There was much celebration in 2001 when lawyers announced a $200 million settlement in a lawsuit they had filed on behalf of dozens of clients who claimed to have been damaged by their use of the diet-drug fen-phen. And why not? It was the kind of settlement that can make both plaintiffs and their lawyers wealthy.
Little did anyone suspect then that the settlment would end the legal careers of five attorneys who allowed a combination of greed, incompetence and laziness to impair their judgment.
Retired judge Joseph F. “Jay” Bamberger, who presided over the case in Boone and Gallatin counties, became the fifth attorney to be brought down by the scandal when the Kentucky Supreme Court on Thursday permanently disbarred him for “the highly egregious nature of his ethical violations” in overseeing the settlement involving the drug fen-phen.
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 supreme court also ordered Bamberger to pay $18,700 to cover the cost of the disciplinary proceedings.
Bamberger described himself as “embarrassed” during a criminal trial related to the settlement and he stepped down as judge in February 2006 to avoid being removed by Kentucky’s judicial conduct commission for his actions.
To date, Bamberger and four attorneys who took part in the settlement have lost their law licenses.
The state’s high court is also weighing a request from the Kentucky Bar Association to revoke the license of Stanley Chesley, a prominent Cincinnati attorney known as the “Master of Disaster” for his handling of large, class-action cases.
Chesley, who has denied any wrongdoing in the settlement, has asked the high court to hear oral arguments over the Kentucky Bar Association’s request to revoke his license, a move that could jeopardize his ability to serve as co-counsel in multiple high-profile class action cases.
Bamberger’s disbarment stems from his handling of the settlement. The high court found that attorneys William Gallion and Shirley Cunningham Jr., who once owned prized racehorse Curlin, along with Melbourne Mills Jr., kept $126 million, more than 63 percent of the settlement, for themselves and took another $20 million in “excess funds.” The men distributed $74,194,577 to their clients, who were never told about the total amount of the settlement or the fees kept by the lawyers, Chief Justice John D. Minton wrote.
After the Kentucky Bar Association began investigating, Gallion, Mills and Chesley held an “off-the-record” meeting with Bamberger on Feb. 6, 2002 to have the judge secretly sign off on their fees, Minton wrote. After the meeting, Bamberger signed an order finding the attorneys’ fees and expenses as paid in the case were “reasonable and necessary.” Bamberger later admitted he had not read the settlement agreement or taken an accounting of it.
Four months later, Bamberger had the order filed with the clerk’s office, but also ruled that all future orders would be provided only to the plaintiffs’ lawyers and that all orders in the case be sealed. Bamberger later authorized the creation of the Kentucky Fund for Healthy Living, a charity set up by the attorneys, with the $20 million in excess funds.
“Despite statements to the contrary, the plaintiff class never consented to the creation of KFHL with settlement funds,” Minton wrote.
Gallion, Cunningham and Mills would become directors of the fund and receive $7,500 per month in salaries.
Just before retiring as a judge, Bamberger relinquished court authority over the charity, saying it had fulfilled its charitable purpose, even though it had “never made any distributions for charitable purposes,” Minton wrote. Bamberger then became a paid director of the funds, drawing $48,150 in salary over nine months.
Gallion and Cunningham resigned from the bar and were convicted in federal court on fraud charges. Both are in federal prison while they appeal. Mills and David Helmers, an associate of Gallion, have been disbarred for their roles in the settlement.
The former plaintiffs have sued the attorneys, winning a $42 million judgment in state court. That case is now before the Kentucky Supreme Court for review.
While laziness and incompetence may have played a role in their actions, the attorneys clearly were motviated by greed in its purest and most disgusting form. They were too busy lining their own pockets to give the people they represented — those who really were harmed by fen-phen — their fair share of a lucrative settlement.
This entire tale is the stuff of a best-selling novel by John Grisham. Sady, this is a true story that exceeds the legal misdeeds imagined in any of the fictional tales written by Grisham.