Willkie Farr & Gallagher’s revelation that a former partner engaged in questionable communications with an opposing counsel has given ammunition to retailers who object to massive settlements in two antitrust cases involving credit card companies.
After former Willkie partner Keila Ravelo was arrested in December on charges of defrauding her employers, Willkie conducted an internal review and uncovered communications between Ravelo and plaintiff’s attorney Gary B. Friedman, “which we believe raise questions,” the firm told parties in the antitrust litigation last month.
Willkie represented Master Card International in one of the cases and Friedman, of the Friedman Law Group, is among the plaintiff counsel in both cases.
Ravelo and Friedman’s friendship extends back to the early 1990s when they were associates at Sidley Austin, and their families have vacationed together over the years.
Now Willkie and possibly Hunton & Williams, where Ravelo was a partner before joining Willkie in 2010, will produce a log of the communications and transferred documents to parties in the antitrust litigation to answer questions about what they discussed and disclosed to one another.
Eastern District Magistrate Judge James Orenstein told the parties at a recent hearing, “There’s a legitimate area of concern here where the court has to sign off on the independence of and on the arm’s length nature of the negotiations that produced the settlement that’s under review.”
The matter directly affects two class actions in the Eastern District over fees merchants pay for credit card transactions.
One suit was brought by retailers against Visa and MasterCard, among other defendants, In Re Payment Card Interchange Fee And Merchant Discount Antitrust Litigation, 05-MD-01720, and the other by retailers against American Express, In re American Express Anti-Steering Antitrust Litigation, 11-MD-2221.
In Interchange, after eight years of litigation, Judge John Gleeson in 2013 gave final approval to a $5.7 billion settlement in what was called the largest antitrust class action settlement in U.S. history.
In American Express, Judge Nicholas Garaufis gave preliminary approval last year to a settlement that would allow merchants to charge a fee to customers who use a credit card or charge card, including American Express cards. A motion for final approval is pending.
In December, the U.S. Attorney’s Office in New Jersey charged Ravelo and her husband, Melvin Feliz, with conspiracy to commit wire fraud. Prosecutors said the couple used two vendors to fraudulently obtain more than $5 million from Willkie, Hunton and her client, MasterCard, by submitting fake invoices.
Prosecutors allege the couple funneled most of the money into their joint bank account and used it to pay their personal expenses and investments. Last month, in a separate case, Feliz pleaded guilty to a narcotics offense.
MasterCard’s lead attorney in Interchange is Kenneth Gallo,a partner with Paul, Weiss, Rifkind, Wharton & Garrison, but Ravelo was also part of the defense team. She had represented MasterCard while at Hunton & Williams.
Ravelo resigned from Willkie on Nov. 14.
After the U.S. attorney’s office subpoenaed Willkie for documents and the firm conducted its own internal review, it found the communications between Ravelo and Friedman.
In particular, Willkie said in a Feb. 19 letter that it found emails and attachments about the American Express litigation, where Ravelo had no role.
Emails also appeared to show that Friedman sent Ravelo documents with information potentially protected by the American Express litigation protective order, according to Willkie.
The firm said it found communications between Ravelo and Friedman that relate to the Interchange litigation and which appear to convey information such as discussions among counsel.
“It also appears that in a few cases, Ms. Ravelo provided some confidential information of MasterCard to Mr. Friedman,” Willkie said.
Willkie has filed a stipulation, now ordered by the court, on its protocol for disclosing to the parties a log of the communications as well as the communications.
Hunton & Williams and Friedman are also expected to submit their own protocol for disclosure of communications.
Samuel Issacharoff, Friedman’s attorney and a New York University law professor, said in a March 5 letter to the court that Friedman and Ravelo have been friends for more than 20 years. They continued to socialize after each married, he said. Feliz, Ravelo’s husband, was a former pro bono client of Friedman and Ravelo.
“Once they both had children, the families grew close and often vacationed together. The communications we will produce reflect the scope of their relationship, including the fact that Mr. Friedman and Ms. Ravelo often discussed their work and their professional ambitions,” Issacharoff said, adding that Friedman had no knowledge of any alleged fraudulent activity involving Ravelo and Feliz.
Dozens of large retailers that objected to the settlements have raised concerns about the attorneys’ communications.
In American Express, the settlement objectors—retailers including Target, Wal-Mart, 7-Eleven and Macy’s—said they’re concerned the violations may implicate the pending motion for settlement approval and that “the elements of procedural and substantive fairness” may have been compromised.
In Interchange, objecting retailers told Orenstein in a Feb. 25 letter that they deserve a full disclosure of all communications between Friedman and Ravelo that bear on the adequacy of the class representation and the procedural fairness of the settlement.
They also said Friedman’s work and the adequacy of his representation are directly relevant to a pending appeal of the settlement.
“There must be some reason why seasoned lawyers would share documents over the course of years in apparent violation of protective orders and duties they owed to others in the litigation,” said the retailers’ lawyers, adding that retailers are “entitled to find out whether there was any quid pro quo or a personal relationship that introduced compromising influences and loyalties to the representation they received.”
The letter is signed by Jeffrey Shinder, a partner with Constantine Cannon and Michael Canter, a partner with Vorys Sater Seymour & Pease, both of whom represent large groups of retailers, as well as Home Depot’s lawyer, Steig Olson, a partner with Quinn Emanuel Urquhart & Sullivan.
At a late February hearing, Olson said, “If there was a compromising financial relationship, if there was a compromising personal relationship that would impact the ability of Mr. Friedman to independently represent [class members], that would be an incredibly significant fact.”
Issacharoff, Friedman’s attorney, objected at the hearing to any “promiscuous character insinuation.” He said, “It’s not an occasion, because there were some AmEx materials discovered, to simply go into people’s lives for the prurient interest of what may be found there.”
While noting concerns over “arm’s length” negotiations for the settlement, Orenstein questioned whether Friedman’s role would affect the Interchange litigation.
Meanwhile, Ravelo’s attorney, Steven Sadow, special counsel at Schulten, Ward & Turner in Atlanta, told the Law Journal, “We believe we will be entitled to full disclosure from Willkie as to all matters that relate to Ms. Ravelo.”
Dechert partner Robert Jossen, who represents Willkie, did not return a call for comment. A Hunton & Williams spokeswoman declined to comment.