A D.C.-based boutique law firm and a former Grant & Eisenhofer PA director urged a federal judge Tuesday to toss G&E’s suit claiming they stole its client and owe $7 million in fees plus a cut of a $280 million settlement reached in a False Claims Act suit against Celgene Corp.
Ex-G&E Director Reuben A. Guttman and his current firm, Guttman Buschner & Brooks PLLC, argued that G&E refused an offer to continue to litigate as co-counsel for whistleblower Beverly Brown in an underlying FCA action against Celgene over the off-label promotion of two cancer drugs. G&E withdrew from the Celgene case because the firm refused to work toward a resolution, and it can’t claim now it’s entitled to millions in fees now that the underlying case has settled, they said.
“G&E now seeks compensation for its work on the Celgene case far in excess of its lawful entitlement and far in excess of its reasonable fees and expenses,” they said.
G&E filed suit against the former director and his current firm in August, claiming they engaged in a “surreptitious scheme” to steal Brown as a client and terminate G&E from the plaintiff’s side of the underlying FCA action. Brown's action was filed in 2010, and unsealed in 2014, and it resulted in a $280 million settlement with federal and state governments in July.
G&E alleges it’s owed $7 million in fees for representing Brown from 2009 to 2015, and points to a retainer agreement Brown signed that entitled it to fees and costs plus 40 percent of any amount awarded to Brown as a relator.
But Guttman and his firm argued in a motion to dismiss Wednesday that G&E chose to terminate Guttman’s employment in mid-2015, in the midst of the ongoing Celgene litigation. Shortly after, Brown terminated her relationship with G&E, allegedly saying she planned to follow him to his new firm.
Guttman and his firm said that G&E could have represented Brown going forward, but G&E rejected the terms offered by co-counsel and the firms could not reach an agreement. Now, G&E has filed the instant suit in its fourth attempt to obtain more than it is lawfully owed for representing Brown, Guttman and his firm argued.
G&E had filed a notice of lien against Brown in the Celgene action and filed two other actions in California federal court, one which G&E voluntarily dismissed, while the other is still pending, Guttman and his firm said. But G&E hasn’t taken action on the lien or even served the defendants in the other case, they said.
Guttman and his firm also argued that G&E has refused to produce its billing records to the court so that it can assess reasonableness, and repeatedly refused requests by Brown to provide backup documentation for its asserted fee claims. Under California law and ethical rules, G&E should have responded to Brown’s request within 10 days, but instead G&E has allegedly ignored it for five months, they said.
In June, Brown informed G&E by letter that she was exercising her right to “void” her retainer agreement with G&E due to its failure to comply with California’s business and professional code, according to the defendants.
Ultimately, G&E has made allegations that serve no purpose other than to damage defendants’ reputation and extort payment far in excess of G&E’s legal entitlement to its fees and costs, Guttman and his firm said. They also argued that Guttman's director title was merely honorific with no legal significance.
The case is Grant & Eisenhofer PA v. Reuben A Guttman et al., case number 1:17-cv-01722, in the U.S. District Court for the District of Columbia.
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