JACKSON, Miss. (Legal Newsline) - Angry ex-clients who claim they were herded into a settlement of a mass-tort case over PCB pollution must arbitrate their dispute with their lawyers, a Mississippi court ruled, rejecting allegations plaintiffs were presented with take-it-or-leave-it contracts as lawyers tried to salvage their own fees.
Nearly 300 clients sued attorneys Richard Freese, Tim Goss, Sheila Bossier and the firms of Freese & Goss and Sweet & Freese in 2010, accusing them of breaching their fiduciary duties by inducing them to sign retainer contracts to facilitate a $28 million settlement with Borg Warner.
The plaintiffs were among some 3,000 would-be claimants lawyers signed up to sue over PCB leaks from a factory in Crystal Springs, Miss. After paying for blood tests on a number of those clients that came back negative for PCBs, plaintiff lawyers started sending out letters releasing claimants from their retainer agreements unless they had proof of exposure.
After sending out the letters, plaintiff lawyers focused on 348 clients who tested positive for PCBs. Then Borg Warner offered to settle their cases, as long as lawyers included the 3,000 other potential claimants in the deal. That set off a frenzied effort to sign the discarded clients back up, this time under retainer agreements that boosted the contingency fee to 45% from 40% and included an arbitration clause for the first time.
Other litigation swirled around the case, including a fee-splitting dispute among the lawyers that went to the Mississippi Supreme Court in 2014 with the court ordering the parties into arbitration.
Meanwhile, the dispute between the lawyers and their former clients moved slowly through state court. The plaintiffs argued they were fraudulently induced into signing the new retainer agreements, making the arbitration clause unenforceable. A trial court disagreed, and the Mississippi Court of Appeals, in an Aug. 23 decision, upheld the order forcing them into arbitration.
The contract each client signed included a paragraph clearly stating they had consented to arbitration, the court ruled. While the American Bar Association has advised lawyers they must adhere to their fiduciary duties if they want to enforce arbitration clauses against their clients, in this case the clients had the opportunity to ask their lawyers why they were signing the new agreements and if there were any conflicts and none did.
“The claimants failed to produce any evidence that they did not know what they were signing when they signed the second retainer,” the appeals court concluded. “There is no proof that the claimants signed the second retainer involuntarily or that they were not given the opportunity to review the agreement and inquire about its terms.”