Investor Who Backed Unsuccessful Lawsuit Is Liable for Defendants' Legal Fees

Andrew Longstreth

The American Lawyer

Given all the attention we've been heaping on third-party litigation financing, we'd be remiss if we didn't point out a provocative decision issued Wednesday by a Florida state appeals court. The 3rd District Court of Appeal reversed a trial court and held that a third-party investor who funded an unsuccessful case against Fresh Del Monte Produce and its chairman and CEO is liable for the defendants' attorney fees and costs.

The underlying suit involved the sale of Fresh Del Monte in the mid-1990s. The plaintiffs, shareholders in Fresh Del Monte's former parent, claimed that CEO Mohammad Abu-Ghazaleh rigged the process with a bribe. In 2006, a jury found in favor of the defendants, who were represented by Cleary Gottlieb Steen & Hamilton and Boies, Schiller & Flexner. That verdict was upheld on appeal.

But the defendants weren't done litigating. Defense counsel Carlos Sires of Boies Schiller told us that through related litigation in New York, his side discovered that the plaintiffs' case had been funded by a man named William Van Diepen and his company, CSI Financial Investments. According to the Florida appeals court opinion, Van Diepen was to receive 18.33 percent of any award the plaintiffs received. Instead, he was hit with a defense motion demanding that he pay Fresh Del Monte's attorneys' fees and expenses.

Van Diepen's attorneys from Rafferty, Stolzenberg, Gelles, Tenenholtz & Flynn argued that he couldn't be held liable since he didn't file the plaintiffs' suit. But lawyers from Boies Schiller and Cleary Gottlieb convinced the appeals court that Van Diepen and CSI were parties to the case under Florida law.

"Van Diepen and CSI clearly have risen to level of party," the court wrote. "The agreement stated that Van Diepen and CSI had to approve counsel for plaintiffs. The litigation costs were paid pursuant to the agreement. They had veto power over whether litigation was filed, who would file it, and how it wold be pursued. Van Diepen even paid $13,00 worth of expenses for one of the plaintiff's main witnesses. Further, the agreement allowed for Van Diepen and CSI to have the final say over any settlement agreements proposed to the plaintiffs."

Sires, who was joined by Cleary's Boaz Morag on the appeal, told us that anyone interested in third-party litigation should take a look at the court's decision. We agree.

Rogert Kobert of Rafferty Stolzenberg declined our request for comment.

This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.