• January 15, 2010

This blog has covered the lawsuit against plaintiff’s class action lawyers (Bill Lerach, lawyers Kevin Roddy and Spencer Burkholz, and the Milberg law firm) by Grand Casinos and Lyle Berman previously (here and here).

Brief background:  the Milberg law firm hired a damages expert in shareholder class action cases (Torkelson) who accepted money from the firm secretly and who lied about it under oath.  Grand Casinos and Lyle Berman were defendants in earlier lawsuits brought by Milberg and Torkelson — in which $100’s of millions of dollars were claimed (supposedly supported by Torkelson’s damages model) but which were settled for under $10 million.

The hearing on defendants’ motion to dismiss plaintiffs’ amended complaint alleging civil RICO violations, common law fraud, etc., was argued this morning before Judge Ericksen (U.S. District Court, D. Minn.). There were some heavy hitters of the defense bar both nationally (Greg Joseph, James Tabb) and locally (Jim VollingLew Remele, Andy Luger, and others) representing the plaintiffs’ class action firm and its lawyers, who faced off against seasoned Dorsey & Whitney trial lawyers (George Eck, Skip Durocher).

Discredited and imprisoned plaintiffs’ class action “causation expert” and defendant, Paul Torkelson, was unrepresented (while doing time at a Federal Correctional Institute in West Virginia).

(Overview of arguments, after the break)

Greg Joseph, defense counsel for plaintiffs’ counsel (that is, Milberg LLP), opened the argument with an focused attack on the purported failure of the plaintiffs to plead a civil RICO injury in their amended complaint, that is, a failure to plead “a concrete, actual, and quantifiable loss.”

Joseph went on to place heavy emphasis on the fact that Plaintiffs Lyle Berman and Lakes Entertainment seem to take the position that they were fraudulently induced into a settlement but are “adamant” that they do not wish to “undo” or void the settlement.

This single fact — that fact that plaintiffs argue they were the victims of fraud but do not wish to undo the settlement that they were allegedly duped into entering into — perhaps more than anything, might sink plaintiffs’ claims in the case at this early threshold stage.

(Attorney Joseph also pointed out that any losses here were suffered not by Berman and Lakes Entertainment but, rather, by the plaintiffs’ shareholder class members.  Defendants also raised the statute of limitations, the litigation privilege, and other defenses.)

Jimmy Tabb, defense counsel for named defendant Spencer Burkholz, argued at great length (some might say excessive length) that the litigation privilege under California law applies here and bars plaintiffs’ claims against his client (click here for seminal Minnesota case on the litigation privilege).

Judge Ericksen teased Eck, plaintiffs’ counsel, at the get-go of his argument for failing to plead diversity of citizenship as a basis for jurisdiction and noting that Milberg LLP is a limited liability partnership (like plaintiffs’ counsel’s firm, Dorsey & Whitney LLP, the Court pointed out).  Moving on to the substance of the argument, Eck emphasized the case’s status  (early on, pre-discovery) and compelling underlying facts weighed against granting motions to dismiss.   There are factual issues, he emphasized, and there should be discovery, he argued, to get to the bottom of what all acknowledge was illegal, wrongful, unethical conduct that undermined the judicial system.  Eck specifically mentioned that discovery would show through testimony of Minneapolis litigator, Mike Keyes, that Torkelson’s trumped up damages were trumpeted and were implicated in the Grand Casinos settlement.

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