PHILADELPHIA – A Pennsylvania federal judge has ruled that a litigation funder that pursued financial recovery against a former National Football League player who allegedly failed to repay it a $500,000 loan will not be allowed to arbitrate the matter.
U.S. District Court Judge Anita Brody ruled Tuesday that Thrivest Specialty Funding was prevented from taking former NFL player William E. White to arbitration in a battle over the repayment of a half million dollar-loan it made to White a year-and-a-half ago, for him to pursue claims in the class-action “NFL Concussion Litigation.”
Brody presides over the NFL Concussion Litigation proceedings, the multi-district lawsuit connected to neurocognitive impairments said to be suffered by ex-NFL players during their active athletic careers.
This past December, Brody ordered that class participants in what has become popularly known as the “NFL Concussion Litigation” were forbidden from using third-party litigation funders to finance their claims, and Brody said her newest decision was made through the All Writs Act to “effectuate” the prior December ruling.
“The court properly invalidated the funding agreements as required by the settlement agreement’s terms. Consequently, Thrivest cannot collaterally attack that determination through arbitration. Such an attack is an improper assault on the terms of the settlement agreement,” Brody stated.
One year prior, in December 2016, White, an 11-year veteran of professional football suffering from amyotrophic lateral sclerosis, decided to sell Thrivest a part of his estimated $3.5 million settlement from the NFL Concussion Litigation in exchange for a $500,000 advance payment – which he used to pay off outstanding tax liens to the Internal Revenue Service.
A 19 percent interest rate applied to White’s deal with Thrivest, but per the agreement reached between the parties, the litigation funder would only receive money if White’s settlement claim was approved.
The class action’s co-lead plaintiff counsel Christopher A. Seeger previously reiterated Brody’s December order nullifying these same types of funding agreements in the NFL Concussion Litigation, and Thrivest cited the Federal Arbitration Act in seeking to have the matter immediately sent to arbitration.
Thrivest argued the deal it struck with White was not an assignment of his claims to it, but instead a “sale” of his settlement proceeds for $500,000 – and thus, was not covered by Brody’s December order.
However, Brody issued a temporary injunction on May 4 that prevented the matter from heading into an arbitration session, prior to the latest permanent injunction.
Peter C. Buckley, a member of Thrivest’s counsel team, offered comment on Brody’s Tuesday decision.
“Thrivest will appeal the injunction; but, beyond the important questions under the FAA which were recently addressed by the Supreme Court and will be a part of our appeal, I have other concerns both for the players and for the availability of post-settlement funding generally,” Buckley said.
“The Claims Administrator is deciding whether a third-party funding agreement is valid, but neither of the parties to those agreements are participating in the Claims Administrator’s decision. The players are sharing their agreements, but, to my knowledge, they are not being asked whether they want to go down this road. And, the funding companies are not even being contacted until after a decision has been made and they are asked to accept rescission or elect to pursue remedies elsewhere. There is no notice or opportunity to be heard, fundamental protections in our system. This encourages the players to take on risks associated with litigation and appeals and opens them up to additional interest and expenses if the funding company is ultimately able to enforce the agreement. There seems to be no discussion of these risks with the players,” Buckley added.
Buckley concluded, “What’s more, the possibility that this process might be a template for future cases will discourage funding companies from offering advances. My client shares the concerns about fairness and transparency. Thrivest provided the lowest rates of any non-recourse advance in the NFL Concussion Class Action and provided a summary of the financial terms on the first page of its agreement. Its advances helped players address critical financial challenges long before the settlement ever could. The concerns should be addressed, but not with a broad brush that paints using form not substance and punishes funders with honest intentions and fair and transparent terms.”
A spokesperson for Seeger did not respond to a request from the Pennsylvania Record for comment at press time.
In a larger sense and as to the overarching NFL Concussion Settlement litigation, arguments on the possible appointment of a special investigator to examine potentially fraudulent settlement claims will take place on May 30 at 11 a.m. in a federal courtroom in Philadelphia, per an order from Brody, and Seeger's firm was just awarded $52 million of an $85 million allotment in legal fees in the class-action itself.
Thrivest is represented by John R. Gotaskie Jr., Eric E. Reed, Mark J. Fanelli and Buckley of Fox Rothschild, in Pittsburgh and Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:18-cv-01877
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com