NEW ORLEANS - After an unfavorable conclusion in a breach of contract lawsuit in California, two high profile attorneys have filed a defamation lawsuit against a litigation support company claiming a representative of the company told a reporter that the attorneys were hypocrites and were only going after more money.
The company representative also allegedly told the reporter that the litigation support company "kicked their ass" with regards to the California lawsuit.
Attorneys Russ M. Herman and Arnold Levin filed suit against Cataphora Inc. and Roger Chadderon on Feb. 23 in federal court in New Orleans.
Defendant Cataphora is a California corporation that provides litigation support and document retrieval services. Defendant Chadderon is the principal agent for Cataphora.
Herman and Levin are on the plaintiffs' steering committee for the multi-district litigation involving Chinese manufactured Drywall (MDL 2047).
According to the lawsuit, the defendants began searching for a business contract in New Orleans federal court in April 2009.
Cataphora allegedly told Herman and Levin that if the plaintiffs' steering committee did not sign with them, they would assist the defendants involved in the Chinese Drywall MDL.
Herman, of New Orleans, and Levin, of Philadelphia, both served on the plaintiff steering committee.
Eventually, in the fall of 2009, the parties entered negotiations for Cataphora to provide litigation support services, the suit states.
A contract was executed in October 2009 that contained an "illegal fee provision," which invalidated the contract, the suit claims.
The fee was a large, upfront fixed fee that would allow a lower rate for work throughout the remainder of the two-year work period.
Cataphora invoiced the plaintiffs' attorneys $366,000 for the initial fee. Herman and Levin state that they terminated the contract within 30 days after "discovering the illegal fee provision" and refused to pay the invoice as Cataphora did not do any work. Herman and Levin argue that the fee is a success fee, which is illegal for non-attorneys to receive.
Cataphora filed a breach of contract lawsuit in the federal court in the Northern District of California and obtained a judgment against the lawyers in September 2011. The judgment ordered the defendants (plaintiffs' lawyers in the Chinese manufactured drywall litigation) to pay $317,110 in lost profits to Cataphora, plus pay Cataphora's attorney's fees.
Levin and Herman state that shortly after Cataphora obtained the judgment it began to make a series of defamatory statements about the plaintiffs, the suit claims. The statements were published in an article about the California case on a legal website, Abovethelaw.com.
Chadderon, who is technology counsel at Cataphora, told Abovethelaw, "These guys are the worst of hypocrites that you can possibly find," the suit states. "They claim to be trying to help the little guy, but what they're doing is trying to put more money in their own pockets. Everybody knows that, but this is a case that illustrates it beyond what I have ever seen."
The plaintiffs argue that these statements, as well as others in the Abovethelaw article, are defamatory as it has caused damage to their personal and professional reputations, caused personal humiliation, embarrassment and mental anguish. The lawyers also argue that these statements are intended to taint potential jurors in future cases involving the Chinese drywall MDL.
"The defamatory statements by Defendants are both slanderous and libelous," Herman and Levin state.
The defendants are also accused of interfering with prospective economic advantages and benefits on the part of Herman and Levin.
Since the California lawsuit, Cataphora's legal division has been sold to Ernest and Young, the suit claims.
Attorneys Herman and Levin are asking for an award of compensatory damages, punitive damages, interest, attorney's fees and court costs.
Herman is a lead partner in the New Orleans law firm of Herman, Herman, Katz & Cotlar and Levin is a lead partner in the Philadelphia law firm of Levin, Fishbein, Sedran & Berman.
U.S. District Judge Kurt D. Engelhardt is assigned to the case.
Case No. 2:12-cv-00497