Law firm not entitled to referral fee

A law firm claiming it was entitled to a fee for referring a plaintiff in an antitrust case lost when the court agreed there was no binding contract and no right to funds in equity.

Background

In February 2010, Criden & Love identified a plaintiff who was willing to challenge anticompetitive conduct in the titanium dioxide market. It referred the client, Isaac Industries, to two law firms, Berger Montague and Lieff Cabraser, in exchange for a referral fee totaling 12.5 percent. Isaac Industries then brought its antitrust claim. This case was consolidated with a similar case brought by Haley Paint.

In April 2011, Lieff Cabraser became co-lead counsel over the consolidated action, known as the “TiO2 Litigation.” A third firm, East Coast Colorants d/b/a/ Breen Color Concentrates, joined the case as a plaintiff a few months later. Breen had no connection with Criden & Love.

In May 2012, an antitrust partner at Lieff Cabraser, Joseph Saveri, left to start his own enterprise, the Joseph Saveri Law Firm. Prior to starting his own firm, while still working at Lieff Cabraser, Saveri had filed a notice to appear on behalf of Isaac Industries. Saveri’s new firm soon took on Breen as a client in the TiO2 litigation, entering an appearance on its behalf on June 1, 2012. Saveri’s firm never had an agreement with Isaac Industries, which was still represented by Lieff Cabraser.

Saveri thereafter sought the lucrative lead counsel role, which he obtained in August 2012. Ultimately, the class action was settled, with the attorneys’ fees totaling more than $54 million. As co-lead counsel, the Saveri Law Firm was awarded approximately $10 million, based entirely on work performed after Saveri left Lieff Cabraser.

The other firms representing the plaintiffs, including Lieff Cabraser, Berger Montague and Criden & Love, were also compensated for their work on the case. In addition, Criden & Love was paid referral fees from Lieff Cabraser and Berger Montague, pursuant to the referral agreements for Isaac Industries.

Once the case settled and the fees were distributed, Saveri communicated to Criden & Love that they had no agreement and no referral fee would be paid. Saveri filed a declaratory judgment action in the federal district court in Maryland, seeking a declaration that the Saveri Law Firm owed no referral fee. The district court found for Saveri.

Analysis

We begin with appellant’s contract claims. It is a bedrock principle of law that a contract cannot be formed by offer alone; there must also be acceptance by the offeree. Here there was no acceptance by Saveri. Although Criden & Love’s email may be considered an offer to enter into a referral agreement, Saveri at no point expressly accepted the terms.

Criden & Love’s equitable theories fare no better. As the district court noted, C&L is seeking a percentage of fees that were awarded to Saveri after he left Lieff Cabraser. Saveri earned these fees for work on behalf of Breen, a client with no connection to Lieff Cabraser or to C&L. C&L’s unjust enrichment claim fails, therefore, because it has no right to the funds that it argues that Saveri received unjustly.

The quantum meruit claim fails for a similar reason. C&L performed no work for which it was not compensated. C&L received $900,000 for referring its client to Lieff Cabraser, which was based in part on work Saveri did while at the latter firm. Equity does not give C&L a second claim against Saveri’s fees.

Finally, Criden & Love brings a fraudulent concealment claim. It claims that Saveri fraudulently concealed an intention not to pay C&L the referral fee. But of course, Saveri never suggested in any way that he did intend to pay the fee. And his notice to appear on behalf of Breen could easily be understood as an objective manifestation of an intent not to pay any referral fee since Breen was not the client C&L had referred.

Affirmed.

Joseph Saveri Law Firm Inc. v. Michael E. Criden P.A., Appeal No. 17-2090, Jan. 14, 2019. 4th Cir. (per curiam), from DMD (Bennett). Kevin Bruce Love for Appellant, James Patrick Ulwick for Appellee. VLW No. 019-2-017, 8 pp.