CINCINNATI (Legal Newsline) -- Prominent plaintiffs lawyer Stanley Chesley has reportedly declined to resign from the University of Cincinnati Board of Trustees.
According to The News Record, the trustees sent a letter to Chesley, who was disbarred in Kentucky last month, asking him to step down by 5 p.m. Monday.
The trustees, in the two-page letter, pointed to Chesley's "disregard" for the university's code of conduct. They wrote that his resignation would be "in the best interest of the University."
"Subsection (B) of the code of conduct states, 'It is vital to the University's missions of education, research and service that it maintain a reputation for integrity that includes, but is not limited to, compliance with laws and regulations and its contractual obligations. As a public institution supported by public resources, even the appearance of misconduct or impropriety can be very damaging to the university.'"
The trustees continued, "While we acknowledge your service to the University, such service cannot overcome the serious breach of your ethical obligations."
Read the trustees' letter to Chesley here.
Chesley maintained he was not co-counsel for the plaintiffs in a controversial class action lawsuit over the diet drug fen-phen. He also said he was not aware that other attorneys were deceiving their clients. He argued he was simply brought in to negotiate the 2001 settlement.
The Kentucky Bar Association's Board of Governors recommended his disbarment in June 2011.
The board also recommended that the Cincinnati trial lawyer, known for winning billions of dollars for his clients in other mass torts, should return $7.5 million in fees he received in the settlement.
In its 38-page opinion and order entered March 21, the Kentucky Supreme Court said his ethical violations warranted permanent disbarment in the state.
Chesley, 76, was admitted to practice law in Kentucky in 1978.
In particular, the court concluded that Chesley's share of fees was "unreasonable."
"He has shown nothing to demonstrate that he expended a great deal of time and labor on the case," Chief Justice John D. Minton Jr. wrote for the court.
"The issues of liability were not particularly difficult or novel, and even if they were, Respondent did not do the heavy-lifting on that aspect of the case."
However, the court declined to order restitution, saying the remedy is "not appropriate" in a case of permanent disbarment. The court also noted that the the claims are being litigated in a separate, civil litigation.
And though Chesley presented evidence "supportive of mitigation," the court said it did not make up for his unethical behavior.
"His most persuasive mitigation evidence is that he has never previously been disciplined by the KBA. He also presented several character witnesses who testified about his prominence in the Cincinnati legal community and his service to various charitable organizations," Minton wrote.
"We are aware of Respondent's reputation and we do not doubt the veracity of the witnesses that attested to his character. While, the good reputation he has enjoyed and his generosity serves to exacerbate the tragedy of his fall, they cannot atone for the serious misconduct he has committed in connection with this matter."
Chairman Fran Barrett told The News Record that the board did not receive notification of Chesley's resignation Monday.
Barrett said the trustees will meet Thursday to consider a formal resolution on his continued service. Chesley's term expires in 2018.
That meeting will be held at 9 a.m.
In addition to Chesley, the Kentucky Supreme Court has disbarred four attorneys who worked on the settlement with American Home Products, the manufacturer of the fen-phen drug. The others included Lexington-area lawyers Shirley Cunningham, William Gallion and Melbourne Mills Jr.
The lawyers received roughly 50 percent of the $200 million settlement. Their 431 clients received the rest.
Chesley, himself, collected a $20.5 million fee for negotiating the settlement.
The clients later sued the lawyers for allegedly breaching their duties by diverting most of the settlement money to themselves.
In 2009, Cunningham and Gallion were sentenced to 20 years in federal prison for their roles in stealing the settlement money. Mills was acquitted of all charges. All three have lost their law licenses.
The court also disbarred David Helmers, who was a relatively new associate at the law firm Gallion, Baker & Bray PSC at the time of the settlement.
The court, while it was sympathetic to that fact, determined Helmers committed "serious ethical violations."
In October 2011, the court also permanently disbarred Joseph F. Bamberger, a senior status special judge who approved the settlement, calling his ethical violations "highly egregious."
"Respondent's conduct shocks the Court's conscience," Minton wrote at the time.
It was revealed that Bamberger, who had resigned, was paid $5,000 a month as a director of a phony charitable entity, The Kentucky Fund for Healthy Living, which was funded by the settlement and allegedly directed by the lawyers.
Chesley's disbarment in Kentucky -- which took effect immediately -- could mean disbarment in his home state of Ohio as well. The two states have a reciprocal agreement.
According to Ohio Supreme Court rules, an attorney disciplined in another state must notify the court's disciplinary counsel within 30 days.
After that, the high court "shall impose the identical or comparable discipline imposed in the other jurisdiction," barring mitigating circumstances.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.