Stan Chesley: How a single case dethroned the ‘Prince of Torts'
Lucy May, WCPO Digital
12:58 PM, May 29, 2013
4:32 PM, Mar 19, 2014
EDITOR'S NOTE: Cincinnati native Stan Chesley, considered the father of the modern-day class action lawsuit, won billions of dollars on behalf of thousands of clients. At his peak he was among the most successful plaintiff’s lawyers in the nation, if not the world. A single case brought it tumbling down. This four-part series examines the man who is loathed by his detractors just as fiercely as he’s defended by his friends. There is occasional profanity.
PART I: Rise Of A Legal Titan
Stan Chesley reaches inside his desk drawer, pulls out an old manila envelope and pinches off a pea-sized piece of foam inside.
Then he lights it on fire. And he watches as a tendril of acrid, cyanide-laced smoke dissipates into the air.
That chunk of chair padding salvaged from the deadly Beverly Hills Supper Club fire, which left 165 people dead 36 years ago, remains a physical reminder of the case that would lead to a lifetime of legal victories and seal Chesley’s future as the king of the class-action lawsuit.
And it would be a class-action lawsuit against a diet-drug manufacturer that would bring his illustrious 53-year career to a devastating end: permanent disbarment amid findings of professional unethical conduct.
“The idea that Stan Chesley has had such a distinguished legal career, that it should end this way, I just find appalling,” said Kenneth Feinberg, a Washington, D.C., lawyer and Chesley friend who is best known for his work as special master of the federal government’s September 11th Victim Compensation Fund.
“It’s a personal tragedy.”
One Client at a Time
Raised by Jewish Ukrainian immigrants in Avondale, Chesley was the son of an owner of a typewriter repair shop in Clifton. He attended Walnut Hills High School, where he was once told he wasn't "college material.''
He didn’t listen.
Instead he paid his way through the University of Cincinnati by selling "budget" shoes at the former Shilito's department store.
The young salesclerk found the name insulting to his customers and suggested the department store change the name of his department to “fashion shoes.”
The suggestion earned him a $25 bonus.
After graduating from the University of Cincinnati College of Law in 1960, he began practice as a personal injury lawyer, making a living for years one client at a time.
“There’s a real misperception of what it was like then,” said Chesley’s son, Rick Chesley, a partner and co-chair of DLA Piper’s restructuring law practice based in Chicago. “We grew up in Bond Hill. He was just a lawyer trying to make a living.”
Chesley worked long hours while his first wife, Suellen, took care of their kids. He went to their son’s Little League games or watched their daughter, Lauren, ice skate when he could.
The scrappy Chesley wasn’t one to give lots of advice, but Lauren Chesley Cohen remembers her dad encouraging her to work hard to make things happen, often repeating:
“You never get more than you deserve – unless you ask for it.”
Her brother added: “We had a middle-class upbringing. It was no different than anybody else growing up.”
But all that changed with the Beverly Hills Supper Club fire in Southgate.
Moral Outrage Drove Case
Rick Chesley was a high school senior at the time. He remembers how some of his dad’s former clients -- reeling from the fire’s aftermath -- were told there was no money to compensate them for their losses – that there was nothing anyone could do.
So they turned to Chesley.
“Part of what drove him was really the moral outrage of that,” Rick Chesley said. “That no one’s held accountable for that. That really struck a nerve for him.”
Chesley took on the case, representing the victims of what remains one of the deadliest nightclub fires in U.S. history. And to the amazement of many, he won an unprecedented court order to stop demolition of the club’s charred ruins so investigators hired by the victims’ legal team could search for evidence.
And then he did what no other lawyer had ever done: He came up with the idea to sue entire industries, now known as enterprise liability.
It was an innovation that would revolutionize the practice of mass tort, or mass injury, law.
Among the companies he sued were manufacturers of wiring that he argued was faulty and makers of seat cushions and draperies that he blamed for toxic fumes when they burned.
The strategy worked, sealing Chesley’s place as a legal trailblazer.
One after the other, lawyers for the defendants settled with Chesley and the team of plaintiffs’ lawyers, who ultimately won more than $49 million for victims of the fire.
The case was so important to Chesley’s career that for years he kept that chunk of padding from a supper club chair cushion in his desk drawer.
But for all the reminders of Chesley’s success in that first big case, his record with Beverly Hills wasn’t perfect.
'You Know I'm Full Of …'
Robert Gettys, a Covington lawyer who represented a heating, ventilation and air conditioning company in the case, didn’t believe his client was at fault in the fire.
He was among a small army of defense lawyers when the case started and watched, stunned, as Chesley picked off the others, convincing them to settle.
“He’s a very strong-willed man,” Gettys said.
Gettys remembers a particular hallway conversation with Chesley and another defense lawyer at the time. Chesley was pointing forcefully at the other, much taller man’s chest telling him that if his client didn’t settle, the plaintiffs’ lawyers would bankrupt the company.
“The guy just withered and settled while I’m standing there watching,” said Gettys, who was just 32 or 33 at the time. “The guy walked away, and Stan said to me: ‘I know I’m full of shit, and I know you know I’m full of shit, but they don’t.’”
Gettys recalled telling Chesley: “’Stan, don’t try that tactic with me because it won’t work.’ And he said, ‘I figured that out early on. You and I will be here until the end.’”
David to Chesley’s Goliath
The trial was so big that rows of tables for hundreds of defense lawyers were placed in the courtroom. A solo practitioner for a small client, Gettys sat at a table in the back during the pre-trial proceedings.
But by the opening day of the trial, the tables were empty.
All the other lawyers had settled.
All but Gettys. He kept his spot.
Not long into the proceedings, though, Chesley leapt up and asked to approach the bench.
“He said: ‘Your Honor, call a recess. I want all those tables removed.’ The judge asked why, and he said, ‘Gettys is trying to pull a David back there,’” Gettys recalled, referring to the Biblical David and Goliath story.
“He’s cognizant of all that,” Gettys said. “Indeed I was.”
Ultimately, the jury agreed with Gettys that his client wasn’t liable, despite Chesley’s impassioned pleas and a scrapbook of gruesome photos of victims, skin charred and bodily fluids bubbling from their noses.
Gettys went down in history as the only lawyer involved in the case to beat Chesley.
Years later Gettys was hired by lawyers in Beverly Hills, Calif., who were facing Chesley in the deadly 1980 fire at the MGM Grand Hotel and Casino.
“They asked my opinions about how to defend the case with Stan." Gettys said. “They were somewhat dismayed because my instructions were:
“‘Don’t listen to his bullshit.’”
PART II: Brave Advocate Or Brazen Bully?
What some term bull, others call chutzpah. Whatever the label, there’s little doubt Stan Chesley has it in spades.
“He has balls as big as brass bells,” said one local attorney who did not want to be named. “He’s done it all on balls and bullshit and been very successful.”
He figured out early on that insurance companies would rather settle such suits than fight in court and risk a jury verdict, the local attorney said.
Chesley, dubbed the “Master of Disaster” for his success, has won billions over the years on behalf of his clients in many of this generation’s most high-profile cases. Consider:
• $200 million settlement with Dow Chemical in 1983 for injuries to Vietnam War veterans who had been exposed to the chemical defoliant Agent Orange.
• $165 million settlement with Pfizer Inc. in 1992 for patients who had received the Bjork-Shiley artificial heart valve – a pioneering case in medical device class-action cases.
• $3.2 billion settlement with Dow Corning in 1998 for women with silicone breast implants.
• $206 billion in the controversial tobacco suit in which Chesley served as lead counsel for settlement negotiations.
• $90 million settlement in the class action lawsuit involving child sexual abuse in the Diocese of Covington.
An associate estimates Chesley’s firm won between 80 percent and 85 percent of his cases, either by settling or prevailing at trial.
“Many lawyers will tell you, they never knew anybody who could settle a case better than Stanley,” said U.S. District Judge Susan Dlott, Chesley’s wife. “He just had like a sixth sense about it.”
Or as Chesley friend and Washington, D.C., lawyer Kenneth Feinberg put it: “He knows how to get to yes.”
Not All Wins
But the scrappy lawyer didn’t win every case.
He spent $2 million developing a settlement for poisoning victims in Bhopal, India, after the 1984 Union Carbide gas plant disaster. The original settlement was rejected, and the case eventually settled for more than $475 million in India. But the agreement included no fees for Chesley.
And in the 1984 Bendectin case, Chesley was part of a team of lawyers representing plaintiffs who argued the anti-nausea drug caused birth defects. Chesley negotiated a $120 million settlement, which other plaintiffs’ attorneys rejected as too low. The case went to trial, and the jury sided with the defense. Chesley’s firm had invested $3 million in that case.
Here in Cincinnati, Chesley and his firm represented Hamilton County in an anti-trust suit against the Cincinnati Bengals and the National Football League. And he took on the local powerhouse firm Taft, Stettinius & Hollister in a probate case over the estate of Austin “Dutch” Knowlton. Knowlton was the first husband of U.S. District Judge Dlott, and owned a large stake in the Bengals years ago.
A judge dismissed the county’s suit, saying it was filed too late, and a jury ruled against Chesley in the probate case.
Still, in a 2004 interview, Chesley estimated his firm had recovered nearly $7 billion for clients since he began doing mass tort litigation in the 1970s.
“We have substantial income,” he said at the time. “We’re a very successful firm.”
He declined repeated requests to be interviewed for this WCPO Digital series.
Some speculate the 77-year-old might be uncharacteristically silent because of a pending civil suit related to the fen-phen diet drug case.
The civil case seeks recovery of money for plaintiffs who took the controversial drug.
Chesley has vehemently denied wrongdoing in that case.
Chesley’s wins made him a rich and powerful man. He has bristled at questions about his wealth in the past. But he’s maintained one of the most opulent offices in Cincinnati, an expansive, well appointed room with a ceiling painted gold.
Whatever Chesley has earned from all those cases, it was enough to buy an $8 million house in Indian Hill back in 2004 with space for his 20-plus-luxury automobile collection, which then included Jaguars, Ferraris, Aston Martins, Bentleys and Rolls-Royce cars.
And all the while Chesley was building his law business and personal wealth; he also was building his status as a local and national philanthropic powerhouse.
PART III: Grandpa Philanthropist And Fundraiser
Locally, Stan Chesley is the rich guy who has helped keep inner city pools open in the summer when the city’s budget was tight.
But he’s also given considerably to charities around the world, particularly those related to Judaism and the people and land of Israel.
Chesley served for five and a half years as president of the board of directors of the Jewish National Fund, the New York-based nonprofit that develops land and plants trees in Israel.
He asked for a leave of absence from that role April 8 as controversy swirled around him in Cincinnati after his disbarment.
Chesley requested the leave to protect the organization, said Russell Robinson, the fund’s CEO.
“He has been an incredible leader,” Robinson said.
It was Chesley’s idea to build a fortified indoor playground in an Israeli town where children couldn’t play outside because of constant shelling.
“It was something that had never been built anywhere in the world,” Robinson said. “It was a great conversation, but it was as much about going to the moon.”
As impossible as it seemed, though, Chesley led the effort to raise $5 million for the facility in a month. It was built in nine months, Russell said, and is the largest fortified indoor playground in the world, with an indoor soccer field, a movie theater and birthday rooms.
Chesley and his firm also worked pro bono to get a $5 billion settlement with German corporations and Swiss and Austrian banks as restitution for Holocaust victims.
“In the Jewish world, Stan has been one of those national and international figures – well known to people in America and beyond,” said Lewis Kamrass, senior rabbi at the Isaac M. Wise Temple, who has known Chesley nearly 30 years. “When it comes to believing in a cause, he’s in.
"He’s there all the way.”
Deep Pockets For Democrats
Chesley has taken the same approach to political giving. He was an early supporter of Bill Clinton, back when he was known for being governor of Arkansas.
During a 2004 interview, Chesley’s office was packed with pictures of him with political dignitaries including former President Bill Clinton, former Secretary of State Hillary Clinton and current Secretary of State John Kerry. Only photos of Chesley’s six grandchildren were more abundant.
“He supported Clinton when nobody else did,” said Lauren Chesley Cohen, Chesley’s daughter. “He was a huge supporter and a huge fan all the way through. My dad is incredibly loyal.”
From 1990 to 2012, Chesley gave more than $690,000 to political parties, candidates and committees, according to the Center for Responsive Politics. During the 2012 election cycle alone he gave $9,800 to the Democratic Party of Ohio, $2,500 to the Democratic Senatorial Committee and $10,000 to Ohio’s Republican Party.
And those totals don’t include the millions raised at the many fundraisers that Chesley has hosted here in town for the Clintons and others.
Even in retirement, local political leaders expect Chesley will continue to donate to the candidates and causes he supports.
“That was one of the things we talked about the last time we talked,” said Tim Burke, president of Manley Burke LPA and chairman of the Hamilton County Democratic Party. “He wanted to make sure he knew where to send the check for a Hamilton County Democratic Party fundraiser.”
Cohen said her father is every bit as generous with his children and grandchildren.
When she was in college at Boston University, her dad would visit at least once a year. They would go to New York to shop and see a Broadway show. One year they got tickets for “Cats” when the musical first started its run on Broadway.
“We were so excited to have these amazing seats,” she said. “We had been shopping and eating all day. We sat down in the theater, and the lights went out, and we both fell fast asleep.”
When Cohen was pregnant with her first daughter – the family’s first grandchild – an excited Chesley tried to be in the hospital room during labor before she asked him to leave.
He drove around Jewish Hospital for hours with a giant teddy bear in his front seat until he got word that the baby was born, Cohen said.
In more recent years, Chesley has been a regular at grandkids’ soccer games and horse shows. He visits his older grandchildren at college and knows their friends by name.
“Our older son graduates from college in Pennsylvania in May,” Rick Chesley said in an April interview. “With everything that’s going on with my father, what’s important to him is to make sure he can be at the graduation.”
Of course, that’s not the Chesley most people know.
PART IV: Chesley's Fall From Grace
Stan Chesley’s detractors call him a bully who manipulates the media to help his causes. Plenty of local lawyers dislike him. Most, however, declined to be quoted.
That’s partly because, although he’s no longer practicing law, Chesley still is married to a federal judge. He and U.S. District Judge Susan Dlott have been married since 1991. (Chesley’s ex-wife, Suellen Chesley Feck, died last July.)
But the other reason Chesley’s local critics won’t talk is because even lawyers who despise Chesley told WCPO Digital that they didn’t want to kick him publicly when he’s down.
Lawyers in other parts of the country have been less reticent.
In a 2004 interview, Seattle attorney Leonard Schroeter called Chesley “an opportunist and just a nasty son of a bitch.” The criticism came after Chesley’s firm’s handling of a class-action case in Washington state on behalf of people injured at a government nuclear weapons plant.
Schroeter has since become ill and couldn’t be interviewed for this story.
Mississippi lawyer Dickie Scruggs, who worked with Chesley on the national tobacco settlement, told the Louisville Courier-Journal in 2007: “Stan will take every advantage you will allow him to take. Some will say his style is a bit ruthless.”
Scruggs couldn’t be reached for this story, though. He pleaded guilty to attempting to bribe a judge and to corruption of a public official in a separate case and was sentenced in 2008 to federal prison.
Chesley Not Alone
James Helmer is among the few local lawyers who would talk to WCPO Digital on the record for this story. Helmer has worked on the same side as Chesley in cases but also has worked as counsel opposing him and has represented people who’ve had disputes with him.
“If you think about some of the people who have really achieved great success in Cincinnati, names that come to mind are Charlie Keating, Morley Thompson, Marvin Warner, Pete Rose and Bob Taft,” said Helmer, president of Helmer, Martins, Rice & Popham Co., LPA.
“They’re all Cincinnati guys, and they all got to the very top of their particular professions. All are self-made. All are innovative and fearless. And every one of them fell off the ladder for not following the rules. To me, as I look at Stan’s situation, I think it’s very similar.”
Helmer views Chesley’s fall from grace as the classic rags to riches to rags story.
“In this country, you can start with nothing and gain quite a bit,” Helmer said. “And if you’re not careful, you can lose that.”
Diet Drug Case Is Undoing
His whole life, Chesley has been driven to succeed.
But in past interviews, he’s said it’s his ability to see things differently that’s made him successful combined with his passion for helping the little guy. Chesley’s a man who will speak truth to power, he said in 2004, and he’s not afraid of criticism along the way.
So how did Chesley, considered by many a prince among men in legal circles, fall so hard?
It all stems from his involvement in a lawsuit against the maker of the controversial diet drug fenfluramine/phentermine, more commonly known as fen-phen. The drug was touted as a miracle treatment for obesity in the 1990s but was pulled off the market in 1997 after it was shown to cause potentially fatal heart problems for people who took it.
Lawyers across the country scrambled to sue. In Kentucky, three lawyers – Shirley Cunningham, Jr., William Gallion and Melbourne Mills Jr. – assembled a group of several hundred clients.
Chesley teamed up with them later and ultimately helped negotiate a $200 million settlement.
But Kentucky courts have found that the lawyers collected far more in fees than they were entitled to, effectively taking money from the people they represented. Cunningham, Gallion, Mills and Kentucky attorney David Helmers were disbarred before Chesley. Cunningham and Gallion were convicted of taking about $94 million from the settlement that should have gone to their clients.
Gallion is serving a 25-year sentence at a federal prison in Oakdale, La., and couldn’t be reached for this story. Cunningham is serving 20 years at a federal prison in Yazoo City, Miss., and spoke by phone only long enough to decline an interview request. Helmers did not return phone calls to his Lexington office.
Chesley received immunity during the criminal proceedings and was never charged with a crime.
But he was disbarred.
A trial commissioner for the Kentucky Bar Association concluded that Chesley collected $7.5 million more in fees than his contract allowed. And while Chesley argued he didn’t realize he had been overpaid, the Kentucky Supreme Court didn’t believe him.
“I think when the book is written on this entire Kentucky thing, Stan got ensnarled with some very sleazy people down there, and he couldn’t extricate himself,” said Hamilton County Prosecutor Joe Deters, a long-time friend of Chesley’s who works part-time at Chesley’s firm as an attorney “of counsel.” “To my dying day, I would never believe that Stan would do something unethical.”
Still, the Kentucky Supreme Court disbarred Chesley on March 21.
“While the good reputation he has enjoyed and his generosity serves to exacerbate the tragedy of his fall, they cannot atone for the serious misconduct he has committed in connection with this matter,” Chief Justice John Minton wrote for the court. “Therefore, we find that permanently disbarring Respondent is an appropriate penalty for his ethical violations.”
He hasn’t spoken publicly since then.
Chesley was also disbarred in Michigan and faced disbarment in Indiana because of the action in Kentucky. He decided to permanently retire from the practice of law in Ohio rather than fight a possible disciplinary action in his home state.
“I think Stan was negligent in not supervising more carefully what these other lawyers were doing,” said Feinberg, the Washington, D.C., lawyer and Chesley friend. “I think Stan had a trust and faith that was misdirected and ultimately proved his undoing, and I think he’s a victim of this fraud committed by others.”
Narcissist or Nice Guy?
Jacquelyn McMurtry doesn’t see it that way.
The Louisville woman was a client of Cunningham’s who had never heard of Chesley until the lawyers came under fire for how they handled the case.
A civil case against Chesley and the other lawyers is pending before the Kentucky Supreme Court. Plaintiffs involved in the original fen-phen case are suing to recover fees their disbarred attorneys collected.
“I went to the trial, and I heard him testify, and I never came to such a low opinion of a human being in my life,” McMurtry said of Chesley.
McMurtry was especially disgusted by Chesley’s condescending attitude toward Lexington lawyer Angela Ford during the proceedings, she said. Ford is the attorney who filed a civil suit against Chesley and the other lawyers involved in the case to try to recover money for people who took the drug.
“He was narcissistic, controlling,” said McMurtry, who said she’s been paid a little over $95,000 in her settlement so far. That’s far more than the roughly $500 a friend was paid in a national fen-phen settlement, she said, but far less than the $1 million another lawyer told her she might get. “He liked to put people down.”
McMurtry believes Chesley was very much a part of the deception that kept money away from people like her and the cover up to hide that deception.
“The bottom line for him is money,” she said. “It’s greed.”
'He's My Hero'
Lisa Crawford knows a very different Stan Chesley.
Crawford was one of the plaintiffs in a case brought against the government by residents near the Fernald, Ohio, plant that processed uranium for nuclear weapons.
She was upset and frightened when she found out the well at her rental home in Crosby Township was contaminated back in 1985. She and her husband asked several lawyers for help, and they all scoffed at the idea of suing the government.
Then a friend told her she should meet with Chesley.
“He was one of the nicest guys I have ever met – cordial, kind, understanding,” she said. “And he was the only one who would even talk to us.”
Chesley took the case and negotiated a $100 million settlement with the U.S. Department of Energy and its private contractor. And, even more important to Crawford, he got a medical monitoring program established so that anyone within a five-mile radius would get regular physicals to try to detect health problems early.
“He’s my hero,” Crawford said.
Crawford, who estimates her family received “a couple hundred thousand dollars” as a settlement, said she doesn’t pretend to understand all the details of the fen-phen case. But it’s hard for her to believe the Chesley she knows did anything to try to hurt anyone.
“I love him, and he’s never been anything but kind or good to me,” she said. “Back then, I could call him any time of day, and the man would call me right back.”
Friends: May Be Down But Not Out
Chesley still has lots of friends in high places locally.
Basketball legend Oscar Robertson, Xavier University President Michael Graham, Cincinnati State President O’dell Owens and Cincinnati Mayor Mark Mallory remain loyal supporters.
They all told WCPO Digital they expect Chesley to continue to contribute to the community in his retirement, and all said he’s far more than the practice of law.
“Stan Chesley has an incredibly generous side to him,” Graham said. “He’s relentless, and I think because of that he’s easily caricatured. In this sound-bite era, we’re all of us caricatured. And that’s never fair.”
As relentless a fighter as Chesley is, though, Dlott said she encouraged her husband to retire.
“He was ready to retire,” she said, “particularly because of the way he had been treated the last couple of years.”
Just a few weeks ago, Dlott and Chesley were at a party, and a young man approached them. He explained that he was going to be a law clerk for U.S. Supreme Court Justice Elena Kagan.
“He said, ‘I heard you were going to be here, and I always wanted to meet you. We studied your cases at Harvard Law School,’” Dlott recounted.
But now those will be the cases of a lawyer disbarred after reaching the pinnacle of his profession.
“It just goes to show you how much is riding on everything you do,” said Howard Erichson, a law professor at Fordham University who was an expert for the government in the federal prosecution of Gallion and Cunningham and in the ethics case against Chesley.
“Stan Chesley had a great career as a mass tort lawyer,” Erichson said. “And there’s something really sad about such a great lawyer falling so hard.”