Monday, July 16, 2018

Big Chiefs, Spy Boys, Flag Boys - How Poydras Street meets Wall Street in a High Stakes New Orleans Courtroom Face-off

Multidistrict Litigation (MDL) is a legal process on the federal level that originated in the early 60’s in response to an antitrust lawsuit against the electrical equipment industry.  

In that case, the number of individual lawsuits against the defendant grew so large, so rapidly, they overcame the federal court system.  1,912 separate civil petitions were filed in 36 different federal judicial districts.  To get a handle on that case and what would clearly be a growing phenomenon, the Department of Justice created the Judicial Panel on Multidistrict Litigation comprised of seven-member group of Federal Judges.

The way MDL’s work, roughly, is that as independent lawsuits amass against a company, and the company agrees to settle, they eventually become class action suits.  If those suits cross federal judicial jurisdictions they can become MDL suits and the MDL Judicial Panel then takes over and assigns the case to a specific federal judicial district, usually the area that has accrued the most suits against the company.  

The case is then assigned to a Federal Judge in that district who appoints one or more "Special Masters" to oversee the settlement such as the payouts to claimants through the claims facility, the accounting, hiring staff, updating the public, etc.  

The Judge also creates what is known as a Plaintiff Steering Committee (PSC) which is typically comprised of the attorneys who represent the most claims in the case.  The PSC’s primary legal responsibility is to serve the benefit of the class claimants as a whole and speak to the court on behalf of all the claimants in the case as well as the claimants’ individual attorneys.  These PSC members receive a fee referred to as a "common benefit fee" at the end of the settlement.  The amount of this fee is decided by the judge.  

The MDL process also requires the appointed Judge to create Qualified Settlement Funds (QSF) which are essentially financial trusts or bank accounts that hold settlement money until the claims in the settlement are thoroughly vetted and ample time has been allotted for claimants to file suit.  The amount deposited in to the QSFs by the court is determined by the judge as well.  Multiple QSFs are usually created for different aspects of  the case, pending the complexity of the settlement.

So take the BP oil spill…there are "BEL" claims - Business Economic Claims, Medical Claims,  Environmental Claims, etc.  The QSFs set aside by the court will address each area of litigation. 

An individual QSF is also created for the myriad attorneys who represent each individual claimant in the class….which I will refer to as the Attorneys Fee QSF, in this story.  This  also happens to be the fund that is tapped to pay the PSC attorneys’ "common benefit fees".

MDL as an industry

Since MDLs were created, a lion’s share of the largest cases have landed here in the Eastern District of Louisiana’s Federal Court on Poydras Street in New Orleans.  

Vioxx, Fema Trailers, Propulsid, Apple’s iPhone, Xarelto, Taxotere, Bone Screws and of course the two largest class action settlements in the history of the country:  Tobacco and the BP oil spill. 

The sheer amount of money involved…approximately $206 billion in tobacco, $20 billion to date in the BP settlement…has turned the MDL process into an industry unto itself.

Fortuitously for them, many of the same group of lawyers keep getting assigned to these MDL cases, nationwide as well as here in New Orleans.

In a paper published in the Cornell Law Review last year, Elizabeth Chamblee Burch, Charles H. Kirbo Chair of Law, University of Georgia Law School and Margaret S. Williams, a visiting scholar at the Federal Judicial Center, examined this elite network of attorneys who specialize in MDL cases and how their social networks allow them to monopolize this branch of litigation.:

Repeat Players in Multidistrict Litigation:  The Social Network

The paper outlines not only how a nationwide cabal of attorneys seemingly control the MDL arena but also details the multiple levels of attorney/client ethical conflicts that arise from this monopoly…citing many of the MDL cases that have landed in the Eastern District of Louisiana.

From the essay:

" Given the degree of specialization and success required to fund firms’ capital contributions in multidistrict litigation, this segment of the plaintiffs’ bar is relatively small; reciprocal relationships form, and an attorney’s reputation matters immensely. Playing the long game may not only allow repeat players to play for rules and reap the advantages those rules provide, but also empower those attorneys to influence and control group dynamics in ways that could impinge on client representation.

Accordingly, whether the positive gains outweigh the potential negatives remains to be seen. Because repeat players have so much control with so few external safeguards and so little incentive to draw attention to deals that may not favor litigants over lawyers, there is a pressing need to examine both who repeat players are and the deals they design."

Burch and Williams found that repeat plaintiff attorneys in the MDL arena constituted 62.8% of MDL leadership roles such as serving on a plaintiff steering committee.  A mere 50 attorneys of 1,221 accounted for 30% of all MDL plaintiff leadership roles.

When looking at the amount of MDL leadership positions held by members of specific law firms involved in MDL cases, 16% of the firms held 54% of all leadership roles.

The paper lists the top fifty firms and individual attorneys in the MDL arena in the appendix.

The Flag Boys

One of the firms which didn’t make the list but is deeply entrenched in MDL cases in the Eastern District of Louisiana is Herman, Herman and Katz. 

Steve Herman was named the lead counsel for the plaintiff steering committee for the
 BP oil spill settlement by Judge Carl Barbier, the second largest MDL settlement in U.S. history. 

(Much of that settlement process was documented here on AZ

Recently motions filed to the court asking to reveal the common benefit fees awarded to the BP Oil Spill settlement PSC have been denied by Judge Barbier but rumor has it the lead council on the committee received upwards of $80 million in common benefit fees…potentially a record amount.

Steve’s father, Russ Herman, was named to the PSC for the Chinese Drywall case filed in March of 2009 along with one of the lawyers who did make Burch and Williams list: Arnold Levine....senior partner in the Philadelphia-based law firm, Levin, Sedran & Berman. 

Levine was number eight on Burch and Williams’ repeat player list in MDL cases and his firm came in fourth. 

Interesting note….Levine had no cases in the Chinese Drywall litigation but was still named as lead counsel along with Russ Herman.

MDL as a Bank

In August of 2013 Levine (Lead Counsel) and Herman (Liaison Counsel) filed a motion to the Federal Judge overseeing the case, Eldon E. Fallon, to create multiple QSF’s with a relatively small, unknown, bank.

Esquire Bank, based in Jericho, New York had only one brick and mortar building located in Brooklyn at the time they were recommended by Herman and Levine.  It just so happened that Herman was on the Board of Directors at Esquire Bank and held stock in the company, Esquire Financial Holdings, Inc., which he disclosed to Judge Fallon at the time of recommendation.

Included in the QSFs the bank would entrust, were individual "attorney fee funds" that were eventually consolidated into a single fund totaling about 200 million dollars.
Esquire is a unique bank in that it is actually vying for class action and MDL settlement QSFs as stated on both their website and in their SEC filings. 

Esquire’s marketing material describes QSF funding as a "newfound liquidity you’ll love" going on to advertise their unique market loaning money to attorneys involved in MDL and class action cases.  In fact, Esquire lends money to the attorneys in the same cases where the bank is holding the court appointed QSFs of the case, itself. 

The literature for the company boasts it’s relationships with the MDL/class action community, repeatedly, mentioning their Board of Directors members’ connections and influence therein:

"We have established our niche in the litigation market through the strategic development of a business model that understands our market’s unique needs and provides access to our target customers.  We have designed unique, value added products and services for our current and potential customers and created a distribution network with direct access to the market through the experience and networks of our Board, Advisory Board, attorney stockholders and certain members of management. A number of our directors, Advisory Board members and investors are well-known, influential market figures and active members of some the leading litigation law firms in the nation and national and state bar associations as well as other industry leading companies such as plaintiff financing and structured settlement services.  In addition, we have established informal affiliations or relationships with key industry organizations such as New York State Trial Lawyers Association, Consumer Attorneys of California, Florida Justice Association, and a number of other state trial attorney associations.  Through our current law firm clients and other relationships, we believe we have access to thousands of trial attorneys."

Keep in mind the "market" they are referring to is largely the federal judicial system, which brings in to question where the influence of Esquire Board members lie.  Does this mean the influence between the trial attorneys and the judges who are ultimately responsible for establishing the QSF’s and the bank(s) in which they are deposited? 

In this case, Chinese Drywall, the QSFs were deposited in Esquire after a motion was made by one of its own Board Members….Russ Herman.

Treating the court as a speculative market

I asked Elizabeth Burch, who is familiar with the current Chinese Drywall/Esquire Bank issues what her opinion of the matter was. 

"What worries me  is that the mass-tort lawyers who are also involved with the financiers loaning money to plaintiffs may be able to profit from their privileged position. There is dual control: attorneys who are on the board of directors are also in key leadership positions in the litigation.  They can prolong the lawsuit or settle quickly, when it behooves the investment firm’s bottom line.

Having banks so closely linked with plaintiffs’ lawyers makes for a tangled web of conflicts. When lawyers serve as behind-the-scenes investors for financiers, they not only seem to be skirting most states’ ban on lending money to their clients, but they may also be profiting from decisions that they help engineer. 

For instance, if a lead mass tort lawyer is in charge of administering plaintiffs’ claims, but also happens to sit on a bank or financier’s board directors, she would have an incentive to delay that process and encourage plaintiffs to accept post-settlement loans. The longer claims administration takes, the more interest the financier can collect.

If that lawyer/director is also an investor in a publicly traded company that owns the bank, like Esquire Financial is Esquire Bank’s parent company, then the conflict deepens. The attorney may not only profits from the delay she helps create, but could then eventually collects a second time when collecting attorneys’ fees.  Investor attorneys may likewise be profiting from lending to other mass-tort lawyers who use the money to invest in the same proceedings.  This time, delaying attorneys’ fees could line investor-attorneys’ pockets at others attorneys’ expense."

Spy Boy calls "Jock-a-mo"

Last May, one of the individual attorneys representing claimants in the Chinese Drywall settlement filed a motion in Judge Fallon’s court asking him to remove the remaining 200 million in the attorneys’ fee QSF from Esquire Bank back in to the court registry.  The motion filed by Mobile, Alabama attorney, Tucker Yance, suggests Herman is deeply conflicted, legally and financially, in his role as Liaison Counsel on the settlement vis-a-vis his financial interests in Esquire.

Estimating the value of Herman’s Esquire stock options to be approximately 1.4 million dollars since its price has risen from 71% after the company’s  initial June 2017 IPO, Yance's motion lays out the exact "conflict issues" Elizabeth Burch belabored above.

Yance’s motion suggests that Herman may be slow rolling the litigation procedure in order to retain the 200 million on Esquire’s ledger as a fluid asset.

Yance states that most of the individual attorneys, "if not an overwhelming most", have settled their claims for clients in the nine years since the litigation began.  He argues there is no good reason for the attorney’s fees to have sat in the Esquire fund for 4 years and for the court not to have ordered the payout. 

Furthermore, Yance stated that some attorneys within the class have been forced to take loans out at prime interest rate plus two points, around 7 %, with Esquire Bank, itself, in order to ease their financial hardship waiting for their payout. He suggests this creates an absurd scenario where the attorneys are being forced to borrow money at a 7% interest rate against their own money being held in trust and used as collateral by the bank holding the QSF from which they would eventually be paid.

In fact, this circuitous loan process is actually touted as a  part of the business plan for Esquire and it’s subsidiary,, as outlined in its prospectus and SEC filings.   

Yance’s motion also suggests the 200 million in the Attorney’s Fee QSF was listed as an asset in Esquire’s ledger before they went public last summer….money which shouldn’t have been listed as collateral for originating loans. 

At the time they went public, a year after the Chinese Drywall QSFs were deposited, the bank reported it had only $290 million in deposits.  At the end of the financial year the bank reported deposits of $383 million.  Yance contests if the $200 million was included in that deposit number at the time it went public that would have constituted 51% of their total deposits and  that would have been a significant factor in promoting  their public offering.

The issue being…were they listing the 200 million as a fluid asset for originating loans when they were taking the company public?  The money was not fluid, it was supposed to be isolated….not used as collateral for loans.  

No interest in interest?

One of the main reasons this "market" is so attractive to Esquire is that there seems to be no court-regulated guidelines as to the interest rate the bank must provide to service the QSF’s. 

In this case, the PSC attorneys did not seek out the highest interest they could get for holding the Attorneys Fee QSF nor did the Judge require the bank to provide a specific interest rate. Yance notes that Esquire paid the Attorneys Fee QSF a mere .02% interest rate accruing only $87,711.98 in the four years they have have held the $200 million. 

Treasury Bill interest rates over a five year period are approximately 1.5% or 75 times higher than the rate Esquire was providing the court. 

To boot, Yance states Esquire provided other QSFs in this litigation, Chinese Drywall, a .5% interest rate which is 25 times higher than what was provided to the Attorney Fee QSF.   
According to the motion, it appears the Attorney Fee QSF was specifically targeted for a lower interest rate burden to the bank.  In fact, this ability to provide MDL court deposits with ridiculously low interest returns is actually touted in Esquire’s marketing literature.   

An argument can be made that Esquire or the court, itself, could not invest the money in "risky" financial instruments and this is why the interest rate was so low, .02%.  But there are other options for shorter term T-Bills (pretty much the safest financial investment available) that would have provided much higher interest returns and certainly other legitimate banks could have competed to provide the court with a higher rate without penalty of early withdrawal.

Basically, when the court chose Esquire, the 200 million was locked in to the .02% interest rate and that was that.   There was no effort by the court or the PSC to obtain a better interest rate for the Attorney Fee QSF.

The Face-off  

Yance’s motion was first addressed by the court in the monthly update/hearing on Tuesday, June 12th.  Yance made an oral argument that there was no reason not to rule on the matter, immediately, because Herman was given ample time to respond.  Judge Fallon subsequently ordered the 200 million to be moved out of Esquire and back in to the court’s hands, Sua Sponte, at Yance’s request.

Herman, in oral argument, responded to the motion stating that he was gathering the information requested by Yance and other attorneys but had not had enough time to fill the request.  He accused Yance of making personal attacks in the motion and stating false assumptions:

From the hearing transcript:

Herman:  There are a number of misstatements in Mr. Yance’s motion.  There are personal attacks in Mr. Yance’s motion.  There is ongoing requests for documents -- by folks who have joined with Mr. Yance -- from BrownGreer, and BrownGreer has responded with the assistance of Esquire Bank.

Judge Fallon:  He says you could have responded within a month.  You haven’t responded in a month.

Herman:  Well, Your Honor, we have received, over the course of this month, repeated requests for information from me, from Esquire Bank, and BrownGreer.  We could hardly do that until the information stream was passed. I also don’t think, under the usual practice of this Court, when a counsel before this Court with 52 years of experience is attacked personally that the matter can be responded to without some thought. I am not accusing Mr. Yance of anything other than, if he had these remarks, to release them publicly to a large number of firms without attempting to seal the record…that’s just not proper.  Perhaps these folks do not understand that we have ongoing litigation against Taishan and that given the fact that the documents were also distributed on the record, accessible to the defense, it does not give us sufficient time. Now, all I’m asking for is a briefing schedule and a hearing date, with the Court’s permission.  

Judge Fallon ordered the $200 million to be moved from Esquire into the Registry of the Court and a hearing date was set for July 12th.

In a response to Reuters reporter Allison Frankel shortly after the hearing, Herman stated Esquire never lent money out of the $200 million. He claimed the .02% interest rate was a standard rate for Esquire’s depositors whose "primary consideration is security".

Herman also claimed any money he has received in compensation from Esquire, $30,000 by his own account, was donated to charity.  He denied having $1.4 million in stock, claiming his current stock in Esquire was only $500,000 and pointed out that he, himself, has a vested interest in resolving the Drywall MDL as he stands to make a financial windfall in common benefit fees….an estimated $28 million.

Mr. Herman's Perspective

I had the opportunity to speak with Russ Herman shortly after he filed a response to the Yance motion.  In that conversation,  he broke down specific issues in the motion and answered them individually.

On the matter of the attorney QSF fund being used as collateral to fund loans distributed by Esquire bank, Herman stated unequivocally (highlighted and capitalized in his official response) NO QSF FUNDS HAVE BEEN USED FOR COLLATERAL FOR LOANS. 

When I questioned him in the interview, he replied, "That’s a lie…that’s a lie. It wasn’t used for collateral for any loan for any reason."

Herman referred to "On balance sheet deposits" and "Off balance sheet deposits.".  He stated "There’s a difference between on balance sheet deposits and off balance sheet deposits.  The attorney fee fund was never used as collateral for any loans, for any purpose."

As to whether or not the QSF was listed as an asset to take the bank public, he replied, "I don’t know."  He said he had not seen the 10k and could not state whether it was used or not.    

In respect to Yance’s questioning of Esquire Bank’s integrity and the fact that they are such a small bank, Herman suggested that many of the larger banks Yance referred to in his motion were either conflicted in the Chinese Drywall Case such as J.P. Morgan, or didn’t have as high a CET1 Ratio (Common Equity Tier 1 Capital ratio..a financial instrument used to measure a bank’s stress) as Esquire.

Regarding the interest rate matter, I asked Herman if he had sought out a bank with a higher interest rate for the QSFs before he recommended Esquire to the court and he replied that  he did not.  I asked him if Judge Fallon had asked him to seek out a higher interest rate and he responded, "I can’t speak for the judge, All I can tell you is I know that Brown Greer and the CPA appointed by the court reviewed everything on these accounts every month, from inception."

I also asked him if he knew what the interest rate was in the Court Registry….what the fund could have drawn had it just been left in the court's possession as opposed to moving it in to Esquire where it drew .02%.  He said he didn’t know what the interest rate in the registry was and added, "No one knows." 

Herman stated in his memo and to me that he did disclose that he held stock in Esquire before he recommended them to the court.  He took issue with the fact that he doesn’t actually own the alleged amount of stock in Esquire that Yance claimed…approximately 1.4 million dollars.  He pointed out the he held only 0.8% of stock in the bank...but in  stock options, not actual stock.  He noted that he would have to pay $186,150 to exercise those options.  He also pointed out that after you add up the tax burden and the cost of obtaining "vested but unexercised" shares of stock in the company you come up with a much lower computation than Yance claims.

I asked Herman when he obtained the stock options in the company, he said he wasn’t sure, "I can’t tell you but I’m not embarrassed by it.  If I had more money, now, I’d invest in it."

I also asked him if any of his relatives or anyone else in his law firm held stock in Esquire bank.  He replied his former wife, his son, Steve (partner in the firm), and brother, Maury, all held stock in the company but their holdings don’t amount to very much.

He also stated that (to his recollection) there were three Plaintiff Steering Committees members who also held stock in Esquire at the time of disclosure to the court. Currently, he doesn’t know which PSC members own or don’t own stock in the company since disclosure to the court.

In hie response to the court, Herman disclosed that he had borrowed money from Esquire, himself.  I asked him if he would be willing to disclose the amount of the loan, he replied no and that if a court ordered him to do so, he would appeal it.  He said his interest rate for the loan he took may be a little bit above the standard interest rate for average loans provided by Esquire but he did not receive a lower than average interest rate from the bank.

I asked him if his own common benefit fee, or projected amount, was used as collateral by the bank to grant his loan and he replied, "I don’t have a common benefit fee.  I won’t have a common benefit fee until first of all…the court rules.  Secondly, the opponents oppose it.  Thirdly, on appeal…final judgement…and at that time I will have a common benefit fee.  No one has a common benefit fee right now and that’s a basic misconstruction of an MDL."

One point Yance made was that the lawyers in this Chinese Drywall MDL case are being forced to borrow money from banks, including Esquire, itself, because the litigation has been drawn out or "slow-rolled" to the benefit of the bank.

As to the accusation that he was "slow-rolling" the outcome of the settlement to benefit Esquire,  
Herman replied, "What he has said is erroneous. It’s a complete misunderstanding of how an MDL works and the power of a federal judge. The judge directed that  Mr. Yance’s eleven clients would be paid first and until his clients and all the other three or four-thousand clients were paid first,100% of their loss…there would be no discussion…he wouldn’t issue any orders about fee.  So it took three years, four years, I don’t know what it took to pay it out….to Mr. Yance’s clients.  So there is no fee delay.  The questions of payments…when they’re made, how they’re made and dispersals, rest with the presiding judge.  They don’t rest with us (plaintiff counsel).  I can’t direct anything, I can only follow directions." 

He went on to say he doesn’t see a potential conflict in his plaintiff role on the MDL and his interest and involvement with Esquire bank, "I think it’s a sleight of hand by those who see a conflict that doesn’t exist and, indeed, don’t understand the process of an MDL or the power of an Article 3 judge."

Russ also noted,  "I sit on an ethics committee in federal court, I lecture routinely in a number of states and bar associations on ethics, I have two partners who teach complex litigation on MDLs…I don’t see anything there.  As a matter of fact, it never arose until objectors were upset with the division Judge Fallon might make between contract fees on the one hand, that’s lawyer’s individual clients with paid claims, and common benefit on the other."

He then added a colorful, local analogy, "I don’t know what to tell you except I’ve been at this a long time, I’ve never been accused of any sort of ethical problem.  Neither has Arnold Levine. Ya know?  I’m from New Orleans, if I want to listen to a philosopher….it’s Bo Dollis…Big Chief Bo Dollis….who says ‘If you don’t like what the Big Chief say, 'Iko iko ane'…’  So if they don’t like what Judge Fallon says, they can go 'iko iko ane', whatever the heck that means!"

That sentiment pretty much sums up Herman’s response and opinion:  there is no conflict if the judge and the court appointed CPA/financial contractors don’t acknowledge a conflict.  In other words, It’s ultimately up to the judge to discern whether on not there is a conflict.

Bank Sweeps and Fees

In Yance’s response to Herman’s response…submitted to the court on July 3rd,…he brought up new issues regarding Esquire that had come to light, in part, from Herman’s own court filing. 

Yance questioned the  nature of the "sweep arrangements" being utilized by Esquire to safely invest and insure the Lawyer’s Fee QSF.

As Yance points out in the petition, sweep arrangements are a common practice among banking institutions to make sure deposits exceeding $250,000 (the limit any single deposit is insured by the FDIC) will be federally insured. 

Instead of having to break up a single, large deposit (exceeding $250,000), two forms of sweep arrangements can be used:  Insured Cash Sweep Service (ICS) ; or Certificate of Deposit Account Registry Service (CDAR).  The bank utilizing ICS/CDAR services has the option of accepting dollar for dollar deposits from banks participating in the sweep process and utilizing that money in its own balance sheet as collateral to initiate loans to customers. Or, the bank can put the money in an "off-balance sheet" category and ACCEPT FEES (emphasis mine) from the participating banks with the interest rates for both options being set by the host bank, accepting the deposits.

Yance contests that in an affidavit included as an exhibit in Herman’s response, Executive Vice President and Chief Financial Officer of Esquire Bank, Eric Bader, stated that "It is not Esquire Bank’s business model to leverage off-balance sheet QSF funds into on-balance sheet deposit(s), thereby utilizing these funds to generate and fund asset growth (i.e., loans and investment securities)". 

Based on that statement, Yance says it’s "clear" that Esquire utilized the off-balance sheet  approach for the Chinese Drywall Lawyer’s Fee QSF.  He then points out that Esquire’s IPO prospectus from March 31, 2017 stated it’s off-balance total at $198.6 million….almost the exact amount of the Lawyers Fee QSF in contention in the Chinese Drywall settlement.  

But….that’s not so clear.  Neither Bader nor Herman confirmed that the QSF was put in to off-balance sheet investments.  Nor did Herman confirm this in my interview with him. Here is the audio byte of Mr. Herman’s response.

There was never confirmation that the Lawyers Fee QSF was put in to off balance sheet status, he simply stated there is a difference between off balance and on balance sheet status and that the money from the QSF was never used to collateralize loans from Esquire. 

It's also important to note he did not deny the QSF wasn’t listed as an asset in the IPO prospectus to take Esquire public.  So far as I can tell, no one from Esquire Bank has denied this.

Yance suggests that if the funds were classified as off balance sheet, Esquire reaped millions of dollars in fees from the participating sweep banks while only paying out  $87,711.98 in interest to the Lawyer’s Fee QSF that was leveraged to accrue those millions.

Duping the Court?

The petition then suggests that in the bid to obtain the QSFs from the Chinese Drywall case, President of Esquire Bank, Andrew Sagliocca, may have purposely misled the court in his September, 2013 appearance in front of Judge Fallon.  He suggests Sagliocca purposely downplayed the fees Esquire would receive from holding the QSF’s and failed to disclose the millions of dollars the off balance sheet sweep arrangement would accrue for the bank. 

A second issue Yance brings up is the .02% interest rate.  He includes an email in his exhibits obtained from the Budget and Financial Administrator of the Court which states the court registry funds being held with Whitney Bank were earning an interest rate of .10% until 2015.  2016 interest earning through the court registry/Whitney account were .25% and 2017 was at .80%. 
A cumulative 40x higher interest rate over the life span of the loan….around 3.4 million dollars that would have been accrued in interest if the 200 million had simply been left where it was.  

Apparently someone does know the interest rate for the court registry…an it’s exponentially higher than the rate Esquire provided.

Won’t bow down

On July 10th, Yance filed a motion to remove both Russ Herman and Arnold Levine from the PSC completely and to unseal all documents related to the common benefit fees for the case.

Thursday, July 12th, Judge Fallon heard oral arguments from both sides of the dispute.  In a short-lived session, both sides pretty much restated their case as laid out in their petitions with Yance asking the judge to leave the QSF funds in the court registry as opposed to moving them back to Esquire. 

In a curt and agitated response, Fallon simply stated that he would take Yance’s plea in to consideration but he found it deeply disconcerting that the conflict over attorney’s fees had snowballed to this level, implying that the PSC and individual attorneys should have worked out their differences without having to turn to the court for resolution.

Waiting for an Iko Iko ane from the Big Chief

The decision the judge makes on what to do with the Lawyers Fee QSF in this MDL case is crucial.  This ruling could set a standard for MDL courts and how all QSFs are  handled in the future. 

In another MDL/Esquire Bank matter, the NFL Helmet case.....the potential conflict is even more egregious.  I’ll be looking in to that in the coming months.

In the meantime, I will post Judge Fallon’s decision when it is handed down.

For the non-Nawlins folks who may be struggling to understand the metaphor's some background on New Orleans Mardi Gras Indians.

1 comment:

Kevin said...

Welcome back! It's been too long ...

From your excellent and revealing post:

“… [t]he CPA appointed by the court reviewed everything on these accounts every month, from inception.”

“…[t]here is no conflict if the judge and the court appointed CPA/financial contractors don’t acknowledge a conflict.”

Do you know if the CPA is the same CPA used by the liaison counsel in:

a. In re Chinese-Manufactured Drywall Products Liability Litigation - MDL 2047
b. In re Oil Spill by the Oil Rig "Deepwater Horizon" - MDL 2179
c. In re: Pool Products Distribution Market Antitrust Litigation - MDL 2328

In each of those cases a member of the Herman Herman & Katz, LLC law firm is identified as Plaintiffs' Liaison Counsel or Co-Liaison Counsel.

I believe the record in each of those matters will show that the CPA was RETAINED by liaison counsel and recommended by liaison counsel to the court "to assist and provide accounting services to Plaintiffs' Liaison Counsel, the Plaintiffs' Steering Committee, and the Court ... "

Good to share the truth with you once again!