Kentucky appellate court to Chesley: You owe $42 million

Another court loss for the former King of Torts, who is still a wanted man in Boone County

Mar 20, 2017 at 9:32 am
click to enlarge Stan Chesley
Stan Chesley

The Kentucky Court of Appeals has unanimously upheld a $42 million civil judgment against disbarred lawyer Stan Chesley of Indian Hill, the latest turn of affairs in a slow-moving legal battle that dates back to the early 2000s.

The 36-page opinion was handed down March 10 and ratified a summary judgment issued by Boone County Circuit Judge James Schrand in October 2014. It represents another vindication for the lawsuit's 382 plaintiffs who were first harmed by the effects of fen-phen weight-loss pills in the 1990s, then duped by Chesley and three other lawyers who negotiated a $200 million out-of-court legal settlement, only to keep $42 million more than they were entitled to.

Fen-phen was a popular diet supplement in the 1990s until the U.S. Food & Drug Administration ordered it off the market because of the potential for heart and lung problems. Tens of thousands of lawsuits were filed against the product maker, American Home Products. The suit filed in Boone County was settled in 2001.

Of the $200 million settlement, however, plaintiffs received only $73.3 million, the Court of Appeals opinion says. The attorneys kept $106 million and put $20.5 million into a sham nonprofit that they created. The contingency fee agreement capped the lawyers' take at $60.8 million. Lexington, Ky., lawyer Angela Ford filed suit on behalf of the plaintiffs in 2004 to recover the excessive money pocketed by the lawyers.

Chesley, whose conduct in the case led to his 2013 disbarment by the Kentucky Supreme Court and his retirement from practicing law, has the option of appealing to the state Supreme Court. His lawyer in the case, Sheryl Snyder of Frost Brown Todd in Louisville, could not be reached for comment Friday. Ford said she didn't think that the Supreme Court would accept the case for review.

Although the Court of Appeals opinion says Chesley received $20.5 million — and should have been paid $12.8 million — he was held jointly and severally liable for the full $42 million. Ford said that the amount due continues to grow.

"Because Chesley chose to fight his former clients for so many years, the interest owed is significant," she said. "The outstanding judgment, with interest, is now over $70 million."

The 382 plaintiffs are scattered across dozens of states, including Ohio, but Kentucky has the most, Ford said. For now, she is focusing her collection effort through the federal court in Cincinnati. Last week, she said, she filed a motion for a partial summary judgment against Chesley.

Meanwhile, an outstanding warrant for Chesley's arrest remains to be served. Schrand issued the warrant in October 2015 after Chesley did not appear at a show-cause hearing related to the $42 million judgment. The Boone County Sheriff's Department said that Hamilton County authorities refused to serve the warrant. Chesley filed suit against Hamilton County Sheriff Jim Neil to block service, and Common Pleas Judge Robert Ruehlman issued a temporary injunction. Ruehlman, though, withdrew from the case without saying why. His replacement, Judge Megan Shanahan, dismissed the suit in January.

That means the 17-month-old warrant against Chesley can now be served in Hamilton County.

"It leaves it where it was under any other circumstance," said James Harper, an assistant prosecuting attorney in Hamilton County. "The sheriff should treat whatever warrant is served on him (Chesley) in the normal fashion."

Hamilton County Sheriff spokesman Mike Robison said Boone County would have to file notice asking Hamilton County to serve the warrant. Apprised of that requirement, the Boone County Sheriff's director of extradition, Jim Beach, replied, "We have, and they wouldn't do it. I'll call them again Monday and see."

CONTACT JAMES McNAIR: [email protected], 513-914-2736, @jmacnews on Twitter