Ex-MasterCard lawyer now helping opponents of $5.7 billion antitrust deal

September 2, 2015

(Reuters) – Keila Ravelo, the notorious onetime partner at Willkie Farr & Gallagher and Hunton & Williams, spent nearly a decade advising her mainstay client MasterCard in a gigantic antitrust class action by retailers accusing MasterCard and Visa of conspiring to fix swipe fees for card users. She brought the case with her from Hunton to Willkie when she changed firms, and though she was not MasterCard’s lead lawyer in the case, she worked closely with MasterCard on managing the massive document production and management the litigation demanded. She also attended the mediation and negotiating sessions that culminated in final approval of a $5.7 billion class action settlement in December 2013. In many ways, that settlement was the capstone of Keila Ravelo’s legal career.

And now she is helping a group of merchants who want to topple it, presumably because she believes that turning on her former client and law firms will help her fend off criminal charges of defrauding them to the tune of $7.8 million.

In a brief filed late Tuesday night, settlement objectors represented by Constantine Cannon, Quinn Emanuel Urquhart & Sullivan and Vorys Sater Seymour & Pease revealed a declaration in which Ravelo admits she relied on improper disclosures from Gary Friedman, a plaintiffs’ lawyer working on the other side of the case, in counseling MasterCard about the $5.7 billion settlement. Ravelo also said she is willing to provide more information in a deposition about how Friedman’s illicit information informed the advice she gave to MasterCard.

Ravelo’s declaration is the first direct link between Friedman’s illicit disclosures and MasterCard’s defense of the merchants’ case. And according to the objectors, Ravelo’s new admission proves the $5.7 billion settlement was tainted by the secret communications between Friedman and Ravelo and must be overturned.

Objecting retailers have already managed to use Friedman’s disclosures to Ravelo to block a $79 million class action settlement with American Express in a parallel antitrust case over swipe fees. As lead class counsel in the Amex case, Friedman – an old friend of Ravelo’s – secretly fed her thousands of pages of confidential documents from both Amex and the retailers he represented. Last month, U.S. District Judge Nicholas Garaufis of Brooklyn rejected the Amex settlement, holding that Friedman’s impropriety fatally compromised his representation of the class.

Friedman was not class counsel in the Visa and MasterCard case, which was led by Robins Kaplan, Robbins Geller Rudman & Dowd and Berger & Montague, though he was involved in drafting key aspects of the settlement’s provisions on the fees merchants are allowed to charge for the use of credit and debit cards from different card sponsors. Ravelo also played only a supporting role in the settlement, behind MasterCard lead counsel Kenneth Gallo of Paul Weiss Rifkind Wharton & Garrison. In briefs filed yesterday in defense of the $5.7 billion deal, Visa and MasterCard and class counsel emphasized – as they have since Friedman’s improper disclosures first surfaced early this year, after Willkie searched Ravelo’s files – that those communications had no impact on the settlement. Neither Friedman nor Ravelo, they have continually argued, had authority to set the terms of a deal that was negotiated with the help of experienced mediators and under the close supervision of two federal judges.

MasterCard’s brief Tuesday denied that Ravelo forwarded confidential information from Friedman to anyone at the company or Paul Weiss. “Objectors  speculate that during the settlement discussions, Ms. Ravelo must have shared with MasterCard confidential information she received from Mr. Friedman,” the brief said. “There is no evidence to support this assertion, and it is not true.”

The objectors’ reply brief, pointing to Ravelo’s declaration, insisted that there is now evidence. “Ms. Ravelo’s declaration confirms that Mr. Friedman’s misconduct affected the advice MasterCard was given by its counsel,” the brief said. “Even if it were true that no one at MasterCard or Paul, Weiss received confidential information, that does not mean that Ms. Ravelo did not draw upon the information Mr. Friedman sent her in advising MasterCard, which she attests she did.”

Ravelo, of course, has her own motives for this sudden willingness to trash a settlement she spent nearly a decade working to put together. A once high-living and highly paid antitrust partner, she was arrested by New Jersey federal authorities last December, accused along with her husband, Melvin Feliz, of defrauding Willkie, Hunton and MasterCard by submitting false bills to dummy litigation support vendors Ravelo and Feliz set up. Feliz has since pleaded guilty to unrelated drug trafficking charges and to conspiring with Ravelo to bilk Willkie and Hunton of $7.8 million.

Ravelo’s criminal defense lawyer, Steven Sadow of Schulten Ward & Turner, told me last week that Feliz bullied Ravelo into using what she believed to be a legitimate litigation support vendor to engage in false billings. He said Feliz, whom Ravelo met when she defended him years ago in a pro bono drug case, was secretly supporting a second family.

Sadow also said that Ravelo believed her exchanges with Gary Friedman helped MasterCard. “Throughout the litigation, she believed she was acting in her client’s best interests,” he told me – a day before Ravelo signed the declaration submitted by objectors in their reply brief.

It is clear from MasterCard’s filing Tuesday that Ravelo’s exchanges with Friedman are part of the criminal case being assembled by federal prosecutors in New Jersey. (Ravelo has not yet been indicted.) The MasterCard brief mentions a July 2012 email that objectors have cited as proof the company knew about Friedman’s improper disclosures. “But objectors fail to inform the Court that the United States Attorney’s office concluded that the email contains false information provided by Ms. Ravelo to conceal her scheme to defraud MasterCard of millions of dollars,” the brief said.

Similarly, MasterCard contends that a report on American Express fees in Australia, supposedly prepared by Ravelo’s husband’s litigation support company using confidential material from Friedman, “was used as part of Ms. Ravelo’s crimes, not in furtherance of legal work on this case.”

Can Ravelo’s threat to spill everything she knows about MasterCard’s settlement strategy help her defense in the criminal case? Sadow must believe it will. And can her declaration persuade U.S. District Judge Margo Brodie of Brooklyn to recommend vacating the Visa/MasterCard judgment?

The odds are certainly against both propositions, but they may be a little better now than they were before Ravelo threw in with the objectors.

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