Dentons scored a major victory on Friday when a New York State judge confirmed private arbitration awards the mega-firm won in an employment dispute with a former partner accusing it of “massive fraud.”
The ruling makes it more likely that any further details of the allegations by Jinshu “John” Zhang, which have sparked an ugly public relations dispute, won’t be filed in a public court docket. Zhang alleges that Mike McNamara, who was removedas Denton’s U.S. CEO last month, “forged” a letter on behalf of a client.
Zhang must withdraw a lawsuit he filed in California state court and pay nearly $30,000 in fees, Judge Barry Ostrager ruled while confirming three emergency arbitration awards Dentons had won before its dispute with Zhang spilled into public court filings.
The dispute arose after Zhang won a contingency fee valued at roughly $35 million. The firm said he engaged in “self-dealing” by getting his client to agree to a deal that would pay him around 85% of the fee. Zhang said he was negotiating a special fee with Dentons within his rights under the firm’s partnership agreement.
Zhang alleged McNamara had a Dentons lawyer draft a “forgery” meant to direct a payment directly to Dentons. He said he discovered the letter on Dentons’ internal server after his client confronted him about a request it had received from a counter-party seeking to send payment to Dentons.
Zhang was fired on May 5, shortly after he called for McNamara’s termination in an email to the firm’s U.S. board, accusing him of a “massive fraud,” according to a redacted copy of the e-mail viewed by Bloomberg Law. Dentons has called Zhang’s allegations “false and slanderous.”
Zhang won a series of early rulings in the case, but the tide has more recently turned in favor of Dentons. A California state court judge last week stayed Zhang’s litigation there pending a ruling in the New York case.
Zhang’s lawyers, Paul Murphy and Daniel Csillag of Murphy Rosen LLP, on Thursday filed an emergency appeal, asking a California appeals court to enjoin the New York arbitration. The writ of appeal says the case represents a novel issue in California that could solve what Zhang’s lawyers say is a contradiction.
A California Labor Code rule mandates California-based employees have their cases adjudicated in the Golden State. But a California Code of Civil Procedure rule requires that California trial courts pause cases when a petition to compel arbitration is pending in any other court of “competent jurisdiction.”
“In the end we are always trying to get justice for John and find out what happened here,” Murphy said in an interview with Bloomberg Law. “We prefer this should happen in the courtroom under the light of day.”
He added that, “Dentons wants to do it under the dark of night in a confidential arbitration. Whether it is in state court or arbitration, the facts are going to come out at some point and we’re confident they’re going to come out our way.”
Dentons did not immediately respond to requests for comment on the ruling.
The case is: Dentons US LLP v. Jinshu John Zhang, N.Y. Sup. Ct., 653795/2021., Decision & Order on Motion 8/20/21.