Law firm Venable hit with $10 mln lawsuit by ex-client in FDA fight

By David Thomas and Mike Scarcella

Feb 20 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to D.Thomas@thomsonreuters.com)

For three years, law firm Venable represented a California clinic fighting claims by the U.S. Food and Drug Administration that it was selling unauthorized stem cell therapy treatments.

Now the clinic is suing Venable and one of its lawyers for more than $10 million, arguing that the law firm betrayed its trust and spread false claims about the clinic's medical practices in a different case.

The California Stem Cell Treatment Center asked a California state judge last week to order Venable to pay back all of the fees it has paid, plus another $10 million in compensatory damages.

The clinic said it already paid approximately $500,000 to Venable, and that the firm claims it still owes another $532,000 in unpaid bills.

A spokesperson for Venable and counsel Thomasina Poirot, who was named as a defendant, declined to comment.

A lawyer for the clinic did not immediately respond to a request for comment.

Venable led the clinic's defense team in the FDA case until one of its partners joined rival firm Jones Day in April 2021. Venable remained "intimately, actively involved in all aspects of the case through trial and beyond," the clinic said in its February 13 lawsuit.

U.S. District Judge Jesus Bernal in Riverside, California, held a bench trial in the FDA's case in 2021 and eventually sided with the California clinic, ruling in August 2022 that its stem cell treatments did not fall under the FDA's regulatory purview. By the time the ruling was issued, all of the remaining Venable lawyers representing the clinic had withdrawn from the case.

Meanwhile, the clinic and other defendants were sued for alleged medical malpractice in Washington state court in January 2022. The lawsuit claimed that a patient, Michael Trujillo, died from complications associated with the injection of stem cells into his spine.

Venable and Poirot began representing a defendant in the Trujillo case, a Seattle-based stem cell doctor, without the California clinic's consent and without notifying it first, according to the clinic's lawsuit against Venable.

In that role, Venable and Poirot falsely claimed that the California clinic's techniques contributed to Trujillo's death, damaging the reputations of the clinic and the doctors who run it, the lawsuit said.

The clinic said it received "summary adjudication" in the malpractice case because none of its affiliates actually treated Trujillo. But it said it had to pay $200,000 in legal fees relating to the case, and could spend more if there's an appeal.

The 9th U.S. Circuit Court of Appeals reversed Bernal's decision in the FDA case in September, finding that the clinic's treatment procedure is subject to FDA regulation. Celeste Brecht, a Jones Day partner who represented the clinic both at trial and on appeal, did not immediately respond to a request for comment.

-- In other news, U.S. plaintiffs' lawyers who negotiated a $275 million settlement with Swiss generic drugmaker Sandoz said they will ask a judge to award them up to $91.6 million in fees.

The settlement, filed in federal court in Pennsylvania this week, resolves consumer and other buyers’ claims that Sandoz conspired with other pharmaceutical companies to inflate the prices of some drugs.

Sandoz denied any wrongdoing in agreeing to settle. The company said it will cooperate with the plaintiffs as they pursue claims against other drugmakers.

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