Fogel vs. Farmers Group Settlement — In Letter to Judge William Highberger Objector Assails Engstrom Lipscomb & Lack’s Walter Lack Re Alleged Collision Between Skadden Arps and Girardi & Keese; Howard Rice’s Jerry Falk
Amid allegations of breached ethics rules and conflicts of interest, Los Angeles Superior Court Hon William Highberger was recently asked to consider additional matters relating to the approval of the settlement.
As a service to the community, we shall publish the communication, below:
Dear Honorable Judge Highberger:
This will serve to further address the grave and dire circumstances surrounding the proposed settlement in Fogel v. Farmers Group, Inc. It will also serve to address matters contained in a troubling order entered by this Court on an ex parte basis on April 28, 2011, and to lodge with the Court concerns regarding the credibility of Thomas Girardi and Walter Lack in hopes that this Court will reject the settlement or, in the alternative, that the Court will award no attorneys’ fees and will shift the proposed $90 million attorneys’ fee award to the pool available to the class.
As the Court is aware, the undersigned have previously lodged an equitable objection ("objection") informing the Court of ethical violations and fraud perpetuated on this Court stemming from collusion between the law offices of Girardi & Keese and Skadden Arps based on the fact that while the Fogel matter was pending before this Court, Skadden Arps and Girardi & Keese entered into a wholly separate agreement by which Skadden Arps agreed to represent Girardi & Keese in the matter of In Re Girardi (9th Circuit Court of Appeals Case No.08-80090).
Neither the Ninth Circuit nor this Court (or for that matter, the class of plaintiffs which Girardi allegedly represents) were timely informed of the concurrent representation. In fact, Skadden Arps (on behalf of itself, its client Farmers, and its client Girardi & Keese and Thomas Girardi) actively and by omission took action to conceal the matter, by among other things, seeking an order from the Ninth Circuit seeking to remove its name from the Ninth Circuit’s published decision of In Re Girardi. The Ninth Circuit denied this request.
A review of class counsel’s omnibus brief and accompanying documents and exhibits filed in the instant matter necessitates this communication in order to ask the Court to further address the following issues:
As this Court is surely aware, the current matter before this court (styled as Fogel v. Farmers Group Inc.) is primarily based on the case originally advanced by the State of Texas and Governor Rick Perry, along with the Texas Department of Insurance, against Farmers Group, Inc. in approximately 2002.
Within days after the State of Texas filed the case, settlement negotiations commenced, and very shortly thereafter a settlement was announced in the amount of approximately $100 million. Joe K. Longley, an attorney from Austin, Texas (alongside Philip K. Maxwell and Steve McCleery), representing policyholder Jan Lubin, stated that Texas is settling on the “cheap,” and immediately commenced legal proceedings to derail the settlement.
Farmers’ policyholders Gilberto Villanueva and Michael Paladino both had previous class actions pending in the State of Texas prior to the State action being brought. These Intervenors were represented by State Bar of Texas members Alice Oliver-Parrott, David Burrow, David Jones, and R. Martin Weber.
At that time, Mr. Longley publicly stated that Farmers was unfairly enriched in an amount 10 times greater than the settlement amount, and presumably Mr. Longley wanted the State of Texas to settle for an amount close to $1 billion. Longley. along with several other lawyers (Phil Maxwell, Mike Gallagher, and Stephen McCleery), who were later joined by David Burrow, Alice Oliver-Parrot, Mike Gallagher and Dan Downey (collectively “Texas Class Counsel” ), immediately commenced legal proceedings to halt the settlement.
Beginning in December 2002 and continuing thereafter for five months in 2003, the parties engaged in intensive discovery; motion practice; document review; hearing preparation; hearings; and depositions, and extensive lawyer time and effort took place to prepare for, and participate in, the preliminary approval hearing the Texas District Court had set to be heard commencing in May 2003.
In February 2003, it became apparent to the Lubin’s co-counsel that additional legal assistance was needed. Mike Gallagher and Dan Downey were added at that time to act as co-counsel, with Longley & Maxwell, LLP, in representing Jan Lubin.
During those proceedings, particularly during the initial phase, Texas Class Counsel obtained and reviewed thousands of documents, and through masterful lawyering, and while opposed by the endless resources of the Attorney General of the State of Texas managed to derail the settlement. This matter became known as the “Lubin Proceedings,” and is still pending in the Texas courts, 261 Judicial District Court of Travis County.
Recognizing that much of the legal work was already completed by the State of Texas and the Texas Department of Insurance — which gave rise to a presumption of validity and credibility to the allegations against Farmers — Mr. Longley and some of the Texas Class Counsel saw the enourmous opportunity that had been presented to them and sought to file a nationwide class action against Farmers.
As such, in 2003, Longley and a few of the Texas Class Counsel flew to Los Angeles to meet with Messrs. Thomas Girardi (of Girardi & Keese) and Walter Lack (of Engstrom Lipscomb & Lack); one month later, after the appropriate plaintiff had been selected, the current case was filed in the Los Angeles Superior Court styled Benjamin Fogel v Farmers Group Inc. (Incidentally, the allegations set forth in Joe Longley’s declaration that they flew to Los Angeles to meet with Girardi and Lack only after reviewing “choice of law” and “venue” provisions because Farmers is headquartered in Los Angeles should be viewed by this Court with extreme skepticism as this suit could have been filed in Eureka, California, Nashville, Tennessee or any other court in the country.)
In approximately 2010, a settlement was reached in this pending matter allocating $455 million to be shared by the class, and $90 million in attorneys’ fees. Class counsel (both from Texas and California) advanced a motion for attorneys’ fees supported by declarations and exhibits. The declarations from Texas Class Counsel submitted to this Court are based on work performed in BOTH the Lubin and Fogel matters.
First, the undersigned respectfully asks this Court to consider whether it is fair to ask the Fogel class to finance the Lubin proceedings. Also, the fact that the Lubin matter is still pending and is specifically exempted from the current settlement will allow Texas Class Counsel to again collect fees if there is a future resolution of the litigation in Texas. As such, it is up to this Court to ensure that there will be no double recovery for the Texas Class counsel, and that the Fogel Class does not pay the attorneys’ fees for the Lubin proceedings.
Second, this Court is under a duty to independently examine the fairness of the settlement, including issues of collusion between class counsel and defendants (and their counsel) to ensure that collusion has not taken place by which defendants offer to settle for a lesser amount while offering incentive to class counsel vis-a-vis a large and disproportionate attorneys’ fee award. Hence, this Court is respectfully asked to inquire of Mr. Longley during the fairness hearing how he can support a settlement worth only $455 million for a NATIONWIDE class composed of 12.5 million Americans, when he has previously stated in his opposition to the Texas settlement that the settlement for ONLY the State of Texas should be closer to the $1 billion, the sum he contended was allegedly unfairly and unlawfully collected by Farmers.
A third issue relates to the declarations submitted in support of the request for attorney’s fees. In comparing declarations submitted by Texas Class Counsel (who, as stated above, did most of the fundamental work in the initial phase of Lubin and Villanueva), the declaration submitted by Thomas Girardi on behalf of Girardi & Keese — in which he states that his firm spent 6662 hours on the case — appears to be highly excessive, highly implausible, and highly suspicious. This is further magnified when considering that Walter Lack and his law firm submitted a declaration stating that close to 4000 hours were devoted to the case by Engstrom Lipscomb & Lack.
Usually, the relationship between Girardi & Keese and Engstrom Lipscomb & Lack is based on a business model whereby Girardi & Keese and Thomas Girardi are responsible for financing the litigation, as well as providing much needed “clout,” very often withing the judicial system of Los Angeles County and the State Bar of California (to wit Thomas Girardi’s friendship with former California Supreme Court Chief Justice George; his friendship with former California State Bar Chief Trial Counsel and former crack addict Mike Nisperos, to whom Girardi serve as a “mentor”; his financing of the political career of the present Executive Director of the State Bar of California, Hon. Senator Joe Dunn; and other questionable “friendships” and relationships, the basis of which are usually political contributions and gifts).
Walter Lack and his firm, who are more methodical, are responsible for the day-to-day management of the litigation through motion practice, discovery, hearings etc. Once serious settlement negotiations commence, Mr. Girardi himself takes over the discussions, and has the final say on whether and under what terms the case should settle.
Hence, if Walter Lack and his firm already worked close to 4000 hours on this case, it is difficult to imagine why Girardi & Keese would also need to have spent 6662 hours on the matter.
In comparison, Joe Longley stated that he worked on BOTH cases only 2740 hours; Philip Maxwell stated that he devoted 2677 hours to both cases. (While this Court treats Longley and Maxwell as two separate law firms, for the majority of the time both presented themselves as one law firm, that of Longley & Maxwell.)
As such, the undersigned respectfully requests that this Court scrutinize the declaration submitted by Thomas Girardi by seeking a complete and detailed breakdown of all hours spent.
Additionally, conspicuously lacking is any declaration from Graham LippSmith of Girardi & Keese, even though he allegedly performed most of the work on behalf of Girardi & Keese. This Court should order Graham LippSmith to also submit a sworn affidavit, along with his timesheets, in support of the purported 6662 hours billed by Girardi & Keese.
Fourth, subsequent to submitting the Objection, and only after reading the omnibus brief submitted by class counsel, the undersigned learned that Zurich Financial Services and Farmers Group, Inc. (represented by Dewey & Lebuef and Skadden Arps) had approached the Court on an ex parte basis in approximately April 2011 in connection with the unsettling attorney-client relationship between Skadden Arps and Girardi & Keese.
It is quite a strange legal phenomenon when defendants move ex parte for an order pertaining to the future relationship between plaintiffs’ counsel and his clients. Indeed, it is almost as though Skadden Arps is still serving as defense counsel for Girardi & Keese, notwithstanding its own concerns that defendants and counsel may be held liable for interfering with the plaintiff class’s contractual relationship with Girardi & Keese or other related collusion.
It is alleged in the omnibus brief that defendants approached the Court ex parte asking it to analyze a “blog entry” alluding to an ethics complaint filed against Girardi & Keese and Skadden Arps with the State Bar of California. Setting aside the absurdity of Zurich Financial Group, Farmers Group, Inc., Dewey & Lebuef, and Skadden Arps (the largest law firm in the world) approaching the Court ex parte asking it to analyze a “blog entry,” as opposed to their own declarations and admissions, the undersigned will concede that, indeed, an ethics complaint was advanced by the undersigned based on the facts subsequently described in the objection filed in this matter.
This Court should be aware that requests by the undersigned to Skadden Arps, Dewey & Lebeuf, Girardi & Keese, ELL, and Texas Class Counsel for a copy of the ex parte papers went unanswered. In addition, the undersigned asked the same parties to post a copy of the complete sets of the ex parte papers on the official settlement website, a request which was also ignored.
Additionally, the undersigned communicated with other credible objectors who were also unaware (at least as of August 16 and 17, 2011) of the fact that defendants had moved ex parte to supplement the notice and restrict any future action on the part of the class, and were otherwise clueless about Paragraph 17 or the fact that Girardi & Keese was a client of Skadden Arps.
As such, this Court must order the parties to post said ex parte application and related papers on the official settlement website so as to provide the class and objectors an opportunity to form objection in an educated fashion by, among other things, requesting a postponement of the upcoming fairness hearing.
Shockingly, and based on the ex parte papers submitted by Zurich and Farmers which were, presumably (and predictably), unopposed by class counsel (because any opposition would expose their own misconduct), the Court issued an order allowing the modification of a notice to the class by which the members would be informed of the attorney-client relationship between Skadden Arps and Girardi & Keese. The order also, shockingly, stated that members of the class would be prohibited in the future from asserting that they were not adequately represented by class counsel due to the Skadden-Girardi relationship.
Upon reviewing this Court order, it is requested that the Court address inaccuracies in both the order and the notice, along with other issues, to wit;
A. This Court order and the Notice in Paragraph 17 state that the class was represented by “5 other law firms, which have not had any connections to the Farmers Group’s attorneys.” This statement is in contradiction to verbiage, also in Paragraph 17, which states, “The Court has appointed the following lawyers to represent the class as ’class counsel’: Thomas Girardi and Graham LippSmith of Girardi & Keese, Walter Lack of ELL, Phillip Maxwell of the Law Offices of Phillip Maxwell and Joe K. Longley of Law offices of Joe K. Longley.”
As this Court only appointed ELL, Longley and Maxwell, the order and the notice are not accurate when it states that 5 other law firms represented the class as, in actuality, only 3 other law firms reviewed the settlement.
B. This Court must take into account that the support of Walter Lack and ELL for the settlement (as part of the “5 other law firms”), and their indifference to the attorney-client relationship between Girardi & Keese and Skadden Arps, is suspect as Walter Lack and his firm were part and parcel of the matter of In Re Girardi.
Walter Lack knew all along about the concurrent representation between Skadden Arps and Girardi & Keese, and was part of the scheme to mislead this Court and the Fogel class by not disclosing the relationship.
In fact, it was Walter Lack himself, despite repeated warnings even from within his own firm and from a federal district court judge, who executed the plan to defraud the federal judiciary with a fraudulent translation of a foreign judgment which resulted in the proceedings of In re Girardi. While the resultant proceedings were titled “In Re Girardi,” respondents in those proceedings were Girardi & Keese, Thomas Girardi, Engstrom Lipscomb & Lack, Paul Triana, Sean Topp, and Walter Lack.
As such, it is highly disingenuous of this Court to authorize a notice to 12.5 million Americans which contains assertions that 5 (or more accuretly, 3) other law firms support the settlement given that one of those law firms (ELL) was part and parcel of the Ninth Circuit proceedings of In Re Girardi.
The Court should keep in mind that Walter Lack for many years chose to hide the collusion between Girardi & Keese and Skadden Arps not only from the class, but also from this Court, and that he is the same person who was found by the Ninth Circuit to have resorted to employing “the persistent use of known falsehoods” and that “false representations” were made “knowingly, intentionally, and recklessly” during years of litigation. Similarly, Walter Lack remained quiet when the State Bar of California appointed Jerome Falk of Howard Rice to serve as special persecutor to examine his misconduct before the Ninth Circuit. Despite the fact that Thomas Girardi stipulated to the prosecutor that he was “reckless,” and Walter Lack stipulated that his misconduct was “intentional,” Jerome Falk (on behalf of the People of the State of California) “exonerated” both of these attorneys, stating that he did not believe the misconduct was “intentional.”
Despite Walter Lack’s (and Thomas Girardi’s) habit of remaining quiet, it was the undersigned who only very recently discovered that, indeed, Walter Lack and Thomas Girardi were actually clients of Jerome Falk and Howard Rice. (See generally Ninth Circuit matter of Copple vs. Astrella ) With this background, Mr. Falk’s refusal to prosecute Lack and Girardi suddenly makes sense.
Fifth, the omnibus brief is highly offensive, incomplete, misleading, legally unsound, and clearly designed to speed up the collection of $90 million in attorneys’ fees. It is shocking that Girardi & Keese, on behalf of the class, is advancing legal arguments supporting the contention that there were no ethical violations on the part of Skadden Arps and Farmers. This is viewed as an additional fact in support of the collusion between Girardi & Keese and Skadden Arps; it also calls into question the ability of Girardi & Keese and Benjamin Fogel to adequately represent the class.
In addition, the undersigned take umbrage over the attitude displayed in the omnibus brief concerning the “conflict of interest.” The Court should note that both the undersigned and, presumably, others utilize the term “conflict of interest” in a generalized fashion (and not just as a term of art involving a legal “conflict of interest” with a client), to otherwise denote violations and breaches of ethics rules.
For example, in this case, a true conflict of interest on the part of Girardi & Keese would have arisen had Girardi & Keese, while representing Mr. Fogel and the class, filed a separate action against Mr. Fogel concerning a different matter on behalf of another client. Even if no “true” conflict exists, this does not negate the fact that Girardi & Keese and Skadden Arps violated other rules of ethics. And, even if no rules of ethics were violated, that does negate the argument that the Court, while independently fulfilling its duty to examine collusion, must take into account the attorney-client relationship between Girardi & Keese and Skadden Arps in the matter of In Re Girardi to support a finding of collusion which was detrimental to the Fogel class and, as such, reject the settlement.
Thank you for your consideration. Please do not hesitate to contact me if the Court needs any further information or clarification of the above-described facts.