Chesley Loses Class Action Client: Ohio, In Wake of KY Bar Decision to Disbar



Chesley in his office

One of the curious things about the Stanley Chesley case was that the State of Ohio employed Chesley to represent it in a Class Action case arising out of the Fannie Mae mortgage meltdown.  Stories quoted Chesley on the subject all while the fen-phen scandal clearly implicated him in the historic rip off the of fen-phen class and cover-up that resulted in the long imprisonment of his co-counsel and disbarment proceeding against him and others.  In other words, Chesley continued to represent one of the largest states in the union in a major piece of litigation under both democratic and republican Ohio governments.  Chesley received the work under former Ohio Attorney General Richard Cordray, a democrat, but he kept the work when former US Senator and Lt. Governor, Mike DeWine, a republican, took over the Attorney General's office during the last general election.  Perhaps the status quo remained under the republicans because Chesley et al. hired former republican operative, and treasurer Joe Deters?

This all changed, yesterday, when Mike DeWine finally brought the axe down on Chesley as it related to official Ohio representation.  Chesley who is facing permament loss of licensure is no longer representing the State of Ohio.  Here's a link to the Cincinnati Enquirer story.

Disciplinary Charges in KY Against Stanley Chesley Over Fen-phen Scheme?

The Bad Lawyer blawg previously reported on some of the attorney disbarment and jailing in the aftermath of the Fen-phen class actions and fraud.  In summary, some Kentucky lawyers were involved in attorney fee "enhancements" out of massive amounts of money obtained in class action settlements of the diet drug Fen-phen which was determined to be a risk of cardiac death.  The last Bad Lawyer post in May reported on the jailing of the legendary Kentucky attorney, Melbourne Mills in the multi-million dollar theft of fees and is at the link.

As you will recall, these Kentucky lawyers created an illusory charitable entity in which they diverted most of the class action settlement proceeds that they then personally withdrew millions from without disclosing to their clients.  Another example of unvarnished greed.

The Louisville Courier-Journal reports this morning, that David Helmers, one of the associate attorneys involved in the scandal of thieving class action attorneys is recommended to receive a 5 year suspension of his law license for participating.  But the big story is the revelation that Kentucky is pursuing disciplinary charges against famed, Cincinnati class action attorney Stanley Chesley (pic).

Chesley is famous for his role in the first great mass tort class action, the 1977 Beverly Hills Supper Club fire which resulted in $49 million dollars in verdicts against the entire aluminum wiring industry.  He has won billions--yes with a "b," in the years since.  I've heard Chesley speak many times over the years on various subjects and he was endlessly instructive on how to prepare a case for trial.

It's Criminal How We Treat Our Strippers!

Masslive.com has this report on the strippers of Springfield, Mass. getting hosed in the wage and hour department.  One of the smartest attorneys I have ever known is a whiz at this "wage and hour" stuff, and he is especially adept at seeing through the games employers play to put workers in "exempt" categories to avoid operation of the provisions of the law which is designed to give workers a fair living wage.  The so-called "independent contractor" is the gold standard for screwing over the employees. 

The following is from Patrick Johnson's article:

"The suit in Springfield, filed by three strippers, two bartenders and two disc jockeys against Mardi Gras Entertainment Inc., and its owners James and Helen Santaniello, of Longmeadow, and Anthony Santaniello, of Springfield, alleges management paid them no salaries, denying them benefits including the state’s minimum wage of $2.63 per hour for employees who also receive tips and overtime. It also charges the clubs required the dancers to pay a $40 to $100 fee for each shift.

A class-action suit filed by exotic dancers over what they say are unfair labor practices at the Mardi Gras and four other area strip clubs parallels a [previous] suit filed by dancers earlier this year against a club in the city of Chelsea, the lawyer for the Springfield area dancers said Friday.  Tod A. Cochran, lawyer with the Boston law firm of Pyle Rome Ehrenberg, went so far as to say the two cases are nearly identical.  “They are not different in any important way,” he said.

The Chelsea case, filed against King Arthur’s Lounge, involves dancers who said the club classified them as independent contractors, rather than employees, and as such denied them minimum wage and other benefits, charged them a $35 fee per shift and kept $10 of every $30 they received for private dances.

In August, Suffolk Superior Court Justice Frances A. McIntyre ruled the management of King Arthur’s erroneously classified the dancers as independent contractors. The ruling allows the class action suit to proceed and opened the door for as many as 70 women who danced at the club to seek thousands in damages for lost wages.  Since then, numerous similar suits have been filed against strip clubs across the state.  The suit in Springfield, filed by three strippers, two bartenders and two disc jockeys against Mardi Gras Entertainment Inc., and its owners James and Helen Santaniello, of Longmeadow, and Anthony Santaniello, of Springfield, alleges management paid them no salaries, denying them benefits including the state’s minimum wage of $2.63 per hour for employees who also receive tips and overtime. It also charges the clubs required the dancers to pay a $40 to $100 fee for each shift.

Mardi Gras Entertainment Inc., since renamed The Worthington Shops, operates five strip clubs, the Mardi Gras, Lace, Fifth Alarm and Center Stage in Springfield and Anthony’s in South Hadley.

In Massachusetts, a worker is considered an employee unless three conditions are met. The worker must be free from control and direction in the performance of a service, the service is done outside the usual course of business of the employer, and the worker is engaged in an independently established trade that is the same as the service performed.   Massachusetts law places the burden of proof on the employer, and failure to any one of the three conditions is sufficient to establish employment.  In the Chelsea case, Judge McIntyre determined King Arthur’s, on all three conditions, “mis-classified its dancers as independent contractors and not employees.”

Boston lawyer Barry Miller, representing the Worthington Shops, said he could say little about the case and was not interested in a war of words with the lawyer for the other side.  “I’m not inclined to respond to out of court from Mr. Cochran.”   The suit has been filed in Hampden Superior Court, and Miller said the Worthington Shops now have until March 3 to file a response with the court. After that, a determination will be made on whether it has merit to proceed.   Miller said he is familiar with the King Arthur ruling and suggested the two cases are not nearly as similar as Cochrane suggest.   “We believe the situation at the Mardi Gras is different from the situation at King Arthur’s,” he said. He declined to elaborate. Cochrane said if the class suit is allowed to continue, it could be extended beyond the seven people listed as plaintiffs to several hundred people who have worked in the five clubs during the past three years.

“The customers are not just coming there to drink beer, they’re coming to see beautiful women dance in the nude,” he said. “To not pay them (the dancers) for their work is unfair..”  Meanwhile some patrons of clubs in downtown Springfield said they did not know very much about the lawsuit and didn’t care to comment.  An older patron at the Mardi Gras did express sympathy for the dancers.  “I’ve been coming to these places for a lot of years and I can’t believe what they have to do for a dollar,” said the man who declined to give his name.   Another patron, smoking a cigarette outside the 5th Alarm on Worthington Street, said in relation to the suit, “I’m only here to see the girls. I don’t really care.”
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I really love the patron comments! 

Patrick Johnson did a yeoman's job of laying out the basic issue, these strip club operators are saying in effect that dancers are "exempt" from wage and hour protections because they are "independent contractors."  The controlling analysis in "independent contractor" claims is the degree to which the "employer" exercised "control."  "Control" can be defined by many differrent elements of the relationship but primarily relates to who determines and controls the times, tools and tasks to be performed.

For these women to be independent contractors you would have to believe that these dancers were entertainers, with their own costume departments, who are able to choosing the terms, conditions and times of their performances.  That the clubs exist as mere concert like venues for these artists to perform their acts.  Uh, huh. 

My dear friend, retired tax denier, rightwing Chuck, knew a bunch of these Strip club operators.  If you want to get quickly depreseed about a dirty business exploiting young women, talk to Chuck.  According to Chuck the dirtbags that usually operate these clubs are as a rule pretty disgusting characters.  These (usually) young women are often drug dependent, debased, and degraded by "businessmen" who are not much more than pimps. 

I hope Mr. Cochran and his colleagues nail these goons, er businessment.

Cy-Pres Doctrine

One of my legal heroes is Cleveland attorney Pat Perotti who has pioneered the use of Cy-Pres, an equity doctrine, in the area of charitable giving.

Perotti, a plaintiff's attorney is a highly successful class action attorney, was troubled that large class action settlements and verdicts would go back to "wrongdoer" corporations when persons entitled to class action money failed to file for it.  He and others borrowed the concept of Cy-Pres (pronounced sigh-pray) a doctrine that allows equity courts to do the "closest thing" to what someone who set up an estate, trust or fund of money would have wanted done with their money when the original conception or plan becomes impossible, no longer relevant, or illegal.

Now according to Perotti, corporations and insurance companies are fighting to keep the money they were ordered or agreed to pay for doing legal wrongs.  Perotti and his allies are asking States to enact legislation allowing them to use this money for charitable giving in local communities.  Sounds like a no-brainer.

for more:  http://www.cleveland.com/opinion/index.ssf/2009/11/ohio_lawmakers_should_pass_bil.html