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"Special Master" in Prudential case turns out to be former counsel for Prudential

A decade-old Associated Press story turns up a previously undisclosed relationship

The Jacobson vs. Prudential case in California presses on, but with new revelations coming from a concurrent Jacobson vs. Prudential case in Florida. (For details on the California case, see Retribution: How two elderly men in California continue to fight Prudential.) In the Florida case, issues of "discovery" were being hashed over. Prudential had temporarily blocked testimony by whistle-blower and former Prudential attorney Ren Nelson by invoking attorney-client privilege, and Federal Judge Alfred M. Wolin of the United States District Court for the District of New Jersey ordered the parties to sort it out in the Florida courts, which they have been doing in the separate case.

Then the week of Jan. 11, 1999, Jacobson attorney Ken Chiate discovered that Florida special master Mattox S. Hair — who has been weighing special evidence issues in the case in the Fourth Judicial Circuit Court — was himself formerly employed as outside counsel by Prudential-Bache Securities. Hair had not disclosed this relationship to Jacobson counsel, even though it appears to be a fact of which the plaintiff lawyers should have been aware.

How did this information come to light? Chiate this week discovered an Associated Press story dated Aug. 30, 1988, discussing Hair's represention of Prudential-Bache Securities (now known as Prudential Securities) against Rawson Food Stores Inc., which won $23.6 million in a suit alleging that Prudential-Bache gave reckless advice to buy part of a supermarket chain. Rawson filed Chapter 11 in 1986 but wanted to pay its creditors and sued Prudential-Bache for the "reckless advice."

Chiate confronted Hair about his undisclosed ties with Prudential.

Chiate confronted Hair in person about his undisclosed representation of a Prudential-related company, suggesting Hair should recuse (or disqualify) himself as Special Master in the case of Jacobson vs. Prudential, where he makes recommendations to the court — including recommendations about the testimony of another former Prudential attorney, Renwick Nelson.

Chiate argues that because Hair's Prudential history was unknown, his legal team never had the chance to give "informed consent" to Hair's appointment as Special Master. Chiate explained, "It only makes sense that for a party to 'consent' to a special master pursuant to FRCP (Florida Rules of Civil Procedure) Rule 1.490(c), as the parties did in this case, that consent must be an informed consent. When a material fact that should be disclosed is not disclosed, either by the special master, or by one of the parties with knowledge of the fact, by definition the consent is not informed."

Chiate cited both Florida rules [where Prudential took the evidentiary fight] and California rules [where the Jacobson case was filed] stating that a proposed neutral arbitrator must disclose any past attorney-client relationship to a party in the proceeding.

Hair will not comment on the case or his relationship with Prudential.

Hair happens to be co-author of "Ethics Within the Mediation Process," published in ADR Currents, a newsletter about dispute resolution law and practice. In addition, he is formerly a circuit judge for the Fourth Judicial Circuit of Florida and a former member of Florida House of Representatives and Senate.

Hair's ultimate influence in the case may be negligible

In a ruling on Dec. 1, 1998, Judge Wolin in New Jersey ordered that Ren Nelson could testify in the Jacobson case in California — testimony that had been up in the air due to objections by Prudential. In that same ruling, according to Chiate, Wolin "indicated that any unresolved privilege issues will be decided by the California courts," thus making Hairœs recommendations or subsequent decisions by the Florida court somewhat moot. Indeed, the Florida case seems to be dying on the vine as the case's issues move to the California jurisdiction.

Chiate says he will file a motion to disqualify judge Hair, and file notice of his withdrawal of the motion to compel Ren Nelson to answer questions in Florida.

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