Kentucky Supreme Court Reinsytates $42 Million Phen Fen Verdict Against Now-disbarred lawyers William Gallion, Shirley Cunningham Jr., and Melbourne Mills.

Court reinstates $42 million verdict in drug case

LOUISVILLE, Ky. — A group of 431 people sickened by the diet drug fen-phen should be allowed to collect a $42 million judgment from their former attorneys who pilfered a massive settlement with the drug's maker, the Kentucky Supreme Court ruled on Thursday.

The unanimous decision moves the group closer to reclaiming the millions improperly kept by now-disbarred lawyers William Gallion, Shirley Cunningham Jr., and Melbourne Mills. Justice Daniel J. Venters, writing for a unanimous court, found that there is enough evidence to back the claims that the trio of attorneys grabbed far more than their contract with clients entitled them to.
"The attorney-client relationship is a fiduciary relationship that subjects the attorney to the duties of honesty, loyalty and good faith," Venters wrote.
Failing to honor a contract with a client violates the "most elementary aspect" of an attorney's duty to the client, Venters wrote.

The former clients sued Gallion, Cunningham and Mills in 2005, claiming they mishandled the settlement and improperly kept a significant portion of the funds for themselves, while keeping clients in the dark about the full amount of the agreement to end the litigation.
Special Judge William Wehr awarded the former clients $42 million in 2007, saying the evidence supported their claims that the attorneys raided a $200 million settlement. Wehr found that Gallion, Cunningham and Mills kept $126 million, more than 63 percent of the settlement, for themselves and took another $20 million in "excess funds." The men distributed about $74 million to their clients, who were never told about the total amount of the settlement or the fees kept by the lawyers.

The Kentucky Court of Appeals overturned the judgment in 2011. The ruling Thursday reinstated the damages award.

Wehr declined to include former class-action specialist Stanley Chesley of Cincinnati in the judgment, even though he had been sued with the others. Wehr ruled that there were genuine issues of fact to be decided when it came to Chesley. The high court upheld that decision.
Any damages or liability on Chesley's part have yet to be determined by the trial court in Boone County.
"Since I believe that Chesley was the chief architect behind the cover up of the fraud, we will be seeking a very large verdict on punitive damages," said Angela Ford, who represents many of the 400 plaintiffs.

The fen-phen case has evolved over more than a decade from a $200 million settlement into a series of criminal, civil and legal disciplinary cases that claimed the careers of at least six of the lawyers involved.

Gallion and Cunningham, one-time owners of champion racehorse Curlin, are serving federal sentences after being convicted of bilking their clients out of millions from the settlement. Both resigned from the bar. Mills was acquitted at a federal criminal trial, but disbarred for his role in the scheme.

Gallion, 62, is serving a sentence in a federal prison in Oakdale, La., and is not scheduled to be released from federal prison until 2029; Cunningham, 58, is being held in a federal prison in Yazoo City, Miss., and won't get out until 2025. A federal appeals court upheld their convictions in January 2012.

Federal prosecutors have seized hundreds of thousands of dollars in earnings by Curlin to disburse as restitution to victims in the criminal case.

The high court disbarred Chesley in April for his role in the settlement. Chesley, who has denied any wrongdoing in the settlement, has since retired from the legal profession.

A former associate of Gallion's, David Helmers of Lexington, and retired state judge Joseph F. "Jay" Bamberger, have also been disbarred in connection with the fen-phen settlement. Bamberger, a circuit court judge in Boone and Gallatin counties from 1992 until his retirement in 2004, signed off on a deal that gave attorneys nearly two-thirds of the settlement and didn't disclose to clients the terms of the deal.

The state's high court disbarred Bamberger in 2011, finding he mishandled the settlement and later received money from the settlement.

Kentucky Supreme Court Rules Prison Disciplinary Committee's "Conviction" Must Demonstrate Reliability Of Confidential Informants.

Court: Info about informants can't be withheld

The Kentucky Supreme Court has ruled that prison officials cannot withhold all information about confidential informants used in prison discipline cases.

The justices concluded that while the full slate of legal rights don't apply to disciplinary cases, an accused inmate cannot lose privileges and good time off their sentences without knowing something about the witnesses against them.

The ruling on Thursday came in the case of 39-year-old Ontario Thomas, who was sent to segregation for 180 days and docked two years of good time for allegedly striking a fellow inmate at the Northpoint Training Center in Burgin.
The disciplinary board relied on the word of a lieutenant, who testified that two confidential informants saw Thomas strike another inmate in a dispute.

Editor's note:You can read the court's opinion here.

New Jersey Court Targets Texters Whose Texts Distract Driver And Cause An Accident.

New Jersey Court of Appeals rules that Third Party Texters could be liable for injuries if they knowingly text someone who is driving and who then gets in an accident.

It will be interesting to see how the New Jersey Supreme Court addresses the issue and to see if other States follow suit.  Of course, the issue in a "Negligent Texting" case will be how do you prove someone knew the person that they texted was driving?  And is the texter really responsible for a driver who voluntarily takes their eyes off the road to read a text?

To read more, go here.

Federal Appeals Court Panel Rules Police Can't Warrantlessly Get A Doctor To Drug And Sedate An Accused ... Just To Retrieve Drugs From Him!

The U.S. court of Appeals for the Sixth Circuit released an interesting new criminal opinion today, which can be viewed and read in its entirety here. The case is United States v. Felix Booker, No. 11-6311.

Booker was a 24-year old black man, who was originally arrested for possession of marijuana, after the car in which he was a passenger was pulled over on a traffic stop in Knoxville, Tennessee.  Problem was, he did not have nearly enough marijuana (more than 1/2 ounce) on him to get arrested.  Under Tennessee law, the police should only have written him a citation, not arrested him.  But the police suspected that he was smuggling drugs in his anus, so following his arrest, they took him to a hospital emergency room in Oak Ridge, Tennessee, to an E.R. doctor who had previously performed digital rectal exams for the police on suspects in two other cases.  The doctor said that he was concerned that the defendant might die, if unwrapped drugs were absorbed through his intestines into his blood.  Keep in mind that the police did not have a search warrant, and the "patient" did not consent to the procedures.

Because the arrestee clinched his butt cheeks and sphincter muscle, the doctor could not insert his finger in the man's anus.  Thus, the doctor intubated the patient, and sedated and paralyzed him with I.V. drugs, rendering him unconscious for 20 to 30 minutes.  The doctor then performed a digital rectal exam and removed a 5 ounce (not grams) rock of crack cocaine, which he gave to the police to use as evidence.

A Federal District Judge was reversed on appeal to the Sixth Circuit, which held that he should have granted the Defendant's Motion to Suppress the Evidence.  The Defendant's conviction was reversed and he cannot be retried.  Interestingly, the Circuit Court found that for 4th Amendment search and seizure purposes the doctor was serving as a state law actor, on behalf of the police.  A dissenting Judge disagreed on that point.  By now, the Defendant has already served most of his sentence and was at a Knoxville halfway house, due to be released on October 2, 2013.

There can be little doubt that this defendant will have a very good civil rights lawsuit (28 U.S. code section 1983) to file.  He should be awarded at least several hundred thousand dollars (a million dollars?) by settlement or judgment because of this ordeal, including the approximately 3 years he spent in jail and prison.  The E.R doctor may also be criminally prosecuted for battery under state law, since these procedures were performed without the "patient's" consent.  I suspect that the Tennessee State Medical Licensing Board may have something to say to the E.R. doctor about his conduct too.

The facts of this case are truly outrageous.  This opinion should be added to a law school case book on search and seizure law.  If the police had first taken an X-Ray of the crack rock in the defendant's anus and showed it to a Judge, they might have persuaded a Judge to sign a search warrant, to remove the crack rock, but here they didn't even think of trying that approach first.  It is hard to imagine this kind of thing can still happen in America.

U. S. Supreme Court Wraps Up "Blockbuster" Term. Watch Video.