Back in the 1990s, Houston lawyer Robert Roach and California vintner Frederick Schrader bonded over a shared love of wine, and after a dinner in 1997 with their respective romantic partners at the French Laundry, the friendship blossomed.
They first met when Roach, already a member of several exclusive wine clubs in Houston, began traveling to Napa Valley. During one trip he met Schrader, whom he was familiar with based on his reputation and success in the wine industry. The friendship between the men grew to the point where each considered the other his best friend, according to testimony. The duo traveled the world, shared confidences. Roach even served as the best man in Schrader’s 2005 wedding to Carol Schrader, and from then on they called themselves the Three Musketeers.
But along the way, the friendship became fraught, and in September 2018 Roach sued Schrader in Harris County District Court, alleging he had wrongfully been cut out of a handshake deal that gave him an ownership stake in a particular Cabernet Sauvignon produced by Schrader Cellars, called RBS, which stood for Roach, Brown (after Thomas Brown, the primary winemaker for Schrader Cellars) and Schrader. Schrader would later testify he named the wine RBS “in recognition of Roach’s friendship” and for his provision of both a $135,000 loan in the early 2000s and legal services to Schrader Cellars.
Schrader Cellars was sold to Constellation Brands in June 2017 for $70.9 million. In the litigation, Roach contended the $135,000 he provided his friend was not a loan but a “start-up investment.”
After Schrader was sued in Harris County, Schrader Cellars returned fire, suing Roach in federal court in San Francisco in February 2021, seeking a declaration that it was the sole owner of all its physical assets and intellectual property when it was sold to Constellation.
In March, Harris County District Judge Tanya Garrison entered final judgment, in accordance with a jury’s verdict, in favor of Schrader. And on April 30, U.S. Magistrate Judge Sallie Kim in California entered findings of fact siding with Schrader Cellars, too. Roach has already filed notice he will be appealing the Harris County judgment. He did not respond to a message seeking comment for this story. His legal team also did not comment.
Casey Low of Pillsbury, who was Schrader’s lead lawyer in both suits, called the situation “tragic.”
“To revisit it, in light of, you know — who sues their best friend, no matter what it was [for]? But it’s also a lawyer doing it, and clearly doing it for money,” Low told The Lawbook in a recent interview. “The tragedy is getting to know Fred and knowing that he really did feel betrayed.”
Harris County Lawsuit
Pillsbury represented Shrader when he sold his winery to Constellation. So when Roach lodged his claim of ownership in Harris County District Court 15 months after the sale, Low, a partner in the firm’s Austin office, got involved in the litigation.
“I got to know Fred well during the years spent on this case,” he said.
The crux of the dispute was the oral agreement Roach said he entered into with Schrader in 2000 or 2001 regarding the RBS Cabernet. In Roach’s telling of the dispute, the $135,000 he gave Schrader (which, according to court documents, was paid back with interest to the tune of $150,000) to purchase grapes was an investment in Schrader Cellars that entitled him to an ownership stake in the company.
The agreement, which was never memorialized in print, allegedly included “14 or 15” terms, Roach would later testify, and he told the court nearly all of those terms were “dictated” by Schrader.
Long before the case made it to trial, there were multiple appeals. Schrader appealed from the denial of his special appearance and later challenged orders denying his motion to disqualify Roach’s lawyer, denying his motion seeking to protect the CEO of Constellation from a deposition and denying his motion to dismiss the lawsuit under the Texas Citizens Participation Act. Schrader also appealed his request to abate the Texas proceedings while the California case was ongoing.
“The trial court here in Houston was intent on moving forward regardless of what happened [in California],” Low said. “At some point, we just had to try it, even though we didn’t think it was right that there would be two bites at the apple.”
Roach also lodged appeals from trial court rulings. Between the parties, court records show eight total appeals were filed in the case, including three appeals to the Texas Supreme Court.
When it came to constructing a story for the jury, Low said the theme was simple: common sense.
“And that really started during jury selection, when all of the panel members expressed surprise at the absence of a written agreement between two parties,” he said. “And then, on top of that, the party claiming to have been wronged was an attorney. So, the common sense was, if it’s about business, you get it in writing. That’s common sense. But if anyone knows that, an attorney should know that. They’re hired to do that.”
Roach presented the case as a fairness proposition, arguing he had spent “over a million hours” promoting RBS wine, that he had been a ground-floor investor in the product and that he was due what he was promised for his work in making the wine a success. He argued the name of the wine also supported his ownership claim.
But Low said his client “had a history of naming wine after friends.”
“His wife, Carol Cole Schrader had a CCS label,” he said. “And these other people, despite being referenced on the label and even working for the winery, never claimed an ownership interest in anything. They just saw it as a tribute, and that’s quintessential Fred. That’s what he does, is promote people.”
Some of the best evidence in the case, Low said, turned out to be items produced or filed by Roach, such as an application he filed with the Texas Alcoholic Beverage Commission that listed Shrader Cellars as the sole owner of RBS, the Cabernet he claimed to have an ownership stake in.
The jury heard five days of testimony in the case and deliberated for about a day and a half before 10 of the 12 jurors rendered a verdict in Schrader’s favor in November. After the verdict, Low spoke with jurors, who pointed to the TABC application as a key piece of evidence.
Prior to the entry of a final take-nothing judgment against him in March, in an unusual move, Roach filed a motion asking the court to compel mediation.
“As the court noted … the outcome of these motions [for final judgment, for a new trial and for judgment notwithstanding the verdict] is uncertain, as is the result of appeals that will follow upon entry of any judgment,” the motion reads. “Accordingly, this is an opportune time for the parties to reevaluate their settlement positions and, with the help of a mediator, to make another run at getting the case settled.”
That request was denied in February. Low said it was a first for him.
“This case has been a history of things I’ve never seen before in 20-something years of practice,” he said. “I’ve seen things I never knew existed in terms of legal maneuvering.”
The case is now pending before the First Court of Appeals in Houston.
California Lawsuit
In San Francisco, a month before the jury trial in Houston, the parties tried the parallel case in a bench trial before Judge Kim in October.
In that case, emails were produced that documented Schrader telling Roach about the sale of the winery.
“YO RANDY [,] WELL BIG NEWS HERE! ……. I HAVE SOLD SCHRADER TO CBI [Constellation],” Schrader wrote to his friend in all caps in a June 25, 2017 email.
“Congratulations; that’s absolutely incredible news!! So glad you and Carol are being rewarded for the excellence you achieved with Cellars!” Roach replied.
Schrader wrote back indicating there would soon be a party to celebrate, and Roach did not respond.
“The next time Fred Schrader heard from Roach was when Roach filed suit against Fred Schrader in Harris County, Texas,” the judge wrote.
Judge Kim issued a 63-page findings of fact April 30 that spent several pages pointing out why, in the Court’s view, Roach was not a credible witness.
“The Court makes this determination based on various issues described fully below and on the Court’s observations of Roach’s demeanor at trial,” she wrote. “Roach claims that Fred Schrader ‘dictated’ ‘14 or 15’ terms of the oral agreement, which Roach recited at trial apparently entirely from memory.”
“According to Roach, both he and Fred Schrader operated in accordance with these terms for 17 years, even though neither Roach nor Fred Schrader reduced the terms to writing. This seems incredible, even for close friends. On the other hand, that a friend would borrow money at a very simple rate based on an oral agreement is believable.”
The court continued, writing that in her view it is “highly unlikely that a trained lawyer like Roach would not write down these extensive terms, even if just for his own benefit” and later wrote that Roach’s “recitation of the terms of the oral agreement shifted over time because he invented them as the litigation progressed.”
Roach, the court found, “engaged in deliberate deception throughout his testimony.”
She also pointed to other testimony from Roach that she said “shows his attempt to twist the truth for his own benefit.”
According to LinkedIn, Roach has served as an adjunct professor at the University of Texas School of Law and the University of Houston Law Center. He started his career as an associate at Vinson & Elkins in 1981 before moving to Mayor, Day, Caldwell & Keeton for nearly a decade. He launched his own firm, now called Roach Newton, in 1993.
Judge Kim pointed to Roach’s experience as a lawyer who taught legal ethics at least twice in the findings, juxtaposing what she said Roach should know or should understand with his conduct in this case.
In examining Roach’s ownership claim, Judge Kim wrote that “Constellation’s due diligence process did not reveal any potential ownership interests of Roach or any separate RBS entity, or any other relevant claims or liens on assets of Cellars.”
Ethics Issues
In October and November of 2020, Schrader filed two grievances against his former friend with the State Bar of Texas, alleging he had violated Texas Disciplinary Rule of Professional Conduct 1.08, which prohibits a lawyer from entering into a business transaction with a client unless certain conditions are met.
The grievances were dismissed, Schrader appealed and the Texas Board of Disciplinary Appeals upheld dismissal in March 2021, after it “determined that the conduct you described does not violate the Texas Disciplinary Rules of Professional Conduct or is otherwise not actionable under the Texas Rules of Disciplinary Procedure.”
Roach used that finding by the Texas State Bar to argue in the California litigation that Schrader was barred from arguing Roach violated California Rule of Professional Conduct 3-300, which governs business relationships between lawyers and their clients. Schrader argued the rule had been violated based on Roach’s failure to put the terms of the oral agreement into writing.
In the California litigation, Judge Kim agreed and found Roach had violated Rule 3-300.
“Here, it is undisputed that the terms of the oral agreement were never transmitted ‘in writing’ to the clients, Fred Schrader and Cellars, that Fred Schrader and Cellars were never advised in writing that they could seek independent counsel, and that Fred Schrader and Cellars never consented in writing,” she wrote. “There simply were no writings regarding the oral agreement. Thus, Roach violated Rule 3-300.”
Roach had argued Rule 3-300 doesn’t apply to the California case because he wasn’t representing Schrader or Cellars when he entered the oral agreement.
But Judge Kim wrote that argument “misses the point.”
“[A] lawyer who simultaneously enters into an agreement to represent a client and also obtains an ownership interest in the client or interest adverse to the client is also bound by Rule 3-300,” she wrote. “To hold otherwise would obviate the entire purpose of Rule 3-300, which is to prevent a lawyer from gaining an advantage over a client. Rule 3-300 has no temporal limitations. Rather, it simply states that a lawyer shall not enter into a certain type of relationship with a client unless certain conditions are met, and it does not state that it only applies to pre-existing clients.”
The Aftermath
Low said the theme of common sense was how the litigation strategy “started and ended.”
“There was a dispute — both of them could not be telling the truth,” he said. “At the end of the day it does not make sense if the agreement included an interest to own the business that it would be completely oral, especially with an attorney involved.”
The case was unique for Low, because, as a lawyer, he put himself in Roach’s shoes throughout trial.
“Even after all this time, I can’t even imagine doing that,” he said of Roach’s lawsuit against a former friend and client over an alleged oral agreement. “It partly made me think more deeply about our profession and the core requirements. One of them is always putting your client above yourself, their interests above your interests, and I cannot think of a situation where that would be more necessary than a business deal that is undocumented.”
Roach is represented by Frank Guerra IV of Guerra LLP, Thomas M. Farrell of McGuireWoods, Manuel Lopez of Roach Newton and Robert DuBose of Alexander Dubose & Jefferson.
Schrader is also represented by Dillon Ferguson, Sarah Goetz and Alex Guerin of Pillsbury.
The federal case number is 3:21-cv-01431. The Harris County case number is 2018-59845.