Plaintiffs' Firm Sued Over Attorney Fees In Tyco Case

Grant & Eisenhofer, P.A. and name-partner Jay Eisenhofer have been sued by a shareholder who alleges that in settling a securities fraud class action lawsuit against Tyco International in 2007 the plaintiffs’ lawyers reaped over $200 million in excess attorneys’ fees in breach of an agreement with the lead plaintiff which was not disclosed to the court as reported by Daniel Fisher for Forbes.  The supposed 2004 agreement between Grant & Eisenhofer and the lead plaintiff — the Teachers Retirement System of Louisiana — is not included as an exhibit to Richard Gielata’s lawsuit against G&E.  A lawyer representing the plaintiff assures ”that he has a copy of the agreement” but a former top official from the Teachers Retirement System of Louisiana says “she has no memory of any such fee agreement” as reported by Zach Lowe for The American Lawyer.  The lawsuit was filed by Delaware lawyer Joseph Gielata — a relative of the plaintiff — who worked at Grant & Eisenhofer several years ago, and the firm contends that he is a “former disgruntled employee” as reported by Phil Milford for Bloomberg:  ”The firm will defend the case vigorously, and its principals ‘vehemently deny these accusations.’”

Another co-lead plaintiffs’ counsel in the Tyco case was Milberg LLP, and in May 2006 the firm — then in an incarnation known as Milberg Weiss Bershad & Schulman – and several of its partners were indicted on federal charges for an alleged decades-long conspiracy pursuant to which serial plaintiffs were paid kickbacks to file securities fraud suits against publicly-traded companies.  Some heavy-weight former partners, including Mel Weiss, pleaded guilty and were jailed for their roles in the scheme, and the firm — once dubbed the “meanest law firm“ in America — avoided prosecution by paying a $75 million fine and hiring a compliance monitor. 

Paul D. Young, a former Milberg partner who worked on the firm’s lawsuit against Tyco, was sued by New York City in November 2006 for alleged criminal nuisance as the landlord to reputed gay S&M sex club  El Mirage as reported by Roger Parloff for Fortune.   Although El Mirage operated out of Young’s building at 253 Houston Street, the certificate of incorporation for the club identified its principal executive office and address for service of process c/o the accounting group at 227 East 56th Street which is the same building out of which the reputed gay bathhouse East Side Club operates in which businessman Robert N. DeBenedictis has an interest.  Last November a California jury returned a verdict against DeBenedictis for over $50 million in a class action lawsuit involving his role at Global Vision Products, Inc. which until recently marketed and sold the hair loss remedy Avacor.

(Just to be clear, neither Paul D. Young nor the Tyco case were part of the allegations by federal prosecutors.)

Copy of Complaint:  Richard P. Gielata v. Jay W. Eisenhofer and Grant & Eisenhofer, P.A.