Facts

In 1989, the U.S. government threatened to criminally prosecute the plaintiff for abusing Medicare. The plaintiff hired Ronald Nessim to defend him. Nessim and his firm generated many confidential documents while they represented the plaintiff.

Then, in December 1989, the plaintiff consulted Richard Drooyan of defendant law firm Skadden, Arps, Slate, Meagher and Flom. Nessim subsequently forwarded his entire original file, including highly sensitive documents, to Drooyan. According to the defendant, the plaintiff also consulted other attorneys during the course of the government’s investigation. The government eventually dropped its criminal investigation without charging the plaintiff. Drooyan left the firm in 1993; there was no evidence at trial that any other Skadden attorney saw the plaintiff’s documents.

In July 1991, Transamerica, Southern California’s Medicare provider, libeled the plaintiff through letters to his patients. The letters informed that the plaintiff provided substandard care and billed improperly. A court ordered Transamerica to send retraction letters. Instead, however, Transamerica sent libelous letters stating that the plaintiff agreed to be excluded from Medicare pursuant to a settlement agreement reached in late 1989.

Then, in September 1991, the U.S. District Court enjoined Transamerica and the U.S. government from further libeling the plaintiff. Transamerica disregarded the injunction by publishing, in its October 1991 newsletter, that the plaintiff had been excluded from the Medicare program for two years. These libelous statements referenced the time when the defendant law firm was defending the plaintiff against the threatened criminal prosecution.

The plaintiff sued Transamerica for defamation and eventually agreed to arbitrate the matter pursuant to a low-high agreement. In 1999, after this agreement was reached, Transamerica retained one of defendant’s partners, Raoul Kennedy, as lead trial counsel to defend the plaintiff’s defamation action. When Kennedy learned of his firm’s prior representation, he investigated it.

PLAINTIFF’S CONTENTIONS:
Upon learning that Transamerica had retained defendant law firm, the plaintiff demanded that the defendant withdraw and moved to vacate the arbitration agreement. To support this argument, the plaintiff contended that defendant breached its fiduciary duty to him. The defendant refused to withdraw, withheld the results of Kennedy’s investigation from the plaintiff, and claimed that it lost the plaintiff’s file.

The plaintiff subsequently moved to disqualify the defendant and appealed the trial court’s denial of his motion. Further, the defendant had an affirmative duty to obtain informed, written consent from the plaintiff before it represented Transamerica.

DEFENDANT’S CONTENTIONS:
The defendants returned the plaintiff’s original file to predecessor counsel, Ronald Nessim. Most of the file was then sent back to the plaintiff, with Nessim retaining the rest. The plaintiff’s contentions concerning the handling of the file were not supported by any of the evidence.

DAMAGES: The plaintiff claimed that the defendant’s involvement in the Transamerica case deprived him of a timely settlement and of millions of dollars. The plaintiff claimed to have suffered emotional distress as a result of defendant’s actions. The plaintiff also suffered to the extent that he underwent extensive litigation and accrued substantial attorney fees to fight defendant’s refusal to withdraw from the Transamerica case while also litigating the case. The plaintiff claimed that his fight against the defendant negatively impacted his physical and emotional health.

Damages

The plaintiff claimed that defendant's involvement in the Transamerica case deprived him of a timely settlement and of millions of dollars. The plaintiff claimed to have suffered emotional distress as a result of defendant's actions. The plaintiff also suffered to the extent that he underwent extensive litigation and accrued substantial attorney fees to fight defendant's refusal to withdraw from the Transamerica case while also litigating the case. The plaintiff claimed that his fight against defendant negatively impacted his physical and emotional health.

Result

This case settled for $2.6 million on the morning of the hearings on defendant's motions for summary judgment.

Other Information

The defendant withdrew as counsel for Transamerica immediately after an appellate court decision in the case, and the plaintiff ultimately reached an agreement to settle the Transamerica case for $11 million after defendant withdrew.