ST. LOUIS — There’s no reason a judge should keep a lawsuit against prominent attorney Jerry Schlichter sealed from public view, a lawyer representing Schlichter’s former law partner Roger Denton argued Friday.
But Schlichter’s attorney, Jack Garvey, says the suit was filed despite an arbitration clause in their partnership agreement and is an attempt to gain leverage in the dispute by threatening to release information jeopardizing enormous class action cases at the country’s preeminent 401(k) plaintiff firm.
Jerry Schlichter
The two sides made their arguments at a Friday hearing before St. Louis Circuit Court Judge Jason Sengheiser, who sealed the case a few days after it was filed Oct. 11 at the request of Schlichter’s attorneys. Denton’s suit claims he has been deprived of at least $875,000 in legal fees.
The sealing is an uncommon move in Missouri, where court files are presumed to be open absent a compelling reason. Schlichter’s high profile as a local public figure and civic philanthropist and his national reputation for winning major class-action lawsuits over improper fees at employer-sponsored retirement plans has drawn interest in the case.
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Schlichter’s firm — St. Louis-based Schlichter, Bogard and Denton — has won two cases before the U.S. Supreme Court and at least $500 million in settlements and judgments against some of the country’s largest employers. The firm, which has targeted what Garvey called “illegal and secretive fees” by fund managers, is credited with forcing pension plan reforms.
That’s “ironic,” said Traci Pupillo, Denton’s attorney. “When there’s litigation over fees he has to pay, he does want it conducted in secret,” she said.
(Pupillo, of Capes Sokol, has taken over Denton’s case from attorneys at Carmody MacDonald, who initially filed it. It’s unclear why Denton changed lawyers.)
Pupillo pointed to the “presumption of openness” in Missouri court procedure rules, which require a “compelling reason” before sealing a case. Sealing an entire file is “almost never justified,” she said. If there are confidential records, the parties can agree to seal individual filings or exhibits, Pupillo said.
But Garvey said the entire case needs to be sealed because of the damage it will have on pending cases. Schlichter goes up against some of the country’s most ruthless defense firms and the powerful asset management industry who will use any information they can to delay or harm the class-action suits. He said Denton actually owes the firm $300,000, but the matter needs to be handled in private arbitration.
“Why has he ignored the arbitration provision?” Garvey asked. “He wants to try the allegations of this case in the public forum, not the actual evidence.”
Pupillo, though, said the cases cited in the lawsuit are filed in public courts. The settlements are posted on the law firm’s website. Applications for attorney fees are filed in the court cases.
“All of this information is in the public record,” she said.
The exhibits in the case thus far are fee-sharing agreements, Pupillo said, and the case is nothing more than a business dispute. Any private company could argue a lawsuit filed against it would harm its business, and if the court allowed the arguments to seal this case to prevail, then “all cases would be sealed,” she said.
Sengheiser pointed to articles in the Post-Dispatch reporting the case’s filing and sealing, asking whether the “cat was out of the bag” at this point.
But Garvey said discovery requests threaten to release more confidential information. Asset manager and financial industry “trade journals,” which tend to jump on Schlichter’s losses, have already picked up the story and are the main concern.
“The Post-Dispatch is the least of our worries,” he said. “More cats are going to come out of the bag.”
Garvey asked for Sengheiser to at least keep the matter sealed until Judge Michael Stelzer rules on a motion to send the matter to arbitration. A hearing for that motion has been set for Jan. 13 at 1 p.m. Sengheiser took the matter under advisement.
“We’re in uncharted waters here,” Garvey, a former judge, told the newspaper after the hearing, “because of the nature of the national role of this firm.”