Lawyers convicted of scamming millions from fen-phen suit get unsympathetic hearing at 6th Circuit

Judge Ronnie Lee Gilman of the 6^th Circuit Court of Appeals told two attorneys that while their trial judge may have made an error, their scamming of millions from a 2001 fen-phen settlement just “looks wrong.”

The attorneys, 60-year-old William Gallion and 57-year-old Shirley Cunningham Jr., are currently serving prison time for taking more than $94.6 million out of a $200 million settlement. Judge Gilman criticized the attorneys for having taken the bulk of the settlement for themselves; initially distributing only $40 million to clients. Gilman said that lawyers getting 75% of the settlement while clients are left with 25% is fundamentally unfair. 

Gallion and Cunningham were convicted of scamming more than 400 clients out of millions they had won against American Home Products, maker of fen-phen. The drug was pulled off the shelves after users complained of heart problems related to the drug. Prosecutors say the attorneys illegally kept the bulk of the settlement, but later made more money available to their clients only after the federal government began a criminal investigation.

Cunningham’s attorney, Clifton Harviel, told the Court of Appeals judges that U.S. District Judge Danny C. Reeves made multiple errors during the trial, depriving the attorneys of a free and fair trial. Gallion’s attorney, Louis Sirkin, pointed out that Reeves allowed jurors to see 22 findings made by the Kentucky Supreme Court against Gallion and Cunningham, even though the high court never held a hearing. “It changed the whole dynamic,” Sirkin said. “It made these people look like bad guys.”

Judge Eric Clay of the 6^th Circuit wasn’t too impressed with the argument and said as much. “You go on and on, but we’re not hearing any legal authorities.” Sirkin replied: “We’re doing the best we can.” 

Prosecutors rehashed some of the evidence of the case, including how Gallion and Cunningham instructed employees not to tell clients the full details of the settlement and offer them less than they were initially allocated. Cunningham initially moved $153 million into the attorneys’ financial accounts, only to reverse court later and put $59 million back into the settlement after the federal government issued subpoenas as part of their criminal investigation.

Prosecutors pointed out that jurors only saw a few of the findings by the Kentucky Supreme Court and were later instructed to disregard what they had been shown, saying “The full list of allegations was never shown to the jury.”

The case has resulted in the downfall of many prominent legal careers. Beyond Gallion and Cunningham, formerly prominent attorneys in Lexington, another attorney, Melbourne Mills, was acquitted at trial but later disbarred for his role in the case. The Kentucky Supreme Court also disbarred former state judge Joseph P. Bamberger, who oversaw the settlement and was found to have profited from it, as well as David Helmers, a former legal associate of Gallion. The Kentucky Supreme Court is still deciding the fate of Stanley Chesley, a class-action specialist from Ohio. Chesley managed to avoid criminal prosecution, but faces multiple ethics charges that could result in disbarment.

Gallion and Cunningham are fighting battles on multiple fronts as they are also being sued by their former clients in civil court. A judge recently awarded the former clients $42 million, but the Kentucky Court of Appeals overturned the decision and the case is now pending before the Kentucky Supreme Court.

The 6^th Circuit Panel has taken the case under advisement and has not yet issued an opinion.  Reversal or either conviction is seen as highly unlikely. Gallion is not scheduled to be released from federal prison until 2029 and Cunningham's release date is not until 2025.

Read: “Federal appeals court hears Ky. diet drug pair,” by Brett Barrouquere, published at CBSNews.com.

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Supreme Court sides with Wal-mart in Huge Class Action Suit

Wal-Mart Stores, Inc. v. Dukes, et. al.

Three former or current Wal-Mart employees brought suit against Wal-Mart as representatives of one of the largest class action suits in history. Members of the class action included 1.5 million current or former female employees of Wal-Mart Stores, Inc. alleging Title VII violations and discriminatory practices based on their gender. Specifically, the Plaintiffs allege that Wal-Mart's promotion and employment procedures are discriminatory towards women and favorable towards men; generally men are paid more and receive more promotions than women of the same employment levels.

The question for the Court was whether this class action fully complies with the requirements of Rule 23 of the Federal Rules of Civil Procedure. There are four requirements a class action suit must meet under Rule 23: numerosity, commonality, typicality, and adequate representation. The 5-4 opinion written by Justice Scalia centered around the "commonality" requirement and whether the 1.5 million women involved could prove that there are "questions of law or fact that are common to the class." Justice Scalia suggested that the commonality requirement required much more than multiple violations of the same provision of law by Wal-Mart. Rather, all members of the class action must have suffered the same injury. The plaintiffs were trying to "literally sue about millions of employment decisions at once." According to the Court,

"without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members' claims for release will produce a common answer to the crucial question why was I disfavored."

To prevent an over-encompassing class action claim, the Court noted that the Plaintiffs would have to provide "significant proof" that Wal-Mart "operated under a general policy of discrimination." The only proof offered by the Plaintiffs was expert testimony which claimed there was a social culture at Wal-Mart that makes it vulnerable to gender bias. The expert could not say how regularly stereotypes or discrimination play a role in the decision-making processes. Without more specific evidence, the Court ruled that this was not significant proof and held that the class action was not in compliance with Rule 23.