By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
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.
However, Pitts does elaborate in the court files.
"Schechter told me that while working for the Clinton for President campaign he had bought and had destroyed a tape that showed Clinton present at a party where illegal drugs were being used," stated Pitts. "Whether Mr. Schechter was lying when he told me this, in order to puff his importance in my eyes, or he had actually had this done, I believed either was despicable, and showed a moral blindness that makes him unworthy of high public office, in my opinion."
Pitts said the reason he addressed the City Council was his "inherent interest in and moral duty to prefer and do what I can to have good government."
During a separate deposition, Pitts also said that he spoke to the City Council because he "came to understand (that Schechter) had ambitions of using the chairmanship for Metro to run for the mayorship," and that he felt compelled as a "citizen" to alert council members that they should look deeper into Schechter before naming him head of the transit authority.
However, Schechter being Schechter, council members didn't hesitate to appoint him to the position.
And despite Pitt's avowed outrage over the alleged Clinton tape, according to a deposition, Pitts says he still referred breast implant clients to Schechter.
Schechter accuses Pitts of slandering him further when Pitts told City Council members that they should ask Schechter to make public any investigations the State Bar of Texas had ever conducted into Schechter's practice of law. According to Schechter's counter-lawsuit, Pitts was implying that Schechter had been investigated often and was a dishonest lawyer.
"Pitts could have chosen a private forum for addressing his alleged concerns," it states in Schechter's counter-lawsuit, "but he elected to do so for all to see."
During the winter of 2004, Pitts claims he became aware that Schechter was charging the breast implant clients 5 percent interest per year on Schechter's expenses. Pitts then mailed a letter to the clients stating that Pitts's law firm never agreed to allow Schechter to charge interest on his expenses and that if they wanted, they could contact the State Bar of Texas Grievance Hotline. Pitts then provided the hotline's toll-free number.
In his counter-lawsuit, Schechter states that Pitts's letter was yet another example of Pitts trying to undermine Schechter by implying he is dishonest, and of Pitts interfering with the cases, thereby invalidating the referral contracts.
"In our opinion," Pitts said, according to a court document, "sending a letter to our clients advising them that Mr. Schechter and his entities were charging interest where we did not intend for it to be charged is not interfering or interference."
But the accusations don't stop.
Next, Schechter accuses Pitts of mocking his title of U.S. ambassador. According to Schechter's lawsuit, "Proud of his accomplishment, Schechter used letterhead referencing himself as an Ambassador. In response, Pitts suddenly began corresponding to Schechter as 'Captain Pitts' referencing Pitts' service in a United States uniformed force."
The accusations become even pettier.
Schechter states in his lawsuit that Pitts "developed a personal vendetta against Schechter," as evidenced by "a recent document inspection" that revealed Pitts was collecting newspaper clippings on Schechter. They included anniversary photos of Schechter and his wife at a gala, the obituary of one of Schechter's family members and articles about Schechter with former Texas Governor Ann Richards and traveling with Clinton on a foreign diplomatic trip.
In response, Pitts claims that his firm cut out the articles because it had referred so many clients to Schechter and that newspaper clippings are "no indication of a personal vendetta" against Schechter.
Finally, last August Pitts filed a lengthy document totaling 33 pages responding to allegations he felt Schechter made questioning Pitts's feelings toward Jewish people. The Press did not find the alleged accusation in the court file; it may have been part of the many sealed sections.
"Unfortunately," Pitts's brief begins, "Mr. Schechter has reached a shameful low in trying to avoid paying his debt. He is now implying that I hate Jewish people, that he is Jewish, and that this is the 'true reason' why he should not have to pay me my money..."
Schechter has one of the most impressive résumés when it comes to philanthropy and his involvement with some of the most prestigious Jewish organizations in Houston and around the country. According to court documents, Schechter has chaired or served on the boards of more than 15 different groups including the United States National Holocaust Museum in Washington, D.C., to which Clinton appointed him; the Jewish Federation of Houston; the American Jewish Committee; and the Texas Jewish Historical Society.
In his brief, Pitts details how although he is a Christian, his first girlfriend was Jewish, his favorite teacher was Jewish and his closest professional colleague is Jewish.
Pitts also waxes on at length about how in 1972, during summer break from college, he worked at an Israeli kibbutz. He tells the story of how he was almost killed in the Lod Airport massacre the first night he arrived in Israel when a three-man hit squad from Japan smuggled weapons onto an Air France flight and then opened fire once they landed in Tel Aviv, killing 26 people. Pitts also recounts the time when walking in the Old City of Jerusalem an Arab man became angry that Pitts was carrying an Israeli flag.
"I responded by turning the flagpole around and pointing the metal attachment end at his head, and prepared to fight if necessary," Pitts states in the document. "I have put my very life and body on the line for the sake of a homeland for the Jewish people, Israel. It is noteworthy that I have born much more personal physical risk in helping Israel than Mr. Schechter has."
That may or may not be the case, but it certainly shows how far afield the two men have strayed from the original lawsuit claiming breach of contract.
"It's just playing hardball," says Pitt's attorney Steven Smith.