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Stan Chesley

More Chesley follies with Judge Bamberger in Kentucky?

by Ted Frank on May 11, 2007

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.)

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Kentucky fen-phen court: “Chesley was paid more than he should have been”

by Ted Frank on April 5, 2007

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.)

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“Fen-Phen Zen”

by Ted Frank on April 4, 2007

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.)

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March 26 roundup

by Ted Frank on March 26, 2007

  • 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]

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NY Times on Ky. fen-phen scandal

by Walter Olson on March 26, 2007

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).

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Grand jury looking at Ky. fen-phen scandal

by Walter Olson on March 19, 2007

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).

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Lawyer: guess maybe we burned that fee documentation

by Walter Olson on January 24, 2007

Sensational new disclosures in the scandal (Mar. 6, Aug. 25, etc.) over self-dealing by lawyers in divvying up the results of fen-phen litigation in Kentucky:

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).

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Heads I win, tails don’t count files: Ohio HMO suit

by Ted Frank on October 5, 2006

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.”

The plaintiffs’ attorney is Overlawyered favorite Stanley Chesley: see Jul. 4, Mar. 6, Aug. 24, 2005, et cetera.

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“Do you know who I am?”

by Walter Olson on July 4, 2006

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.

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Judge resigns in Ky. fen-phen scandal

by Walter Olson on March 6, 2006

Last May 10 we reported on the questions that were being asked about a sealed settlement of Kentucky fen-phen claims which had included (along with vast sums in legal fees) the quiet diversion of $20 million into a mysterious new charitable entity called the Kentucky Fund for Healthy Living. Now the mystery has turned to scandal: the judge who approved the settlement, Joseph F. (“Jay”) Bamberger has resigned after allegations surfaced that he was serving as a director of the fund, receiving $5,000 a month (three of the plaintiff’s lawyers were also paid directors). The state’s Judicial Conduct Commission said Bamberger’s actions “shock the conscience” and he faced possible removal had he not resigned. Particular attention is being focused on Bamberger’s close ties to Mark Modlin, a trial consultant in the fen-phen case who has had co-investments with the judge. The alleged closeness between Bamberger and Modlin had led to protests from litigants in a number of earlier cases, including a high-profile priest-abuse case against the Catholic Diocese of Covington.

The commission’s reprimand (PDF) revealed a startling fact. “The attorney fees approved were at least $86 million and perhaps as much as $104 million” — well exceeding the $74 million that was split among the 431 claimants in settlement. A lawsuit continues on behalf of some allegedly victimized clients against four plaintiff’s lawyers involved in the settlement, including big-league Cincinnati operator Stanley Chesley. (Beth Musgrave, “Fen-phen lawsuit judge resigns”, Lexington Herald-Leader, Feb. 28; Jim Hannah, “Judge quits amid allegations”, Cincinnati Enquirer, Feb. 28; “Investigation of Bamberger warranted” (editorial), Cincinnati Enquirer, Mar. 1; “A blistering rebuke” (editorial), Cincinnati Post, Mar. 1; Peter Bronson, “Hold this judge in contempt”, Cincinnati Enquirer, Mar. 2)(cross-posted from Point of Law).

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Violent teen only 30 percent at fault for his crimes

by Walter Olson on August 24, 2005

His affluent parents bear the other 70 percent of the fault, a Cincinnati jury decided, as they awarded $10 million to victim Casey Hilmer and her family. Ben White was just 11 days short of his 18th birthday when he savagely stabbed the girl in an unprovoked assault; he was later sentenced to 10 years for attempted murder. You’d think for White’s parents to be more than twice as much at fault in the outrage as he was — 70 percent compared with 30 percent — they must be quite the monstrous couple. Curiously, though, the jury foreman said of Lance and Diane White afterward that they had “no intent” to harm and that he didn’t think they showed “ill will” or “conscious disregard for somebody”: “I’m not saying they’re bad parents”. The plaintiff’s lawyer was Stanley Chesley, who will be familiar to many of our readers. (Sharon Coolidge, “Parents must pay $7M”, Cincinnati Enquirer, Aug. 20; Tony Cook and Jeanne Houck, “Stabbed girl wins $10M judgment”, Cincinnati Post, Aug. 20).

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Fee catfight in Microsoft case

by Walter Olson on January 11, 2004

Class-actioneers Michael Hausfeld and Stanley Chesley, already in line to collect $10.5 million in fees under Microsoft’s settlement of one of its antitrust cases filed in federal court, “say they are entitled to share in $50 million for helping lay the groundwork for the state claims [filed by other law firms].” Hausfeld and Chesley say many lawyers who filed state claims were happy to rely on the work they did in advancing the federal case, but “‘Memories are short and gratitude fleeting when attorneys’ fees are at issue.’ … In a reply brief, the law firms of Milberg, Weiss and Lieff, Cabraser, and Kirby, McInerney & Squire argue that assistance provided by Hausfeld and Chesley ‘was spotty and sometimes non-existent.’ ‘To put it most charitably, rather than being a resource to various state court counsel throughout these proceedings, Hausfeld-Chesley looked out for their own clients (and fees) in their own cases, which of course is completely proper,’ the lawyers in the state cases replied. ‘Such behavior, however, does not give rise to an entitlement for fees for other plaintiffs in other cases.’” (James Rowley, “Legal-fee fight erupts over Microsoft case”, Bloomberg/Seattle Times, Jan. 7)

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