New filings reveal outline of improper disclosures in Amex, MasterCard cases

June 12, 2015

(Reuters) – Details emerged this week in one of the most inexplicable cases of improper lawyer conduct I’ve ever seen. We now know that Gary Friedman of the Friedman Law Group, an accomplished antitrust lawyer who co-led a long-running case for merchants suing American Express over supposedly inflated credit card fees, supplied proprietary information about retailers in his case, as well as a confidential expert witness report, to MasterCard lawyer Keila Ravelo, a onetime partner at Willkie Farr & Gallagher who is facing federal criminal charges for allegedly defrauding the firm and her former client MasterCard.

Communications between Friedman and Ravelo have been under scrutiny since February, when Willkie informed lawyers in both the Amex case and similar multidistrict antitrust litigation against MasterCard and Visa that its internal investigation of Ravelo had uncovered some potentially problematic documents. Those turned out to be emails between her and Friedman, a close friend who met Ravelo years ago when they were both associates at Sidley & Austin, working together on a pro bono case for a defendant Ravelo later married.

A Feb. 26 hearing before U.S. Magistrate Judge James Orenstein of Brooklyn in the MasterCard case revealed that Ravelo’s files contained confidential materials from the parallel Amex case, at least some of which had been supplied by Friedman.

Major retailers protesting an approved $5.7 billion settlement of the MasterCard and Visa case and a proposed injunction-only settlement in the Amex case demanded more information about the Friedman and Ravelo documents. (For the sake of simplicity, I’m going to refer to the litigation against MasterCard and Visa just as the MasterCard case.) Objectors’ lawyers at Constantine Cannon and Quinn Emanuel Urquhart & Sullivan claimed the MasterCard settlement may have been tainted by Friedman’s disclosures to Ravelo, even though Friedman was not class counsel in the MasterCard case and Ravelo’s client, MasterCard, was not a defendant in the Amex case Friedman was leading.

Willkie, Friedman and another of Ravelo’s former law firms, Hunton & Williams, eventually agreed to prepare and distribute logs of all of the exchanges between Ravelo and Friedman. In April, the parties signed stipulations permitting most of the actual documents to be distributed to all of the parties in both the Amex and MasterCard cases.

Those amounted to more than 10,000 pages of emails, texts and hard copy files, according to a May 20 status report filed in the MasterCard case. But according to objectors in the MasterCard case – who contend the settlement granted overly broad litigation releases in exchange for inadequate compensation to retailers – about 1,200 of the most sensitive documents were withheld from production because Amex, Friedman or merchants in the Amex case claimed confidentiality.

Last Friday, objectors’ counsel Jeffrey Shinder of Constantine filed a motion in the Amex case, asking U.S. Magistrate Judge Ramon Reyes of Brooklyn to compel production of all of the remaining documents. The motion is under seal, but redacted responses from the credit card company Discover and from individual merchants suing Amex suggest the already disclosed documents cast a harsh light on Friedman’s conduct.

Discover’s letter, filed by the credit card company’s lawyers at Kirkland & Ellis, cited his “patently improper communications” with Ravelo. A separate letter from more than a dozen large retailers, including CVS, Rite-Aid and Walgreens, referred to the “bizarre and unusual” circumstances that had “presented us with an unwanted glimpse into the behavior of a once trusted colleague.” The retailers’ letter, filed by Vanek Vickers & Masini, said Friedman “chose to violate the trust of the individual plaintiff merchants and their counsel” by giving Ravelo confidential information about their credit card volume, discounts and fees. According to the retailers, Friedman also forwarded Ravelo an expert report that contained their sensitive business information and attorney work product.

The big question, of course, is whether Friedman and Ravelo’s apparently improper conduct will impact either the MasterCard or Amex settlements. The $5.7 billion MasterCard case received final approval from U.S. District Judge John Gleeson of Brooklyn in December 2013, and Magistrate Judge Orenstein has so far seemed skeptical that objectors will be able to explain why Friedman’s disclosures to Ravelo should unravel the settlement. Class counsel and defendants in the case have repeatedly said Friedman’s disclosures did not affect their negotiations or agreement. None of the thousands of exchanges between him and Ravelo, according to the status report filed in May, “supports an assertion that any of the settlement terms adopted by the actual decisionmakers – the plaintiff and defendant parties and their lead counsel, acting under the guidance and supervision of two respected mediators and the court – was the product of collusion.”

Ravelo wasn’t MasterCard’s lead counsel in the antitrust case, in which Paul Weiss Rifkind Wharton & Garrison represented the credit card company in settlement talks. And Friedman, according to MasterCard class counsel, had only a minor part in structuring the “level playing field” relief in their settlement. He had no decisionmaking authority in the case, the MasterCard class lawyers informed the Amex court, and didn’t have any role in the mediation sessions that resulted in the settlement.

In the Amex case, by contrast, Friedman was in charge, along with Reinhardt Wendorf & Blanchfield and Squire Patton Boggs. And the settlement in that case, unlike the MasterCard agreement, has not yet received final approval from the court. U.S. District Judge Nicholas Garaufis of Brooklyn, who is overseeing the Amex suit, has ordered settlement proponents and objectors to submit briefs on the impact of the communications between Friedman and Ravelo but not until litigation over the production of the documents has ended.

We won’t know for a while, in other words, whether Friedman damaged the Amex case by giving confidential documents to his friend Ravelo. It’s beyond dispute, however, that he damaged his career.

Friedman counsel Theresa Trzaskoma of Brune & Richard declined to comment.

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