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February 21, 2014

Personal Grudge Adds Another Layer of Intrigue to SCOTUS Case

Paul Barrett brings to light the secret history behind a blockbuster securities case set to go before the Supreme Court next month.

In Halliburton v. Erica P. John Fund, the court will decide the future of the “fraud-on-market” theory, which allows lawyers to group shareholders together for securities class actions rather than requiring them to prove individual investors relied on any alleged fraud.

But Barrett says the motivation behind the case is more personal. The plaintiffs lawyers behind the case had an axe to grind against former Vice President Dick Cheney, he reports in Bloomberg Businessweek:

Dig deeper into the records, though, it becomes clear that Bill Lerach, the former Milberg Weiss partner who for a time controlled the case, actually had a bee in his bonnet about Dick Cheney. During a break from politics in the Clinton era, Cheney served from 1995 to 2000 as Halliburton’s chairman and chief executive. Lerach didn’t formally name Cheney as a defendant, but the plaintiffs’ 2005 amended complaint reads like a semi-hysterical indictment of the Republican stalwart, who, as we all know, had returned to Washington to serve as vice president to George W. Bush.

Lerach raised money for Democratic causes and politicians. He did not like Cheney. In their 2010 Lerach biography, Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to Its Knees, Patrick Dillon and Carl Cannon described how Lerach essentially admitted that he viewed the Halliburton case as a means to afflict Cheney. After all, the prospect of deposing a sitting vice president under oath about his years as a corporate CEO would have excited any red-blooded Democratic-leaning litigator.

The court is scheduled to hear oral arguments on March 5.

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