August 5, 2010 1:23 PM
All Sorts of Questions in Massive Would-Be Suit Against Grant & Eisenhofer
Posted by Zach Lowe
Andrew Longstreth, our colleague at The Am Law Litigation Daily, did a wonderful job of asking some very serious questions about a would-be class action that accuses Grant & Eisenhofer of making a grab for $200 million in fees linked to the Tyco securities class action even though the firm agreed not to pursue those fees.
The Tyco securities litigation, in which G&E served as cocounsel with two other firms, yielded a $3.2 billion settlement fund, the Lit Daily says. A federal judge in 2008 awarded $464 million in attorney fees, but Richard Gielata, the name plaintiff in the would-be case against G&E, says the law firm signed a prior agreement with one of the lead Tyco plaintiffs that limited the firm's possible fees to a much lower percentage of the total Tyco settlement. The difference amounts to about $200 million, the Lit Daily says.
Longstreth asks a simple question: Where is this alleged fee agreement? Thomas Cronin, one of the lawyers representing the plaintiffs in the G&E case, assured Longstreth that he has a copy of the agreement but opted not to attach it to the initial complaint. Cronin said he just wasn't ready to put the agreement in the public record. But a former top official at the Teachers' Retirement System of Louisiana, a lead plaintiff in the Tyco matter and the party that supposedly signed the alleged fee agreement with G&E, told Longstreth she has no memory of any such fee agreement.
The fee agreement issue alone makes this an interesting case. But there's more. Richard Gielata has turned to his son, Joseph, for representation in the case against G&E. Joseph Gielata apparently once worked at G&E and might have a grudge against his old firm, at least according to G&E officials, who described Gielata as "a disgruntled employee" in interviews with Longstreth. (The firm denies all the allegations, by the way.)
Another tidbit about Joseph Gielata, courtesy of G&E and confirmed by Longstreth via the public record: The Delaware Supreme Court once reprimanded the younger Gielata for his role in a scheme in which he tried to take advantage of PayPal's money-back guarantee using sham transactions. Gielata pleaded guilty to a misdemeanor theft charge in connection to the scheme, though the charge was eventually dismissed when he completed a period of probation, the Lit Daily notes.
More proof that there is always something interesting happening in Delaware.
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