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In 1996, Eugene Stearns and his Miami-based law firm joined a team of lawyers representing thousands of gas station owners around the country who claimed they’d been ripped off by oil giant Exxon. Just before Stearns and his firm signed on as lead trial counsel with the team, which included Pertnoy Solowsky & Allen of Miami, an internal memo written by another plaintiffs attorney, Virginia solo practitioner Gerald Bowen, referred to the giant federal class action case as “a sinking ship.” Stearns found when he came on the case that thousands of pages of documents were still unread with only three months left in the allowed discovery period, according to court documents. No experts had been hired. Most alarming, Stearns wrote, was that the legal strategy was deeply flawed for proving that Exxon had fraudulently operated a discount-for-cash program that allegedly overcharged 11,000 gas station owners around the country for gasoline. “There were key moments when the prosecution of this meritorious claim had been so bungled it would have taken little for Exxon to have prevailed,” Stearns wrote in an August filing for fees in U.S. District Court in Miami. Under the original fee agreement reached in 1996 among the plaintiffs lawyers, Pertnoy Solowsky would get 47 percent of the awarded attorney fees, Bowen 25 percent and Stearns Weaver 25 percent. The widow of famed New York City trial lawyer Roy Grutman, who was the original trial counsel in the case before he had to withdraw due to illness, would get 3 percent. Obviously, the ship didn’t sink. Someone had wrested victory from the brink of defeat and led the plaintiffs to a field of black gold. And after years of fighting the oil giant, the plaintiffs attorneys have turned on each other, claiming credit for the victory and seeking a bigger piece of an estimated $440 million in fees. MASSIVE AWARD After a deadlocked jury led to a mistrial in 1999, a second federal jury in Miami in 2001 awarded the plaintiff class $500 million plus interest after a three-week trial before U.S. District Judge Alan S. Gold. The final amount of the award has yet to be determined, but is estimated to be roughly $1.3 billion. In 2005, the jury’s verdict was upheld by the U.S. Supreme Court. In his recent fee petition to Gold, Eugene Stearns asserted that he and his 100-lawyer firm, Stearns Weaver Miller Weissler Alhadeff & Sitterson, saved the day and therefore are entitled to roughly 77 percent of the fees. If Gold awards the plaintiffs attorneys the largest possible contingency fee of 33 percent, and if the $1.3 billion estimate holds true, and if Stearns Weaver wins the battle for fees, the Miami firm could see a $330 million pay day. Stearns says the hefty payout is well-justified. “In the trenches of this case, we were alone,” wrote Stearns, the chairman of Stearns Weaver who was the public face of the plaintiffs lawyer team. The dispute, he argued, “pits the lawyers who worked to achieve the recovery for the class … against the lawyers who mostly sat by and watched.” But success has a thousand fathers, and Stearns is hardly the only lawyer who claims to have been instrumental in winning the verdict — the largest compensatory damage award ever delivered by a South Florida jury. Indeed, the plaintiffs lawyers who previously teamed together to hammer Exxon have turned on each other in a ferocious dogfight over the giant slab of fees. An attempt at mediation last year brought the parties no closer to resolution. The plaintiffs attorneys are preparing for a trial before Gold, who will decide the fee split. A hearing on how the fees will be distributed among the plaintiffs attorneys is scheduled for Dec. 19. In court filings, the conflicting law firms have accused each other of incompetence, laziness and lying. In its court response to Stearns’ petition, Pertnoy Solowsky called Stearns’ allegations “blatant untruth.” The firm, which has ranged from five lawyers to 15 over the course of the litigation, claims that even though it was never the public face of the Exxon plaintiffs, it worked long and hard behind the scene. “This litigation took everything PSA and its people had,” the firm wrote in its motions for attorney fees. “And it took its toll in the forms of enormous personal and professional sacrifices.” While much of the hostile fire is between Stearns Weaver and Pertnoy Solowsky, three other parties — Bowen, the national law firm McKenna Long & Aldridge and Grutman’s widow, Jewel — also are demanding a portion of the fees. Bowen, who dropped out of the case shortly after Stearns Weaver joined, and Jewel Grutman filed motions to enforce the original fee agreement along with Pertnoy Solowsky & Allen. Typically, in a large case with multiple law firms involved, the plaintiffs lawyers divide the proceeds among themselves with no judicial intervention. But when disputes arise, the attorneys can put the question to the judge. In determining fees, the judge may take into account factors such as degree of risk assumed by the respective lawyers, their individual contributions to the case and the number of hours the firms and attorneys sank into the case. Meanwhile, even though it lost in the nation’s highest court, Exxon, which merged with Mobil in 1999 to form ExxonMobil, continues to vigorously challenge the station owners’ awards on an individual case level. That is creating more work and billable lawyer hours that could stretch well into this decade and possibly into the next. Eugene Stearns declined to comment for this article. Sidney Pertnoy, a partner at Pertnoy Solowsky & Allen, and Pertnoy Solowky’s attorney, Stephen Susman of Susman & Godfrey in Houston, did not return calls. Thomas Julin, a partner at Hunton & Williams in Miami who is representing ExxonMobil, declined to comment. Bowen’s New York attorney, Thomas McKenna, and Jewel Grutman, who’s an attorney, did not return calls for comment. Bowen, who no longer practices law, could not be located. 1991 FRAUD ALLEGATIONS The case started in 1991, when Bowen heard allegations of marketing fraud against Exxon after a top Exxon executive made statements calling into question the company’s discount-for-cash system. The issue arose from Exxon’s creation of a discount program in 1982 in which cash customers paid a few cents per gallon less than those who paid with credit cards. The discount-for-cash program was launched in response to competition from rivals charging lower prices. Exxon promised its dealers that they would receive a discount in the wholesale price they paid for fuel in return for participating in the program. At first, Exxon gave the station owners the discount. But the station owners alleged that the company later raised the wholesale price and then lied to the dealers by telling them that the price break was built into the rate. The station owners got suspicious and sued for breach of contract, alleging that Exxon violated the deal. The oil company insisted that it had never stopped giving the station owners the discount. Bowen recruited Pertnoy Solowsky to work with him on that case. Bowen previously worked with the Miami firm to handle a successful — though vastly smaller — case against Unocal. The Exxon case, by contrast, would eventually include 11,000 station owner-plaintiffs in 36 states and the District of Columbia. Neither Bowen nor Pertnoy Solowsky & Allen specialized in trial litigation. So, as they had in the Unocal case, they brought in Grutman, who had handled many high-profile cases and represented clients such as Penthouse and Jerry Falwell. In 1995, with the case snowballing and Exxon fighting back hard, Grutman announced that he was terminally ill and had to quit the case. He later died, leaving his wife Jewel as his heir. Grutman’s departure left Pertnoy Solowsky & Allen and Bowen looking for a new trial counsel. In late 1995, they interviewed attorneys for the job, finally settling on two Denver-based partners, Daniel Hoffman and Miles Cortez, from McKenna Cuneo, now McKenna Long & Aldridge. But the marriage was short-lived. In October 1996, the McKenna partners dropped out, saying that differences in “style, approach and pretrial strategy made the working relationship difficult for all counsel,” according to McKenna Long & Aldridge’s application for part of the attorney fees. In late 1996, Pertnoy Solowsky retained Stearns Weaver, with Eugene Stearns as the lead trial counsel. Shortly after Stearns came on the case, Bowen left the case. In court filings in August, Bowen claimed that his departure was due to financial hardships that befell him after his legal victory over an insurance company. Bowen claims that the insurer went after him in court and decimated his firm’s finances. Among the colorful claims in his fee petition to Judge Gold, Bowen alleges that his insurance nemesis instigated a civil suit filed against him alleging that he beat his dog. Bowen’s departure left only two law firms on the case as it went to trial — Stearns Weaver and Pertnoy Solowsky & Allen. The case proceeded and proved to be massive and highly complex. The concept of how wholesale gas prices are set was vital to the plaintiff argument, but was not simple to explain. At trial, Stearns put together a high-tech presentation intended to boil the complicated pricing argument for the jurors — some of whom hadn’t finished high school. The computerized exhibits proved to be a useful tool. The final award will allow the dealers to recover an average of $130,000. Stearns Weaver Miller also used technology in setting up an online-based system for reaching out to the class and informing them of the case. The system allowed the plaintiffs to reach out nationwide and eventually to have 90 percent of the eligible claimants asserting claims against Exxon. LEGAL STARS At trial, Exxon employed an all-star cast of attorneys, including lead attorney Larry Stewart, a partner at Stewart Tilghman Fox & Bianchi in Miami, Robert G. Abrams and Robert Brookhiser Jr., partners at Howrey Simon Arnold & White in Washington, D.C., and in-house counsel Robert B. Wallis. After the trial, Exxon launched a grueling appellate fight, arguing that the case improperly included station owners who were seeking less than $50,000, which at the time of the filing was the threshold for certain types of stand-alone federal suits. Exxon argued that the inclusion of these smaller claims tainted the whole case and asked for a new trial. In June, the U.S. Supreme Court, in a 5-4 decision, rejected Exxon’s claim. But as the appellate battle was ending, the war over attorney fees was just heating up. On March 18, Pertnoy Solowsky & Allen filed a motion to have Gold enforce the attorney fee contract. The firm also requested that the dispute be filed under seal, to prevent “mischief” on the part of Exxon. Stearns Weaver and Exxon opposed the sealing, and Gold ruled to keep the case open. In his fee petition to Gold, Eugene Stearns accused Pertnoy Solowsky of incompetence and sloth. Stearns cited a number of instances in which his firm bore the brunt of the case while Pertnoy Solowsky sat and watched, and contends that the fee agreement was unenforceable. In a May hearing in front of Gold on the enforceability of the fee agreement, Stearns claimed that Pertnoy Solowsky had misrepresented the condition of the case and their contributions to it. “Would I have signed on to this knowing what I know now? Heck, no,” Stearns said in court. In court filings, Stearns claimed that the fee agreement was a ruse. “Lurking in the recesses of their minds when they brought in counsel to undertake the tasks for which they were not competent was a single objective: self interest,” Stearns wrote. “Their admitted criteria for selection was a firm willing to give them a brokers fee of staggering dimensions.” Stearns classified Pertnoy Solowsky’s contributions to the case as minor and meaningless. Prior to the plaintiffs’ 2003 appeal to the 11th U.S. Circuit Court of Appeals, Stearns claimed that Pertnoy Solowsky offered to write a portion of a brief. When Stearns read the brief, he said, he found that it consisted entirely of material cut and pasted from a Stearns Weaver memo submitted earlier in the case. “The intellectual laziness associated with that undertaking was underscored when, after presenting it, they took off for a ski vacation,” Stearns wrote in an affidavit filed with the court in August. Offers of help from Pertnoy Solowsky were rare, he wrote. “We like work,” Stearns said in the affidavit. “They do not.” At a May court hearing, Stearns said he realized early on that the fee agreement would have to be disputed, but said the reason he did not challenge it earlier while the case was pending was because he didn’t want to harm the class with lawyer infighting. Pertnoy Solowsky fired back, insisting that Stearns Weaver signed the fee agreement and should be held to it. It is demanding its original 47 percent cut. “The parties agreed on a fee split precisely because they wanted to avoid this donnybrook that Stearns Weaver invites now,” Pertnoy Solowsky argued in a motion to enforce the original fee agreement. The agreement also was designed to avoid “the kind of strategic behavior aimed at influencing the allocation that Stearns Weaver has engaged in over the past eight years and now tries to turn to its advantage.” Pertnoy Solowksy also pointed out that it launched the case, absorbed a great deal of the risk involved in taking on the case initially and is the only firm to see the case through from start to finish. The firm said the case took a personal toll on its lawyers — causing missed holidays, family events and paychecks. Bowen didn’t escape the crossfire. Stearns blasted the Virginia solo practitioner, who prior to Stearns Weaver’s arrival in the case was in charge of case strategy. Stearns claims that Bowen was dead set against presenting the case as a pricing case, despite the fact that much of the case centered on the prices station owners were paying for fuel. Bowen wanted to base the case on marketing, rather than pricing, Stearns said in his filing. Pricing cases are rare and very complex in nature. Bowen “strictly enforced the notion that no lawyer working on the case could write or mention prices, margins or any other subject Bowen believed to be Exxon’s home turf,” Stearns claimed in his affidavit. McKenna Long & Aldridge has also entered the fray, claiming $1 million for its relatively short time on the case. For his part, Bowen, who found this gusher of a case, is claiming financial hardship and has pleaded with the court to promptly award him his 25 percent share of the fees under the original fee agreement — even before Gold makes a final decision in the fee case. Bowen, whose Virginia bar license has lapsed, said in motion for emergency attorney fees in August that he needs the money right away to care for a mentally ill son. He claimed that he could not afford to pay his utility bills or even feed himself or his dog. Bowen, who has no office and lists no phone number with the court, has not had an official role in the case since 1997. During the fees process he has sporadically popped up, showing up at the 2004 mediation and taking a front row chair and filing long, tortured motions for his share of the fees. Stearns Weaver, he wrote in several of his motions, is “like the human vultures reported to have been robbing the persons of the dead, injured and dying of valuables … following the 9-11 terrorist attacks.” But Bowen’s pleas didn’t sway Gold, who denied his petition for advance payment of his fees. Ervin Gonzalez, partner at Colson Hicks Eidson in Miami, is not involved in the fee dispute, but has faced similar situations. He said that it’s not unusual for attorneys who were once working together to turn against each other when payday comes. “If the money’s out there and ready to be distributed, people get gold fever,” Gonzalez said. “You want to try to do it before the money comes. The longer you wait, the bloodier it gets.” Trials over attorney fee allocation involve expert testimony on the value of the various attorneys contributions to the case. The Stearns Weaver-Pertnoy Solowsky dispute, is shaping up to pit the value of finding and case and nurturing it in the early stages against the ultimate success of the case. Both arguments have some merit. “Our community values an attorney who is able to bring in a case,” Gonzalez said. “If you start it up with an innovative theory and start the case, that has some value. But you can’t take away from who actually delivered.” Gonzalez said when fees are disputed, attorneys typically make every effort to reconcile without taking it to the judge, who in class actions, is ultimately responsible for the amount of the fee, if not the distribution. Mediation is commonly used to come to an acceptable agreement. “You don’t want the plaintiff attorneys fighting publicly,” Gonzalez said. “You want to provide a united front.”

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