Fen-Phen lawyers seek stay in civil lawsuit until federal case settled
Beth Musgrave Lexington Herald-Leader July 24, 2007
Three suspended lawyers accused of bilking millions from their former clients want a judge to stay a civil lawsuit until a federal criminal case against the lawyers is completed in October.
Special Judge William Wehr, in a hearing Tuesday, said he was leaning toward delaying a September civil trial over what happened with a $200-million settlement over the diet drug fen-phen until after the criminal case is tried Oct. 15.
Wehr said he should soon have a final, written order on whether the civil trial will be delayed.
William Gallion, Shirley Cunningham Jr. and Melbourne Mills Jr., formerly based in Lexington, are being sued by more than 400 former fen-phen clients who say their former lawyers took millions more of a $200-million settlement than they should have received. In March 2006, Wehr ruled that they had breached their fiduciary duty to their clients when more of the settlement money — about $106 million — went to the lawyers and consultants than to the clients, despite contracts that said the lawyers should receive much less.
Gallion, Cunningham and Mills were indicted June 14 by a federal grand jury on one count each of conspiracy to commit mail fraud, charging that they conspired to take $65 million of the settlement that should have gone to their clients. If convicted, they could receive a maximum of 20 years in prison. Lawyers for Gallion, Cunningham and Mills have vowed to fight the criminal charges and say that the defendants have not had the opportunity to tell their side of the story. Gallion, Cunningham and Mills were temporarily suspended from the practice of law by the Kentucky Bar Association.
How much the fen-phen clients should receive from their former lawyers has still not been decided. But Wehr said during Tuesday’s hearing that he hopes by the end of this week to enter an order that may set a dollar amount for damages he thinks the plaintiffs are entitled to. Other monetary awards — including punitive damages — would be decided by a jury.
In court documents and during Tuesday’s hearing, lawyers for Gallion, Mills and Cunningham argued that proceeding with the civil action while the criminal case was pending would force their clients to choose between their right to testify on their own behalf and their right not to incriminate themselves.
Angela Ford, a Lexington lawyer who represents the former fen-phen plaintiffs, argued that the three lawyers gave up their Fifth Amendment right not to incriminate themselves when they voluntarily submitted to depositions in the civil lawsuit and gave key documents in the case to the plaintiffs. The former fen-phen clients also worry they may never get their money back if a trial to decide damages is further delayed, Ford said.
But Wehr said he thought that if forced to testify in the civil suit, the three would be placed in a difficult position. Wehr said he did not think that case would have to be delayed too long after the criminal case is completed.
Cincinnati lawyer Stanley Chesley has also been named in the lawsuit, but Wehr has not ruled on whether Chesley also breached his fiduciary duty to the clients. Chesley’s lawyers have argued that Chesley had no contracts with individual clients. Wehr said Tuesday he will likely separate Chesley’s trial from the three Lexington lawyers. Chesley’s lawyers have also asked that their client’s case be stayed because of the criminal charges facing the other lawyers.
But lawyers for all the defendants agreed to attempt another round of settlement negotiations, possibly in early August. Two previous efforts to settle the civil case were not successful.