A shocking practice in an otherwise virtuous area of law has recently bobbed up to the surface.  Lee v Leeds, Morelli & Brown, P.C.  2020 NY Slip Op 33374(U) September 30, 2020 Supreme Court, Kings County Docket Number: 8651/05 Judge: Ingrid Joseph is the latest case in which the Leeds Morelli paradigm of “anti-discrimination” litigation is exposed.  Another example is Dowe v. Leeds Brown Law, P.C. et al   .  In these two cases Plaintiffs alleged that there was a fake representation of them by Leeds Morelli.  They alleged that Leeds Morelli partnered with the employer in order to bring and settle large number of discrimination cases at a discount for the employer and a detriment for the employees, but with a profit for the law firm.  From Lee:

“Plaintiffs commenced this putative class action seeking damages for breach of fiduciary duty, legal malpractice and fraud, among other claims, stemming from a global settlement agreement between LMB and Bear. Plaintiffs contend that the agreement was secretly designed to materially benefit both LMB and Bear while depriving plaintiffs of the right to bring legal actions against Bear for race, age and gender discrimination by compelling plaintiffs to settle for capped and inadequate settlement awards.

In or around early 2001, LMB was consulted by several Bear employees,including plaintiffs Lee and Roe, regarding employment discrimination claims against Bear. Plaintiffs each  executed an undated retainer agreement authorizing LMB to represent them with respect to “negotiating a settlement” against Bear. On or about October 1, 2001, LMB and Bear agreed to a global settlement award and process which was memorialized in a “Dispute Resolution Agreement by Single Settlement Payment” (DRA), dated October 17, 2001. The DRA set forth a global settlement amount of $3 million. From the global settlement amount, Bear agreed to pay LMB’s one-third contingency fee of $1 million that the 52 claimants  represented by LMB (including plaintiffs) would otherwise be required to pay from their settlement allocations. The remaining $2 million in settlement funds was to be distributed among the claimants according to the settlement process set forth in the DRA. Under this process, each of the 52 participating claimants would receive an up-front $2,500 payment for releasing their right to bring any claims and/or causes of action against Bear, and the $1.87 million remaining in the global settlement fund would then be divided among the claimants basedupon the merits of each individual claim. The merits of each claim would be examined by an independent evaluator, selected by LMB, who would thereafter issue a settlement
award to the claimant, if merited, based upon submissions from LMB on behalf of the claimant and from Bear in opposition. If any amount remained in the settlement fund
following distribution of all claimants’ awards, such sums would be donated by Bear to the New York Times 9/11 Fund.”

“Plaintiffs commenced the instant action on March 23, 2005. In their complaint, plaintiffs set forth causes of action against LMB and LMB attorneys for breach of fiduciary duty (first), fraud (third) and legal malpractice (sixth), against Bear and the John Doe defendants for aiding and abetting breach of fiduciary duty (second), aiding and abetting fraud (fourth), constructive fraud (fifth) and tortious interference with a contract (seventh) Plaintiffs’ eighth and final cause of action is interposed against all defendants for “commercial bribery.” The gravamen of plaintiffs’ claims is that LMB and Bear agreed to a mutually beneficial global settlement agreement, which (1) capped the amount of damages Bear would pay to settle the claims, which in tum capped the amounts LMB’s clients could recover under the settlement process, (2) guaranteed a generous $1,000,000 legal fee to LMB and (3) protected Bear from negative publicity which may have ensued from litigation of employment discrimination claims in court.  Plaintiffs allege that LMB “duped” their clients into waiving relief in court and into participating in the “sham” settlement process for “arbitrary” and “inadequate” settlement awards. Plaintiffs contend that because the DRA made the $1 million legal fee contingent on LMB persuading the 52 claimants to execute releases and participate in the “sham” settlement, a conflict of interest was created between LMB and its claimant/ clients. ”

“By order dated January 8, 2020, this court dismissed the complaint in its entirety. The court found the first cause of action for breach of fiduciary duty untimely as it accrued, at the latest, upon plaintiffs’ execution of the superseding retainer agreements on October 2, 2001 and October 3, 2001, wherein plaintiffs expressly assented to the global settlement process pursuant to the DRA and waived any other claims or causes of action against Bear. The court applied the three-year statute of limitations as it determined the remedy sought by plaintiffs was purely monetary in nature. Because the instant action was not commenced until March 23, 2005, the breach of fiduciary cause of action was barred by the statute of limitations. In addition, the court found that the cause of action for breach of fiduciary duty was subject to dismissal as duplicative of the legal malpractice cause of action, because both claims were based on the same facts and did not allege distinct damages. In the January 8, 2020 order, the court found that the legal malpractice cause of action was also barred by the statute of limitations, since it accrued at the latest, on March 6, 2002 and March 7, 2002, when plaintiff Lee and plaintiff Roe, respectively, signed and swore to the “Evaluation Allocation and Release Agreement[s]” accepting the settlement awards. The court also dismissed the cause of action for fraud as it determined that plaintiffs failed to plead that they suffered actual pecuniary loss or and “out-of- pocket” loss as the result of the alleged fraud. “