McCaffery drops suit against Inquirer

Pennsylvania Supreme Court Justice Seamus P. McCaffery on Tuesday withdrew his defamation suit against The Inquirer for articles detailing how his wife collected lucrative referral fees from personal-injury law firms while serving as his judicial aide.

McCaffery and his wife, Lise Rapaport, who jointly sued the newspaper, decided to drop their claim after The Inquirer agreed to report a statement from federal prosecutors saying that after a yearlong investigation of the fees, they had decided "that federal criminal charges should not be filed."

Inquirer editor William K. Marimow said the paper readily agreed to that request on the ground that the federal statement was newsworthy in its own right.

Marimow noted that the paper did not agree to pay any damages or retract any part of its reporting.

"The Inquirer's stories about Justice McCaffery were classic public-service journalism - articles that examined a powerful public official acting in his capacity as a state Supreme Court justice," Marimow said.

"This is precisely the kind of journalism that a free press should be undertaking in a democracy. The stories were accurate, thorough, and fair, and we went to great lengths to understand the issues from Justice McCaffery's point of view."

McCaffery's lawyer, Dion G. Rassias, said Tuesday, "Why continue with a lawsuit to prove that The Inquirer was wrong when it's better to confirm that the FBI and the U.S. Attorney's Office got it right?"

Rassias also said, "The reporting was bad and the referral fees were legal."

In a telephone interview, the lawyer added: "You guys at The Inquirer got lucky as a result of subsequent events. You tell Bill Marimow that he slipped a noose on this one."

While federal prosecutors made it plain in their statement Tuesday that they had ended their inquiry, McCaffery still faces scrutiny on several fronts.

On Monday, the state Supreme Court voted to suspend him from his duties with pay. On Tuesday, his leading critic on the court, Chief Justice Ronald D. Castille, said in an interview that high-level federal prosecutors had told him they found McCaffery had violated no federal laws, but had said his conduct might run afoul of state ethics provisions.

Castille also said the officials told him at a meeting last summer that upon request, they would share FBI interview transcripts and other investigative material with local prosecutors or the state Judicial Conduct Board.

In a separate interview, prosecutor Louis Lappen, first assistant to U.S. Attorney Zane David Memeger, confirmed that the office had advised Castille it would not bring charges against McCaffery.

Lappen also said that on occasion, "if there is a request from another law enforcement agency for investigative material," the office will consider providing the material.

After meeting with federal prosecutors, Castille said, he met on July 28 with Philadelphia District Attorney Seth Williams to urge him to seek and review the federal case files. He said he had not heard back from the district attorney since then.

Williams' spokeswoman, Tasha Jamerson, issued this statement Tuesday night: "This office cannot confirm nor deny any of this information. It would be unseemly and unfair for this office to comment about whether we were asked to investigate potential criminal activity."

McCaffery is already facing an ethics investigation by the state Judicial Conduct Board.

When the court suspended him Monday, it also ordered the judicial board to report within 30 days on whether McCaffery should face ethics charges in any of several controversies: the referral fees; allegations that he may have fixed a traffic ticket for his wife; his admitted sending of sexually explicit e-mails; and a threat he allegedly made against another justice.

McCaffery, 64, has served on the state's highest court since 2008. He has steadfastly defended his conduct and said he broke no rules.

Even before the court's Monday order, board investigators were asking questions about a call McCaffery allegedly made to a top court administrator in 2012 to complain about a Philadelphia judge.

The judge was involved in cases brought by a personal-injury law firm that had paid Rapaport, who is a lawyer, a referral fee, and whose members had made campaign donations to McCaffery.

Sources say federal authorities have already agreed to share FBI interview transcripts with the Judicial Conduct Board.

In an article published last year, The Inquirer reported that law firms had paid referral fees to Rapaport 19 times over the previous decade for connecting them with clients. In the one case where the fee was public, a Philadelphia firm paid her $821,000 after it successfully settled a multimillion-dollar insurance claim.

The paper also reported that McCaffery had voted on 20 appeals involving law firms that had paid his wife fees. He did not disclose the fees in court.

(There is no suggestion he voted in any case tied to a specific referral fee for his wife. The firm that paid the $821,000 was not among those that had appeals before the court.)

Referral fees are legal in Pennsylvania, but the fees paid to Rapaport were questioned by Castille and by legal experts interviewed by The Inquirer. Critics said that given Rapaport's role as a court official, she should have abstained from accepting the fees or that McCaffery should have disclosed them to litigants in open court.

According to her lawyers' filings in the defamation suit, Rapaport has stopped making referrals, out of an "abundance of caution" about what rules apply to her.

In March, just before the anniversary of the first Inquirer article on the fees, McCaffery and Rapaport filed their defamation suit. The suit called the story "a smear piece" that was "intentionally false."

The suit named staff writer Craig R. McCoy, author of the 2013 stories, as well as Marimow and Interstate General Media, the parent company of The Inquirer, the Philadelphia Daily News, and Philly.com.

The couple also sued cartoonist Signe Wilkinson and Daily News editor Michael Days over a cartoon that showed McCaffery asking his wife, "Bring home any fees from your separate and perfectly legal business, hon?"

The suit called the drawing "false and disgraceful."

Lawyer Amy B. Ginensky, a senior partner at Pepper Hamilton L.L.P. and leader of the legal team that represented Marimow and the other defendants, said Tuesday, "My clients are pleased that this lawsuit has ended and they can go back to what they do best - reporting on matters of public importance. They and we always were convinced that their reporting was fair and accurate and about a matter of great public importance. The cartoon expressed the cartoonist's legitimate opinion on these matters of public concern."

The United States Attorney's Office and the Federal Bureau of Investigation conducted an investigation with respect to Pennsylvania Supreme Court Justice Seamus McCaffery and his wife, Lise Rapaport, in connection with referral fees paid to Ms. Rapaport in civil cases. On the basis of this investigation, these agencies concluded that federal criminal charges should not be filed, and have therefore closed their investigation.

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For more coverage of the Pennsylvania e-mail porn case, go to inquirer.com/emailporn

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