Daniel S. Drosman

It took 14 years, but last October Drosman, as lead trial counsel, and his colleagues gained final court approval of a record-breaking $1.575 billion settlement in the Household International securities class action. The defendant, now known as HSBC Finance Corp., will pay the largest recovery ever following a securities fraud class action trial, the largest securities fraud settlement in the 7th U.S. Circuit Court of Appeals and the seventh-largest settlement in any securities fraud case filed after the Private Securities Litigation Reform Act of 1995.

Drosman recalled the effort it took to demonstrate the defendant’s predatory lending practices. “At one point there were four of us sitting in a windowless 50-foot war room surrounded by scores of bankers boxes of documents. We didn’t take a break for four months. There were blood, sweat and tears. Ultimately, we had 900 documents on our witness list, and we probably used 500 at the trial. This was no easy feat.”

The case was venued in the Northern District of Illinois. In May 2009 Drosman’s team won a $2.25 billion jury verdict for the shareholder class. “Then came years of post-trial hassle,” Drosman said. His team successfully overcame defendants’ repeated attempts to derail the litigation, including several motions to invalidate the verdict and objections to thousands of claims by injured class members. An appellate panel reversed in part in 2015 and remanded for a new trial. In May 2016 the trial team moved back to Chicago to try the case again. On the morning the second trial was to begin, Drosman said a settlement was reached.

“The defense thought incorrectly that a lot of our fraud evidence would not be admitted at the retrial,” Drosman said. “They thought that would all be sanitized and the retrial would simply be about loss causation. But we persuaded the judge that the jurors in the retrial would need evidence of the fraud as background, and we hammered out an outline of what had occurred. The defendant’s actions were so disgusting and abhorrent we knew the jury couldn’t ignore it.” The prospect of seeing that inflammatory material go to jurors plus Drosman’s scheduled fraud causation witness, Daniel R. Fischel, evidently forced the other side to avoid another trial.

“We went out to dinner,” Drosman said. “There was a tremendous feeling of accomplishment and relief. We’d felt the weight of the world on our shoulders, and now it was gone. It was the highlight of my professional career.”

— John Roemer