229 Former Prudential Employees Tell All --

After Originally Being Gagged By Judge Winard

Click headline for full story

October 2010

Plaintiffs, Alleging Prudential Conspired With Their Lawyers,
Try to Pierce Privilege

Mary Pat Gallagher, New Jersey Law Journal

10-06-10 -- Ex-employees of Prudential Life Insurance who say the company bribed their lawyers to keep their bias claims out of court are seeking access to thousands of documents the company asserts are privileged. . . . The plaintiffs claim that the documents fall under the crime-fraud exception, a statutory loophole in the attorney-client privilege for communications for legal services "sought or obtained in aid of the commission of a crime or fraud." . . . The request was made in a motion by Stephen Snyder, the attorney for 73 of the 234 plaintiffs, who told Bergen County Judge Brian Martinotti at a hearing Wednesday that the alleged collusion between Prudential and Leeds Morelli & Brown, of Carle Place, N.Y., was unprecedented. . . . "It is unheard of for an adversary to pay a contingency fee up front," he said, especially when $4 million of it is nonrefundable and the amount of the payment is laid out in a separate agreement not signed by the clients and allegedly hidden from them. Snyder made repeated references to Prudential's conversion to a publicly traded company, which he said made it extra important to keep the claims -- which included allegations of red-lining minorities -- out of court and the public eye. Prudential did not go public until 2001, but in 1999, when the alleged bribe was paid, Prudential needed government approval, and bad publicity could have derailed the plans, the plaintiffs claim. . . . Prudential's lawyer retorted that the remedy sought is also unprecedented. "No court in the history of this state has ever done what the plaintiffs are asking this court to do," said Gerard Harper, of Paul Weiss Rifkind Wharton & Garrison in New York. . . . The plaintiffs seek the entire privilege log, about 37,000 documents totaling more than 100,000 pages, and they are asking for it without in camera review by Martinotti to determine whether the crime-fraud exception applies to each document, Harper said.

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The case, originally known as Lederman v. Prudential, was transferred in February from Essex to Bergen for centralized case management under the caption, In re: Prudential Life Ins. Co. of America Tort Litigation, BER-L-2251-10.

September 2010

Court Nixes Challenge to Special Master in Prudential Fraud Suit

Mary Pat Gallagher, New Jersey Law Journal

09-14-10 -- Former Prudential Life Insurance Co. employees have lost a bid to remove a special master from their suit accusing the company of bribing their lawyers to keep their employment claims out of court. . . . The New Jersey Superior Court, Appellate Division on Sept. 3 denied an emergent interlocutory appeal of the appointment of former U.S. Magistrate Judge William Hunt to oversee discovery, including nearly 300 depositions to be done by Oct. 6. . . . The plaintiffs argued that no master should have been named in the case, In re: Prudential Life Insurance Co. of America Tort Litigation, BER-L-2251-10, since consent or "extraordinary circumstances," as required by R. 4:41-1, were absent.

August 2010

Master in Prudential Fraud Case Lowers His Fees as Plaintiffs Seek His Ouster

Judge defends appointment of special master and the hours billed

Charles Toutant, New Jersey Law Journal

08-26-10 -- The special master appointed to handle discovery in a mammoth fraud and bribery suit against Prudential Life Insurance Co. has agreed to reduce his fees, even as the plaintiffs lawyers are trying to dispense with him altogether. . . . William Hunt said in an Aug. 19 letter to the parties that he would cut his hourly rate from $450 to $350. The concession came after plaintiffs lawyer Angela Roper sounded alarms over the $77,265 bill Hunt submitted for his first three weeks on the job. The rate reduction, retroactive to Hunt's appointment, will shave about $17,000 off the total. . . . But Roper says she will nonetheless proceed with her motion, filed July 30, for an emergent interlocutory appeal of Hunt's appointment in the case, In re Prudential Life Insurance Co. of America Litigation, AM-00820-09.

Plaintiffs Seek Ouster of Master in Fraud Litigation Against Prudential

Mary Pat Gallagher, New Jersey Law Journal

08-18-10 -- Plaintiffs in a massive fraud and commercial bribery suit against Prudential Life Insurance Co. have asked an appeals court to overturn the appointment of a discovery master, partly because of his $77,265 bill for his first three weeks. . . . In motion papers filed Aug. 13, they referred to the amount billed by William Hunt as a "princely sum" equal to about half a Superior Court judge's annual salary. . . . It is not just Hunt they object to but the decision to appoint any discovery master, which they contend is not authorized by Rule 4:41-1, because it was done without their consent and in the absence of "extraordinary circumstances." . . . They had already moved for leave to file an emergent interlocutory appeal on July 30, before they received Hunt's first bill. But once they got his Aug. 10 invoice covering 171.7 hours he spent from July 16 through Aug. 4, they made a supplemental filing arguing that the cost of paying him would unjustly burden them and possibly bankrupt their lawyers.

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July 2010

Special Master in Prudential Litigation Steps Aside as Conflicts Are Alleged

Mary Pat Gallagher, New Jersey Law Journal

07-19-10 -- The day after her appointment to oversee discovery in massive litigation against Prudential Life Insurance, a special master has withdrawn amid allegations that impermissible conflicts of interest barred her involvement. . . . Lauren Handler said Tuesday she was bowing out not due to any actual conflict but because she did not have the confidence of counsel for the plaintiffs: 234 former Prudential employees who accuse the company of, among other things, conspiring with their own lawyers to keep them from suing it. . . . "When the litigants do not have confidence that our system of justice is fair, we all lose out. I do not wish to play a part in that," Handler said in an e-mail to the attorneys in the case. . . . The plaintiffs counsel contended Handler was disqualified by two blatant conflicts of interest. . . . One is that Angela Roper, of Roper & Twardowsky in Totowa, who represents 163 of the Prudential plaintiffs, also represents a plaintiff in a malpractice suit against Handler's firm, Porzio Bromberg & Newman in Morristown. . . . The other is that Porzio Bromberg represented a corporate defendant in another litigation with claims strikingly similar to those in the Prudential case. . . . In the case at hand, In re Prudential Life Insurance Co. of American Litigation, BER-L-2251-10, the plaintiffs alleged Prudential agreed with law firm Leeds Morelli & Brown, of Carle Place, N.Y., to steer their discrimination and other claims into confidential arbitration, paying the firm $5 million for its legal fees.

June 2010

Prudential insurance case gets court date

Susan Todd/The Star-Ledger

06-25-10 -- A group of former sales agents with Prudential Life Insurance who allege the company paid millions of dollars nearly a decade ago to resolve a discrimination lawsuit rather than allow it to be decided in court are scheduled to go to trial next year, according to an order issued by a Superior Court judge in Bergen County. . . . During a case management conference Tuesday, Judge Brian Martinotti ordered the attorneys in the case to complete discovery by Sept. 30, limited the depositions of each plaintiff to 2½ hours and set the trial date for June 6, 2011. . . . "This is a firm date," Martinotti noted in the order. . . . Legal battles are often lengthy ordeals, but the Prudential case has taken a particularly windy course: eight years, numerous court orders and appeals, five superior court judges and an aborted mediation process to get to this point. . . . "We think the facts are compelling," said Angela Roper, a Totowa attorney representing 162 plaintiffs. . . . "We’re looking forward to having our clients have their day in court." . . . Bob DeFillipo, a spokesman for Prudential, declined to comment yesterday, saying it is the company’s policy not to talk about active litigation. . . . An attorney representing Prudential also declined to comment.

Judge Puts Rush on Discovery in Fraud Suit Against Prudential

Mary Pat Gallagher, New Jersey Law Journal

06-23-10 -- Hundreds of ex-employees who claim Prudential Life Insurance conspired with a law firm to keep them from suing for discrimination have got a trial date -- a year from now -- and lawyers on both sides are locked into a breakneck discovery schedule. . . . At a case management conference on Tuesday, Bergen County Superior Court Judge Brian Martinotti set the June 6, 2011, trial date and other deadlines in Lederman v. Prudential Life Ins. Co. of America, BER-L-2251-10. . . . In the suit, originally filed in Essex County, N.J., in 2002, more than 230 plaintiffs allege that the firm handling their claims against Prudential accepted $5 million from the insurer to steer them away from court and into a confidential alternative dispute resolution process, where they recovered less than if they had sued. . . . The plaintiffs also sued the law firm, Leeds Morelli & Brown of Carle Place, N.Y., but the claims were dismissed without prejudice because of discovery violations. The firm, however, remains in the case as a third-party defendant. . . . Prudential has asserted contribution claims against four law firms that represented some employees in the dispute- resolution process and obtained settlements for them. The company contends that if the process did not adequately compensate those employees for their damages, those lawyers must be at fault. . . . The case was sent to Bergen for centralized case management in February. . . . At Tuesday's conference, Martinotti gave the parties until Sept. 30 to complete fact discovery by deposing each plaintiff, the defendants and some nonparties. To meet that deadline, Prudential and Leeds Morelli will each have only 2.5 hours per plaintiff. . . . Angela Roper, who represents 162 plaintiffs, had urged Martinotti to bifurcate the case and take discovery on liability first. That approach might reduce the number of depositions or narrow their scope, she suggested. For example, it would not be necessary to ask whether each plaintiff was aware of the $5 million payment, if, as the plaintiffs allege, Leeds Morelli engaged in the unauthorized practice of law in New Jersey.

February 2010

Short-changed Prudential workers finally get a leg up

Jerry DeMarco, Cliffview Pilot.com

02-19-10 -- Angela Roper has negotiated treacherous waters representing 161 former Prudential workers who say the insurance giant and a New York law firm conspired to short-change them on benefits. Now she has convinced the state's highest court to consolidate the case in Bergen County. . . . The state Supreme Court has ordered that Lederman v. Prudential Life Ins. Co. of America be assigned to Superior Court Judge Brian Martinotti in Hackensack, a move the Totowa lawyer hopes will resolve an 8-year battle. . . . Given the number of plaintiffs and attorneys involved in the case, Roper argued that coordinated discovery and special masters would move things much faster than painstakingly taking each claim individually. . . . The decision could set a precedent for others of its kind. . . . Mass torts and consolidated management cases are associated more with claims that medical products are defective -- in which case, everyone affected has shared an extremely similar experience -- not with fraud, bribery, collusion, or discrimination. . . . They provide additional judicial resources, a specially trained staff and supervision by judges not bogged down by other cases. . . . The employees first filed suit eight years ago, claiming that Prudential basically bribed the law firm chosen to represent them, leading to a settlement far short of what the workers were entitled to. . . . In order to make their claim, the employees say, the court must compel the Newark-based insurance company to turn over documents it has so far withheld. These, the workers claim, will prove the Pru's footsie-playing with the legal eagles.

December 2009

Former Employees Suing Prudential for Benefit Fraud Seek Mass Tort Status

Henry Gottlieb, New Jersey Law Journal

12-1-09 -- The New Jersey Supreme Court is considering mass-tort treatment for claims by hundreds of former Prudential Insurance Co. workers that the company conspired with a New York law firm to bamboozle them out of employment benefits. . . . Angela Roper, who represents 161 of the 236 plaintiffs, said in an application made public Monday that coordinated discovery and special masters would help resolve the seven-year-old matter. . . . The cases have been consolidated with Essex County Superior Court Judge Sebastian Lombardi, but months of discovery and depositions remain and Roper says the case needs additional judicial resources and expertise of the staff that runs the mass tort program. . . . If accepted, the litigation would be different from the 18 matters now on the mass-tort docket. The current list involves environmental claims or allegations that medical products are defective. A key question for the courts is whether torts such as bribery and legal malpractice are suitable for mass management. . . . What's more, a lawyer with the second-largest batch of plaintiffs opposes the mass tort designation and has written to the court to keep the case where it is, according to three people familiar with the filings. The lawyer, Stephen Snyder of Snyder & Snyder in Baltimore, who represents 73 clients, did not return a call for comment. . . . At issue in Lederman v. Prudential, 10547-02, is whether Prudential and Leeds Morelli & Brown of Carle Place, N.Y., conspired to defraud workers in 1999 by funneling them into what the plaintiffs allege to be a series of sham alternate dispute resolution sessions.

April 2009

Legal fight pitting Prudential, ex-workers rolls on

Dozens of motions prompt another continuance in years-long lawsuit

By Carmen Juri, Star-Ledger Staff

4-21-09 -- Former Prudential employees who sued the insurance giant are a step closer to having their day in court -- after years of legal wrangling. . . . During a hearing yesterday in Superior Court in Newark, lawyers presented dozens of legal motions involving the discovery process. Because of the number of motions, Judge Sebastian Lombardi set aside May 18 and 19 to continue the hearings. . . . "We hope this moves the case forward," said William Gold, one of the attorneys representing dozens of plaintiffs. . . . The litigation began in the late 1990s, when 359 employees said the company pressured agents not to sell insurance to minorities. In 1999, the former employees agreed to enter confidential arbitration. Leeds, Morelli & Brown, a New York law firm, was retained by the employees, who agreed the firm would be paid one-third of whatever the court awarded. . . . In 2001, Prudential offered $10.5 million to settle their claim confidentially, according to court papers. Within weeks, a second dispute developed among Prudential, its former agents and the firm that reached the settlement.

Long legal battle for former Prudential Insurance workers

By Christopher N. Dela Cruz, NJ.com

04-19-09 -- In November of 2002, the employees filed a lawsuit against Prudential claiming they were short-changed in the settlement between themselves and the Newark-based insurance giant in a discrimination case. . . . For more than six years, there were no depositions, no subpoenas, no naming of expert witnesses, no trial dates set. . . . More than a half dozen judges have been involved in the case, which has bounced between lower and appellate courts. And many lives have changed since the suit was filed. . . . "I have five grandchildren now," said Lederman, 63, who lives in Holmdel and worked as a Prudential salesman and manager for 32 years. "I didn't have any before." . . . A hearing is scheduled for tomorrow in a state Superior Courtroom in Essex County before Judge Sebastian Lombardi, making Lederman and his co-plaintiffs cautiously optimistic that their lawsuit will be revived. . . . "All we want is our day in court," Lederman said in a telephone interview last week. "Let us tell our story and let a jury of our peers determine whether our case is valid." . . . Once the case makes its way back in court, Steve Snyder, a Baltimore attorney representing Lederman and several other insurance employees, will try to convince the judge that Prudential should be compelled to release documents that will prove the plaintiff's allegations. Angela Roper, a Totowa attorney who originally filed the case, represents several other former Prudential employees.

August 2008

Prudential Financial, Inc.: Lit. Rel. No. 20670

U.S. Securities And Exchange Commission

Litigation Release No. 20670 / August 6, 2008

Securities and Exchange Commission v. Prudential Financial, Inc., 08 Civ. 3916 (PGS) (D.N.J.)

Accounting and Auditing Enforcement Release No. 2860 / August 6, 2008

Prudential Financial, Inc. Settles Financial Reporting and Related Charges by SEC for Improperly Reporting Over $200 Million in Income as a Result of Purported Reinsurance Contracts.

On August 6, 2008, the Securities and Exchange Commission filed a civil injunctive action in United States District Court for the District of New Jersey charging Prudential Financial, Inc., a leading provider of financial services, with violating the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934. Prudential has agreed to settle the case, without admitting or denying the Commission's allegations, by consenting to the entry of a permanent injunction.

The Commission's complaint, filed in federal court in Newark, alleges that from December 1997 through December 2002, Prudential's former property and casualty subsidiaries known as the Prupac companies ("Prupac"), entered into a series of so-called finite reinsurance contracts with General Reinsurance Corporation ("Gen Re") that had no economic substance and no purpose other than to build up and then draw down on an off-balance sheet asset, or "bank," that Gen Re held for Prupac. According to the complaint, the contracts were shams, written to look like they met the requirements to qualify for reinsurance accounting; in fact, they were subject to an oral side agreement that effectively eliminated any risk to either party and made such accounting improper. Prupac built up the bank in 1997, 1998 and 1999 and then, in 2000, 2001 and 2002, drew down on the bank and improperly recorded the repayments as income. In 2001, Prudential became a public company and the inaccurate financial statements became a part of its annual, quarterly and current filings thereafter.

The complaint alleges that the improper accounting practices began in 1997, when Prudential and Gen Re negotiated a riskless reinsurance contract under which Prupac paid Gen Re $50 million. The contract was entered into in the final days of the coverage period, but backdated to appear as if it had been agreed to before the coverage period began. The understanding between the parties was that Gen Re would credit Prupac with interest at the one-year Treasury bill rate and also collect a fee on the money it held. It was further agreed that the relationship would be riskless: If Gen Re lost money in the early years of the relationship, when its exposure on the purported reinsurance contracts was greater than the amount in the bank, Prupac would make Gen Re whole. The parties kept track of where they stood in the relationship by means of a ledger, called an "Experience Account Balance," which showed payments made into the bank, less fees, plus interest, and less payments out.

From 1997 through 2000, Prupac built up the bank, depositing approximately $190 million of the $200 million it would eventually deposit with Gen Re in the form of premiums on reinsurance policies for which no reinsurance recoveries were triggered. In 2000, 2001, and 2002, Prupac drew down on the bank, structuring the purported reinsurance contracts to ensure it recovered virtually to the penny every payment it had made, plus interest, less Gen Re's fee. As a result of these recoveries, Prudential improperly reported additional pre-tax income of $97 million, $80 million and $41 million in 2000, 2001 and 2002, respectively.

The complaint alleges that the improper accounting practices within Prudential's Property and Casualty Insurance division resulted in an overstatement of Prudential's consolidated pre-tax income for 2000, 2001 and 2002 by $57 million or 9%, $75 million or 25%, and by $38 million or 146%, respectively. As a result of these improper accounting practices, Prudential filed annual, quarterly and current reports with the Commission that included financial statements that were inaccurate and misleading and violated the financial reporting, books-and-records, and internal controls provisions of the Exchange Act. Specifically, the complaint alleges that Prudential violated Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.

Without admitting or denying the Commission's allegations, Prudential has agreed to settle the charges by consenting to a permanent injunction against further violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.

SEC Complaint in this matter

April 2008

NEW JERSEY  

Bias Plaintiff Says Lawyer Sell-Out Warrants Vacating of Arbitration

Mary Pat Gallagher, New Jersey Law Journal 

04-08-08 -- A former Prudential Ins. Co. executive who claims the company discriminated against her is asking a federal judge to set aside an arbitration award, alleging her lawyers were given improper financial inducement to keep her claim and hundreds of others out of court. . . . According to Linda Guyden, the company paid $5 million to the law firm representing her and 358 other employees, in return for which Prudential's total exposure was capped at $10 million and the claims were kept secret just as the company was about to be taken public. . . . Guyden, an African-American woman who was a vice president for Prudential in Newark, N.J., claims she was paid less and denied promotions on account of her race and that Prudential retaliated against her for complaining of discrimination. . . . In 1999, she signed a retainer agreement with Leeds Morelli & Brown of Carle Place, N.Y., which represented hundreds of other Prudential employees with similar claims. That May, she and the other 358 employees signed an agreement with Prudential and Leeds Morelli to decide the case by alternative dispute resolution. Prudential agreed to pay the employees' legal fees and both sides consented to keep the matter confidential. . . . Guyden alleges there was another, secret agreement the same day, by which Prudential agreed to pay the firm $5 million on the claimants' anticipated legal fees, $3.5 million on execution and the rest by Aug. 31, 1999. In addition, $4 million was nonrefundable.

219 plaintiffs join Prudential suit

By Peter J. Sampson, Staff Writer

03-14-07 -- The number of former and current employees suing The Prudential Insurance Company of America on discrimination, fraud and commercial bribery charges swelled to 236 from 17 following a judge's ruling. . . . State Superior Court Judge Walter Koprowski granted permission for the plaintiffs' lawyers to amend their lawsuit to drop class-action claims and allow 219 individuals join as plaintiffs. . . . The lawyers said it would have been extremely difficult to prove damages in a class action because of the varied circumstances of their clients. . . . The judge also ruled that the plaintiffs may add charges under the state's Law Against Discrimination. . . . That could make a big difference if the plaintiffs win, said Totowa attorney Kenneth S. Thyne. Punitive damages are normally capped at five times compensatory damages, but under the state law there is no limit to what a jury can award, he said. . . . From November 2002 to March 2005, 11 lawsuits filed in New Jersey named as defendants the insurance giant and Leeds Morelli & Brown, a New York law firm that represented 359 current and former employees. . . . The suits allege a conspiracy to commit fraud, malpractice, breach of contract and racketeering by advancing a $5 million "bribe" to the law firm to cap Prudential's liability to the claimants at $15 million. . . . The employees claimed they were duped into agreeing to an alternate-dispute resolution process instead of litigating claims that Prudential discriminated against them for selling insurance to minorities. . . . In 2004, a Superior Court judge sealed the record in the first suit and ordered it to arbitration. In May, that decision was reversed by an appellate panel, which held that the case was improperly sealed and should be heard in court rather than arbitrated.

N.J. Judge Who Cited Lawyers for Contempt
Pulls Out of Prudential Case

Mary Pat Gallagher, New Jersey Law Journal

Note: This was originally a free article but now requires a paid subscription

Hon. Theodore A. Winard

11-29-06 -- A judge who brought criminal contempt charges against two lawyers for violating a sealing order -- and battled a prosecutor's attempt to drop the charges after the sealing order was vacated on appeal -- has taken himself off the litigation that set off the imbroglio. . ..  In a letter to counsel in Lederman v. Prudential and 11 consolidated cases, Superior Court Judge Theodore Winard of Essex County, N.J., said, "I am recusing myself sua sponte. I think in the interests of justice it would be better to have a different judge manage this case from this point forward." . . . Winard's letter was dated Nov. 15, the same day the lawyers, Angela Roper and Kenneth Thyne, filed an interlocutory appeal from his denial of their recusal motion on Oct. 6. . ..  The letter mentioned that another Essex County judge, Donald Goldman, had dismissed the criminal charges against the two lawyers on Oct. 11. . ..  The underlying case is now assigned to Superior Court Judge Walter Koprowski Jr. . . . The plaintiffs charge that a law firm, Leeds Morelli & Brown, which 359 employees had retained to pursue discrimination claims against Prudential Ins. Co., entered into a secret side deal with the company to keep the claims out of court and send them to alternative dispute resolution where recovery was capped at $10 million. In return, Prudential paid the Carle Place, N.Y., firm $5 million in fees up front, the plaintiffs say. . ..  They also contend that with Prudential about to sell shares in an initial public offering, it was especially eager to bury the plaintiffs' claims that agents were told not to sell insurance to minorities, and other embarrassing allegations.

A victory for former Prudential Insurance employees

By Sarah Wallace, WABC

05-24-06 -- There is a victory for former employees of Prudential Insurance. They have for years claimed that the law firm they hired to represent them against Prudential, instead sold them out. Now, documents are about to be unsealed and they will get their day in court. . . . You have to wonder what are they trying to hide? For three and a half years, this case has been shrouded in secrecy -- sealed at the request of both Prudential and a law firm that was supposed to be their adversary. Instead, they became legal allies trying to keep their dealings in the dark. Well, that's about to change. . . . These former Prudential Insurance agents and mangers claim they were punished for one reason. . . . Schubert Jacques, former Prudential employee: "Prudential did not want us to write to minorities. They did not want the minority business." . . . Here's some background: By 1999, Prudential Insurance, headquartered in Newark, New Jersey, had been accused of various types of discrimination by a staggering 359 current and former employees. They signed to be represented by the New York based law firm, Leeds, Morelli and Brown. Prudential, determined to keep the claims out of court and the media, agreed to a confidential mediation process to settle them. . . . What these men and others say they didn't know is that Prudential and LMB entered into a separate secret agreement, which we obtained. The law firm got $5,000,000 from Prudential up front. The companies deny that was improper.

Court documents open despite secrecy agreement

"Documents filed in court cannot be sealed merely because the parties previously agreed to keep them confidential," a state intermediate court ruled in a case involving allegations of discrimination, fraud and bribery.

Reporters Committee for Freedom of the Press

05-12-06 -- The public's right to court documents trumps a confidentiality agreement between parties in a lawsuit, the Superior Court of New Jersey Appellate Division decided Tuesday, ruling that a trial court erroneously sealed virtually all pleadings, documents and hearings based on the pact. . . . "Mere deprivation of the right to enforce a contractual obligation is not, without an additional showing of serious harm, sufficient to override the public's right of access to the courts," Judge Michael Winkelstein wrote for the unanimous three-judge panel. . . . The court rejected Essex County Superior Court Judge Theodore Winard's concern for the potential harm to the parties' reputations should the documents become public. "If embarrassment were the yardstick, sealing court records would be the rule, not the exception," Winkelstein wrote. . ..  Attorney Bruce S. Rosen, who has spent three years fighting to get the documents opened for the intervening media companies, said the court's decision reinforces the fundamental principle of openness that underlies the public court system. . ..  Allowing Winard's decision to stand "would've privatized the court system," he said.

Lederman v. Prudential

DOCKET No. A-1449-04T5

Court Unseals Prudential suit

By Amy Klein, Staff Writer

Article removed from original site

05-11-06 -- In a scathing opinion released Wednesday, the state appellate court unsealed a class-action law suit against Prudential Insurance Co. and a mediation law firm, ordering a judge to open all records regarding allegations of sweetheart deals and redlining. . . . In a separate move, the appellate panel also sent the case back to Superior Court rather than allow it to be resolved in closed-door arbitration. . . . The rulings marked a sweeping victory for former Prudential employees who have fought for their case to go to trial, as well as for the three media outlets -- The Record, ABC News and Bloomberg -- that had sued for access to the court records. . . . "The presumption of openness to court proceedings requires more than a passing nod," the three appellate judges wrote. "Open access is the lens through which the public views our government institutions. It is essential to foster public confidence in the judiciary." . . . The lawsuit against Prudential and Long Island law firm Leeds, Morelli & Brown was filed in 2002 by Prudential manager Lawrence Lederman, who accused his employer of repeatedly telling him to stop selling auto insurance in Hudson and Essex counties in the mid-1990s. . . . In 2001, Lederman and 358 other employees entered into arbitration with Prudential and were represented by Leeds, Morelli. Lederman received $500,000 in the confidential negotiations, according to Lederman's lawsuit. . . . The suit alleges that Prudential paid Leeds, Morelli $5 million up front to cap the settlement at $10 million. Traditionally, attorneys earn a percentage of the final agreement as an incentive to work for a larger settlement. . . . Lawyers for Prudential and Leeds, Morelli had argued that the case should be sealed be cause the allegations concerned matters that were confidential under the terms of the arbitration and could embarrass the companies. Essex County Superior Court Judge Theodore Winard agreed and yanked the original complaint and all further motions and briefs out of the public eye.

Lederman v. Prudential

DOCKET No. A-1449-04T5

Whistleblower Alleges Conspiracy Between Plaintiffs Attorneys and Employer Voids Arbitration Agreement
Henry Gottlieb, New Jersey Law Journal

04-13-06 -- Lawyers for a former Prudential Insurance Co. agent with a whistleblower claim asked an appeals court April 5 to buck a national trend in favor of alternate dispute resolution and rule that litigation alleging fraud in an arbitration clause belongs before a judge, not an arbitrator. . . . And Bloomberg News, ABC-TV and The Record of Hackensack, N.J., asked the appeals judges to reverse a sealing order that has kept details of the allegations against Prudential secret for three years. . .  The media group won a small victory even before the argument began in a packed Morris County, N.J., courtroom. . . . Presiding Appellate Division Judge Harvey Weissbard announced that the tribunal had rejected a request that the hearing be closed to the public. "We're not sealing anything," he said. . . . He expressed confidence that the lawyers would be circumspect about confidential facts, and they were. They referred only obliquely to the plaintiff's claim that he and 358 other Prudential employees were defrauded into a bogus arbitration by Prudential and their own law firm, New York's Leeds, Morelli & Brown. . . . Openness aside, the case of Lederman v. Prudential, A-1449-04T5, could add to the long-running debate between plaintiffs lawyers and corporations over confidential arbitrations. The question this time: Are ADR agreements that cover large numbers of employees enforceable if the workers claim that their own lawyers conspired with the corporation to limit recoveries and enrich the lawyers?

Ex-Prudential worker fights to unseal suit

By Amy Klein, Staff Writer

Article removed from original site

04-06-06 -- For more than three years, a class-action lawsuit accusing Prudential Insurance Co. and a mediation law firm of duping former employees out of millions of dollars has wound through the state's courts shrouded in secrecy. . . . But on Wednesday, a three-judge appellate panel in Morris County broke the seal that kept proceedings closed and offered a rare glimpse into allegations that Long Island law firm Leeds, Morelli & Brown concocted a sweetheart deal with Prudential to shortchange employees in arbitration negotiations. . . . The accusations echo those in other lawsuits against Leeds, Morelli across the country, including one in which the firm has fought just as hard to keep information out of the public eye. . . . New Jersey state judges have yanked the original complaint against Prudential -- which was initially public and widely reported -- from sight. . . . Despite repeated opposition from lawyers representing The Record, ABC News and Bloomberg, the judges have sealed their opinions, as well as the briefs filed by media lawyers arguing for more access. . . "I'm at a loss to understand how a case rose to trump First Amendment rights," said lawyer Bruce Rosen, who asked the appellate court Wednesday to open the entire case. "Why were they so vehement in trying to seal this?"

Press Is Refused Access to Files in Prudential Fraud Case

Judge also places unusual seal on opinion outlining his reasoning

Henry Gottlieb, New Jersey Law Journal

09-05-03 -- Taking secrecy in civil proceedings to a new height, a New Jersey judge has sealed an opinion denying three news organizations' request for access to documents and proceedings in a case against Prudential Insurance Co. . . . Essex County Superior Court Judge Theodore Winard also ordered lawyers for ABC, Bloomberg News and The Record of Hackensack to refrain from showing the opinion to their clients, allowing them to give news executives only enough information to decide whether to appeal. . . . Winard also denied an unsealing motion by the plaintiffs in the case, a group of former Prudential employees suing the company for fraud. . . . A gag order bars lawyers from commenting on the judge's Aug. 7 order denying the motion, the only public record of the secrecy dispute, a clerk in Winard's office said Aug. 27. . . . Attorneys outside the case who have litigated other court secrecy cases say they can recall no instance in which a judge who rejected a motion to unseal went further and declined to allow public access to the opinion outlining the reasoning. . . . "I have never experienced that," says Thomas Cafferty of Somerset's McGimpsey & Cafferty, counsel to the New Jersey Press Association. . . . Cafferty and other experts in the field say the traditional procedure in such cases is for judges to issue public opinions that explain the legal reasoning while avoiding sensitive factual revelations. . . . When a ruling is made at a hearing and the opinion is in the form of a transcript, as in the Prudential case, judges avoid problems by picking their words carefully or redacting the transcript before making it part of the public record.