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Diana L. Courson

Zuckerman Spaeder LLP Wins Major Appellate Victory in Litigation Over Tobacco Fee

January 1, 2002

The U.S. Court of Appeals awarded a major victory to Zuckerman Spaeder client Marc Edell in his claim for a share of the legal fees for representing the State of Maryland in litigation against the tobacco industry. At the urging of firm attorneys Martin S. Himeles, Jr., and Cynthia L. Tippett, the appellate court reversed a district court order granting summary judgment against Edell and permitted him to proceed to trial on his claims against the Law Offices of Peter Angelos.

Edell, the first lawyer ever to win a jury verdict against a tobacco company in the well-known Cipollone case, was enlisted by the Law Offices of Peter Angelos to join in its proposal to represent the State of Maryland in pursuing claims against the major tobacco companies. The proposal was accepted, and Edell played a central role in the litigation, taking and defending key depositions, arguing important motions, and participating in key strategic decisions.

Edell contended that the Angelos firm promised to pay him a generous share of the contingent fee in the case. The Angelos firm denied having made any such promise and argued that in any event there was no agreement on the percentage of the fee and any agreement was therefore non-binding. The tobacco litigation ended in a settlement valued at $4.4 billion, and the Angelos firm's contract with the state entitles it to a $1.1 billion fee — an amount the State is challenging in separate litigation against the Angelos firm. Responding to Edell's claim, the Angelos firm claimed it owed him nothing beyond the monthly and hourly fees paid to him during the litigation.

The district court granted summary judgment against Edell, finding that there was nothing more than a non-binding agreement to agree among the parties. Zuckerman Spaeder was retained to appeal the decision. Relying on The Maryland Rule of Professional Conduct governing fee-sharing agreements, the Fourth Circuit unanimously held that the facts alleged by Edell were sufficient to establish a binding contract under which Edell was entitled to share in the contingent fee in proportion to the relative value of the services he performed — a percentage that will be determined by a jury. The court further held by a 2-1 margin that Edell had alleged facts sufficient to support claims for fraud and negligent misrepresentation.

The decision sent the case back to the district court for the completion of discovery and trial. Zuckerman Spaeder will continue to work with Edell's trial counsel to obtain for Edell a substantial share of the contingent fee in recognition of his invaluable role in achieving an unprecedented recovery.