By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
By Jeff Balke
When well-known attorney and philanthropist Arthur Schechter first agreed to sue the makers of silicone breast implants, the future chairman of the board of the Greater Houston Metropolitan Transit Authority never guessed he'd be doing it more than a decade later.
And he certainly never could have guessed that he'd end up in a two-year legal pissing contest with the attorney who handed him a bunch of the cases.
Now a two-tiered metal trolley stuffed with case files stands testament to the battle between Schechter — the one-time U.S. Ambassador to the Bahamas — and Gary Pitts, a similarly respected attorney who does most of his practice in federal court. The case files in State District Court Judge Randy Wilson's office at the Harris County Civil Court include thousands of pages of pleadings and exhibits.
Schechter has countersued Pitts, and over time the level of debate between the two has plummeted to name-calling and unsubstantiated accusations, resulting in many of the documents being sealed.
It all started out simply enough during the early 1990s when Pitts and his law partner Ed Collard began drumming up clients who suffered adverse effects from their breast implants and wanted to sue the manufacturers. By 1993, Pitts began referring out the clients he'd collected, and by 1994 Pitts had sent Schechter and his then-firm, Schechter PC, more than 1,000 breast implant cases. The initial agreement, according to Pitts, was that Schechter's firm would take 60 percent of the attorney's fees, while Pitts and Collard would collect the remaining 40 percent.
But since then, the entire affair has devolved into a granddaddy of a "he-said, he-said."
In 2005, Pitts and Collard sued Schechter, Schechter PC and Schechter's subsequent firm, Schechter & Marshall, for breach of contract, saying they did not pay Pitts and Collard the money owed under the referral agreements. Collard has since settled for an undisclosed amount of money; however, Pitts continues to fight and a trial date is set for early February. Pitts's attorney, Steven Smith, says Pitts is seeking $640,000 plus punitive damages.
Attorneys for both sides have decided to be closemouthed for now, but their case files speak loudly, even if it takes a while to digest them.
The basic argument offered by Schechter's attorneys, Dale Jefferson and Raul Suazo, is that Schechter does not owe Pitts any money because the referral contracts are invalidated due to the limited funds recovered as well as Pitts's breach of fiduciary duty to both the clients and Schechter. Jefferson and Suazo did not return phone calls from the Houston Press.
Schechter's team argues that at the outset both sides believed that the breast implant litigation would be resolved quickly and profitably. However, some of the cases have dragged on and are still open today. During litigation, the breast implant manufacturer, Dow Corning, filed bankruptcy and the bankruptcy court imposed strict caps on all breast implant litigation fees and settlements. As a result, states Schechter, the cases were settled at a loss to his firm. Schechter argues that because he has not been able to recover his full expenses, the referral contract is invalidated and Pitts is not entitled to any money.
Pitts counters by saying that there was no mutual timetable agreed upon and it is impossible to know how long a case will take. He also claims that it was foreseeable that Dow Corning would file bankruptcy, thereby limiting the recoverable fees, but that fact in no way affects the basic split of the pie along the agreed upon percentages.
Schechter's attorneys state that Pitts's law firm abandoned the clients and did not perform its share of work on the cases as promised. They claim that during Dow Corning's prolonged bankruptcy process, Pitts's firm "did not show any gratitude to Schechter for having his firm carry expenses on the Dow Corning cases, pursue clients' rights despite a rapidly dwindling recovery, maintain client contact...(and) refused to participate in performing their share of the work..."
Pitts's attorneys dismiss this claim stating that Pitts in fact did do his portion of the work.
Schechter's team also claims that there was an understanding implicit in the referral contracts that Pitts would not impede Schechter's handling of the cases. Schechter states that this alleged interference took several forms and invalidates the agreements.
In his counter-lawsuit, Schechter claims that Pitts engaged in a "defamation campaign" against Schechter and accuses him of slander and libel. He cites, for instance, when Pitts addressed Houston City Council in April 2002 at a televised meeting. At the time, the City Council was in the process of appointing Schechter as chairman of the board of Metro.
During the City Council meeting, according to court documents, Pitts said that Schechter has been a fund-raiser and "power broker" for the Democratic Party and was former President Bill Clinton's campaign chairman in Texas. Clinton later appointed Schechter U.S. Ambassador to the Bahamas. Pitts also told the council, according to court records, that after Clinton's presidential election in 1992, Schechter "bragged to me about something that he did on behalf of Clinton, that, in my opinion, was ethically questionable."
Pitts did not go into further detail with the council that day.