Silica Suit Firm Can Take Clients to Arbitration
HOUSTON (CN) - Claims that a Houston law firm ran a fraudulent, multimillion-dollar "silica litigation machine" should go to arbitration, a federal judge ruled.
The plaintiffs, 31 residents of Alabama or Mississippi, claim that they were diagnosed as having silicosis by medical professionals handpicked by The O'Quinn Law Firm.
Silicosis is a lung disease caused by inhaling tiny particles of silica, a mineral found in sand, rock and mineral ores like quartz. People with silicosis are unable to fight infections well and are at high risk for developing potentially lethal diseases like tuberculosis.
Other attorneys allegedly solicited the plaintiffs to undergo medical screening for silicosis and then ushered them into contracts with law firms that promised to litigate their silicosis claims.
O'Quinn took referral of these cases, and up to 98 percent of its silicosis docket came from referring law firms, according to the federal complaint filed in December 2012.
The plaintiffs claim that the firm paid a $350 per-case referral fee to the silicosis-screening company N&M Inc., and then passed the fees on to them as expenses.
O'Quinn also allegedly passed on frivolous expenses, including a $60,000 charge for a database to manage the silica docket that it never used, $20,000 a pop for medical reports by unqualified experts, $1,000 dinner tabs, and even for flights on private jets.
Worse yet, the plaintiffs claimed that the firm failed to process the settlements offers from Sanstorm aka Air Liquide and Moldex, costing silica clients $7.5 million.
The clients named The O'Quinn Law Firm as a defendant, along with former and current attorneys of the firm, and the firms that gave it silica case referrals. They wanted the defendants to disgorge their attorneys' fees and expenses.
U.S. District Judge Nelva Gonzales Ramos in Corpus Christi, Texas, refused to dismiss the action in April. She did, however, agree to suspend the proceedings for 60 days since the plaintiffs filed a deceptive trade claim without notice.
This week, Ramos said the plaintiffs must face arbitration pursuant to a clause in the Power of Attorney and Contingent Fee Contracts that they signed.
The plaintiffs had argued O'Quinn and the others had waived their right to arbitration by challenging the jurisdiction and the merits of plaintiffs' claims in earlier motions.
These claims failed, however, to sway Judge Ramos.
"While plaintiffs assert that movants sought decisions on the merits of their claims, that assertion is not borne out by a review of the motions and their conclusions or prayers," she wrote. "Consequently, the Court holds that the preliminary motions did not invoke the judicial process in a manner that waived arbitration."
Ramos put a stay on the case and ordered the plaintiffs to arbitrate all their claims against The O'Quinn Firm and its co-defendants in Harris County, Texas.
She also ordered the parties to file a status update on Nov. 30, 2013, and every six months thereafter until the dispute is resolved.
John O'Quinn founded The O'Quinn Law Firm fka O'Quinn & Laminack with partner Richard Laminack, also a defendant. The firm has handled major litigation, including a $1 billion Fen-Phen diet drug case.
O'Quinn died in a car wreck on a wet Houston road on Oct. 29, 2009.