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Lawsuit of the Day: Nobody Puts Faruqi in the Corner

Star-crossed lawyers: Juan Monteverde and Alexandra Marchuk.

If you want to sue a defense-side Biglaw firm for employment-related claims, go for it. Unless your lawsuit is bats**t insane, chances are the firm will settle with you. See, e.g., Charney v. Sullivan & Cromwell; Schoenfeld v. Allen & Overy. Heck, you don’t even need to file an actual case; even threatened litigation can yield a six-figure payday.

Biglaw firms are busy — busy making money, of course — and very reputation-conscious. They don’t want to be distracted by litigation, and they don’t want their white shoes sullied by grime. They will pay good money to make headaches go away.

But suing a scrappy plaintiff-side firm is an entirely different story. They will hit back — and hard.

Last month, Alexandra Marchuk sued her former firm, Faruqi & Faruqi, making a host of salacious allegations. The most incendiary: that a partner of the firm, Juan Monteverde, forcibly had sex with her in his office after the firm holiday party.

Now the Faruqis and Monteverde are turning it around on Alexandra Marchuk. They’re suing her back, filing counterclaims and seeking an eight-figure sum….

And they’re not messing around. The Faruqis hired a Biglaw firm, Epstein Becker & Green, to pursue Marchuk for defamation, tortious interference, and other claims. The case is being handled personally by Ronald Green, a founding partner of EBG, aided by partner Barry Asen and associate Victoria Sloan.

Just as they do with the securities class actions they file, the Faruqis issued a press release about their suit, which seeks $15 million in damages from Marchuk (which the debt-saddled law grad, now doing foreclosure work in Nebraska, clearly does not have). The press release, reprinted in full on the next page, was sent to us by one of the nation’s top public relations firms, Rubinstein Associates.

There’s coverage of the counterclaim over at DealBook (Peter Lattman), Thomson Reuters (Casey Sullivan), and the ABA Journal (Martha Neil), among other outlets. From DealBook:

A law firm partner who was sued last month for sexual harassment fired back at the junior lawyer who brought the case, accusing her of fabricating her claims and being obsessed with him….

The counterclaim denied [Marchuk’s] accusations. “In fact, however, there was no sexual intercourse, forced or otherwise; there was no sexual harassment, and there were no complaints,” the countersuit said. “Marchuk’s claims are false.”

As you will recall, Marchuk alleged that Monteverde, after some post-hearing drinks, “aggressively grabbed and kissed Ms. Marchuk and attempted to fondle her breasts.” Monteverde offers a very different account:

“Once at LexBar, both Marhuck and Monteverde drank,” the countersuit said. “After some time at the bar and several drinks, both engaged in consensual kissing and fondling.”

They continued their “consensual conduct” on the sidewalk, the countersuit said.

“Marchuk volunteered that if Monteverde wanted to have sex with her, she would not say no,” it continued. “But Monteverde said no and hailed a taxi for Marchuk, at which point they parted ways. The next day, Monteverde told Marchuk that they both had too much to drink and it could not happen again.”

According to Marchuk’s complaint, Monteverde was obsessed with her from day one. Monteverde alleges the exact opposite, claiming that upon arriving at the firm as a first-year associate, she specifically requested to work with Monteverde. And then, later on:

At one point, she told him that her mother was making a sculpture for him similar to the one in her office, which he had complimented, the complaint said.

And she boiled his pet bunny, too.

Regarding the post-party office sex, Faruqi and Monteverde claim that it was consensual. This is sounding a bit like the typical “he said, she said” — except recall Marchuk’s allegations that Monteverde’s misbehavior was witnessed by other lawyers at the firm. At the same time, Monteverde alleges in the answer and counterclaims that other lawyers can back up his version of events (e.g., he claims that colleagues witnessed him and Marchuk making out publicly and enthusiastically on the night of the holiday party). Discovery is going to be FUN in this case.

UPDATE (9:15 p.m.): Apologies for the lack of clarity (noted in the comments); we’ll clear things up. Faruqi and Monteverde can claim that “there was no sexual intercourse” because the post-party sex, according to them, was merely oral: “Monteverde, who was inebriated, got on top of her with his clothes still on and his pants around his ankles. He could not get an erection. After 15-20 seconds, and with no penetration, Monteverde rolled off of her. Marchuk then told Monteverde to sit on the couch where she performed oral sex on him. Monteverde did not resist.”

Regarding Marchuk’s departure from the firm, here is what the Faruqis allege (as summarized in their press release):

[O]n December 22, 2011, Ms. Marchuk, a first-year associate who had been at the firm for three and one-half months, abruptly sent an email to Lubna and Nadeem Faruqi, stating that she was resigning and had seen an employment attorney whom she did not identify. Ms. Marchuk specifically instructed them not to contact her. She did not state why she was resigning nor allege that she had been sexually harassed. The Faruqis did not hear another word from Ms. Marchuk or anyone acting on her behalf for more than nine months. It was not until October, 1, 2012, when they received a letter from Ms. Marchuk’s counsel did they learn of Ms. Marchuk’s spurious allegations. On March 13, 2013, almost 15 months after her resignation, Ms. Marchuk commenced this lawsuit.

Again, as some of you may recall, Marchuk in her complaint noted that “nobody from F&F ever contacted Ms. Marchuk to determine the reason for her resignation.” If Marchuk specifically asked not to be contacted, that puts things in a different light.

The firm further states that Marchuk’s allegations have harmed business. From Thomson Reuters:

In its counterclaim, the firm and Monteverde said Marchuk’s allegations were false and that as a result of her lawsuit the firm has had “difficulty marketing their legal services to public entities, which account for over 50 percent of the firm’s business.”

The firm said it had received inquiries from existing clients that have expressed shock about the lawsuit. The clients inquired about how the “scurrilous allegations” would affect their ability to continue doing business with the firm, the counterclaim said.

Marchuk’s allegations stymied a recently launched public sector practice, Faruqi & Faruqi said in court papers.

“Just before this complaint was filed, (the firm) had substantially invested in a new public sector practice area and hired attorneys to bring in and generate business as a significant segment of the firm’s practice,” the lawsuit said. “This initiative is on hold, indefinitely.”

If Marchuk’s goal was to harm the Faruqi firm and Juan Monteverde, whether maliciously or in justified revenge, it would appear that she has succeeded. Alexandra Unchained?

We reached out to Marchuk’s lawyers, Harry Lipman and Thomas Chase of Rottenberg Lipman Rich, for comment. Here is what Lipman told us:

Mr. Lat, as you yourself can confirm, neither Ms Marchuk nor any of her agents sent you the complaint. Indeed, the allegation that Ms. Marchuk or her agents distributed the Complaint to the media or to anyone else besides the clerk at the Federal Court is totally baseless and a tellingly desperate attempt to blame the victim. Once filed, the Complaint, like all complaints, became publicly available, and it was picked up by the media independent of Ms. Marchuk or her agents. If anyone emailed the complaint to any clients or other parties related to F&F or to Mr. Monteverde, it was done entirely without Ms. Marchuk’s or her agents’ involvement and we are confident that defendants’ counterclaims will be dismissed.

We generally do not comment on the identity of our sources, but in this case we can confirm that we did not receive the complaint from Lipman or Chase. As we stated in our earlier story, we got it from multiple sources after it went viral over email in New York lawyer circles.

Securities class actions, the typical fare of Faruqi & Faruqi, generally end in settlements (often with rich payouts to plaintiffs’ counsel). But given the ample bad blood in the litigation between the Faruqis, Juan Monteverde, and Alexandra Marchuk, I wouldn’t be shocked to see this case go all the way.

(Flip to the next page to read the full Faruqi press release and to view the answer and counterclaims in all their glory.)

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