In re All Individual Kugel Mesh Cases
| Decision Date | 10 November 2022 |
| Docket Number | PC-2008-9999 |
| Parties | IN RE: ALL INDIVIDUAL KUGEL MESH CASES |
| Court | Rhode Island Superior Court |
For Plaintiff: John E. Deaton, Esq., Donald A. Migliori, Esq. Vincent L. Greene, IV, Esq.
For Defendant: Thomas M. Robinson, Esq.,
For Intervenor: Michael Daly, Esq.
Plaintiff Rickie Patton (Patton), through his attorney John Deaton (Deaton), seeks disbursement of his allocated portion of the Qualified Settlement Fund (the QSF) established by this Court in connection with the global settlement agreement that resolved Patton's claims against Defendants C.R. Bard Inc. and Davol, Inc. (the Kugel Mesh Defendants). Before the Court for decision is a Motion to Stay Proceedings (Motion to Stay) filed by intervening party The Law Offices of Steven M. Johnson, P.C. d/b/a The Johnson Law Firm (JLF). Jurisdiction is pursuant to 9 U.S.C. §§ 2 and 3 and G.L. 1956 §§ 8-2-14, 10-3-2, and 10-3-3.
The current proceedings are but one part of a long-lived "multi-front chess match" amongst Patton, Deaton, and JLF. Deaton v. Johnson, No. 20-78WES, 2020 WL 4673834, at *1 (D.R.I. Aug. 12, 2020) (). In April 2007, Patton retained JLF, a Texas law firm, to pursue his personal injury claims against the Kugel Mesh Defendants. (JLF's Mot. to Stay Proceedings (Mot. to Stay) 3). To that end, Patton and JLF-through JLF's principal, Steven M. Johnson (Steven Johnson)-executed an Attorney Representation Agreement (the ARA). See generally Mot. to Stay Ex. 1 (ARA). The ARA contains severability and Texas choice of law provisions; provides for a contingent attorneys' fee of "ONE THIRD (33 1/3%) of all sums recovered[,]" whether "by way of settlement, judgment or otherwise"; states that "[a]fter the above fees are deducted, client shall pay to attorneys, ONLY OUT OF THE CLIENT'S SHARE OF THE RECOVERY AND NOT OUT OF CLIENT'S POCKET, all court costs and expenses, advanced by the attorneys in connection with said matter"; and provides JLF with a lien on any recovery "as security for the payment of attorneys' fees and expenses[.]" Id. at ¶¶ 3-4, 8, 10. Paragraphs 16, 17, and 18 of the ARA (the Arbitration Provisions) state that "any dispute[s] arising from the interpretation, performance, or breach" of the ARA "shall be resolved by final and binding arbitration conducted in Fort Worth, Texas and administered by Judicial Arbitration and Mediation Service (JAMS)[.]" Id. ¶¶ 16-18. Although each of the three Arbitration Provisions is followed by a space labeled "CLIENT INITIAL HERE[,]" Patton did not initial, or otherwise sign, any of the three spaces. Id.
"Beginning in 2008, [JLF] engaged [Deaton], a Rhode Island attorney, to serve as local representation for 176 Kugel Mesh cases filed in this Court" and as trial counsel in Patton v. Davol, Inc. (Patton MDL), C. A. No. 08-2316ML, Patton's case against the Kugel Mesh Defendants in the United States District Court for the District of Rhode Island. In re All Individual Kugel Mesh Cases, No. PC-2008-9999, 2020 WL 6335955, at *1 (R.I. Super. Oct. 22, 2020) (citations omitted). In exchange, JLF agreed to pay Deaton a percentage of the contingency fees that JLF recovered under its ARAs. Id. The Patton MDL case was initially slated for trial as a bellwether case; however, in November 2012, the federal court excluded an expert report proffered by Patton- through Deaton-and "the subsequent management of the case was fraught with conflict" between Patton, Deaton, and JLF. Patton v. Johnson, No. 17-259WES, 2018 WL 3655785, at *3 (D.R.I. Aug. 2, 2018); see Mot. to Stay Ex. 7 (Patton MDL Hr'g Tr., Nov. 9, 2012) 19:22-22:21. Ultimately, the Patton MDL case did not proceed to trial. See Deaton v. Johnson, No. 05-16-01221-CV, 2017 WL 2991939, at *1 (Tex. App. July 14, 2017).
After a protracted mediation process, the Kugel Mesh cases before this Court culminated in a global settlement memorialized in the June 2014 Master Settlement Agreement (MSA). In re All Individual Kugel Mesh Cases, 2020 WL 6335955, at *1. "The venue for all disputes related to the settlement was established as the 'Superior Court of Rhode Island[,]' and the global settlement agreement explicitly provided that all 'Counsel and/or Co-Counsel hereby submit himself, herself, itself or themselves to the personal jurisdiction of the Superior Court of Rhode Island.'" Id. (quoting Deaton v. Johnson, 2020 WL 4673834, at *3). In April 2015, Patton joined the global settlement by executing a Confidential Settlement Agreement and Release. (Mot. to Dis[b]urse Qualified Settlement Fund Allocations to Pl., Rickie Patton (Mot. to Disburse), Ex. B.)
Pursuant to Internal Revenue Code § 468B, in March 2016 this Court created the QSF to facilitate the resolution of the claims encompassed by the MSA and appointed Garretson Resolution Group, Inc. (Garretson)[1] as Administrator of the QSF. See Deposit Order (Mar. 11, 2016) (Gibney, P.J.); Stipulation to Establish QSF, Appoint Fund Administrator and Escrow Agent and Address Related Issues (QSF Stip.) ¶ 7. As Administrator, Garretson is "authorized to distribute all attorney fees and litigation expenses for Claimants, consistent with existing contingency fee contracts and, to the extent required by law, upon Court approval upon the joint motion of Claimants' Counsel and [the Kugel Mesh Defendants]." (QSF Stip. ¶ 19.)
By March 2016, however, the tension between Deaton and JLF had developed into a fullblown dispute over Deaton's entitlement to attorneys' fees from the Kugel Mesh cases resolved through the MSA. See In re All Individual Kugel Mesh Cases, 2020 WL 6335955, at *1. On March 7, 2016, Deaton filed a motion to compel JLF to disclose the settlement amounts and allocations and to enforce a lien for attorneys' fees on the QSF. Id. at *2. On March 11, 2016, after "[a]cknowledging the work by Attorney Deaton witnessed by this Court and performed relative to the mediation overseen by this Court," this Court entered an order "providing that $1 million be segregated within the QSF to be distributed only upon further order of this Court." Id.
The messy denouement of the Patton MDL case-and Patton's subsequent decision to settle his Kugel Mesh claims-spawned further litigation over the parties' competing allegations of legal malpractice. See Patton v. Johnson, 2018 WL 3655785, at *3. "On April 4, 2016, Barry Johnson, who worked with JLF in Texas on Patton's case," filed suit against JLF and Patton in a Texas state court and sought "an order compelling the parties to arbitrate all disputes between the parties, including legal malpractice claims asserted by Patton against Barry Johnson or JLF."[2]Deaton v. Johnson, 2017 WL 2991939, at *2. JLF then filed multiple crossclaims against Deaton with respect to Deaton's representation of Patton and other JLF clients and sought its own order compelling arbitration. Id. After Patton and Deaton disputed the Texas state court's jurisdiction over their persons, the Texas County Court denied both challenges; "Deaton appealed, and the Texas Court of Appeals affirmed." Patton v. Johnson, 915 F.3d 827, 831 (1st Cir. 2019) (citing Deaton v. Johnson, 2017 WL 2991939, at *4).
During the pendency of Deaton's jurisdictional appeal, JLF initiated a JAMS arbitration proceeding against Patton before Arbitrator Hugh Hackney (Hackney) in Fort Worth, Texas. Id. In response, Patton argued that JLF could not enforce the Arbitration Provisions of the ARA because Patton had never agreed to those provisions. See id.; see also Mot. to Stay Ex. 8 (Hackney Decision) 31-33 ("The question presented in [Patton]'s Motion to Dismiss the Arbitration may be summarized as whether or not [Patton] agreed to and is contractually bound by the arbitration clause contained in [the ARA]."). After reviewing the ARA and affidavits from both sides, Hackney concluded that "'[Patton] failed to agree to arbitrate any dispute arising out of [the ARA] he signed with [JLF], although he did agree to be represented by [JLF].'" Patton v. Johnson, 2018 WL 3655785, at *3, *7 (quoting Mot. to Stay Ex. 8 (Hackney Decision) 33). Accordingly, on November 15, 2016, Hackney dismissed the arbitration proceedings for lack of jurisdiction. (Mot. to Stay Ex. 8 (Hackney Decision) 33.)
In April 2017, Patton (and his wife Cathleen Marquardt) sued Barry Johnson, JLF, and Steven Johnson in Rhode Island Superior Court for legal malpractice and other claims arising from Patton's Kugel Mesh case. See Patton, 915 F.3d at 831. After the defendants removed the case to the United States District Court for the District of Rhode Island, Barry Johnson-but not JLF or Steven Johnson-moved to stay proceedings and compel arbitration under the Arbitration Provisions of Patton's ARA. See id. at 832. However, a federal magistrate judge concluded-and the district court agreed-that Barry Johnson was collaterally estopped from relitigating whether Patton had agreed to the ARA's Arbitration Provisions. See Patton v. Johnson, 2018 WL 3655785, at *1, *5-9.
The magistrate judge, after noting that a party seeking to vacate the decision of an arbitrator bears a heavy burden, found that the Hackney Decision "relied on the lack of initials or signatures in the spaces meant for them as evidence of the lack of an agreement; it did not rest only on a rigid legal requirement that [arbitration] clauses must always be signed." Id. at *6. "Thus, at worst, [Hackney] was guilty of a harmless misstatement of applicable law concerning the requirement of signatures, at the same time that his analysis [was] properly focused on the facts evidencing the formation of an agreement." See id.; see also id. at *7 (citing Oxford Health Plans LLC v. Sutter 569 U.S. 564, 573 (2013)) (...
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