parties have reached a settlement for about $300 million, according to news reports. So for all the hype that went into covering every twist and turn of this litigation, it turned out to be a dud.
The suit against Apple Inc., Google Inc., Intel Corp. and Adobe Systems Inc. claimed to cover about 64,000 employees. They might get a few thousand dollars each, on average. The law firms that filed the suit will get millions, of course, which is what this case really was about. As for the companies, the payments will be a nuisance fee. Apple, for instance, this week reported quarterly earnings of more than $10 billion.
A similar thing is going on at the Justice Department. Yesterday, we learned that prosecutors are demanding an 11-figure sum from Bank of America Corp. to resolve investigations into its sales of mortgage bonds before the 2008 financial crisis. Different numbers are getting bandied around, and there's no way for ordinary readers to know what to make of them. But the story has led to some amusing journalism. See this excerpt from the New York Times, for example:
In a move that raised the stakes for the government's crackdown on banks that sold the troubled mortgage investments during the financial crisis, the Justice Department made Bank of America an opening settlement offer of roughly $20 billion several weeks ago, according to people briefed on the matter.
But that amount is a somewhat inflated starting point for negotiations, and Bank of America has not yet made a counteroffer, according to the people who were not authorized to speak publicly.
Think about that "inflated starting point" line for a moment. If the unnamed people are from the Justice Department camp, then they just undercut the credibility of the government's offer. If they're from the Bank of America camp, then of course they would be predisposed to say the government's opening demand was inflated.
The Justice Department has a record of inflating its achievements. Last year, when JPMorgan Chase & Co. reached a big settlement with federal prosecutors, Justice billed it as a $13 billion deal. But that figure was grossly misleading. Only $2 billion went to resolve Justice Department claims. Most of it consisted of deals with other federal and state agencies that Justice had little or nothing to do with.
Just wake me up when the settlement is over. Whatever it ends up being, I'm certain the Justice Department will take great pains to make sure that Bank of America can afford it.
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