So wrote Boone Circuit Court Senior Judge William Wehr in a motion denying both Stan Chesley’s motion to dismiss a suit against him in the Kentucky fen-phen fee scandal. But, with plaintiffs’ summary judgment motion also denied, a jury will ultimately decide how much that “more” should be, and whether a fiduciary duty was broken. The same order denied a request by Melbourne Mills to reconsider the finding that a fiduciary duty was broken. Chesley’s attorneys state that he will pay back $7 million of his $20 million fee. (Jim Hannah, “Chesley made too much”, Cincinnati Enquirer, Apr. 5). Earlier: OL Mar. 26 and links therein. (Cross-posted at Point of Law.)
We’ve been beating the drums on this one for a while (Mar. 6 and Aug. 25, 2006, Jan. 24, Feb. 14, Feb. 21, Mar. 19, 2007; Point of Law May 10, 2005) and it’s nice to see the Times’s Adam Liptak with a front-pager this weekend on the affair. The story begins by telling the story of what happened when W.L. Carter, one of the clients in the 440-member batch, went to pick up his check from the fen-phen settlement:
The check was, for starters, much smaller than he had expected. And his own lawyers threatened to retaliate against him if he ever told anyone, including his family, how much he had been paid. “You will be fined $100,000, you will go to jail and you will be sued,” Mr. Carter recalled them saying.
Liptak writes: “Legal experts said the fraud might be one of the biggest and most brazen in legal history.” Or at least one of the biggest and most brazen that’s come to light: batch settlements in mass tort cases are frequently so secretive in their details, and so carefully drawn up to repel inquiries from outsiders or from clients themselves about who got what, that we can at best speculate about whether the Kentucky scandal is an outlier. (“Fraud Inquiry Looks at Lawyers in Diet-Drug Case”, Mar. 22).
P.S. As Ted notes above, today’s Louisville Courier-Journal adds some new information about the alleged role played by Stanley Chesley’s Cincinnati law firm (Andrew Wolfson, “Court filing ties lawyer into diet- drug pay scheme”, Mar. 26; Lattman, Mar. 26).
A grand jury is expected to hear testimony this week about the role of three Lexington lawyers in the now-infamous Kentucky fen-phen settlement (Feb. 14, etc.). “Frank Bentley IV, a lawyer representing [Cincinnati’s Stanley] Chesley, said he is not a target of the criminal investigation.” (Andrew Wolfson, “Grand jury to look at diet-drug attorneys”, Louisville Courier-Journal, Mar. 15). Last month one of the lawyers caught up in the scandal, William Gallion, said “that he did nothing wrong and that a lawsuit filed against him and others in the case is simply the result of ‘a cottage industry of lawyers who attack class-action settlements.'” (Andrew Wolfson, “Attorney denies wrongdoing”, Courier-Journal, Feb. 11).
Updating our Sept. 11 (“Neglect Your Kid Now, Sue for $5M Later” and Sept. 26, 2006 items: Lifeway for Youth, a foster-care training agency, has agreed to pay $200,000 to settle Donna Trevino’s suit seeking $5 million over the death of her 3-year-old son, allegedly at the hands of his foster parents. “Trevino told police in April to take her children; that her son Marcus Fiesel, who was developmentally disabled, and his older brother and infant sister, were not her problem.” The money is supposed to be used on behalf of Marcus’s siblings, who may also be beneficiaries of further lawsuits being pursued against other defendants. (Eileen Kelley, “Birth mother settles lawsuit”, Cincinnati Enquirer, Feb. 10).
Attorney Donald Caster writes from Cincinnati:
OK, I’ll admit it: I’m a “trial lawyer,” and I usually disagree with Overlawyered’s point of view. (In fact, usually when I read the blog, I’m thinking about what a great job a particular lawyer did to get the result that you’re now protesting.) But I get nearly as agitated as you folks do over the abusiveness of coupon settlements in class action cases, and I just got notice of such a settlement myself.
Below I’ve cut and pasted the exact text of the email message I received notifying me of the settlement. The class action has its own website at www.browningsettlement.com. As you can see, the defendant is Experian, and the plaintiffs claim that they made some sort of representations on a website that violated the “Credit Repair Organizations Act.”
Class counsel is set to take over $2.5 million in fees. The “benefit” to the class? A settlement in which class members get either (a) a free credit score, or (b) free credit monitoring for two months. And oh, by the way, if you take the latter option, you have to remember to cancel the monitoring, or you’ll automatically start getting billed $9.95/month for credit monitoring after sixty days. That reeks of a lack of arms-length negotiation between class counsel and the defendant (what a great deal for the defendant–they get new customers in exchange for settling a class action lawsuit!).
The three lawyers accused of plundering Kentucky’s $200 million fen-phen settlement “tore up or burned” notes showing how much they paid themselves and their clients, according to one of the lawyers.
Depositions obtained by The Courier-Journal include Lexington attorney Melbourne Mills Jr.’s description of a secret meeting that he said he and lawyers William Gallion and Shirley Cunningham Jr., also of Lexington, held at Gallion’s house in 2001 to divvy up an extra $10 million beyond what they’d already paid themselves from the settlement. …
[Attorney Angela] Ford alleges that Mills’ description is a “dramatic indication of a cover-up.”
She has asked that those lawyers and another attorney, Stan Chesley of Cincinnati, who helped negotiate the settlement, be forced to surrender $62.6 million in funds they allegedly misappropriated — as well as $59.5 million they paid themselves in fees….
Kentucky courts have never required a lawyer to “disgorge” or return a fee for misconduct, but courts in other states have done so, according to Ford’s motion….
Chesley, who was hired by the Lexington lawyers to negotiate the settlement, said he had no reason to question why he was paid $20.5 million — $7 million more than his contract outlined — in part because he could not “believe that these good folks would have sent me more money than I was entitled to.”
In her motion to force the lawyers to give up their fees, Ford said the defendant lawyers, including Chesley, breached their duties in a “spectacular and unparalleled way” by giving only about one-third of the settlement to the clients.
“The facts of this case truly are as egregious as it gets,” she said in court papers. ..
Since the settlement, Gallion and Cunningham have both become permanent residents of Florida, a state that Ford notes allows debtors to keep their homes when they take bankruptcy.
Stanley Chesley was, and remains, one of the most famous plaintiff’s lawyers in the United States and a major powerbroker in national Democratic politics. The article also sheds further light on the close ties between now-disgraced Judge Joseph F. (“Jay”) Bamberger, who approved the Kentucky fen-phen settlement and has since resigned, and the plaintiff’s team in the litigation. (Andrew Wolfson, “Lawyer: Fen-phen notes destroyed”, Louisville Courier-Journal, Jan. 21).
More: a companion piece in the same paper profiles the Cincinnati-based Chesley (Andrew Wolfson, “A breach of duty; wealth mounts for ‘prince of torts'”, Louisville Courier-Journal, Jan. 21)(via Lattman).
More on the Marcus Fiesel/Donna Trevino case, as noted here Sept. 11: “The birth mother who sued Butler County for $5 million over her son’s death in foster care had no intention of reuniting with the boy, according to court records The Enquirer obtained Monday. In addition, the attorney who stands to gain millions in the civil case if the case is successful knew that.” (Sheila McLaughlin, “Birth mom didn’t want Marcus”, Cincinnati Enquirer, Sept. 26)(hat tip: reader D.B.).
You may be interested in the tragic story from Cincinnati. Three year old Marcus Fiesel was taken from his mother. She had three children by three fathers and they lived in a flea infested place which was smeared with feces and lacked food. She told police that the children were “their problem” now. The children were put into foster care. Marcus was placed in a home where he should not have been, as the foster father had a police record that was not discovered. His foster mother pretended to faint at a local park, and when she awoke she said Marcus was missing. There was a huge community search, but Marcus was never found. Later police discovered that the foster parents had wrapped him in a blanket and left him in a hot closet for 2 days while they attended a family reunipn.Then the foster father burned his body. The birth mother is suing everyone she can for $5 million and saying it is “not about the money.” There is outrage in Cincinnati first over the circumstances of his death and now over this outrageous lawsuit. The Cincinnati press has covered the story for the last 2 weeks with almost daily updates. Here is a report on the lawsuit and a Cincinnati Enquirer editorial.
Update: Sept. 26.
According to an editorial report in London’s Telegraph earlier this year, an Italian court has ruled that it is not inappropriate for a lawyers’ association to discipline one of its members for uttering in the course of a social interaction that classic phrase of intimidation, “Do you know who I am?” (“We know who you are” (editorial), Daily Telegraph, Jan. 15). If adopted in this country, such a disciplinary rule might tend to crimp the style of famed tort high-roller Stanley Chesley, to judge by an generally puffy recent Cincinnati Enquirer profile (Chuck Martin, “Champion for little guy”, May 28). (These seeming puff pieces so often turn out to embarrass inadvertently.) More on Chesley: Mar. 6, 2006; Aug. 24, 2005; Jan. 11, 2004; Aug. 7-8, 2001; Aug. 16-17, 2000; Jun. 1, 2000; Apr. 12, 2000; Mar. 30, 2000; Dec. 23-26, 1999.
The city of Cincinnati has reached a $6.5 million settlement with the family of Roger Owensby Jr., who died in police custody, but the money is mostly going to … well, go ahead and guess. “If approved in federal and probate courts, the settlement would leave the family with $2.4 million and the family’s attorneys with $4.1 million.” Owensby’s father says he doesn’t mind, but not everyone regards the division of spoils in the case as benign. “Some members of City Council, which has approved the settlement, said they might not have agreed had they known lawyers would pocket more money than Owensby’s family.” (Dan Horn and Dan Klepal, “Owensby lawyers take $4.1 million”, Cincinnati Enquirer, Apr. 13). “It was originally reported that about two-thirds of the money would go to the family.” (“Most Of Roger Owensby Jr. Settlement Will Go To Attorneys”, WKRC, Apr. 12).