Michael Hausfeld hasn’t wasted any time responding to a juicy wrongful termination suit filed by one of his former law partners, Jon King, who says he was canned after speaking out about a raft of alleged ethics violations at Hausfeld’s eponymous Washington, D.C., antitrust class action firm, Hausfeld LLP.
On Jan. 18—one day after the case was filed—Hausfeld filed a motion to seal the complaint on the grounds that it “alleges irrelevant, sensitive information about the firm for the apparent purpose of diminishing the firm’s reputation within the legal community in hopes of leveraging a settlement, or otherwise exacting revenge.” And on Tuesday Hausfeld moved to dismiss the suit entirely, arguing that King agreed to arbitrate any employment-related grievances. Daniel Hoffer of Venable filed both motions for Hausfeld.
King’s 78-page indictment of his former boss and his five-year-old firm shows why Hausfeld moved so quickly to shield it from the public eye. The pro se complaint, filed in U.S. district court in San Francisco, is well worth a look.
Here’s the back story, as alleged in the complaint. King and Hausfeld first worked together in 2008, when they were both at Cohen Milstein Sellers & Toll. Later that year, Hausfeld had a falling out with Cohen Milstein’s leaders. He wanted to pump more money into a London office, while they wanted to abandon the firm’s overseas expansion. The dispute couldn’t be reconciled, and Hausfeld left in November 2008 to start his own international antitrust boutique. Hausfeld and one of his partners, Michael Lehmann, persuaded King to join the new firm as a partner.
According to King, Hausfeld LLP has been mired in debt from the beginning. “Mr. Hausfeld spent lavishly to create the appearance of success, incurred a crushing debt-load, and leased expensive offices on K Street in Washington D.C. and London,” alleges King, who says he eventually opted for non-equity partner status at the firm. “He spoke often of showing his old law firm, and the legal community, that his prior law firm made a major mistake in firing him.”
Those alleged financial burdens, King claims, caused Hausfeld to take all sorts of ethical shortcuts. Possibly the most inflammatory allegation is that Hausfeld, while serving as plaintiffs counsel in a massive price-fixing class action, allegedly courted two of the defendants—both Asian electronics manufacturers—as future clients for a case he wanted to bring in secret in London. King doesn’t identify the class action, but his description bears a strong resemblance to the LCD panel antitrust litigation that’s still unfolding before U.S. District Judge Susan Illston in San Francisco.
What’s worse, in hopes of winning over the unnamed defendants to serve as plaintiffs in the new case, Hausfeld allegedly promised to monitor plaintiffs lawyers in the U.S. case and to tell the potential clients what he learned. Worse still: At least some of those lawyers were at Zelle Hofmann Voelbel & Mason, the same firm that, according to King, was kind enough to let Hausfeld use its office space on the cheap. (Zelle Hofmann is co-lead class counsel for indirect purchasers in the LCD litigation; another firm that’s headquartered in the same building in San Francisco, Pearson, Simon, Warshaw & Penny, is co-lead counsel for the direct purchaser class.)
There’s plenty more. For one, when working alongside other plaintiffs firms, Hausfeld allegedly made them pay into a shared litigation fund while hiding that fact that his own firm never chipped in. There’s also a claim that Hausfeld forged the signature of a famed client, retired football player Elvin Bethea, in a letter to the AFL-CIO.
Some of King’s multitudinous allegations focus on the foibles of his former colleagues, many of whom he claims were infected by a culture of greed. He claims one former partner fell on hard times in part because of an online shopping addiction. He complains that another lawyer had to settle a case on the cheap after he printed out a Wikipedia entry and realized, from reading the first paragraph, that his whole theory of the case was bogus.
Reached for comment on Wednesday, King blasted Hausfeld for trying to keep the case under wraps. “At the Hausfeld firm, everything we fought for was grounded in transparency and access to the judicial system,” King said. “I find it incredibly ironic that the defendant’s first move is then to attempt to bury the complaint and force the case into arbitration. I will fight those tactics vehemently.”
Michael Hausfeld, meanwhile, is portraying King as a disgruntled employee and has vehemently denied the allegations. “This is an employment grievance from a former partner of Hausfeld LLP,” he said in a statement. “The firm separated with Mr. King for good reason, and the allegations made by him are baseless. We abide by the highest ethical standards and will defend our reputation vigorously.”