January 31, 2010 in Business

Trolls lurk near financial hardship

By The Spokesman-Review
 

Corey Deter sued Sterling Financial Corp. on Jan. 11.

The suit was dismissed Jan. 21.

Turns out Deter never sued Sterling. Attorneys trolling for a plaintiff did.

Deter worked for Sterling for three years before leaving in September to work for an Oregon bank.

In December, he saw an announcement from Brodsky & Smith LLC, a Pennsylvania law firm that said it was “investigating” Sterling on behalf of participants in the Spokane bank’s 401(k) plan. The so-called investigation was no more than a parroting of claims made by shareholders aggrieved by the plunge of Sterling stock between July 2008 and January 2009.

A shareholder class action was filed against Sterling in December. Almost immediately, six other law firms piled on by seeking other plaintiffs. The game: The attorney who snags the client with the biggest loss takes over the case, and the fees.

By targeting Sterling 401(k) participants, Brodsky & Smith was casting for a different sort of fish.

The faux Deter lawsuit alleged Sterling and some executives did not fulfill their fiduciary responsibilities managing the retirement program, which matched employee contributions with Sterling stock.

Deter says his 401(k) losses amounted to maybe $5,000, an amount he did not think was worth the hassle of litigation. But he concedes early on he told Brodsky & Smith it could represent him.

What followed was an exchange of e-mails and telephone calls, with the Pennsylvania firm pressing him to sign paperwork that could get a lawsuit under way. Deter says he signed nothing, did not even open some of the e-mails, and had not decided to sue.

Instead, he headed for a Caribbean vacation. Until he returned, Deter says he was unaware he was the plaintiff in a class action against his former employer.

“I don’t even know what the complaint was,” he says

Deter contacted the attorneys, who had the U.S. District Court in Spokane dismiss the suit.

Since then, he has asked Brodsky & Smith and Hagens Berman Sobol Shapiro LLP, the Seattle law firm that filed the lawsuit, to clear his name by publicly acknowledging he did not consent to its filing.

“This could damage my reputation,” Deter says. “I was briefly scared for my job.”

Andrew Volk, an attorney with Hagens Berman, sent a letter to Deter Jan. 21 saying the lawsuit was filed only after Brodsky & Smith assured the Seattle firm he had consented. He apologized for the inconvenience.

But in an e-mail sent the same day, he declined to issue a statement because the firm does not know that he did not authorize the lawsuit.

Volk held to that position in an e-mail last week, and added, “Please let us know with whom your reputation has been damaged. If there is a particular person or entity you wish us to write or e-mail, we will do so and inform that that you have told us that you never authorized the suit and we therefore dismissed it.”

In a Jan. 20 e-mail, Jason Brodsky maintained that Deter had given his consent during the exchange of e-mails and never advised the firm otherwise.

An exasperated Deter says he has an attorney and plans to file complaints against his would-be attorneys with the Pennsylvania and Washington bar associations. Beyond that, he probably will let the matter drop, with a lesson learned about curiosity and attorneys.

“What does it hurt to ask?” he says. “Well, I guess it does hurt to ask.”

For Sterling, the piling on continues. Hagens Berman had another 401(k) lawsuit in the courthouse before the first was officially dismissed. Another law firm has filed a second lawsuit.

The trolling never ends.


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