Kimberly Justice, with Freed Kanner London & Millen.

A federal judge has rejected Kessler Topaz Meltzer & Check's request to remove its former partner, Kimberly Justice, from her leadership post in the multidistrict litigation over alleged manipulation of the Chicago Board Options Exchange Volatility Index.

Justice, a prominent plaintiffs attorney in multidistrict litigation, left Kessler Topaz, where she was co-chairman of the antitrust practice group, to open an office earlier this month in Conshohocken, Pennsylvania, for Freed Kanner London & Millen, a class action boutique based in the Chicago suburbs. That prompted Kessler Topaz, based in Radnor, Pennsylvania, to file an April 3 motion seeking to replace her, as co-lead counsel, with partner Sharan Nirmul.

“In short, Mr. Nirmul and Kessler Topaz are exceedingly qualified to continue representing the putative class, and the replacement of Ms. Justice with Mr. Nirmul will ensure minimal disruption to the prosecution of the litigation and is in the best interest of the class,” wrote Nirmul, in Kessler Topaz's motion.

On Tuesday, U.S. District Judge Manish Shah of the Northern District of Illinois refused to boot Justice “for now,” but appointed Nirmul to the plaintiffs' steering committee “to allow for continuity of assignments and to allow the Kessler Topaz clients to have a role in directing the case.” He said he would consider restructuring the leadership team when the appointments expire Aug. 1.

The ruling is similar to a suggestion from the other co-lead counsel in the case, Jonathan Bunge, managing partner of the Chicago office of Quinn Emanuel Urquhart & Sullivan. He filed a motion Tuesday suggesting that Justice remain in her role but continue to lean on Kessler Topaz for support—perhaps by appointing Nirmul as a third co-lead counsel.

“We have spent a substantial amount of time working with Ms. Justice and the Kessler attorneys since the lead counsel appointment in August 2018,” Bunge wrote. “We believe that it is in the best interest of the class for the current Kessler team to continue to work together on this matter.”

Justice, and all the other lawyers appointed in the case, had opposed Kessler Topaz's request to remove her from the case, noting that the leadership appointments are personal in nature.

“Since being appointed, Ms. Justice has devoted substantial time to this case, gaining significant institutional knowledge regarding the facts and legal issues involved,” Justice wrote in an April 10 response. “Although Ms. Justice has changed firms, her commitment to this case has not changed.”

The three lawyers on the plaintiffs' steering committee said Justice was “well-qualified” and that her new firm, Freed Kanner, had “ample experience in complex litigation.”

“There have been no changed circumstances to warrant the removal of Ms. Justice from her leadership position,” they wrote.

After the ruling, Justice emailed a statement: “I appreciate Judge Shah ruling so quickly on the motion and for agreeing with my co-lead counsel, all three plaintiffs' steering committee members, and the majority of law firms involved in the case that I should continue to serve in my leadership role for the benefit of the litigation.”

Nirmul and Bunge did not immediately respond to requests for comment. The three lawyers on the plaintiffs' steering committee—David Frederick of Kellogg, Hansen, Todd, Figel & Frederick in Washington D.C.; Hilary Scherrer of Hausfeld LLP in Washington, D.C.; and Michelle Clerkin, an associate at Motley Rice in New York—also did not immediately respond to messages.

The lawsuits allege that several traders rigged the Chicago Board Options Exchange, a financial index that trades on the volatility of the S&P 500.

On Aug. 16, Shah appointed five lawyers to lead the MDL. The plaintiffs' steering committee originally included Frederick, Scherrer and Erin Durba, then of Motley Rice.

On Nov. 6, Motley Rice sought to replace Durba, who left the firm, with partner Michelle Clerkin. Shah granted that request.

Kessler Topaz cited that instance in its motion to replace Justice.

Nirmul “has been actively involved in developing and advancing the theory of liability in this litigation since its inception” and brings a “deep well of complex securities fraud and commercial litigation experience” with him, according to the firm's motion. The firm also has about two dozen attorneys, investigators and other professionals working on the case.

Kessler Topaz has not sought to replace Justice in her other leadership positions in three separate antitrust cases. In a reply filed Monday, the firm said her appointments in those cases were in “traditional price-fixing class actions,” which Freed Kanner “specializes in handling.”

“Here, the decision to seek Ms. Justice's replacement is based solely on the facts and circumstances of this litigation,” Nirmul wrote. “Ms. Justice's appointment as co-lead counsel in her individual capacity should not trump the wishes of the named plaintiffs or the best interests of the class.”

But, in addition to the four other lawyers appointed to lead the case, six additional law firms with cases in the multidistrict litigation supported retaining Justice, according to a footnote in Justice's response.

Justice said she “intends to involve and assign work” to Kessler Topaz attorneys who worked with her on the litigation, specifically mentioning associate Joshua Materese. She also said that Freed Kanner would absorb any bills associated with time spent transitioning the case.

Judges in other cases, such as in the “clean diesel” multidistrict litigation against Volkswagen, allowed lawyers to retain their leadership positions after changing firms, she wrote. In a footnote, she said Motley Rice's replacement was different because Durba, unlike her, “was leaving the relevant practice area.” According to her LinkedIn profile, Durba is at Harrington, Ocko & Monk, a business litigation firm in White Plains, New York.

But Kessler Topaz, in its reply, noted that partner Stacey Kaplan, in San Francisco, was “instrumental in the prosecution of this litigation” and that the firm's team, even without Justice, had expended nearly 3,000 hours so far on the case.

Further, Nirmul wrote, the support of other firms is irrelevant.

“While the views of other counsel may be relevant at the outset of a case when most parties stand on equal footing, many of the firms purporting to support Ms. Justice have not been actively involved in this litigation over the past year and have cited no specific facts justifying their support of Ms. Justice's continued involvement,” he wrote.