Stan Chesley Chapter II: Settling for more, but losing plenty

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 is the second in a four-part series that examines the man who is loathed by his detractors just as fiercely as he’s defended by his friends. There is occasional profanity.

CINCINNATI - 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.”

Chesley’s storied legal career ended in April when he abruptly retired from practicing law in Ohio just a month after the Kentucky Supreme Court permanently disbarred him. Before that, though, he played a lead role in many of the most high-profile mass injury – or mass tort – cases of the past generation.

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.”

 

Next page: What did it all add up to?

Not All Wins

But the scrappy lawyer who grew up in Avondale, the son of Jewish Ukrainian immigrants, 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.


Stan Chesley's wife, U.S. District Court Judge Susan Dlott

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.”

Chesley 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, which resulted in the disbarment of Chesley and four other lawyers.

While two other lawyers went to prison for their role in that Kentucky-based case, Chesley was never accused of a crime. However, the Kentucky Supreme Court found he was overpaid for his role in negotiating a $200 million settlement in the case. The court also ruled he committed eight counts of professional misconduct relating to fees and the payment agreement among the attorneys.

“(Chesley) engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation following the initial distribution of client funds and concealed unethical handling of client funds by others,’’ the court said in its March 21 ruling to permanently disbar him.

The civil case seeks recovery of the money for plaintiffs who took the controversial drug.

Chesley has vehemently denied wrongdoing in that case.

Wealthy Showman

Chesley’s wins made him rich and powerful. 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.  

 

Coming Tomorrow: Grandpa Philanthropist, Political Fundraiser.

To inner-city Cincinnati kids he’s the guy who has paid to keep the pools open, to Holocaust victims he is the man who worked for free to win them millions in reparations, to Democrats he is the donor with deep pockets. To his children’s children, he’s simply "Baba" or "Papa."

Read the first installment and follow this entire four-part series at  http://www.wcpo.com/generic/news/local_news/Stan-Chesley-How-a-single-case-dethroned-the-Prince-of-Torts.

iPad users can read the entire four part series now in the WCPO iPad app, free in the App Store at https://itunes.apple.com/us/app/wcpo-9-for-ipad-cincinnati/id481447058?mt=8

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