July 25, 2018 / 8:29 PM / a month ago

Ending epic debacle, Florida tobacco firms agree to pay $4.3 million sanction

(Reuters) - The chief beneficiaries of sanctionable conduct by a pair of Florida plaintiffs' firms, the Wilner Firm and Farah & Farah, will end up being the firms’ co-counsel in a $100 million settlement of federal-court litigation by Florida smokers, under an order issued Monday by four federal district court judges in Jacksonville, Florida. As part of a global resolution of the sanctions issue and fee disputes, Wilner and the Farah firm agreed to cede more than $7 million in claimed attorneys’ fees to Motley Rice, Lieff Cabraser Heimann & Bernstein and two other plaintiffs' firms, reducing the payout to Wilner and Farah to only $4.3 million.

The lesser beneficiaries are the four Florida judges – William Young, Marcia Howard, Timothy Corrigan and Roy Dalton – who issued Monday’s order. The began the opinion with a grateful observation: “Nearly nine years ago the federal Engle litigation saga began. It has now, mercifully, run its tortured course, approaching its apparent end.”

In case you’ve managed to forget, the Engle litigation stems from a long-ago class action by Florida smokers suing tobacco companies for smoking-related ailments. The Florida Supreme Court ultimately decertified the so-called Engle class because of variations in smokers’ causation and damages arguments. But the court ruled individual smokers could rely on certain findings by the jury that issued a verdict in the class action. If smokers filed their own suits, they would not have to re-establish the tobacco industry’s negligence or cigarettes’ carcinogenicity. The Supreme Court gave Florida smokers one year to file their own complaints, which became broadly known as Engle progeny suits.

The Wilner Firm filed about 3,700 Engle progeny suits in state and federal court, working with the Farah firm on about 160 of them. But as the litigation began in earnest, many of the Wilner cases proved to be fundamentally flawed. Federal judges in Jacksonville kept imposing new screening requirements. Wilner kept making excuses. Finally, in 2015, the court drafted the Jacksonville U.S. Attorney’s office to serve as special master to investigate potential sanctions.

In October 2017, Judges Young, Howard, Corrigan and Dalton hit Wilner and Farah with about $9.2 million in sanctions for hundreds of violations of Rule 11 of the Federal Rules of Civil Procedure and the federal prohibition on vexation litigation.

Their 148-page ruling laid out a dispiriting litany of sloppiness and misrepresentation. As I’ve reported, the judges concluded that 1,250 of the cases filed by Wilner and Farah were frivolous. More than 570 purported plaintiffs never responded to repeated attempts by the court to contact them. Another 15 cases were not authorized by plaintiffs – including one supposed plaintiff who was coincidentally called for jury duty in another tobacco personal injury case and said she had years ago told plaintiffs' lawyers she didn't want to sue. Twenty-eight plaintiffs had already resolved their tobacco claims by the time Wilner and Farah filed their suits. Thirty-six plaintiffs didn’t live in Florida. Eighteen didn’t smoke. And 588 cases were filed after plaintiffs had died.

The judges ordered that $9.2 million be transferred to the court from a $45 million fund for attorneys’ fees from the $100 million settlement of federal Engle progeny suits. They also instructed Wilner, Farah, Lieff Cabraser and Motley Rice – the latter two of which it declined to sanction – to submit a joint plan to allocate the rest of the money reserved for legal fees.

Wilner and the Farah firm each filed objections to the sanctions order. Meanwhile, as I suspect you will not be surprised to hear, they battled Lieff and Motley Rice over how to split the fee fund. In December, the judges appointed U.S. Magistrate Judge Anthony Porcelli to mediate the fee fight.

On June 29, Wilner and Farah proposed a global resolution that, they said, was supported by Judge Porcelli and the other plaintiffs' firms. They said they’d agreed to a deep cut in their fees, from the $15.7 million they contended they were due under their original deal with Lieff Cabraser to about $8.6 million. But that agreement, they said, was contingent upon the court cutting the $9.2 million sanction to $4.3 million and returning the remaining $4.8 million to the attorneys’ fee fund. (I’ve rounded the numbers if you’re doing the math.)

The net effect, as the judges explained in Monday’s order approving the proposed settlement, is that Wilner and Farah will walk away with only $4.3 million in fees (the $8.6 million share they’d negotiated with Lieff and Motley Rice, minus the revised $4.3 million in sanctions) from a settlement in which they had once expected to receive $15.7 million. And because the court agreed to return the rest of the reduced sanction money to the attorneys’ fee fund, the pie to be divided among Lieff, Motley Rice and other plaintiffs’ firms is bigger. “In sum, the $4.8 million reduction of the sanction will consummate Wilner’s and Farah’s settlement with Lieff Cabraser and Motley Rice by allowing those funds to be paid to the law firms that the court determined should not be sanctioned,” the judges said.

Their order emphasizes that the sanction reduction should in no way be interpreted as a dilution of their holding against Wilner and Farah. It “does not reflect a retreat from the sanctions order,” they wrote. “Neither does the court shrink from its findings of abuse or the original computation of the sanction amount. The court reaffirms every aspect of its sanctions order, both the factual and legal conclusions. Wilner and Farah filed at least 1,250 frivolous lawsuits and continued to advocate or maintain them in federal court after they knew, or certainly should have known, they were baseless.”

The judges said they were willing to cut the sanction to reflect the reduced fees Wilner and Farah would receive under their agreement with Lieff and Motley Rice. They also noted, with relief, that Wilner and Farah said they would drop their opposition to the sanction and end litigation over their share of the fees if the court approved the global deal.

“The long-awaited end of the road is in sight,” the judges wrote. The court is anxious to turn the page, finish the chapter and close the book, as Wilner and Farah must be as well.”

Indeed. I left phone and email messages for Wilner and Farah but didn’t hear back. Lawyers for Lieff and Motley Rice also didn’t respond to requests for comment.

The views expressed in this article are not those of Reuters News.

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