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Full title: Reply to (related document(s): 389 Motion for Order Authorizing the Transition and Assignment of the Estate's Interests in the NFL Concussion Litigation to Goldberg Persky White P.C. Free and Clear of Liens, Claims and Interests Pursuant to 11 U.S.C. Secton 363; Memorandum of Poi filed by Trustee Elissa Miller (TR), 428 Motion (REDACTED) Motion for Order Authorizing the Transition and Assignment of the Estate's Interests in the Mesh Litigation to Nadrich & Cohen LLP and The Oshman Firm, LLC, Free and Clear of Liens, Claims and Interests Pursuant to 11 U.S.C. Se filed by Trustee Elissa Miller (TR)) Redacted-Omnibus Reply In Support Of Trustee's: (A) Motion For Order Authorizing the Transition and Assignment Of The Estate's Interests In The NFL Concussion Litigation to Goldberg Persky White P.C. Free and Clear of Liens, Claims and Interests Pursuant to 11 U.S.C. § 363; and (B) Motion for Order Authorizing the Transition and Assignment of the Estate's Interests in the Mesh Litigation to Nadrich & Cohen LLP and The Oshman Firm, LLC, Free and Clear of Liens, Claims and Interests Pursuant to 11 U.S.C. § 363 with Proof of Service Filed by Trustee Elissa Miller (TR) (Strok, Philip) (Entered: 08/03/2021)
Document posted on Aug 2, 2021 in the bankruptcy, 23 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
The contingency fee for counsel in the 25 Mesh Litigation was either Pursuant to the Debtor's approximately 20 26 co-counsel/referral agreements with Nadrich, the Debtor was to receive of the 27 attorneys' fees to be recovered in the Mesh Litigation after referral fees are paid.The Debtor's clients in the NFL Concussion Litigation 18 and Mesh Litigation need counsel to continue to represent them, and the Transition 19 Agreements provide the clients with clarity as to who they are being represented by.The recovery to M 5‐ osta 4 44 16 be received from the J&J Litigation is also justified because (a) trial is fast approaching C 1 7 el T 17 and it will be incredibly difficult to transfer cases to new counsel; and (b) the Debtor's 18 bankruptcy has prevented the Debtor from actively participating in the current litigation. 21 E. Expert Opinions on the Value of the Debtor's Interests in the NFL 22 Concussion Litigation and Mesh Litigation are Irrelevant 23Moreover, as discussed 5 earlier, the value of the Debtor's interest in the NFL Concussion Litigation and Mesh 6 Litigation is either difficult or impossible to value.
List of Tables
Document Contents1 SMILEY WANG-EKVALL, LLP Philip E. Strok, State Bar No. 169296 2 firstname.lastname@example.org Kyra E. Andrassy, State Bar No. 207959 3 email@example.com Timothy W. Evanston, State Bar No. 319342 4 firstname.lastname@example.org 3200 Park Center Drive, Suite 250 5 Costa Mesa, California 92626 Telephone: 714 445-1000 6 Facsimile: 714 445-1002 7 Attorneys for Elissa D. Miller, Chapter 7 Trustee 8 UNITED STATES BANKRUPTCY COURT 9 CENTRAL DISTRICT OF CALIFORNIA — LOS ANGELES DIVISION 10 In re Case No. 2:20-bk-21022-BR 11 GIRARDI KEESE, Chapter 7 2 00 12 92626 4 445‐1 13 Debtor. OTRMUNSIBTUEES' SR:E PLY IN SUPPORT OF alifornia • Fax 71 14 (A) MOTION FOR ORDER a, C 00 AUTHORIZING THE TRANSITION AND es 10 15 ASSIGNMENT OF THE ESTATE'S osta M 4 445‐ 16 ILNITTIEGRAETSIOTNS ITNO T GHOEL NDFBLE CROGN PCEURSSSKIOYN C 1 7 el WHITE P.C. FREE AND CLEAR OF T 17 LIENS, CLAIMS AND INTERESTS PURSUANT TO 11 U.S.C. § 363; AND 18 (B) MOTION FOR ORDER 19 AUTHORIZING THE TRANSITION AND ASSIGNMENT OF THE ESTATE'S 20 INTERESTS IN THE MESH LITIGATION TO NADRICH & COHEN LLP AND THE 21 OSHMAN FIRM, LLC, FREE AND CLEAR OF LIENS, CLAIMS AND 22 INTERESTS PURSUANT TO 11 U.S.C. § 363 23 [Declarations of Jason Luckasevic and 24 Jeffrey Nadrich filed concurrently] 25 Date: August 10, 2021 Time: 2:00 p.m. 26 Ctrm.: 1668 255 E. Temple Street 27 Los Angeles, California 90012 28
11 TABLE OF CONTENTS Pag 2 3 I. INTRODUCTION .................................................................................................... 4 II. SUPPLEMENTAL BACKGROUND ......................................................................... 5 A. The NFL Concussion Litigation .................................................................... 6 B. Settlement of the NFL Concussion Litigation ............................................... 7 C. The Mesh Litigation ...................................................................................... 8 D. Current Status of the Mesh Litigation ........................................................... 9 E. Recent Proceedings in the Debtor's Bankruptcy Case ................................. 10 III. LEGAL ARGUMENT ............................................................................................... 11 A. Erika Has No Standing ................................................................................. 2 00 12 B. The Transition Agreements Provide an Optimal Outcome for the 92626 4 445‐1 13 Estate ......................................................................................................... 1alifornia • Fax 71 14 C. Tthhee D Terabntosri'tsio Cnl iAegnrtse e..m...e..n..t.s.. .A..r..e. .I.n.. .t.h..e.. .B...e..s..t. .I.n..t.e..r.e..s.t. .o..f. .t.h..e.. .E...s..t.a..t.e.. .a..n.d.. ....... 1a, C 00 es 10 15 D. The Transition Agreements Are Supported by a Valid Business osta M 4 445‐ 16 Justification Because They Are Reasonable .............................................. 1C 1 7 el E. Expert Opinions on the Value of the Debtor's Interests in the NFL T 17 Concussion Litigation and Mesh Litigation are Irrelevant ........................... 118 IV. CONCLUSION ...................................................................................................... 1 19 20 21 22 23 24 25 26 27 28
21 TABLE OF AUTHORITIES 2 Pag 3 CASES 4 Abbott v. Daff (In re Abbott), 5 183 B.R. 198 (B.A.P. 9th Cir. 1995) ........................................................................ 6 Fondiller v. Robertson (In re Fondiller), 707 F.2d 441 (9th Cir. 1983) ............................................................................. 9, 1 7 In re Autosport Int'l, Inc., 8 2013 WL 3199826 (Bankr. C.D. Cal. June 24, 2013) .............................................. 9 Sheen v. Diamond (In re Am. Comput. & Dig. Components, Inc.), 2005 WL 6960172 (B.A.P. 9th Cir. May 12, 2005) .................................................. 10 Wigley v. Wigley (In re Wigley), 11 886 F.3d 681 (8th Cir. 2018) ................................................................................... 2 00 12 92626 4 445‐1 13 STATUTES alifornia • Fax 71 14 11 U.S.C. § 363 ................................................................................................................. a, C 00 es 10 15 M 5‐ osta 4 44 16 C 1 7 el T 17 18 19 20 21 22 23 24 25 26 27 28
31 TO THE HONORABLE BARRY RUSSELL, UNITED STATES BANKRUPTCY JUDGE: 2 Elissa D. Miller, the chapter 7 trustee (the "Trustee") for the bankruptcy estate (th3 "Estate") of Girardi Keese (the "Debtor"), submits this omnibus reply ("Reply") in support 4 of the Trustee's (A) Motion for Order Authorizing the Transition and Assignment of the 5 Estate's Interests in the NFL Concussion Litigation to Goldberg Persky White P.C. Free 6 and Clear of Liens, Claims and Interests Pursuant to 11 U.S.C. § 363 [Docket No. 389] 7 (the "NFL Concussion Litigation Motion"); and (B) Motion for Order Authorizing the 8 Transition and Assignment of the Estate's Interests in the Mesh Litigation to Nadrich & 9 Cohen LLP and The Oshman Firm, LLC, Free and Clear of Liens, Claims and Interests 10 Pursuant to 11 U.S.C. § 363 [Docket No. 428] (the "Mesh Litigation Motion") (the NFL 11 Concussion Litigation Motion and the Mesh Litigation Motion collectively, the "Motions").12 00 12 The Reply addresses the following pleadings filed by Erika Girardi ("Erika") objecting to 92626 4 445‐1 13 the Motions: alifornia • Fax 71 14 Objection of Party-In-Interest Erika Girardi to Chapter 7 Trustee's Motion foa, C 00 es 10 15 Order Authorizing the Transition of the Estate's Interest in the NFL M 5‐ osta 4 44 16 Concussion Litigation to Goldberg Persky White P.C. Free and Clear of C 1 7 el T 17 Liens, Claims and Interests Pursuant to 11 U.S.C. § 363 [Docket No. 445]; 18 and 19 Objection of Party-In-Interest Erika Girardi to Chapter 7 Trustee's Motion fo20 Order Authorizing the Transition of the Estate's Interest in the Mesh 21 Litigation to Nadrich & Cohen LLP and The Oshman Firm, LLC Free and 22 Clear of Liens, Claims and Interests Pursuant to 11 U.S.C. § 363 [Docket 23 No. 481]. 24 25 26 27 1 Unless otherwise defined in this Reply, capitalized terms used herein shall have the meanings 28 ascribed to them in the Motions.
41 I. INTRODUCTION 2 The Motions should be granted and the objections overruled. First and foremost, 3 Erika has no standing to object. Assuming arguendo that Erika does have standing, her 4 objections have no basis and are completely devoid of any evidence. Instead, Erika 5 relies on alleged conversations between her counsel and unnamed sources that have 6 stated the Debtor's cases are "extremely valuable." These unidentified sources, who 7 Erika admits are competitors of the Debtor, provide no basis for their opinions. Based o8 this speculation, Erika suggests that the Trustee is "giving" away Estate value. This 9 suggestion is short sighted. Erika ignores that the transition agreements in the Motions 10 (the "Transition Agreements") provide value to the Estate by avoiding the risk that the 11 Estate is left only to assert inferior quantum meruit claims. Conjecture and false 2 00 12 assumptions are not grounds to deny the Motions. 92626 4 445‐1 13 The Transition Agreements should be approved because they preserve value for alifornia • Fax 71 14 the Estate. Make no mistake about it, the Debtor is no longer in a position to service its a, C 00 es 10 15 clients. If the Transition Agreements are not approved, clients are free to retain new M 5‐ osta 4 44 16 counsel, and the Trustee will be faced with proving up quantum meruit claims at a likely C 1 7 el T 17 sizeable loss to the Estate. Importantly, the Transition Agreements also protect the 18 Debtor's clients. The Transition Agreements eliminate any confusion for the Debtor's 19 clients as to who represents them, while also providing them with qualified counsel who 20 can continue to protect their interests. In short, the Transition Agreements should be 21 approved because they are supported by a valid business justification and are in the bes22 interest of the Estate. 23 The Trustee is legitimately concerned that Erika's objections represent her latest 24 effort to interfere with the Trustee's administration of the Debtor's case, and are part of a 25 larger campaign to hinder the Trustee's investigation of claims against Erika. The Court 26 recently entered an order approving the Trustee's application to employ special litigation 27 counsel to pursue the Estate's claims against Erika. Prior to special litigation counsel's 28 employment, the Trustee filed five motions to transition cases to qualified counsel. Erika
51 opposed none. Only when faced with a pending investigation has Erika's "shared 2 interest" for the Debtor's victims conveniently materialized. Erika's feigned concern is 3 nothing more than a distraction. In reality, Erika's objections could derail the Trustee's 4 work to maximize the Estate's value for the same creditors she claims to be looking after 5 There is no dispute that Erika is entitled to defend herself against the Trustee's 6 investigation and adversary proceeding. But Erika's defense should not spill over into th 7 Trustee's work to maximize value for the Estate and protect the Debtor's former clients. 8 Her defense should not be at the cost of the Debtor's victims and current clients. 9 For all of these reasons, the Court should grant the Motions. 10 11 II. SUPPLEMENTAL BACKGROUND 2 00 12 A. The NFL Concussion Litigation 92626 4 445‐1 13 Pre-petition, the Debtor represented approximately 100 NFL players claiming toalifornia • Fax 71 14 have suffered concussion injuries from repeated blows to the head (the "NFL Concussioa, C 00 es 10 15 Litigation"). Goldberg Persky White P.C. ("GPW") was named as co-counsel of record inM 5‐ osta 4 44 16 these cases. On or about December 26, 2012, the Debtor and GPW entered into a LetteC 1 7 el T 17 of Agreement regarding the NFL Concussion Litigation. See Ex. "1." Under the Letter of18 Agreement, the Debtor, GPW, and another firm, Russomano & Borrello ("RB") agreed to19 fee sharing arrangements depending mainly on the origination of the specific case. 20 Depending on the case, the Debtor would receive either of the 21 attorneys' fees recovered after the payment of any referral fees. In addition, the Letter of22 Agreement provided that the Debtor would be responsible for general litigation costs. Id. 23 GPW contends that the Debtor breached this obligation, instead leaving GPW to pay 24 nearly $2 million in costs throughout the NFL Concussion Litigation. See Declaration of 25 Jason Luckasevic. 26 Notwithstanding the Letter of Agreement, the court in the NFL Concussion 27 Litigation has entered an order modifying the fee agreements between plaintiffs and their28 counsel, with plaintiffs' counsel only entitled to receive of all recoveries for their
61 attorneys' fees. Moreover, counsel for plaintiffs are required to divert of any amount 2 recovered to a common benefit fund. In sum, the plaintiffs' firms involved in the NFL 3 Concussion Litigation will receive just of any sum recovered, with the potential to 4 receive some proceeds from the common benefit fund. See Declaration of Jason 5 Luckasevic. 6 During the NFL Concussion Litigation, GPW, RB, and the Debtor entered into a 7 loan agreement with Virage SPV 1, LLC ("Virage"), where Thomas Girardi agreed to 8 guarantee the Debtor's obligations under the loan agreement. Currently, Virage asserts 9 to hold a secured claim against the Debtor's recovery of attorneys' fees in the NFL 10 Concussion Litigation. 11 B. Settlement of the NFL Concussion Litigation 2 00 12 The NFL Concussion Litigation has since settled. However, settlement has not92626 4 445‐1 13 resulted in a definitive conclusion. A complicated global protocol governs the settlement alifornia • Fax 71 14 (the "Global Protocol"). The settlement put in place a two-party claim system wherein tha, C 00 es 10 15 NFL was one party having its own legal representation, and each former NFL player wasM 5‐ osta 4 44 16 the other party with independent legal representation. The Global Protocol utilizes a C 1 7 el T 17 complicated, multi-factor formula to calculate the threshold amount of a player's claim. 18 Specifically, the formula looks at whether the player was alive at a given date. From this19 date, a player then has 65 years going forward to file a claim for brain injury 20 compensation. The formula also requires the player to have played a certain number of 21 seasons compared to the player's age, and considers the player's degree of injury. This 22 information is then input into a formula which then determines the amount of the claim. 23 See Declaration of Jason Luckasevic. 24 The players are not entitled to settlement proceeds automatically. To eventually 25 receive settlement proceeds, the players file an initial statement of claim after completion26 of a lengthy test battery with two settlement-approved physicians. One evaluation in and27 of itself by the neuropsychologist includes a test that spans 6 hours. If the player's 28 evaluation results in an approved qualifying diagnosis, then the player must submit a
71 claim to the claims administrator, Brown Greer ("BG"). The claims process is filled with 2 complications throughout, including navigating a 126 page settlement agreement and 37 3 Frequently Asked Questions found on www.nflconcussionsettlement.com. To date, of th4 class of over 20,000 former NFL players, just 1,220 former players have received a 5 monetary award from this settlement claims process. See Declaration of Jason 6 Luckasevic. 7 Once the claim is filed, BG performs an initial review of the claim. Based on the 8 initial review, BG may either reject the claim, request additional information from the 9 claimant, or cite other issues. After the initial review, BG then conducts an initial 10 administration determination. Under the Global Protocol, the NFL is entitled (and in fact 11 does) appeal these determinations. BG is also entitled to assign review of the claim sua 2 00 12 sponte to a panel of experts selected by the NFL. Currently, much work remains for 92626 4 445‐1 13 plaintiffs' counsel under the Global Protocol, as players need assistance in simply alifornia • Fax 71 14 evaluating their past medical history, scheduling evaluations, submitting claims, and latera, C 00 es 10 15 defending their claim throughout the claims process. In short, the settlement did not fullyM 5‐ osta 4 44 16 resolve the players' claims, as claims have a 65 year window to be submitted and requirC 1 7 el T 17 continued prosecution. Currently, GPW's efforts have caused over 70 of its 400 plus 18 clients to receive a monetary award. See Declaration of Jason Luckasevic. 19 C. The Mesh Litigation 20 As detailed in the Trustee's Mesh Litigation Motion, the Mesh Litigation involves 21 two different sets of cases against two primary defendants, Johnson & Johnson, et al. 22 (the "J&J Litigation") and Boston Scientific Corporation (the "BSC Litigation"). 23 Prepetition, the Debtor represented approximately 30 plaintiffs in the J&J Litigation and 24 approximately 22 plaintiffs in the BSC Litigation. The contingency fee for counsel in the 25 Mesh Litigation was either Pursuant to the Debtor's approximately 20 26 co-counsel/referral agreements with Nadrich, the Debtor was to receive of the 27 attorneys' fees to be recovered in the Mesh Litigation after referral fees are paid. The 28 Trustee has been informed that the majority of the Debtor's cases were referred, with
81 referring counsel entitled to receive of attorneys' fees recovered. In addition, th 2 Trustee has been informed that the court in the J&J Litigation was on the verge of 3 dismissing the Debtor's clients for lack of prosecution. However, the court ultimately 4 declined to do so upon N&O's representation that the Trustee was seeking an order from5 this Court approving the transition of cases to N&O. See Declaration of Jeffrey Nadrich. 6 D. Current Status of the Mesh Litigation 7 In the BSC Litigation, the Debtor has agreed to a proposed aggregate settlement 8 amount of . But this does not mean that the BSC Litigation has concluded. 9 Currently, not a single plaintiff has received a settlement offer, nor has a single plaintiff 10 agreed to the settlement and signed a release. Moreover, before the settlement award i11 made to any plaintiff, a settlement master must first be retained and paid for. Next, all 2 00 12 medical documentation as to each plaintiff is analyzed and then submitted to the 92626 4 445‐1 13 settlement master in a summary fashion. Individual awards are then made by the alifornia • Fax 71 14 settlement master and plaintiffs are requested to agree to a release. If any plaintiffs do a, C 00 es 10 15 not agree to the release or the settlement terms (as if often happens), the case proceedsM 5‐ osta 4 44 16 back to litigation and trial. Moreover, many of the plaintiffs' recoveries may be C 1 7 el T 17 encumbered by asserted medical liens. At some point, these medical liens will need to 18 be evaluated and reviewed to determine their validity. In sum, counsel is required in the 19 BSC Litigation to move the settlement process forward. The J&J Litigation has not 20 settled. The parties in the J&J Litigation are actively litigating the case, with trial to be 21 scheduled for either February or March of 2022. See Declaration of Jeffrey Nadrich. 22 The Trustee has been informed that certain clients are considering terminating th23 Debtor as counsel due to inactivity. The Trustee has long acknowledged that the 24 Debtor's clients are free to choose their own counsel. However, if a client decides to 25 choose new counsel, the Debtor will only be entitled to a comparative contingent lien, 26 which is speculative and typically less than a quantum meruit claim. 27 28
91 E. Recent Proceedings in the Debtor's Bankruptcy Case 2 On April 26, 2021, the Trustee filed an application (the "Application") to retain 3 special litigation counsel to investigate and pursue potential claims against Erika and an4 of her related entities. On May 10, 2021, Erika filed an opposition to the Application. On 5 June 1, 2021, the Trustee filed a reply to Erika's opposition. Ultimately the court granted6 the Application, and on June 10, 2021, the Court entered an order approving the 7 Trustee's request to retain special litigation counsel. 8 On June 24, 2021, Erika filed a motion to reconsider the Application. This motion,9 filed in the midst of the Trustee's special litigation counsel's investigation, seeks to 10 remove special litigation counsel and is currently pending.2 On July 14, 2021, the 11 Trustee's special litigation counsel filed a complaint against Erika and her related entities2 00 12 Prior to the Court's order granting the Application, the Trustee filed five separate motions92626 4 445‐1 13 to approve the transitions of cases to other counsel. See Docket Nos. 123, 229, 313, alifornia • Fax 71 14 322, and 326. Erika did not oppose any of these five motions. a, C 00 es 10 15 M 5‐ osta 4 44 16 III. LEGAL ARGUMENT C 1 7 el T 17 A. Erika Has No Standing 18 Erika lacks standing to bring the Motion. She is a litigation defendant – nothing 19 more. "A party's standing in a bankruptcy case is governed by the 'person aggrieved' 20 standard. A 'person aggrieved' is one whose pecuniary interests are directly adversely 21 affected." Sheen v. Diamond (In re Am. Comput. & Dig. Components, Inc.), 2005 WL 22 6960172 at *3 (B.A.P. 9th Cir. May 12, 2005); see also In re Autosport Int'l, Inc., 2013 W23 3199826 at *3-4 (Bankr. C.D. Cal. June 24, 2013) (determining that opposition 24 documents to motion could not be considered because the party lacked standing). 25 26 2 On July 5, 2021, the day before the scheduled hearing, Erika filed a late Opposition to the Motion 27 to Approve Stipulation Between Jason M. Rund (Chapter 7 Trustee) and Secured Creditors Joseph Ruigomez, Jaime Ruigomez, and Kathleen Ruigomez for Relief from the Automatic Stay Under 11 U.S.C. 28 § 362 [Docket No. 236] in Thomas Girardi's individual case.
101 Erika has not made any showing of how she is a person aggrieved with standing. 2 Here, Erika has not filed a proof of claim, nor has she ever claimed to be a creditor of the 3 Estate. Erika has no pecuniary interest that would be adversely affected by the Motions. 4 Erika has previously asserted that Thomas Girardi "was the 100% equity holder of Girard 5 Keese," and she "has a community property interest in any distributions due to Mr. 6 Girardi." See Reply In Support of Motion for Reconsideration at 11:9-11, Docket No. 517 (emphasis added). As acknowledged by Erika, her community interests, if any, are with 8 respect to Thomas Girardi's equity interest in the Debtor. Thomas Girardi's equity 9 interest is property of his individual bankruptcy estate and is controlled by its trustee, 10 Jason Rund—not the Debtor. As such, her alleged community property interest can only11 be asserted against Thomas Girardi's estate. Erika's alleged residual interest against 2 00 12 Thomas Girardi's individual estate has no ties to this Estate and does not confer her with92626 4 445‐1 13 standing. alifornia • Fax 71 14 Erika also cannot establish standing simply because she is a defendant in a a, C 00 es 10 15 fraudulent transfer action. Courts have routinely held that status as a defendant in a M 5‐ osta 4 44 16 fraudulent transfer case does not confer standing. See, e.g. Abbott v. Daff (In re Abbott)C 1 7 el T 17 183 B.R. 198 (B.A.P. 9th Cir. 1995) (holding that the debtor's wife did not have standing 18 as a potential defendant to appeal the order reopening case so that trustee could pursue19 fraudulent transfer claims against her); Wigley v. Wigley (In re Wigley), 886 F.3d 681, 6820 (8th Cir. 2018) (holding that debtor's wife did not have standing to appeal bankruptcy 21 court's order granting the creditor relief from stay to prosecute fraudulent transfer action 22 against her). 23 The Ninth Circuit's decision in Fondiller v. Robertson (In re Fondiller), 707 F.2d 24 441 (9th Cir. 1983) mirrors the facts here. In Fondiller, the chapter 7 trustee employed 25 special litigation counsel to investigate and pursue fraudulent transfer claims against a 26 debtor and his wife, a non-debtor. The bankruptcy court approved the employment of 27 special litigation counsel, and the BAP affirmed. Subsequently, the wife appealed the 28 order, and the Ninth Circuit affirmed the BAP. In its holding, the Ninth Circuit noted that
111 the wife's only "demonstrable interest" was as a "potential party defendant in an 2 adversary proceeding[.]" Id. at 443. Thus, because the "order did not diminish her 3 property, increase her burdens, or detrimentally affect her rights," the wife lacked 4 standing to appeal the order. Similarly, the Motions have no direct impact on Erika. The 5 Motions do not diminish her property, increase any burdens, or detrimentally affect any 6 rights. In sum, Erika, is a mere defendant and does not have standing to object to the 7 Motions. The Court should disregard her objections on this basis alone. 8 B. The Transition Agreements Provide an Optimal Outcome for the 9 Estate 10 The Transition Agreements provide a highly desired outcome for the Estate by 11 maximizing value for the Estate. Erika's contention that the Trustee has raised a "false 2 00 12 exigency" with respect to the NFL Concussion Litigation Motion is incorrect. The Trustee92626 4 445‐1 13 entered into the Transition Agreement after arms-length negotiations and evaluating the alifornia • Fax 71 14 benefits for the Debtor's Estate. As the Trustee has recognized from the beginning of tha, C 00 es 10 15 Debtor's case, every client of the Debtor has the choice to their own counsel. While the M 5‐ osta 4 44 16 clients may choose to remain with the Debtor as the Trustee works to transition their C 1 7 el T 17 cases to qualified counsel, the clients are under no obligation to do so. Thus, there is th18 risk that clients will make the decision to terminate their relationship with the Debtor and 19 instead choose entirely new counsel. 20 This risk that clients will leave the Debtor is especially pronounced given the 21 publicity surrounding the Debtor's bankruptcy. Clients may be especially concerned or 22 even confused as to who represents them if they know of the Debtor's chapter 7 case. If23 clients choose to retain new counsel, then the Estate's interest in attorneys' fees will be 24 limited to a quantum meruit claim. This quantum meruit claim will be far less than any 25 amount the Estate will receive under the Transition Agreements. This risk is not 26 speculative. The Trustee has since learned that certain of the Debtor's clients in the 27 Mesh Litigation are currently considering retaining new counsel if the Debtor remains 28 inactive. See Declaration of Jeffrey Nadrich. Finally, the court in the J&J Litigation nearl
121 dismissed the Debtor's clients for lack of prosecution, only declining to do so when N&O 2 represented that the Trustee would be seeking an order to transition the cases to N&O. 3 Id. These clients should not suffer prejudice due to the Debtor's inability to handle their 4 cases. The Transition Agreements are necessary to prevent further erosion of the 5 Estate's financial interests in its cases and protect the Debtor's current clients. Delay 6 only guarantees increased risks to the Estate. 7 The Transition Agreements maximize the value for the Estate. Erika's objections 8 are founded on the flawed premise that the Trustee must focus on the "value" of the 9 cases and the amount that the Estate has "given up" under the Transition Agreements. 10 This framework is based on two faulty assumptions: (1) that the value of the cases can 11 be quantified; and (2) that the Estate is automatically entitled to the recoveries permitted 2 00 12 under its pre-petition retainer agreements. Erika's analysis is also backward looking and92626 4 445‐1 13 fails to consider the risk that the Debtor only receives quantum meruit claims if the alifornia • Fax 71 14 Transition Agreements are not approved. a, C 00 es 10 15 First, the value of the Debtor's cases are generally not able to be quantified. ErikM 5‐ osta 4 44 16 provides no evidence for her contention that the cases can even be valued. Instead, C 1 7 el T 17 Erika's counsel makes passing references to conversations with "experienced mass 18 tort/plaintiff's attorneys who were and are competitors" of the Debtor that have told 19 counsel the Debtor's cases "should be extremely valuable." See, e.g., NFL Concussion 20 Litigation Motion at 2:25-27. Erika offers no explanation for how these unnamed sources21 have determined the Debtor's cases are "extremely valuable" when these sources are 22 admittedly "competitors" of the Debtor and have no access to any of the Debtor's 23 confidential information. In reality, the Debtor's cases cannot be easily valued.3 In 24 particular, the NFL Concussion Litigation cannot be valued. As noted earlier, potential 25 plaintiffs have 65 years to submit a claim, which is subject to a formula, with the claim 26 amount subject to dispute. As to the NFL Concussion Litigation, no expert can possibly 27 28 3 As discussed later, the opinion of experts as to the value of the Debtor's cases is not relevant.
131 figure out the value of the cases given that players' claims may be submitted more than 2 half a century later. There is no way to value unknown claims. The Debtor's interest in 3 the J&J Litigation is also difficult to value. The Debtor did not have a full-interest in its 4 attorneys' fees, and the settlement amount in the BSC Litigation involved different 5 defendants. 6 Second, Erika wrongly assumes that the Debtor will automatically be entitled to all7 of its fees and reimbursement of costs due under its pre-petition retainer agreements. 8 Such a result is far from certain, particularly given that the Debtor is no longer able to 9 fulfill its obligations to its clients. It is not unusual for Debtor's co-counsel to contend that10 the Debtor breached its agreement by not adequately representing its clients or paying it11 share of costs, and thus, the Debtor is not entitled to any of its fees (or a significantly 2 00 12 smaller portion of its fees) for breaching a material term of a contract. These claims, if 92626 4 445‐1 13 true, would result in a significantly diminished recovery for the Estate that is far less thanalifornia • Fax 71 14 the amounts the Estate will receive under the Transition Agreements. In sum, it is not a, C 00 es 10 15 clear whether the Debtor would be entitled to receive all of its fees and reimbursement ofM 5‐ osta 4 44 16 costs pursuant to its pre-petition agreements. C 1 7 el T 17 The Estate is not "giving up" value (value that as explained above, cannot be 18 easily quantified) under the Transition Agreements. Erika fails to consider that the 19 Transition Agreements avoid a result where the Estate is left only with quantum meruit 20 claims.4 In this outcome, the Estate would receive significantly less value, as the 21 amounts received under the Transition Agreements exceed any quantum meruit claims 22 the Trustee could assert on behalf of the Estate. Further, asserting the quantum meruit 23 claims is not without expense to the Estate. The Trustee will need to compile the 24 Debtor's disorganized cost ledgers and billing records to assert a quantum meruit claim 25 that will likely need to be defended. Compilation of this information and defense of the 26 claim will be at a great expense, and only to receive a significantly smaller recovery for 27 4 In the Mesh Litigation, the Estate may only be entitled to a comparative contingent lien, which is 28 speculative and potentially even less than a quantum meruit claim.
141 the Estate. In sum, Erika's analysis ignores the risks the Estate may likely face if the 2 Transition Agreements are not approved. 3 C. The Transition Agreements Are In the Best Interest of the Estate and 4 the Debtor's Clients 5 The Transitions Agreements are in the best interest of the Debtor's clients and the 6 Estate. Substantial work remains in the both the NFL Concussion Litigation and Mesh 7 Litigation; work that the Debtor is no longer able to do. As detailed above, the NFL 8 Concussion Litigation requires counsel to conduct plaintiff intake, coordinate with health 9 care providers so that players can be diagnosed, and compile evidence for the player's 10 claim so that it can be submitted to the claims administrator. Once the claim is 11 submitted, counsel must continue to work to defend the player's claim against adverse 2 00 12 rulings from the claims administrator and challenges from the NFL. Additional work 92626 4 445‐1 13 remains in both cases of the Mesh Litigation. In the BSC Litigation, counsel must still alifornia • Fax 71 14 calculate and reach consensus on the amounts to be apportioned to clients, as well as a, C 00 es 10 15 evaluate the validity of the medical liens being asserted against the recoveries. In the M 5‐ osta 4 44 16 J&J Litigation, no settlement has been reached. The parties are actively litigating with C 1 7 el T 17 trial approaching in early 2021. The Debtor's clients in the NFL Concussion Litigation 18 and Mesh Litigation need counsel to continue to represent them, and the Transition 19 Agreements provide the clients with clarity as to who they are being represented by. 20 Moreover, the Trustee's selected counsel is best prepared. GPW has significant 21 experience and has been involved in the NFL Concussion Litigation since its inception. 22 See Declaration of Jason Luckasevic. In addition, because GPW is a co-borrower on th23 loan to Virage, GPW is incentivized to maximize recovery for both its clients and to 24 reduce its obligations to Virage. The Estate is well-served by this motivation. Further, 25 both Nadrich and Oshman have extensive experience, with Nadrich settling over 1,000 26 mass tort cases over the past 20 years and N&O being involved in the Mesh Litigation 27 since 2010. In sum, the Transition Agreements prevent the Estates from losing value, 28
151 and provide the Debtor's clients with competent counsel to protect their interests. The 2 Transition Agreements should be approved. 3 D. The Transition Agreements Are Supported by a Valid Business 4 Justification Because They Are Reasonable 5 There is business justification for the Transition Agreements because they are 6 reasonable. With respect to the transition agreement for the NFL Concussion Litigation, 7 the Estate will receive 25% of the amounts recovered and any referral fees will be 8 deducted from GPW's share.5 This result benefits the Estate, and is especially 9 reasonable given that (a) the court in the NFL Concussion Litigation has reduced all 10 plaintiffs' counsel's fees to of any amounts recovered, and (b) there is extensive 11 work to be completed over a long period of time. Moreover, the amounts to be received 2 00 12 in the J&J Litigation and BSC Litigation are reasonable because the majorit92626 4 445‐1 13 of the Debtor's cases in the Mesh Litigation were referred, with the Debtor only to receivalifornia • Fax 71 14 of any recovery. Now, the referral fees will not be deducted from the Debtor's a, C 00 es 10 15 share and will instead be deducted from the allocations owed to N&O. The recovery to M 5‐ osta 4 44 16 be received from the J&J Litigation is also justified because (a) trial is fast approaching C 1 7 el T 17 and it will be incredibly difficult to transfer cases to new counsel; and (b) the Debtor's 18 bankruptcy has prevented the Debtor from actively participating in the current litigation. 19 Accordingly, the Transition Agreements are reasonable, and a valid business justification20 warrants their approval. 21 E. Expert Opinions on the Value of the Debtor's Interests in the NFL 22 Concussion Litigation and Mesh Litigation are Irrelevant 23 There is no need for the Trustee to retain and confer with experts to value the 24 Debtor's Interest in the NFL Concussion Litigation and Mesh Litigation. In seeking to 25 transition cases, the Trustee is working hard to secure the highest percentage of 26 5 Erika asserts that the NFL Concussion Litigation Motion states that certain of the cases have been27 referred by GPW to the Debtor. This is false. The Motion's only mention of referrals is in the context of thterms of the transition agreement, which provides that to extent referral fees are owed to other firms, these28 fees will be deducted from GPW's allocation rather than the Estate's allocation.
161 recovery for the Debtor. Any valuation of the Debtor's cases is irrelevant to this goal. Fo2 instance, the Trustee does not need an expert to explain that a proposed allocation of 3 10% for the Estate is not as valuable as an offer that the Estate receive an allocation 4 25%. The value of the cases does not change this analysis. Moreover, as discussed 5 earlier, the value of the Debtor's interest in the NFL Concussion Litigation and Mesh 6 Litigation is either difficult or impossible to value. Attempting to value the NFL 7 Concussion Litigation Cases and the Mesh Litigation Cases is a costly exercise in futility 8 that has no bearing on the Trustee's determination of what is best for the Estate. In 9 short, experts are not required for the Trustee to complete her duties. 10 In addition, the Trustee has neither the luxury of time nor the financial resources 11 available to retain experts. In a perfect world, that suggestion might make sense. 2 00 12 Unfortunately, that is not the reality that the Trustee has been dealing with since her 92626 4 445‐1 13 appointment. alifornia • Fax 71 14 a, C 00 es 10 15 IV. CONCLUSION M 5‐ osta 4 44 16 For the foregoing reasons, the Trustee requests that the Court enter ordersC 1 7 el T 17 granting the Motions. 18 19 DATED: August 3, 2021 Respectfully submitted, 20 SMILEY WANG-EKVALL, LLP 21 22 By: 23 PHILIP E. STROK Attorneys for Elissa D. Miller, Chapter 7 24 Trustee 25 26 27 28
20PROOF OF SERVICE OF DOCUMENT am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is 3200 ark Center Drive, Suite 250, Costa Mesa, CA 92626. true and correct copy of the foregoing document entitled (specify): OMNIBUS REPLY IN SUPPORT OF TRUSTEE'S: )MOTION FOR ORDER AUTHORIZING THE TRANSITION AND ASSIGNMENT OF THE ESTATE'S INTERESTS INHE NFL CONCUSSION LITIGATION TO GOLDBERG PERSKY WHITE P.C. FREE AND CLEAR OF LIENS, CLAIMSND INTERESTS PURSUANT TO 11 U.S.C. § 363; AND (B) MOTION FOR ORDER AUTHORIZING THE TRANSITIOND ASSIGNMENT OF THE ESTATE'S INTERESTS IN THE MESH LITIGATION TO NADRICH & COHEN LLP ANDHE OSHMAN FIRM, LLC, FREE AND CLEAR OF LIENS, CLAIMS AND INTERESTS PURSUANT TO 11 U.S.C. §63 will be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and)in the manner stated below: .TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling Generalrders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date)August 3, 2021 I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that thllowing persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated below: Service information continued on attached pag . SERVED BY UNITED STATES MAIL: n (date) ________ , I served the following persons and/or entities at the last known addresses in this bankruptcy caser adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, firstlass, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judgill be completed no later than 24 hours after the document is filed. Service information continued on attached pag . SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state method r each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on (date) ____, I served the following ersons and/or entities by personal delivery, overnight mail service, or (for those who consented in writing to such ervice method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that ersonal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed. Service information continued on attached pag declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. August 3, 2021 Gabriela Gomez-Cruz /s/ Gabriela Gomez-Cruz Date PrintedName Signature
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