- Barbara Bonar gets supporting testimony in her claims against Stan Chesley, but loses bench trial in case she brought over questionable settlement over Catholic church sex abuse. Bonar, the next president of the Kentucky Bar, will appeal. In the meantime, she faces trumped up ethics charges for representing class member opt-out settlements. (Andrew Wolfson, “Covington lawyer loses fee dispute case”, Louisville Courier-Journal, May 12).
- Angela Ford, who is bringing the lawsuit on behalf of Kentucky fen-phen victims ripped off by their attorneys against their co-counsel, Stan Chesley, is now also facing what seems to me retaliatory political pressure; a Hamilton County, Ohio, judge, apparently unaware of deposition commissions, is complaining that she subpoenaed an Ohio witness without being licensed to practice law in that state. For some reason, a Kentucky judge, Stanley Billingsley, is testifying on behalf of Chesley. An American Home Products witness contradicted defendants’ claims that they “set aside” some settlement money for future Kentucky claimants (who, under the U.S. Supreme Court Amchem precedent, could not be bound by the settlement). And the parties are in mediation tomorrow and Thursday, which, judging by Chesley’s attorney’s complaints about press coverage, implies a confidential settlement is near. Next court hearing is May 31. (Shelly Whitehead, “Fen-phen suit heads to mediation”, Cincinnati Post, Apr. 24; Beth Musgrave and Jim Warren, “Lawyers meet Wednesday to try to reach deal on fen-phen millions”, Lexington Herald-Leader, May 14).
- Angela Ford herself has a website, which is not surprising, but it does include a remarkable resource of publicly-available court documents related to the Abbott v. Chesley case.
Prominent Cincinnati attorney Stan Chesley said he wanted to file the Diocese of Covington priest-abuse case in Boone County because “we have a real friendly judge there,” a lawyer testified this week.
“He winked at me” and said “we need to file this in Boone County,” testified Covington lawyer Barbara Bonar, who is suing Chesley in a dispute over attorneys fees in the $84.5 million case.
“He said we already have hired a trial consultant, and he is real friendly with the judge,” Bonar said, describing a conversation she claimed to have had with Chesley in January 2003. “And he winked at me again.”
Chesley denies the allegations, but the fact remains that the Boone Circuit judge, Joseph Bamberger, of Kentucky fen-phen scandal fame, made an unprecedented ruling certifying a class action over priest abuse that forced the diocese into a $84.5 million settlement given that the church could not hope to defend itself against anonymous unnamed class members.
Bonar, who was briefly co-counsel for the class in the priest-abuse case, testified that Chesley’s partner Robert Steinberg told her in August 2003 that the Chesley firm had to turn down an early $3 million settlement offer from the diocese because it already had paid $400,000 in expenses to Modlin as a fee “to get the class certified.”
The diocese had sought Bamberger’s recusal. Modlin was also hired as a $2 million “trial consultant” in the fen-phen case, and went on to buy a house in Florida with Judge Bamberger. Chesley denies paying Modlin $400,000, and Bonar has her own motivation to fib, as she’s suing for a share of the Chesley fees from the class action, and claims she left the case only because of her fear of being involved in a fraud on the court. Bonar has already earned $2 million in fees out of the $4.7 million she settled for in individual cases outside the class action. Somewhere in here, a crime has been committed, whether it be bribery or perjury, but there’s work for a grand jury to be done. (Andrew Wolfson, “Lawyers clash in dispute over fees”, Louisville Courier-Journal, May 10; see also Jeanne Houck, “Claims tangle diocese lawsuit”, Kentucky Post, Nov. 26, 2003).
Update: the Kentucky Bar Association is investigating. (Paul A. Long, “Bar: Probe attorneys’ conduct”, Cincinnati Post, May 10.)
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.)
Hey, I just write the American.com column about the Kentucky fen-phen fraud, not the headlines. Earlier on Overlawyered: Mar. 26 and links therein. (Cross-posted at Point of Law.)
- More fen-phen scandals: Possible smoking-gun email in Kentucky case (see Walter’s post today) came from Chesley firm computer; Vicksburg lawyer first attorney convicted in Mississippi fen-phen scam. [Courier-Journal via Lattman; Clarion-Ledger (h/t S.B.)] (Updated with correct Courier-Journal link.)
- Allegheny College found not liable by jury for student’s suicide; school raised issue of student privacy concerns. Earlier on OL: May 30; Dec. 7, 2004. [WSJ]
- Update on the tempered glass versus laminated issue earlier discussed in Overlawyered (Feb. 15, 2006; May 16, 2005; May 13, 2005, etc.) [LA Times]
- Massachusetts court rejects quack sudden acceleration theory. (See also Dec. 20, Aug. 7, etc.) [Prince]
- California bill would bar carpenters from school campuses. [Overcriminalized]
- New book: Antitrust Consent Decrees in Theory and Practice [Richard Epstein @ AEI]
- To be fair, I went to school with “young Mr Sussman, the boyish charmer”, and I don’t know how to pronounce “calumnies” either—it’s one of those words I’ve only seen written, and never heard spoken [Steyn; MSNBC]
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).
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).
The US Supreme Court denied certiorari on United HealthCare’s attempt to enforce an arbitration agreement in its contracts with doctors who filed an Ohio class action over reimbursements. The underlying class action is essentially identical to one that a federal court threw out as meritless in July, though this isn’t mentioned in the television coverage, much less that from Bizarro-Overlawyered. The Class Action Fairness Act effectively ends this sort of Russian-roulette game where plaintiffs get multiple chances to win a gigantic class action by filing in multiple jurisdictions, but does not apply to class actions (like this one) filed before 2004.
The AMA has supported these lawsuits, which is disappointing, to be sure; as I noted on Point of Law in July, “Next time the AMA complains about the costs of excessive meritless litigation, they can perhaps look in the mirror.”
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.