October 17, 2008 9:30 AM

The Am Law Litigation Daily: October 17, 2008

Posted by Ed Shanahan

Edited by Andrew Longstreth

LITIGATOR OF THE WEEK
Fred Baron, founder of Baron & Budd
A day after we learned the sad news of Fred Baron's end-stage multiple myeloma, we thought it fitting to salute the plaintiffs lawyer who, perhaps more than any lawyer in America, shaped (and profited from) the modern mass tort. However you view Baron's pioneering work, it's hard to overestimate the impact he's had on American civil litigation.

Start with asbestos, which is where Baron's career began. A University of Texas graduate who always cited Ralph Nader as his inspiration, Baron began handling an asbestos case against Pittsburgh Corning as a newly-minted lawyer in the early 1970s, when it seemed a quixotic mission. It was through the perseverance of lawyers like him and Ronald Motley that asbestos manufacturers were eventually forced to acknowledge their liability and begin paying damages to people injured by their product. "I would probably say that he and Ron Motley were the leading pioneers in asbestos litigation," Joe Rice of Motley Rice, told us yesterday.

Smart, exuberant, and boyishly handsome, Baron charmed juries and outmaneuvered an ever-widening universe of asbestos defendants, eventually becoming one of the wealthiest plaintiffs lawyers in the country. "I think I am the luckiest human being that ever walked on the face of the earth. I get to do exactly what I want to do," Baron told Texas Lawyer in a thorough 2007 review of his career. "I really had a great law practice, but as a consequence--and I don't exactly know how it happened--I made a lot of money."

His success was not without controversy. Baron's firm, Baron & Budd, commoditized asbestos plaintiffs work. It innovated such practices as enlisting thousands of clients with minimal injuries and bundling their cases for settlement with those of much more seriously-injured victims. In the 1990s Baron's firm was embarrassed by the exposure of a memo that seemed to suggest that the firm coached witnesses to lie in depositions. And as more and more companies with tenuous links to asbestos were crushed under the weight of asbestos claims, Baron--who had by then given up asbestos litigation for more complex toxic tort cases--was prominent among the lawyers whom tort reformers accused of corrupting the civil justice system.

Yet Baron believed passionately in that system. In the early 1990s he split with Ron Motley over the question of class action settlements as a vehicle for resolving large numbers of personal injury claims. Baron insisted that every tort victim had an individual right to sue. His challenge to an asbestos class action settlement engineered by the Motley firm ended up before the U.S. Supreme Court, with Baron paying for Harvard law professor Laurence Tribe to argue that the deal was unconstitutional. The Court's ruling in Amchem was the beginning of the end of the movement toward personal injury class actions settlements. Baron once told The American Lawyer that he considered the Supreme Court challenge, which cost him $4.5 million in out-of-pocket expenses, to be one of his proudest accomplishments as a lawyer.

Baron was also active in the organized trial bar's political efforts. As a leader of the group then known as the Association of Trial Lawyers of America, he spearheaded opposition to Congressional tort reform efforts. Baron stepped up his political engagement after leaving Baron & Budd in 2002 to work on the presidential campaign of Senator John Edwards, a fellow trial lawyer. (Baron and his wife Lisa Blue, also a very successful plaintiffs lawyer, later sued Baron & Budd for allegedly failing to pay Baron and Blue their share of firm profits.) Most recently, as Texas Lawyer has reported, Baron has thrown his influence and money into a grassroots effort to reclaim the Texas state judiciary from judges elected with the support of tort reform groups.

According to Baron's son Andrew, Fred Baron has only days to live. On his website, Andrew posted a letter he sent to the CEO of the pharmaceutical company Biogen, requesting that his father be permitted to use the Biogen drug Tsabari, which has not won regulatory approval, to treat his cancer. In a bit of irony, famed Texas trial lawyer Mark Lanier, who is reportedly representing the Baron family, even pledged to Biogen that the company would not be sued if anything went wrong. But Biogen has rejected the Baron family's request.

This is not an obituary. We're hoping that Baron beats the odds. But in a season when most people think of Fred Baron as the man who paid John Edward's mistress, Rielle Hunter, to move out of North Carolina, we wanted to remind Litigation Daily readers of all that this litigator has accomplished in his truly remarkable career.

--Alison Frankel

M&A
After Win Against Hexion in Delaware, Huntsman Goes After Banks in Texas
Huntsman's legal strategy received more validation this week. After winning a September 29 ruling in Delaware that bound Hexion Specialty Chemicals to their merger agreement, Huntsman has now turned its attention toward the banks that promised funding for the $10 billion deal. In a suit filed in Texas state court against Credit Suisse and Deutsche Bank, Huntsman claims the banks are liable for tortious interference in not only its merger agreement with Hexion, but also a previous merger agreement with Basel.

The banks wanted a declaratory judgment that a combined Huntsman/Hexion would be insolvent. Huntsman moved to enjoin them from suing to obtain that ruling. (Here's the TRO petition that Huntsman's lawyers at Gibbs & Bruns submitted.) On Monday, Montgomery County judge Fred Edwards granted the injunction in a two-page order, finding that Huntsman had "proved a probable right of recovery on the merits and a probable injury in the interim if this injunction is not granted." The banks, represented by a team that includes Richard Clary of Cravath, Swaine & Moore and Mark Glasser of Baker Botts, have already filed an appeal to the Court of Appeals for the Ninth Judicial District of Texas at Beaumont.

Huntsman touted the Texas injunction as a win in a press release, but The New York Times's Deal Professor warns that the banks can still refuse to finance the merger, which would force Hexion (not Huntsman) to sue them. "The only thing this TRO does is give Hexion and Huntsman, as a party-in-interest, the ability to control when litigation commences," the Deal Professor wrote. "Any such litigation will occur in New York, the forum selected by the banks' debt commitment letter for such disputes."

Given that Hexion wanted to get out of the deal and that the banks have so far refused to fund it, we're eager to see whether Hexion will, in fact, sue its erstwhile financiers. It's unclear what role Huntsman would have in that case, but we understand the company has hired Boies, Schiller & Flexner to handle potential litigation in New York. Meanwhile, Huntsman's tortious interference case against the banks, according to Huntsman's Texas counsel Kathy Patrick of Gibbs & Bruns, will proceed in the Lone Star State.

JUDICIARY
Holland & Knight Partner to Lead Porteous Impeachment Proceedings
Embattled federal judge Thomas Porteous, Jr., of the Eastern District of Louisiana can't be encouraged by this news: The House Judiciary Committee has retained Holland & Knight partner Alan Baron to lead its investigation into a possible impeachment of Judge Porteous.

It's a bad omen for Porteous. Baron was special impeachment counsel to the House of Representatives in the late 1980s when federal judges Walter Nixon and Alcee Hastings were impeached and removed from office. Baron, who is the cochair of Holland & Knight's Congressional investigations practice, has also served as special counsel to the Governor of Rhode Island in an investigation of the state credit unions in 1991 and as minority chief counsel to the Senate Government Affairs Committee in its 1997 campaign finance investigation.

Both the Fifth Circuit Court of Appeals and the Judicial Conference of the United States have found that Judge Porteous lied on financial disclosure forms in bankruptcy proceedings and took cash from lawyers who had cases pending before him.

Given how rare judges are investigated for possible impeachment, we found it amazing that Baron could be involved in three such inquiries. He told us the rarity of such probes is what makes them so interesting. "I've come to corner the market on footnotes in American judicial history," he joked.

History hasn't yet been made in the case of Judge Porteous. Even if Baron's team, which will include Holland & Knight litigation partner Jennifer Short and senior counsel John Irving, finds evidence that leads the House Judiciary Committee to recommend Porteous's impeachment, the judge's ultimate removal from office will still be a long way off. Impeachment requires a majority vote of the 435 members of the House of Representatives and then a two-thirds vote for impeachment in the Senate.

WHITE-COLLAR
Anticipating Fraud Cases, U.S. Attorneys Beef Up Staff
Looking for a new job? U.S. Attorneys in New York and New Jersey are hiring. According to Bloomberg, the top federal prosecutors in Newark, Manhattan, and Brooklyn are adding lawyers and staff to handle investigations of financial companies connected to the financial meltdown.

Manhattan U.S. Attorney Michael Garcia told Bloomberg that he's added three lawyers to his white-collar unit, and has created a new eight-lawyer mortgage-fraud division. Brooklyn U.S. Attorney Benton Campbell says he's assigned 12 prosecutors to securities-fraud cases and launched a task force dedicated to the subprime fallout. Not to be left out, New Jersey U.S. Attorney Christopher Christie has also added a prosecutor to his 10-person securities fraud unit.

The U.S. Attorneys told Bloomberg that they're looking for familiar evidence: incriminating e-mails, documents, and any other evidence that suggests corporations or executives committed criminal fraud in misleading the investing public. But the prosecutors are already warning that these will be tough cases to investigate. "The scandals in the earlier part of this decade were much more contained," Christie told Bloomberg. "Here, you have something that is potentially much broader across the marketplace. As a result, it's going to make it more time-consuming to figure out."

Right on cue, the white-collar defense bar has begun voicing concerns about politically motivated prosecutions. Debevoise & Plimpton partner Mary Jo White, whose phone we suspect has been ringing fairly constantly in the last few weeks, told Bloomberg that some cases may not be meritorious. "People doing their job in good faith should not find themselves under massive investigation," White said.

This week's Legal Times has a nice rundown on who's gotten financial-crisis white-collar defense work so far. New York firms have dominated, Legal Times says, but there should eventually be enough work for Washington, D.C., lawyers to see their fair share as well.

WHITE-COLLAR
New York Court of Appeals Affirms Convictions of "Tyco Two"
In today's economic turmoil, former Tyco CEO Dennis Kozlowski and CFO Mark Swartz seem like relics of a long-lost era, when corporate disaster was measured in far fewer billions than it is today. But the duo inserted themselves back into our consciousness yesterday when New York's highest court, the Court of Appeals, affirmed their 2005 convictions in a 37-page opinion.

The key issue in the appeal was whether the trial court should have permitted the testimony of David Boies, who conducted an internal investigation at Tyco and was called by the government to testify about interviews he conducted with Tyco's board and senior management, including Swartz. Lawyers for Kozlowski and Swartz argued that parts of Boies's testimony improperly suggested that the defendants were guilty. The Court of Appeals disagreed. "Boies's testimony on these subjects was limited to a first-hand factual account," the judges concluded. "The line is not crossed when a witness relates facts that may be prejudicial."

Nathaniel Marmur of Stillman, Friedman & Schectman, who represents Swartz, told us he was "disappointed" with the ruling and was studying his client's options. Kozlowski's attorney, John Martin of Martin & Obermaier, did not return a call seeking comment.

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