Appeals court approves Newton as arbitrator in Coon and Umphrey fee dispute

David Yates Sep. 29, 2009, 6:00am


A Texas appeals court shot down attorney Brent Coon recently, ruling the Provost Umphrey law firm will get to keep its selected arbitrator in a dispute over attorney's fees.

For the past two years, Coon and Walter Umphrey, two of Texas' most influential plaintiff's lawyers, have been bitterly embattled over millions in attorney's fees stemming from the state's mega-billion dollar tobacco settlement.

As the Record reported in July, Coon filed a motion for a writ of mandamus with the Texas Ninth District Court of Appeals, asking justices to revoke Umphrey's selection of Frank Newton as his firm's arbitrator, alleging the prospective arbitrator may be biased toward Umphrey.

On Sept. 24, justices denied Coon's writ and affirmed the ruling of Judge Bob Wortham, who had shepherded the parties back into arbitration.

The crux of the dispute arose in November 2007, when Coon, once a Provost Umphrey partner, claimed he never received his share of the more than $3 billion in attorneys' fees from the $17.3 billion tobacco settlement with the state of Texas.

Coon had filed a complaint to compel arbitration in federal court in the Western District of Texas, naming the Provost Umphrey Tobacco (PUT) Partnership and several area attorneys as defendants.

The federal suit was dismissed in January 2008 when the parties agreed to arbitration through the American Arbitration Association.
Umphrey and his tobacco settlement partners quickly fired back at Coon, filing their own petition in Jefferson County District Court.

They alleged Coon violated an arbitration agreement that was set up in case such a dispute arose over the settlement and Coon withdrew from the PUT partnership.

On March 20, 2008, Judge Bob Wortham, 58th District Court, side stepped the American Arbitration Association and compelled arbitration under the agreement, which called for a three-party panel to arbitrate the dispute, court papers say.

According to the order, each side was to pick one arbitrator and a third was to be jointly picked. Coon selected Chuck Herring, a partner in Austin's Herring & Irwin, and Umphrey chose Newton, current CEO of the Beaumont Foundation of America.

The Beaumont Foundation of America was created with funds from the $2.1 billion settlement of a 1999 federal class action against Toshiba filed by several Beaumont attorneys.

Coon objected to Umphrey's selection and moved that the Arbitration Association decide whether Newton was qualified to serve as arbitrator.

Judge Wortham denied Coon's motion, leading the attorney to appeal.

"In this case (Judge Wortham) has followed the suggestion of Walter Umphrey and held the party-selected arbitrator need not meet any test of impartiality," Coon's appellate brief stated.

"This contradicts AAA rules. Following (Judge Wortham's and Umphrey's) logic, one could appoint your spouse or law partner to the panel of arbitrators. This ruling undermines the entire … panel and must be reversed."

In his brief, Coon argued that Newton has "connections and an apparent bias in favor of the Umphrey plaintiffs."

Conversely, Umphrey and his attorneys argued Coon has no grounds to appeal Judge Wortham's ruling.

"The mandamus record submitted by Coon does not show that the arbitrator was clearly disqualified," states the appeals opinion, authored by Justice Charles Kreger.

"Mandamus relief is proper only to correct a clear abuse of discretion when there is no adequate remedy by appeal. Having reviewed the mandamus record, we conclude Coon has neither established a clear abuse of discretion by the trial court nor demonstrated that the benefits of mandamus review outweigh the detriments. We overrule issue two and deny the petition for writ of mandamus."

Coon is represented in part by two Austin lawyers, Donald Taylor of Taylor, Dunham & Burgess LLP and Joe K. Longley.

Umphrey is represented in part by attorney Gary Reger.

Walter Umphrey PC et al vs. Brent W. Coon et al, Jefferson County District Court Case No. E180-900
Appeals case No. 09-09-00264-CV

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