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Lost in the uproar last month over a federal judge's decision to go easy on Fast Eddie Vrdolyak was another piece of information to emerge from his sentencing that was nearly as outrageous.
Vrdolyak, come to find out, was the recipient of a multimillion-dollar legal fee paid from the big 1998 tobacco settlement -- and he's still collecting on it.
You remember the tobacco settlement: hundreds of billion of dollars paid by cigarette makers to state governments to make all those pesky liability suits go away, billions in turn directed to state-hired law firms that brought the cases. . . .
That calculates to a $6.25 million total fee for Vrdolyak using the prosecution's number or $9 million using the judge's. I couldn't get clarification. The U.S. attorney's office declined to clarify. Monico wouldn't return my calls. Pre-sentence investigations reports aren't public records.
Did this involve pal-in-crime Levine?
People want to write off Vrdolyak as a quaint relic from yesteryear, yet even though long retired from public office, he still was able to find a way to latch on to the sweetest litigation jackpot in U.S. history -- and keep it secret. That's impressive, as well as suspicious.
What, you may wonder, did he do to earn his fee, and who agreed to pay him?
I don't have the answers, but I'll fill you in as best I can.
For what little we do know, we can thank U.S. District Judge Milton Shadur.
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Federal authorities who have been investigating judicial bribery cases in Mississippi are interested in the trail of money that leads from tobacco settlement expenses.
Dickie Scruggs, who pleaded guilty in two judicial bribery schemes, is cooperating with federal authorities. He earned $1 billion as chief negotiator of the tobacco settlement.
Scruggs' attorney, John Keker of San Francisco, denied federal authorities are exploring the matter.
Last week, a federal grand jury questioned witnesses regarding P.L. Blake, who earned $50 million from tobacco settlement expenses.
Five years ago, two attorneys, Alwyn Luckey and Bob Wilson, raised questions about some of those tobacco settlement expenses in their litigation against Scruggs, their former law partner.
Their attorney, Charlie Merkel of Clarksdale, said what they found in documents detailing the payments for tobacco settlement expenses was a veritable maze.
A new lawsuit against incarcerated plaintiffs attorney Richard "Dickie" Scruggs accuses a state judge and a former U.S. Senator of teaming with Scruggs in a judicial bribery scheme.
The suit, filed Monday by Scruggs' former asbestos litigation partner William Roberts Wilson, alleges a conspiracy that involves Scruggs, his lawyers in a dispute with Wilson over attorneys fees, Hinds County Circuit Judge Bobby DeLaughter, former state Auditor Steven Patterson, former Hinds County District Attorney Ed Peters and an unnamed former U.S. Senator. . . .
Wilson claims Scruggs used those ill-gotten funds from the asbestos settlement to fund the landmark tobacco litigation that resulted in billions of dollars for plaintiffs attorneys hired to represent their respective states.
Scruggs represented Mississippi, hired by then-Attorney General Mike Moore. His work led to the 1998 Tobacco Master Settlement Agreement, which has an estimated worth of $246 billion for the 52 participating territories and states. The case, and Scruggs' work, was depicted in the Al Pacino/Russell Crowe film "The Insider."
Wilson had filed suit in federal court, asking for a share of the tobacco fees because it was his money Scruggs was using to fund the litigation. When DeLaughter ruled that Wilson was not owed anything, that argument died.
"Scruggs, along with defendants Timothy Balducci, Edward J. Peters, Steven A. Patterson, David Zachary Scruggs (his son and law partner) and non-parties Joseph C. Langston and others did enter into a conspiracy to illegally and feloniously influence and corrupt (DeLaughter) to render a zero judgment on asbestos fees in Scruggs' favor against Wilson so that the U.S. District Court would be thwarted and defrauded out of its intention to hear evidence supporting the imposition of a constructive trust over the tobacco settlement proceeds," the complaint says.
"As a result of the scheme, Wilson was defrauded out of his cause of action in the U.S District Court, his claims for constructive trust over tobacco proceeds and the corpus of his trust in the asbestos fees and other relief."
Citigroup Inc. was sued by two former brokers who invested billions of dollars in tobacco- settlement money and who claim they were fired to protect the bank when it charged the fund excessive fees.
The brokers, Peter Dunn and Alan Kirman, claim that Citigroup, the biggest U.S. bank by assets, wrongly blamed them for overcharging the tobacco-settlement trust, which holds money paid by the major U.S. tobacco companies as part of a $206 billion settlement with 46 states in 1998.
Dunn and Kirman, in a suit filed July 17 in state court in Florida, claim they were unaware of any fee limits on the settlement money. They claim senior executives, who also were unaware of the limits, blamed them to avoid losing the account when the excessive fees were discovered. . . .
The case is Dunn v. Citigroup Global Markets Inc., 08-CV-80926, U.S. District Court, Southern District of Florida (West Palm Beach).
Richard ``Dickie'' Scruggs, the Mississippi lawyer who spearheaded legal settlements with tobacco firms that provided $206 billion to 46 U.S. states, was sentenced to the maximum five years in prison for trying to bribe a judge.
Scruggs, 62, whose firm made hundreds of millions of dollars on the tobacco cases, pleaded guilty in March to conspiring to pay a $40,000 bribe to a state judge. That judge handled a lawsuit on how to divide $26.5 million in legal fees from an $89 million settlement with State Farm Mutual Automobile Insurance Co. over claims from Hurricane Katrina in 2005.
``You committed a reprehensible crime in my opinion, the most reprehensible crime a lawyer can commit, which is the corruption of a judge,'' said U.S. District Judge Neal Biggers today at a hearing in federal court in Oxford, Mississippi. ``The justice system made you a rich man, and yet you attempted to corrupt it.'' . . .
Biggers suggested Scruggs might reduce his term if he cooperates with prosecutors probing payments to non-lawyers in tobacco-fee litigation.
Scruggs may know ``where a lot of bodies are buried,'' Biggers said. ``If you uncover some of those bodies, it might help you in the future.''
They took us into their office and made us part of their family. God has truly given the sick Florida smokers two angels.Diana Duyser, whose husband, Gregg, has emphysema and was part of the original Engle suit, on the Rosenblatts.
Miami-Dade Circuit Judge David C. Miller awarded $218 million in legal fees Tuesday to Stanley and Susan Rosenblatt for years of work they put into now-defunct class action litigation against the nation's biggest cigarette markers.
"I find it very reasonable," Miller said from the bench, referring to fee calculations estimating they worked for 77 hours a week on average at an hourly rate of $274. "These are reasonable and conservative hours."
"In fact, in some firms that would not have been acceptable billing," he joked before a courtroom packed with at least 200 people.
Tobacco attorney Robert Heim, a partner with Dechert in Philadelphia, told Miller "it would be wrong under common fund law" to award fees to the Rosenblatts, saying a guardian ad litem should be appointed to administer a fund "to protect the interests of the class."
The fees would come out of a common "guaranteed fund" of about $800 million that Big Tobacco put up as collateral in 2001 to appeal the record $145 billion punitive verdict the Rosenblatt's won against cigarette makers. The verdict was later thrown out by the Florida Supreme Court along with a class certification order uniting sick smokers in a single lawsuit.
Miller still must determine how to distribute the rest of the $800 million fund. . . .
A line to speak in support of the Rosenblatts' fee request ran out of the room. Many people at the hearing were visibly ill or relatives of deceased smokers.
The seminar was entitled: "The Tobacco Settlement: Practical Implications and the Future of the Tort Law."
I moderated a panel discussion that included three of the major players in the national tobacco settlement - then national Big Tobacco lobbyist and former Republican National Committee chairman Haley Barbour of Yazoo City, then-Mississippi Attorney General Mike Moore and then-lead tobacco litigation negotiator "Dickie" Scruggs.
From my notes 11 years ago, a few random observations on the night's seminar discussion:
* Neither Moore nor Scruggs was at all forthcoming at the seminar when asked the total of the legal fees Scruggs would be receiving, how Moore determined the fee structure that would govern Scruggs' fees and expense reimbursements and how much the other 12 law firms involved in Mississippi's tobacco suit would get. . . .
Fordice died. Barbour's now governor. Moore's defending Scruggs' son, Zach, on the same charges to which his father pleaded guilty - and the same questions linger today that lingered in 1997 at the Ole Miss Law School about Mississippi's tobacco litigation, the legal fees and the political relationships and entanglements that perhaps forever changed Mississippi's legal landscape.
Around this time, another law-school classmate, Michael T. Lewis, says he gave Mr. Scruggs the idea that ultimately made him rich and famous: demanding that tobacco companies repay states for their Medicaid costs in caring for people sickened by smoking.
Mr. Scruggs was intrigued, but had drawn criticism over his asbestos litigation for the state. Detractors called it a gravy train for the attorney general's favored lawyers, who repaid the favor with campaign donations.
So Mr. Scruggs turned to another political pal: Pete Johnson, who says Mr. Scruggs asked him to help push through legislation clearly authorizing the attorney general to farm out lawsuits to private lawyers. Mr. Johnson, a former state auditor, says that at an airport restaurant in March 1994, Mr. Scruggs promised him 10% of his legal fees from the tobacco case if the bill passed and the litigation was successful.
A former Mississippi state auditor, Steven A. Patterson, stood before a rapt courtroom and pleaded guilty to a charge of conspiracy. Prosecutors said he had worked with Richard Scruggs, arguably the country’s best-known plaintiff’s lawyer, to bribe a local judge to rule in Mr. Scruggs’s favor in a fee battle with another lawyer.
Mr. Patterson’s plea — and his agreement to cooperate with prosecutors — significantly ratchets up the pressure on Mr. Scruggs, who was indicted on federal conspiracy and bribery charges in November. . . .
Indeed, prosecutors plan to cite the political influence brought to bear by Mr. Scruggs, who once boasted that lawsuits are “won on the back roads long before the case goes to trial,” when his own trial begins on March 31.
Rather than courtroom victories against the tobacco makers, legal experts say, it was Mr. Scruggs’s ability to put together a coalition of state officials and Washington politicians, while adeptly courting the news media, that ultimately forced cigarette makers to pay up in the landmark $248 billion national settlement.
Mr. Scruggs declined to comment for this article. But his lead defense lawyer, John Keker, says Mr. Scruggs was unaware of any bribery attempts and is completely innocent.
Now, the fate of Mr. Scruggs is being watched closely by advocates of tort reform as well as lawyers and industry leaders, who have all found themselves in his cross hairs over the last two decades. “He stands for the proposition that the halls of justice can become the arena for pressing public policy goals,” says David M. Bernick, a partner at the firm Kirkland & Ellis, who has represented the tobacco industry. “People want to know the reality of how he came to be so influential.”
On Nov. 2, 2007, Brent Coon, now a principal in Beaumont's Brent Coon & Associates, sued 10 defendants in U.S. District Court for the Western District in Austin. In his original complaint in Coon v. Umphrey, et al., he alleges he was a partner in Provost Umphrey in January 1998, when the state reached a settlement agreement with the tobacco companies, and he is entitled to a portion of the fees. The total amount of fees to be split among the lawyers who represented the state is $3.3 billion.
"Coon did not receive any of his scheduled attorney's fees payments despite Defendants obligation to pay those attorney's fees," Coon alleges in the complaint.
"This is a multimillion-dollar claim for back pay," Coon says in an interview.
Two of the biggest names in civil litigation in Southeast Texas have filed suits against each other over the mega-billion dollar tobacco settlement.
Brent Coon, once a partner in the Provost Umphrey Law Firm, claims he has not received his share of the more than $3 billion in attorneys' fees from the $17.3 billion tobacco settlement with the State of Texas.
On Nov. 2, Coon filed a Complaint to Compel Arbitration in federal court in the Western District of Texas. As defendants, the complaint names the Provost Umphrey Tobacco (PUT) Partnership and the following individuals or their professional corporations: Umphrey, Bryan Blevins, Paul "Chip" Ferguson Jr., Keith Hyde, Greg Thompson, Mike Ramsay, Glenn Steele, Jr., Robert Giblin and David Brandon. . . .
Beaumont's own "King of Torts," Walter Umphrey, and his tobacco settlement partners have fired back at Coon, filing their own petition alleging that Coon is violating an arbitration agreement established in the event disputes arose over the settlement and Coon's withdrawal from the PUT partnership.
Lawyers who were awarded more than $14 billion from the tobacco settlement between states and cigarette makers will be in U.S. District Court in Columbus today to settle disputes over how to divide $145 million of this year’s payment of the award.
After the tobacco companies filed a lawsuit to force a resolution, it appears that Mississippi lawyer Richard Scruggs — whose share of the settlement reportedly is $1 billion — has come up with a compromise that other lawyers have OK’d.
The proposed solution won’t increase any awards. Instead, money would continue to flow as expected to more than 200 lawyers and law firms involved in the original settlements.
In return, the lawyers won’t sue cigarette makers again.
My favorite moment during last winter's $1.3 billion Massachusetts tobacco-fee trial came near the end, when Ronald Kehoe, an avuncular, white-haired assistant attorney general, was questioning the state's star witness, Thomas Sobol. Sobol was describing how his former law firm, Brown Rudnick Berlack & Israels, prepared in 1995 to sue Big Tobacco on behalf of the Commonwealth.
Sobol testified that to reduce its risk on what looked like a long-shot lawsuit, Brown Rudnick hired a bunch of cheapo "contract" lawyers, at $25 to $35 an hour, and also cut back on its pro bono commitment, redirecting $1 million worth of work to the anti-tobacco litigation. . . .
The war never ends, this line of theorizing goes. Yesterday the lawyers bankrupted the silicone-breast-implant and asbestos industries. Today they have targeted cigarette and handgun manufacturers. Tomorrow, as everyone knows, they will take on the nefarious merchants of trans fat: McDonald's, Frito-Lay, Taco Bell.
The Richlin-Silver exchange made for great theater, and ever since I have been wondering: Did I sit in a courtroom off and on for six weeks watching lawyers battle for the heart and soul of our civil justice system? Was the case, as Popeo explained to me afterward, a unique test of the separation of powers, of the sanctity of the contract—indeed, of the integrity of the state?
Or was I simply watching some of the best litigators on the East Coast wrangle over astronomical sums of money—sums that few of us laypeople could even understand?
I think I know the answer.
A Manhattan appeals court Tuesday reinstated a $1.3 billion fee award for attorneys who helped to settle tobacco litigation in California, saying the arbitrators who awarded the fee did not exceed their authority and should not have been second-guessed by a state judge.
In October 2002, Manhattan Supreme Justice Nicholas Figueroa said the fee award was improperly based on work the attorneys had done in nationwide tobacco litigation, rather than just the litigation to settle claims on behalf of the state of California.
However, a unanimous panel of the Appellate Division, 1st Department, found that Justice Figueroa had "improperly interjected" himself into a dispute over the merits of the award. "It is beyond cavil that the scope of judicial review of an arbitration proceeding is extremely limited," the court wrote in an unsigned opinion, In re Application of Brown & Williamson, 1284N. . . .
The $1.3 billion fee award, given to a 56-firm consortium known as the Castano Group, was the largest under the 1998 nationwide tobacco settlement that required tobacco companies to pay $206 billion to 46 states. It was the only fee award challenged by the tobacco industry.
The Castano Group, taking on the role of a private attorney general under California law, sued the tobacco industry and helped to win $25 billion for the state. The group began suing tobacco companies in 1994 in Louisiana and has sued the industry in 25 states.