NEW YORK (Legal Newsline) - A law firm with a history of judicial sanctions against it now faces a proposed racketeering class action alleging the firm paid flat fees to a psychiatrist who is the brother-in-law of one of the firm's attorneys to churn out cookie-cutter reports supporting claims of emotional trauma.
The lawsuit against Derek Smith Law Group seeks to include more than 170 businesses that were forced to defend themselves or pay settlements against bogus claims of workplace discrimination. The lead plaintiff is Bashir Majid, owner of a pair of New York clubs that lost a sexual harassment lawsuit to a DSLG client in 2020.
Majid is represented by attorney Thomas Shanahan, who has faced off against DSLG before, including in a similar lawsuit against a nightclub in which the judge ordered $200,000 in sanctions against the firm for presenting a case littered with “false statements, half-truths, cover-ups, and misrepresentations.”
Another judge ordered DSLG to pay more than $100,000 in sanctions for allowing a client to present false text messages in a harassment case.
Majid accuses DSLG and principal Derek Smith of colluding with Dr. Yaakov Siegel. The complaint says Siegel is “an obviously conflicted witness” who is the brother-in-law of another DSLG partner and issues diagnoses of psychological damage after a brief consultation and without reviewing patient records.
The law firm “demanded six- and seven-figure settlements and relief” and relied upon Dr. Siegel’s reports “to justify such exorbitant numbers.” It cites 177 cases in which Dr. Siegel was named as an expert witness.
A phone call and emails to DSLG weren’t immediately answered. Shanahan has unsuccessfully pursued similar claims of collusion in federal court, however, with judges refusing to go beyond finding DSLG attorneys cherry-picked the client information they shared with Dr. Siegel.
DSLG represented Mark Cooper, a former doorman who sued Majid’s Upstairs Downstairs of New York for gay harassment at its Townhouse Bar, seeking $8 million in damages. Upstairs Downstairs offered $50,000 to settle but the case went to trial in 2020. The jury awarded Cooper $6,500 in punitive damages but ruled for the defendant on each of Cooper’s claims. (Federal and New York City discrimination laws allow plaintiffs to win punitive damages even if the jury doesn’t award any other compensation.)
Cooper’s lawyer Alex Cabeceiras sought $150,000 in fees but the judge cut his fee award to $5,350, noting Cooper won only a small fraction of what he was seeking.
In that case, Cooper dropped all of his economic damages claims after failing to provide the defense with tax records to show his income. He sought money for “anxiety, doubt in his performance, panic attacks and recurring nightmares,” but acknowledged he hadn’t incurred any medical expenses related to his claims and Dr. Siegel was the only medical professional he’d seen.
In a motion to exclude Dr. Siegel as an expert witness, the defense said he diagnosed Cooper with posttraumatic stress disorder after one meeting, without consulting any medical records and without recommending any further therapy.
In a June 26 order now on appeal, U.S. District Judge Katherina Failla ordered DSLG and its client to pay almost $200,000 in fees and costs to East Side Club in a similar lawsuit claiming gay sexual harassment. The judge said the case was littered with the plaintiff's “false statements, half-truths, cover-ups, and misrepresentations” made “with the witting or unwitting assistance” of his lawyer at DSLG.
In that case, the plaintiff sought almost $15 million in damages. But he made the mistake of later filing another lawsuit against Fordham University and others in which he claimed he had recovered from the trauma of working at East Side Club but was plunged back into psychiatric distress by the new defendants.
The judge also accused the plaintiff and his lawyers of engaging in a “systematic campaign of obstruction” by refusing to turn over evidence including an asylum application in which he said he’d been hospitalized for psychological problems related to anti-gay discrimination in Russia.
Dr. Siegel was the expert witness in that case as well. The judge described his practice as “something of a loss leader” in which he charges plaintiffs modest fees with the hope of charging “a lot of extra money to the defendants who will necessarily want to be taking his deposition.” The judge refused to sanction DSLG for colluding with the psychologist, however, saying at worst DSLG concealed unfavorable information from him.
She concluded by saying “the conduct in this case exists in the gray area between incompetence and bad faith.”
Another federal judge in 2021 ordered $157,000 in sanctions against DSLG and attorney Daniel Altaras for allowing his client to submit fake text messages to support a sexual discrimination claim. The Second Circuit reversed the sanctions order on technical grounds, saying it may be merited but the judge must first enter a finding of bad faith. A hearing is set for next year on whether to order sanctions again.