CNMI tormentor gets own torment

The New York-based law firm that lodged a $1 billion class-action lawsuit against the CNMI garment industry has found itself in deep financial trouble.

In a space of two days, the law firm Milberg Weiss Bershad Hynes and Lerach, known for filing shareholder class-action suits in which investors go against corporate management with big money at stake, was $95 million deep in court-mandated obligations.

The amount represents a $50 million in settlement and $45 million in compensatory damages — both won by the dean of the University of Chicago’s law school and his partners who sued the law firm for damages for including them in a racketeering case.

A hearing on punitive damages should begin yesterday (Saipan time).

“The biggest class-action firm in the U.S. has been held liable for abuse of process,” a Wall Street Journal report quoted Alan Salpeter, Dean Daniel Fischel’s counsel, as saying. “This is an enormous victory, and a very significant case for the legal profession.”

Under the agreement, the firm wired $50 million to the plaintiffs yesterday, an Associated Press report said.

The settlement allows no appeal and ends a bitter seven-year legal wrangle, the AP report said, also quoting Salpeter.

The law firm had included Fischel and Lexecon, a consulting firm, as one of many defendants in a $1.2 billion rackeeting lawsuit filed by shareholders in 1990 over the Lincoln Savings & Loan collapse.

Lexecon prepared financial reports for Lincoln Saving and was dismissed from the racketeering lawsuit.

Salpeter said the reason the law firm sued Lexecon was to try to tarnish its image by tying it to the unpopular Lincoln Savings case. The motive, the lawsuit said, was revenge for Fischel’s work in a 1988 case that cost the law firm a $200 million verdict.

“We will destroy you,” one Milberg Weiss partner was quoted as telling Fischel. Another allegedly boasted that “we’re going to put that little … out of business.”

Fischel smiled broadly and laughed with friends in the courtroom after the agreement was announced but sent word through Salpeter that he would not have any comment.

In January the law firm sued several garment factories on Saipan, alleging that workers were made to work in sweatshop conditions. Owners assailed the lawsuit as embellished and unreal.