With FTX cases headed to Miami, Boies and Moskowitz law firms seem poised to grab lead roles

Apr 28, 2023

(Reuters) - A brash tactical move by the plaintiffs lawyers suing FTX's celebrity endorsers seems to have paid off.

The U.S. Panel for Multidistrict Litigation on Monday granted a hotly contested petition by Boies Schiller Flexner and The Moskowitz Law Firm to consolidate almost all of the private lawsuits brought on behalf of allegedly defrauded FTX customers in federal court in Miami, where Boies and Moskowitz are already litigating a prospective class action against former NFL star Tom Brady, comedian Larry David and other celebrities who once served as "brand ambassadors" for the now-bankrupt crypto exchange.

Another group of plaintiffs' firms had called for the FTX litigation to be based instead in federal court in San Francisco. Those firms, which are pursuing claims against FTX's financial advisors, told the multidistrict litigation panel that they had already created an informal leadership structure and were best positioned to advance the FTX litigation efficiently. They also criticized some of the Boies and Moskowitz firms' litigation maneuvers.

But it now seems that the Boies and Moskowitz firms, which have said their aggressive tactics are intended to advance their clients' interests, are well positioned for a leadership role in the consolidated cases. Adam Moskowitz told me on Monday, in an email response to my query to him and David Boies, that the firms "would be honored" to be put in charge.

Lawyers from two other big-name plaintiffs' firms that have brought FTX customer suits meanwhile seem to be expecting Boies and Moskowitz to be appointed to help lead the litigation. Mark Lanier of The Lanier Law Firm, who filed a case against FTX's former accountants and one of the venture capital firms that invested in FTX, supported consolidation of the litigation in Miami. He said by email that Boies and Moskowitz "are naturals for leadership roles because they have been instrumental from the ground up."

Stuart Davidson of Robbins Geller Rudman & Dowd also complimented the firms. Robbins Geller, which was one of the first plaintiffs' firms to name FTX's venture capital investors as defendants, had urged the multidistrict litigation panel not to consolidate the cases at all and alternatively argued for San Francisco over Miami. But in an email on Monday, Davidson said his firm has "worked extremely well and achieved great results" with Boies and Moskowitz in past cases "and expects nothing less this time around."

I reached out to the plaintiffs' firms that argued most ardently against the Boies and Moskowitz petition to transfer the FTX litigation to Miami – Kaplan Fox & Kilsheimer; Audet & Associates; Pomerantz; and Edelson – but did not receive a response.

It's quite possible that the judge newly assigned to oversee the cases, U.S. District Judge Michael Moore of Miami, will appoint a committee of several plaintiffs' lawyers to steer the litigation on behalf of FTX customers. (I also should note that there's certainly no guarantee Moore will name Boies and Moskowitz.)

For plaintiffs' firms, these leadership appointments are not just an opportunity to guide big cases but are also lucrative. Typically, steering committee members are rewarded for their work with a small "common benefit" share of all of the money recovered in the litigation.

Judges overseeing consolidated multidistrict cases have broad leeway to decide how to structure the often-sprawling cases. That latitude could be particularly important in the FTX litigation, which involves claims against different categories of defendants with little in common, as Monday's consolidation order acknowledged.

So, while the Boies and Moskowitz firms have focused on claims against Brady and other celebrities who endorsed FTX, asserting that these so-called brand ambassadors violated Florida securities and consumer protection laws, other plaintiffs' firms have devoted their efforts to investigating FTX's advisors and venture capital investors. (The judicial panel opted not to include FTX customers’ claims against Silvergate and Signature Banks in the consolidated litigation.)

FTX judge Moore may well decide to create separate tracks within the consolidated litigation to manage claims against various groups of defendants. He could also appoint separate teams of plaintiffs' lawyers to lead the different tracks, as many firms proposed in their briefs to the multidistrict litigation panel.

Plaintiffs' firm Fishman Haygood, which filed a comprehensive suit against 18 FTX defendants last February, told me it will urge Moore to do just that. "Separate tracks are warranted given how different our case and others are from the celebrity cases," said Kerry Miller of Fishman via email. "We will certainly seek a leadership role over our types of cases."

Moskowitz did not respond to my follow-up questions about whether the celebrity cases should proceed on a separate track.

Moore's handling so far of the brand ambassadors case suggests a brisk pace for the FTX litigation. The judge's first move, as I’ve previously reported, was an order claiming oversight over several, nearly identical FTX lawsuits filed in federal court by Moskowitz and Boies. He similarly acted quickly when some of the brand ambassador defendants – all of whom deny liability for misleading FTX customers – removed a narrower state-court case to federal court. Within weeks, Moore denied an attempt by Moskowitz and Boies to remand the lawsuit to state court.

To prevent the broad celebrity litigation from bogging down in unresolved motions and ancillary disputes, Moore has issued a series of quick-response orders. In March, for example, he warned the parties that they faced sanctions for failing to docket the joint scheduling report he had ordered back in November.

He allowed Boies and Moskowitz to file an amended complaint earlier this month to address (among other things) defendants’ jurisdictional arguments – but made it clear that a reckoning is imminent. The judge set an ambitious schedule for dismissal motions, ordering the brand ambassadors to file one joint 20-page brief arguing that plaintiffs had not adequately alleged their claim and a second 20-page brief on jurisdictional defenses. (Any additional defense, he said, should be addressed in a separate three-page brief.) Plaintiffs' lawyers then have two weeks to respond.

I don't know how the consolidation will affect that schedule. But I’d predict Moore isn't going to waste anyone's time.

Read more:

Silvergate, Signature banks' woes pose new obstacle for FTX customers

Boies, co-counsel move to grab control of all private FTX cases

Boies law firm makes odd moves in FTX case against Tom Brady, celebs

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World's Most Valuable Coin.