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What began as a testy environmental tort case 13 years ago has grown into a nasty battle in which a Nashville, Tenn., law firm is accused of using a sham defendant to thwart federal jurisdiction. The suit, which has lost at every legal turn so far, accuses Waller Lansden Dortch & Davis of fraud in a 1994 wrongful death case that it brought against now-bankrupt Saltire Industrial Inc. Saltire was accused of poisoning well water by dumping toxic waste in a landfill. Robert Bertellotti, president of Saltire’s parent company, Alper Holdings USA Inc. in New York, said last week’s 6th U.S. Circuit Court of Appeals decision dismissing the fraud case opens the way for plaintiffs’ lawyers to employ sham defendants as a legitimate litigation tactic. He plans to seek en banc reconsideration. One sentence in particular from the decision incensed both Bertellotti and his lawyer, Alan Turk of Brentwood, Tenn. “What Waller Lansden’s actions boil down to, in our view, is litigation strategy,” wrote Judge Ronald Lee Gilman, himself a former Tennessee lawyer. Saltire Industrial Inc. v. Waller, Lansden, Dortch & Davis, 2007 WL 1745290. No-show for depositions Bertellotti’s suit accuses Waller Lansden of striking a deal with the quasi-governmental Industrial Development Board (IDB) of Dickson, Tenn., which controlled the Saltire property. Waller would name the IDB as a defendant, thereby forcing Saltire to remain in state court. In exchange for the IDB not seeking dismissal based on immunity, Waller would voluntarily dismiss IDB later in the litigation, according to Alper’s fraud suit. Ratcheting up the litigation pressure, Alper’s appeal also says it was a former Tennessee attorney general and one-time Waller Lansden partner, William M. Leech, who arranged the deal along with two other former Waller lawyers, Nancy S. Jones and William Farmer, both former federal prosecutors. Leech died in 1996. Jones and Farmer could not be reached for comment. Speaking of the 6th Circuit opinion, Turk said, “What this tells an attorney is: If you don’t want to be in federal court, find a defendant to include. It can defeat complete diversity. Alper wanted to be in federal court in Nashville. This was a highly charged tort case alleging poisoning of groundwater.” Robert J. Walker, an attorney at Walker, Tipps & Malone in Nashville who represents Waller Lansden, noted that apparently Bertellotti’s initial lawyers “didn’t bother to ask why [the local defendant] was not showing up for depositions.” Walker did not mince words about his disgust with the fraud claim. He called Turk’s assertion that the IDB’s potential immunity rendered it an invalid defendant “horse pucky.” “I think it is ridiculous that a client like Alper, represented [over the years] by some of the better law firms in the Southeast, has two removals where diversity is the issue and they don’t appreciate the fact that IDB was a real party,” he said. “IDB may have had an immunity defense, but that doesn’t mean there was no valid cause of action and liability for an injunction. IDB was owner of the Saltire property. You have to sue the property owner if you want the nuisance abated,” Walker said. Alper Holdings was drawn into the tort case in 2003. Bertellotti filed the fraud claim against Waller only after the underlying environmental tort case was settled. And a letter from Waller Lansden to the IDB that Bertellotti claims is the smoking gun against Waller was in his hands five months before the settlement, according to the 6th Circuit ruling. Turk said the company settled wrongful death claims with the family because there was no indication the victims were aware of a secret agreement to use the IDB as a local defendant. As for the claim that the decision opens the way for use of sham defendants, Daniel Farber, environmental law professor at the University of California, Berkeley School of Law, said: “I don’t think it’s at all unusual for plaintiffs to add a party in order to defeat removal. When this is done in bad faith, the defendant has various responses available within the litigation. “It seems highly unusual, to say the least, for this to result in a subsequent tort suit for fraud,” he said.

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