Texas Supreme Court justices are weighing whether 3,994 fen-phen plaintiffs suing their former attorney for breaches are bound by the results of a bellwether trial decided against them.
In deciding the case, the justices are considering whether to adopt frameworks that would permit an implied agreement to establish privity — a legally binding relationship between the parties — for collateral estoppel purposes.
The justices riddled lawyers with questions during oral arguments Tuesday in an appeal from Houston personal injury attorney George Fleming, who after winning a bellwether trial against six former clients is trying to bring an end to the claims from thousands of other former clients who accuse him of breaching his contractual and fiduciary duties.
Fleming has said Texas law should analyze privity in accordance with the U.S. Supreme Court’s ruling in the 2008 case Taylor v. Sturgell and Section 40 of the Restatement of Judgments. In Taylor, SCOTUS justices established a six-prong test for determining whether nonparties are bound to a judgment. The decision relied on Section 40, which says a nonparty to a case may be bound by express or implied agreement.
His lawyers, David M. Gunn and Murray Fogler, argue the justices should find privity existed in his case, therefore ending the lawsuit brought by thousands of former Fleming clients.
Justice Jane Bland asked how multidistrict jurisdiction and consumer contract cases would be impacted under Fleming’s theory and whether the justices would be creating different rules for state and federal courts.
Gunn contended the same rule should apply in state and federal courts.
“I want the Restatement rule and I don’t want it for your typical MDL. I don’t want it for mass tort,” Gunn said, adding that this case is unusual.
He pointed to a 1967 Fifth Circuit opinion in the case of Cauefield v. Fidelity & Cas. Co. of New York. There, the circuit judges affirmed a state court’s dismissal of a lawsuit alleging desecration of a Louisiana cemetery because a previous state court judgment denied a similar claim against the same cemetery. The theory argued was that the doctrine of judicial estoppel as applied in Louisiana foreclosed the lawsuit.
This petition for review stems from a malpractice case against the drug manufacturer Wyeth over the diet drug “fen-phen.” Fleming won a $339 million settlement in 2006 for about 8,000 clients.
About half the former clients later sued Fleming’s firm, alleging he deducted costs from the settlement without authorization. Fleming had spent more than $20 million to screen potential clients for the heart problem allegedly caused by the diet pills. The former clients who are suing Fleming say he breached his contractual and fiduciary duties by charging them for the screenings performed on about 32,000 people he never represented.
A small group of former clients led by plaintiff Sandra Kinney and represented by the Ware Jackson firm won a trial in 2010 against Fleming. The Kirklin Law Firm advertised the win and got more clients, including the lead plaintiff in this case, Rebecca Wilson. Ware Jackson and Wilson’s lawyers moved for summary judgment after the trial to avoid repetitive trials. The judgment was later reversed and Fleming settled with those plaintiffs.
In 2011, the plaintiffs sought collateral estoppel to avoid repetitive trials, but Fleming objected and a Harris County judge sided with him.
The lawyers offered a trial for six plaintiffs and the judge agreed, severing plaintiff Kathy Harpst and five others for trial. Fleming got a take-nothing verdict in the Harpst trial and moved for summary judgment in the Wilson case. A Harris County judge granted summary judgment but the 14th Court of Appeals reversed, finding Fleming did not prove the Wilson plaintiffs were aligned with the Harpst plaintiffs through the privity doctrine of contract law.
The plaintiffs indeed sought collateral estoppel after the Kinney case victory, Kirklin admitted. But Fleming’s attorneys fought against collateral estoppel and a Harris County judge sided with Fleming.
Now, Fleming wants to incorrectly argue the plaintiffs’ offer for collateral estoppel is an agreement with the trial court, Kirklin argued.
Justice Jeff Boyd seemed to agree, noting a party would have to obtain mutual consent to be bound.
“There’s no collateral estoppel unless the court accepts that offer,” Boyd said.
“Right. That’s my point,” Kirklin said. “They’re saying if you just offer it, that’s an agreement, but you hit on it. That’s it. Mutual assent. You have to get the court to approve that, or you have to get the opposing party.”
Justice Evan Young also questioned Gunn on that point.
“You made the representation to that court about them not being uniform. They’re nowhere near identical. There are all these differences, not just of state law but of other things as well. And then you stopped them from having a single trial in state court,” Young said. “Why is it that we’re gonna hold them to that representation when they didn’t get the thing that the representation was made for?”
Gunn again pointed to the Cauefield case.
Young appeared skeptical. He asked whether the legal community viewed Cauefield “without complete approbation.”
“I think that’s fair. It says it’s somewhat ambiguous on the facts. I didn’t find it ambiguous,” Gunn replied. “I found it congruent with our facts.”
Fleming’s lawyers have argued that Section 40 “does not care whether a formal contract was executed, but whether ‘representations were made to the court.’”
Young said a key question is whether the 3,994 Wilson plaintiffs are sufficiently linked to the Harpst plaintiffs. One of Fleming’s strongest points is that all the plaintiffs actively participated in the Harpst litigation, Young said.
“I recognize they were not taking the stand but they were behind [the litigation]. They were calling shots about strategy for expert admissibility, all this stuff. They are participating in this case,” Young said.
“Respectfully, they did not participate in the Harpst trial,” Kirlin countered. “They didn’t obtain jury findings.”
“I get that — not in the trial but in the litigation,” Young pushed back. “But I think we’ve made that point.”
Justices Brett Busby and John Phillip Devine did not hear the cases. Busby was on the 14th court panel that ruled in the case before it was appealed to the Texas Supreme Court. Devine agreed last week to not hear the case after a respondents’ motion pointed out he was one of Fleming’s co-counsel attorneys during the fen-phen litigation.
Devine was given an opportunity in 2006 to review the clients’ settlement packages, including the expense charges, and suggest changes, according to the motion. A lawyer for Wilson made the discovery last month when he ran into a former Fleming employee, mentioned the appeal before the Texas Supreme Court and was told Devine had been involved in the case. The lawyer looked into the records and found Devine was, indeed, listed among the more than 150 lawyers in the fen-phen litigation.
The case number is 22-0166.