$5 million fee dispute in rice litigation not derailing lawyers' cooperation in corn litigation

By The SE Texas Record | Aug 4, 2015

KANSAS CITY, Kan. – Texas lawyer Mikal Watts will cooperate with leaders of corn litigation while defending himself against their claim that he cheated them out of fees from rice litigation.

Watts agreed to abide by a fee order from a federal court while pursuing about 2,000 corn contamination claims against Syngenta Seeds in a Minnesota court.

Leaders of the corn litigation allege that in the rice litigation, Watts and others used their work in state courts without contributing to their common benefit fund.

The leaders seek to recover more than $5 million from Watts, Texas lawyer Martin Phipps, and others.

To prevent such a dispute in the corn litigation, the leaders proposed a common benefit order with specific provisions for groups that Watts and Phipps led.

The Watts group signed a side agreement in April, and the Phipps group did not.

The leaders tried to hold Phipps to provisions he had accepted, but U.S. District Judge Robert Lungstrum affirmed his independence on July 27.

Lungstrum, presiding over about 2,000 cases for the Judicial Panel on Multi District Litigation, ruled that a contract between Phipps and the leaders never took effect.

The contract set an effective date on the date of a court order approving it, and Lungstrum had signed no such order.

Lungstrum wrote that the leaders demonstrated no requirement or proper reason for him to approve a side agreement they had reached.

He wrote that although they argued it would be good policy to enforce it, he would be rewriting it “without a valid reason simply to achieve policy goals.”

“Forcing Phipps to honor the contract in violation of its terms would also have the effect of improperly circumventing the court’s ruling that it otherwise lacks jurisdiction to include cases outside the multi district litigation within the scope of the common benefit order,” Lungstrum wrote.

He wrote that a request for approval of a side agreement seemed “oddly selective,” when agreements among the leaders have not been subject his scrutiny.

The judge signed a separate order establishing a common benefit fund and summarizing the side agreement, which he had studied in his chambers.

It entitles the Watts group to use common benefit work.

It provides that the group will pay the same fee and cost assessments as others for clients in federal court, and half for all other clients.

It provides that the group isn’t eligible for payments from the fund and the leaders aren’t eligible for payments from any fund a Minnesota court might establish.

It finds that the Watts group is uniquely situated in the litigation.

“They have agreed to undertake significant efforts to promote appropriate federal-state cooperation and coordination,” Lungstrum wrote.

He wrote that they agreed to seek identical assessment percentages in Minnesota, and to take steps to avoid duplicate assessments.

“This step should discourage assessment based forum selection decisions,” he wrote.

The order prohibits the Watts group from sharing common benefit work product with counsel who aren’t subject to common benefit payments, except when taking depositions or in hearings and trials.

The order defines eight categories of recoveries, and assesses them in a range from 5.5 percent to 13 percent.

Litigation against Syngenta Seeds began last year, after China rejected shipments of corn that contained Viptera, a genetically modified substance.

Multi District judges assigned about 4,000 cases to Lungstrum, who remanded the Watts cases to Hennepin County court in Minneapolis.

Leaders in the multi district action previously led rice contamination litigation against Bayer at federal court in St. Louis.

Watts, Phipps and others pursued similar claims in state courts.

In 2013, after leaders settled with Bayer, they sued Watts, Phipps, Charles Banks of Arkansas, Stephen Murray of Louisiana, and the Texas firm of Keller Stolarczyk.

The leaders sought to recover the value of the work the defendants used in state courts, plus about $1.4 million in dispute within the common benefit fund.

District Judge Catherine Perry, who presided over the Bayer litigation, certified a class action against Watts, Phipps, and the others on July 14.

She wrote that more than 30 firms provided common benefit services, and that parts of more than 5,000 settlements were deposited into a trust fund.

“By pooling their resources, the plaintiffs and their lawyers achieved a great deal of efficiency in the prosecution and settlement of all their claims,” Perry wrote.

“Because they undertook this joint approach to the underlying litigation, they will not have to show that each individual class member provided or paid for specific things.

“Instead they can show that they jointly incurred the expenses that conferred a benefit on the defendants.”

She wrote that so far as any plaintiff was harmed, the entire class was harmed.

Watts is a high profile attorney from San Antonio, who has pursued pharmaceutical and other injury cases against big business. He explored the possibility of running for Senate as a Democrat in 2008, but the campaign never materialized. He gained more fame in 2013, when the New York Times reported that he filed suits over the BP oil spill for fictitious clients or clients he didn’t know.

BP sued him to recover amounts it spent on his cases, and federal agents seized his records and computers.

A federal judge stayed BP’s suit pending resolution of a criminal investigation, and the stay remains in place.

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