MOUNT VERNON – Twentieth Circuit Chief Judge Andrew Gleeson picked the wrong winner in a fee fight, Fifth District appellate judges ruled on April 21.
They reversed his order awarding $242,130 to attorney Michael Baum of Los Angeles, and held that it must revert to attorney Steven M. Johnson of Houston.
Baum and Johnson teamed up in 2012, for 205 clients suing Glaxo Smith Kline (GSK) over heart injuries from diabetes drug Avandia.
Their association collapsed in the midst of a settlement, and their dispute has lasted longer than the Avandia litigation did.
Gleeson enforced a fee sharing agreement in Baum’s favor, but Fifth District judges found he shouldn’t have enforced it.
Justice Judy Cates wrote that neither lawyer notified their plaintiffs, as a Supreme Court rule requires.
“Baum and Johnson are seasoned attorneys,” Cates wrote.
“Each had an obligation to ensure that the Johnson Law Firm plaintiffs were fully informed of Baum’s representation and the fee sharing arrangements between Baum and Johnson.”
Also, each had an obligation to ensure plaintiffs consented in writing to shared representation and the fee arrangement. The Supreme Court rules have the force of law, “and there is a presumption that they will be obeyed and enforced as written,” Cates wrote.
Justices Randy Moore and Milton Wharton concurred.
Local lawyers David Jones and Robert Jones began filing Avandia suits in 2009, and Johnson entered in 2010.
GSK and plaintiffs agreed to hold four individual trials, starting with plaintiff’s choice and taking turns after that.
Results, according to the plan, would shape settlement for the other 201 plaintiffs.
Gleeson set the first trial for September 2012.
By January of that year, a federal judge in Pennsylvania had resolved the bulk of Avandia cases through multi district litigation.
That spring, Johnson attended a conference in California on Avandia litigation that continued in state courts.
The event featured “trial in a box,” a package of pleadings, motions, and a database of indexed documents and expert reports.
Those who took it home promised to abide by protective orders and to pay seven percent of any settlement to the common benefit fund in the Pennsylvania court.
Three percent would come from plaintiffs, four percent from lawyers.
Johnson met with Baum and Erick Rosemond, who had performed common benefit work in the Pennsylvania court.
“After meeting with Johnson, Baum and Rosemond agreed to prepare and act as trial counsel in the St. Clair County bellwether cases,” Cates wrote.
She wrote that they exchanged email discussing an arrangement whereby Baum would receive 75 percent of any settlements or verdicts in those four cases.
Baum would receive ten percent of fees from the other 201 plaintiffs, after deduction of the seven percent assessment.
Baum picked two cases for trial, which Gleeson delayed to January 2013.
While Baum prepared on behalf of his first pick, plaintiff David Troupe, Johnson agreed to mediate through retired St. Clair County circuit judge Lloyd Cueto.
“Johnson did not consult with Baum before agreeing to mediation,” Cates wrote.
The session succeeded, and GSK agreed to pay $10.5 million on all 205 claims.
As soon as GSK notified Gleeson, Troupe fired Johnson and indicated he thought his case would be resolved through trial.
Troupe retained Patricia Murphy of Marion, wife of Patrick Murphy who at the time served as U.S. district judge.
Troupe moved to reinstate his trial date, citing his declining physical health.
GSK moved to enforce the settlement, claiming Johnson represented that he had authority to settle all cases including Troupe.
Troupe, by affidavit, stated that a member of Johnson’s staff notified him of a settlement and indicated his case could be settled for about $200,000.
He stated he and Baum tried to contact Johnson but couldn’t.
Gleeson ordered Baum and Johnson to mediate through Cueto.
Local lawyers Jones and Jones, already in the background, withdrew entirely.
GSK withdrew its motion to enforce the settlement, without explanation.
Johnson moved to compel arbitration, claiming GSK tried to abandon or scuttle the agreement.
Baum and GSK separately settled Troupe’s claim for $900,000, and Johnson asserted that Troupe didn’t satisfy his attorney’s lien.
“Johnson sought to have the full settlement amount deposited in the registry of the court until the lien obligations could be sorted out in arbitration,” Cates wrote.
Johnson filed an emergency motion to disqualify Baum, claiming he settled Troupe’s claims to the detriment of other plaintiffs.
“There is no indication that Johnson ever sought a hearing or ruling on his emergency motion,” Cates wrote.
GSK opposed arbitration, and Gleeson ordered mediation through Cueto.
“The record is silent as to what occurred during the next 11 months,” Cates wrote.
At a hearing in June 2014, Joseph Bartholomew of Bruce Cook’s firm in Belleville entered an appearance for Johnson’s plaintiffs.
He claimed the settlement was enforceable and sought arbitration of a dispute about whether to pay Troupe out of the $10.5 million settlement fund.
Gleeson entered an order finding the agreement binding and enforceable, and he sealed the transcript of the hearing.
On Jan. 27, 2015, the parties met with Gleeson in chambers prior to a hearing.
In open court, Gleeson said he would enter an order over plaintiffs’ objection.
He allocated $100,000 to each plaintiff who experienced a heart attack and $25,000 to those who had not.
He reduced Johnson’s 40 percent fee from $4.1 million to $2,329,200.
He directed GSK to hold seven percent, $735,000, in reserve pending resolution of the allocation for the common benefit fund.
Later he deposited $348,795.68 in the court’s registry pending further orders including whether Baum was entitled to $242,140.
Johnson moved for release of the deposit to himself.
GSK moved to disburse the $735,000 to the common benefit fund in 2017, and Johnson opposed the motion.
He argued that neither Baum nor the common benefit fund should collect any fees.
In 2018, Gleeson held a hearing and found GSK should pay into the common benefit fund because all plaintiffs benefitted from the “trial in a box.”
He awarded Baum $242,130 from the registry, leaving $106,665.68 for Johnson.
Cates, after ruling for Johnson, found no excuse for his inaction.
“We are simply upholding the public policy to protect the interests of the clients above the remedies of the attorneys,” she wrote.
She rejected Johnson’s bid to restore his fee to $4.1 million, finding the parties apparently discussed it in chambers.
“There is no transcript of these discussions, and no bystander’s report has been submitted,” she wrote.
She wrote that no one requested findings and reasons regarding the fee allocation.
She also rejected his bid to block payment to the common benefit fund.
Edward Clinton of Chicago represented Johnson at the Fifth District.
Bijan Esfandiari of Los Angeles represented Baum.