You may recall the earlier trial of the Kentucky fen-phen attorneys who had stolen tens of millions of dollars from their clients ended in a mistrial for two and an acquittal for their third compatriot. This time around, a federal court jury, after ten hours of deliberation, found William Gallion and Shirley Cunningham Jr. guilty of eight counts of fraud and one count of conspiracy. A streamlined prosecution case no doubt helped make a difference; defense attorneys sought to blame the matter on Stan Chesley, who negotiated the underlying settlement and received millions more than he was contracted to receive, and it remains mysterious why he was not charged. [Courier-Journal]
From the Cincinnati Enquirer columnist, a refreshingly acerbic account of the erstwhile Master of Disaster’s time on the stand in the Kentucky fen-phen trial, during which he compared himself to Tiger Woods in explaining why he should not be asked to stoop to taking an hourly fee:
Jurors have been anesthetized by six weeks of watching witnesses avoid the truth the way cats avoid a bath. …
…when [defense attorney O. Hale] Almand tried to make Chesley admit – yes or no – that he knew his own lawyer told prosecutors he would take the Fifth unless he got immunity, Chesley’s serial evasions made the courtroom squirm.
I counted at least nine tries. After the seventh, the judge twice ordered Chesley to answer yes or no.
He would not. He wheedled, ducked, swerved and danced. He blustered about attorney-client privilege, corrected the grammar of the question, and griped about how he has been mistreated by the press. …
If you’re hoping to hit a slip-and-fall lotto jackpot by suing Amalgamated Banana Peel Inc., Chesley is just the guy to take on herds of high-paid lawyers. But if you’re looking for a straight answer under oath, look somewhere else.
(“Tiger Woods of Torts”, Cincinnati Enquirer, Jun. 19).
Perfectly jaw-dropping testimony at the ongoing Covington, Ky. trial:
Attorney William Gallion testified yesterday that he and his co-defendants would have been “legally justified” in taking as much as $170 million from Kentucky’s $200 million fen-phen settlement — because, he said, their clients’ cases were worth only $30 million.
“We were like an insurance company where the hurricane didn’t strike, so we got to keep the premium,” the suspended Lexington lawyer testified in his diet-drug fraud trial in U.S. District Court.
The lawyers, it seemed, had structured the settlement so as to reserve the gigantic helping of gravy in question for the supposed disposition of certain contingencies which then conveniently failed to materialize. Judge William Bertelsman immediately told the jury that Gallion’s interpretation of the law was wrong. (Andrew Wolfson, “Judge, lawyer clash at fen-phen trial”, Louisville Courier Journal, Jun. 14).
And on Monday, famed Cincinnati attorney Stan Chesley — who has been given immunity — testified, assailing the conduct of the three defendants and conveying his complete shock that they would structure the settlement so unfavorably to clients. (Jason Riley, “Chesley rakes diet-drug trio”, Courier-Journal, Jun. 17; Jim Hannah, “Chesley: Fen-phen role slim”, Cincinnati Enquirer, Jun. 17). For a different viewpoint, see Peter Bronson, “Where’s Chesley?”, Cincinnati Enquirer, Jun. 12. More: Herald-Leader.
“The court finds that there is a serious risk that the funds will be moved offshore and that with these funds at their disposal, the defendants will flee to a country with which the United States has no extradition treaty or otherwise disappear,” U.S. District Judge William Bertelsman wrote in the Friday order sending Shirley Cunningham Jr., William Gallion, and Melbourne Mills Jr. to jail without bond until the January 7 trial date. (Jim Hannah, “Fen-phen lawyers are jailed”, Cincinnati Enquirer, Aug. 11). We have lots of coverage of the Kentucky fen-phen lawyers, who have been found in a civil case, to have misappropriated $62 million of settlement funds by overcharging on attorneys’ fees and other diversions. Cincinnati attorney Stan Chesley, who has not been criminally indicted, is also civilly liable on part of his $20 million fee for helping to negotiate the settlement, with the scope of liability yet to be determined; trial has been delayed while the criminal trial is pending.
- Curlin, the horse owned by fen-phen fraudsters Gallion and Cunningham, won the Preakness by a head. Curlin’s trainer is apparently ensconced in his own scandal, having served a six-month suspension for illegally drugging horses. (Andrew Beyer, “Making a Run for It”, Washington Post, May 20; Jennie Rees, “Curlin camp a crowded place”, Louisville Courier-Journal, May 20).
- Stan Chesley did not even show up to the court-ordered May 16 mediation session, allegedly forcing a rescheduling until May 23. (Chesley’s attorney says he was in contact with his client at the hearing.) Plaintiffs have asked for sanctions. (Paul Long, “Mediation over lawyer fees fails”, Cincinnati Post, May 18).
- “Lawsuit: Licorice Twizzlers caused man’s heart disease” [WDRB; earlier on dismissal of German lawsuit filed by customer who ate nearly a pound a day of the candy]
- Empirical study of how personal injury claims are pursued in Great Britain [Richard Lewis, SSRN]
- How attorney Marc Lanier got that $4.7 billion talc/baby powder verdict [Daniel Fisher, Forbes] “Attorney sees lawyers’ role in judge selection process as helping fuel rise in lawsuits in ‘Sue Me State'” [Devin Watkins on Missouri; Angela Underwood, St. Louis Record]
- “$12.8M suit filed by estate of man killed in WWII tank blast” [AP]
- “Stan Chesley’s law firm admits ‘unjust enrichment,’ agrees to $23 million settlement” [Kevin Grasha, Cincinnati Enquirer; earlier]
- “Sweeping new arbitration study: ‘Enterprising’ plaintiffs’ lawyers adapt” [Alison Frankel, Reuters]
Update on the long-running Kentucky fen-phen fee scandal: one-time “King of Torts” Stan Chesley has maneuvered for years “to avoid paying a multimillion-dollar judgment to hundreds of former clients. The Enquirer has found that Chesley’s legal maneuverings have led to more than $162,000 in sanctions against Chesley and his attorneys….The Ohio Supreme Court in an October ruling – one of two during the prolonged legal battle – said Chesley has engaged in a ‘pattern of misuse of the judicial process…to obstruct collection efforts.'” [Kevin Grasha, Cincinnati Enquirer, more]
- In the just-out eighth edition of the Cato Handbook for Policymakers, I helped revise and add to the chapter on tort and class action reform, joining Robert A. Levy and Mark Moller as authors;
- Baron & Budd “Preparing For Your Deposition” asbestos memo still being fought over in court 20 years later [David Yates/Southeast Texas Record, my piece back when]
- “Wanted in Kentucky, seemingly immune to arrest in Ohio” [James McNair, CityBeat on Stan Chesley]
- Congress needs to rewrite the law on multi-district litigation or else the lawyerly gamesmanship will continue [James Beck, Drug and Device Law]
- While generally critical of class action reform proposals in Congress, Alison Frankel does find one idea in it — accounting for class action payouts — to be intriguing [Reuters]
- “New Jersey, Allstate sue chiropractors convicted of running ‘personal injury mill'” [Susan K. Livio, NJ.com]
Please don’t do these [in some cases alleged] things:
- Calif.: “Judge accused of stealing elderly neighbor’s $1.6M life savings resigns from bench” [ABA Journal]
- Stan Chesley joins a rogue’s gallery of disgraced litigators [Paul Barrett/Business Week, earlier here, etc.]
- San Francisco’s Alioto firm: “Attorney and law firm must pay $67K …for ‘vexatious’ suit challenging airline merger” [ABA Journal, Andrew Longstreth/Reuters (Joseph Alioto: “badge of honor”), Ted Frank/PoL (sanctions are small change compared with enormous fees obtainable through merger challenges]
- N.J.: “Lawyer takes state plea, will pay $1M to widow’s estate” [ABA Journal]
- Texas: “State Rep. Reynolds charged with 7 others in barratry scheme” [SETR]
- “Paul Bergrin, ‘The Baddest Lawyer in the History of Jersey,’ Convicted at Last” [David Lat/Above the Law, earlier]
- “Attorney’s mug shot winds up next to his law firm’s ad, in marketing effort gone awry” [Martha Neil, ABA Journal]
- Once the American legal profession reformed itself, but that was long ago [John Steele Gordon]