The firm claims that Mr. Spielberg defamed the firm when he wrote to the office of the Manhattan district attorney asking prosecutors to open an investigation into what Mr. Spielberg alleges is the firm’s mishandling of earlier litigation involving the diet drug fen-phen.

The lawsuit also claims that Mr. Spielberg slandered the firm in conversations he had with a New York Times reporter, Anthony DePalma, who wrote a lengthy article about the involvement of a name partner at the firm, Paul Napoli, in the fen-phen litigation.

Yet, Mr. DePalma’s article doesn’t quote Mr. Spielberg or mention him at all. Napoli Bern is representing the vast majority of thousands of ground zero workers in their suits alleging that the city failed to protect them from toxins at the site that have caused respiratory and other illnesses. …

“They don’t want me to be able to talk to the press or law enforcement,” Mr. Spielberg said of the suit against him.

(Joseph Goldstein, “Seeking To Cut Off Criticism, Law Firm Sues Former Client”, New York Sun, Jun. 6).

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(Bumped Tuesday with SSRN link to testimony.)

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Napoli Kaiser Bern (now known as Napoli Bern) represented more than 5,000 plaintiffs who had opted out of the larger class action suit against manufacturer AHP; a whistleblower, or disgruntled ex-employee (take your pick) alleged that Napoli Bern manipulated the amounts of the settlement to be paid to each plaintiff — giving more to its own direct clients — so that Napoli could maximize its own profits at the expense of other law firms.

More important is the allegation that Napoli Bern lied to its clients (and to its own expert witness on ethics) in making them think that the amounts allocated to each plaintiff had been determined by AHP and reviewed by a special master appointed by the court; in fact, it appears that Napoli Bern may have decided unilaterally how much to offer each plaintiff. Yesterday, a New York state judge ruled that the allegations had sufficient merit to reopen the settlement and send the allegations against Napoli Bern to trial.

The stakes are high here; the total amount of this settlement — confidential, but reportedly at least a billion dollars — is not at issue, but the distribution of that money among the lawyers and plaintiffs is. As the judge noted, in theory the penalty could be as severe as requiring Napoli Bern to forfeit all fees earned in the case. (Isn’t mass tort litigation fun? Billions of dollars of Other People’s Money floating around, waiting for lawyers to figure out how to distribute it.)

(Previously covered on Overlawyered: Feb. 2005, Dec. 2001)

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