Judge rules in favor of plaintiffs firm in contingency fee dispute

John O'Brien Dec. 12, 2008, 2:19pm

PHILADELPHIA (Legal Newsline) - Plaintiffs firm Bailey Perrin Bailey of Houston won't be disqualified from a lawsuit it brought on behalf of Pennsylvania Gov. Ed Rendell, a state judge recently decided.

Attorneys for Janssen Pharmaceutica argued that the firm, a major campaign contributor of Rendell's, should not be steering the suit. Janssen is accused of off-label marketing for its antipsychotic drug Risperdal.

Judge Howland Abramson of the Philadelphia County Court of Common Pleas denied Janssen's motion to disqualify on Dec. 8. The order gave no explanation.

Bailey Perrin Bailey has made the same claim of marketing violations against Janssen, a subsidiary of Johnson & Johnson, in at least six other states, including Arkansas and Louisiana. State Medicaid programs, it is alleged, are harmed by Janssen's off-label marketing and failure to disclose side effects.

When Rendell decided to file his own suit, it was Bailey Perrin Bailey and a Pennsylvania firm acting as co-counsel submitting the complaint instead of Republican state Attorney General Tom Corbett. Rendell, a Democrat, hired BPB on a contingent-fee basis that Janssen is challenging in the Philadelphia Court of Common Pleas.

"No attorney from the (Governor's Office of General Counsel) ... has entered an appearance in this action," says Janssen's June 9 Motion to Disqualify Counsel, signed by Ed Posner of Drinker Biddle & Reath. "The Complaint was not verified by any Commonwealth officer or employee.

"The verification attached to the Complaint -- attesting that the signatory is 'in a better position than any individual officer or employee of the agencies of the Commonwealth Plaintiff to present this verification' -- was signed by (a BPB attorney)."

Janssen's attorneys said those who filed the suit must not have a financial or personal interest in the outcome. BPB's obvious financial interest (15 percent of any monetary recovery) will affect the actions of a public office, they claimed.

The Due Process Clause requires Rendell to be guided by the sense of public responsibility for the attainment of justice, Janssen says.

"The risk that Bailey Perrin's financial stake in the outcome will affect government decision-making in connection with this action is real and serious," the motion says.

"Indeed, the role of the Governor's General Counsel in the retention of Bailey Perrin, the timing and amounts of Mr. Bailey's campaign contributions the terms of the contingent fee agreement, and the involvement of Bailey Perrin in other Risperdal-related litigation that might be affected by this lawsuit combined to give rise to a manifest appearance of impropriety -- the impression that the government's prosecutorial decisions have already been infected by impermissible considerations."

In its answer, BPB says Janssen has it all wrong. Final decision-making and ultimate control stays with Rendell's office.

"The contract relegates the Commonwealth's outside counsel, Bailey Perrin Bailey, to 'advis(ing), counsel(ing) and recommend(ing) actions to the OGC' and to 'carry(ing) out to the best of its ability (the OGC's) directions.'

"Further, Bailey Perrin Bailey is 'responsible directly to the General Counsel ... on all matters of strategy and tactics,' and must consult and cooperate with the OGC regarding the same."

BPB says it has assumed the risks of litigation and will have to stand behind any decisions made by Rendell's general counsel. Relinquishing control was a must.

"(N)othing in the contract restricts the OGC from negotiating any amount of monetary settlement with Janssen, or even abandoning the litigation altogether, a result which would result in no financial harm to the Commonwealth and no compensation to Bailey Perrin Bailey," the answer said.

Janssen's attorneys also attempted to make an issue of the campaign contributions given by BPB to Rendell.

"The contingent fee contract whereby the (Governor's Office of General Counsel) retained Bailey Perrin was not the subject of any competitive bidding or legislative authorization," Janssen claimed in its motion.

"Rather, the contract appears to be the product of private negotiations between the (OGC) and (BPB) over a period of several months in 2006.

"In the precise time period during which the contract was negotiated and executed ... F. Kenneth Bailey ... made repeated and significant contributions, totaling more than $100,000 to Gov. Rendell's re-election campaign and to the Democratic Governors Association."

Between Feb. 23 and Oct. 30, 2006, Bailey gave $75,000 directly to Rendell's campaign, more than $16,000 in airplane travel and $25,000 to the Democratic Governors Association, which contributed more than $1.2 million to Rendell's $27 million total. He easily defeated former Pittsburgh Steelers great Lynn Swann.

Bailey also gave $50,000 to Mississippi Attorney General Jim Hood, who hired BPB to pursue a claim against Eli Lilly & Co.

In Louisiana, another state BPB is representing in litigation, Bailey gave $20,000 to the state's Democratic Party last year. In Arkansas, which hired BPB for a suit against Janssen, he gave $70,000 to the Democratic Party in 2006.

Bailey's response: So what?

"Janssen's gratuitous identification of campaign contributions are no more relevant to the resolution of this matter than political contributions (Janssen counsel) Drinker Biddle & Reath's Political Action Committee made to various candidates presumably aligned with Drinker's and/or its clients' interests, which totaled nearly $120,000 during the 2004-06 election cycles," BPB's answer says.

Drinker Biddle even contributed $10,000 to Rendell in 2006, as well as a little more than $10,000 to state Attorney General Tom Corbett. Corbett was not running for re-election that year. The firm and one of its attorneys have given Corbett $8,000 for his 2008 campaign.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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