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).
4 Comments
To us non-lawyers, class action lawsuits seem to be nothing but a legal scam that makes use of some “injured” class to extract money from companies. I still have my check for 12 cents that I received from a settlement from a class action lawsuit that I of course did not know I was a member of. Since judges are not stupid they clearly know that any settlement that provides such a ridiculously small amount of money has nothing to do with compensating the injured class and everything to do with making money for the lawyers. It seemed to me that no honest judge would allow such a settlement to take place. I always wondered whether in these egregious settlements money was being passed back to the judge under the table. In the case of the fen-phen class action lawsuit I got my answer. There was a quid pro quo. What I want to know is why that judge (and the lawyers) are not going to jail for stealing. Somehow just being made to give back the money doesn’t seem like the proper penalty.
Do note that the Kentucky fen-phen suit was not a class action as usually defined, but what I’ve elsewhere described as a batch settlement: The clients knowingly chose to sue (as opposed to simply failing to opt out of someone else’s suit) and their individually claimed damages were not trivially small. Batch settlements do overlap with class settlements in some of the temptations they pose for lawyers to behave contrary to their clients’ best interests.
“Somehow just being made to give back the money doesn’t seem like the proper penalty.”
A slight understatement, I would think. And the Grand Canyon is a bit a hole in a ground.
Meanwhile, no word on the merit of the underlying suit! Plaintiffs really shoot themselves in the foot here: it’s hard enough defending the questionable causation of so many product liability suits (I don’t know about the merits of fen-fen), but here, they’ve thrown some apparently outright fraud on top. Corruption begets corruption, I guess.