Reddy Victims Sue Their Own Lawyers By MATTHEW ARTZ

Tuesday June 28, 2005

The family of a teenage girl who died in an apartment owned by Berkeley real estate magnate Lakireddy Bali Reddy has sued the attorneys who won them an $8.9 million settlement last year. 

In a complaint filed last month in San Francisco Superior Court, the family of Chanti Prattipatti charged that lead attorneys Michael Rubin and John Flynn ignored their wishes to settle the case earlier for less money, then demanded additional legal fees. Rubin works for the San Francisco law firm of Altshuler, Berzon, Nussbaum, Rubin & Demain while Flynn works for the firm of Latham & Watkins. 

The complaint alleges that the family’s legal team, afraid that the Prattipatis would accept a lower settlement offer, at one point locked the family in a hotel room and falsely told them that only “the attorneys had authority to approve a settlement.” 

Rubin denied the charges. “The allegations are absolutely untrue,” he said. “We followed our clients’ instructions and acted in the strongest ethical traditions.”  

Chanti Prattipati was 17 when she died of carbon monoxide poisoning Nov. 24, 1999 in a Berkeley apartment owned by the Reddys. Her death led authorities to uncover an illegal scheme to smuggle Indians into the country for sex and cheap labor. 

The girl’s 15-year-old sister survived the gas poisoning, caused by a blocked heating vent, and ultimately told federal authorities that she and her sister were flown to the United States and forced to have sex with members of the Reddy family. 

Most of the other plaintiffs in the case dropped out or quickly agreed to settlements, leading some Reddy critics to question whether they feared reprisals by the family in their native India. 

Bali Reddy, the family patriarch, remains in federal prison serving a 97-month sentence after he pled guilty in 2001 to one count of conspiracy to commit immigration fraud, two counts of transporting a minor for illegal sex and one count of submitting a false tax return. 

The Prattipatis filed suit against Bali Reddy and in April, 2004 settled for $8.9 million. 

At issue is how the $8.9 million settlement should be split between the Prattipattis and their attorneys. 

The family, who once lived in poverty in the same Indian town as the Reddys, insists it is entitled to $5.5 million and the attorneys to $3.4 million. The attorneys counter that their fees amount to $3.9 million. 

William Gwire, a malpractice attorney now representing the Prattipatis, charged that when the settlement was reached, the Prattipatis’ legal team pressured them to ignore their payment schedule and pay a flat fee of $3.9 million. 

“They disregarded their own fee agreement,” said Gwire, who said that under the agreement the attorneys should receive $3.4 million. 

Gwire and the former attorneys agreed to reserve $1 million of the settlement proceeds in an escrow account awaiting the ruling of a judge. The Prattipatis have already received $4.5 million from the settlement.  

Rubin said that the fee dispute has been ongoing and that it was set to go before an arbitrator before the family decided to file a lawsuit. 

Although Gwire is not seeking damages for malpractice, his complaint charged that the attorneys deliberately “dragged out the settlement process” to inflate their fees while causing undue stress to the Prattipatis. 

“The Prattipatis were desperate in their desire not to go to trial, and were afraid to even come to court,” according to the complaint. 

The family directed Rubin and Flynn to accept a $7.5 million settlement offered by the Reddys, the complaint alleges, but the lawyers refused, telling the family that “they could not accept any settlement without the attorneys’ approval. . .” 

Gwire also questioned why Rubin and Flynn pursued the case as a class action lawsuit. He said the more complex type of litigation added to attorney fees and made a settlement more difficult. 

Gwire declined to say who referred the Prattipatis to him and how he was being compensated for his work.