Legal News

Class Action Guru Stan Chesley Takes Stand in Fen-Phen Trial

By Dan Slater

In an apparent last-ditch effort to salvage their case, the lawyer-defendants in the Fen-Phen trial called an adverse witness, Stanley Chesley, to testify on their behalf. That, apparently, was all they were left with.

“They kind of don’t have a choice because there really isn’t anyone that’s going to testify for them except their experts,” Angela Ford, an attorney who’s been attending the trial and leading a civil action against the attorneys on behalf of 418 Fen-Phen claimants, told the NLJ.

Stan Chesley (Credit: Associated Press/David Kohl)

Yesterday, Shirley Cunningham, Melbourne Mills and William Gallion — who are on trial in federal court for allegedly bilking their clients out of $65 million of a $200 million settlement over alleged injuries caused by the diet drug Phen-Fen — called class-action guru Stan Chesley to the stand, apparently in the hope that he’d bolster their case. Click here for reports from the Cincinnati Enquirer and the Kentucky Herald-Leader.

Chesley testified that he was hired by the three lawyer-defendants to help settle the Fen Phen suit for a 27% take of the settlement. When he didn’t get an agreement with the drug maker — American Home Products (now Wyeth) — within 12 months, his fees were reduced to 21%, or roughly $20 million, he reportedly testified. “I guess they didn’t think I was very effective,” Chesley said.

If Chesley took the fee reduction as an affront to his good name, he took yesterday’s and today’s testimony as an opportunity to repay the favor. Chesley reportedly answered “absolutely not” to a series of questions from federal prosecutors about whether the defendants correctly conducted the settlement.

Chesley’s testimony followed that of William Gallion, who, according to the Courier-Journal, testified on Friday that he and his co-defendants would have been “legally justified” in taking as much as $170 million from the $200 million. Why? Because, he reportedly explained, their clients’ cases were worth only $30 million. Whether or not a contingency-fee arrangement was in place is at issue in the case.

“We were like an insurance company where the hurricane didn’t strike, so we got to keep the premium,” said Gallion.

But Judge William O. Bertelsman immediately told the jury that Gallion’s interpretation of the law was wrong, prompting Gallion’s lawyer, O. Hale Almand, to shout out an objection.

“Overruled, and sit down,” Bertelsman told Almand.

Full post as published by Law Blog - WSJ.com on June 17, 2008 (boomark / email).