Wednesday, July 14, 2010
Ninth Circuit Sanctions Lack, Girardi for False Statements
By STEVEN M. ELLIS, Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday suspended Engstrom, Lipscomb & Lack founder Walter Lack and firm member Paul Traina from practice before the court for six months for their role in a frivolous appeal, and reprimanded Girardi | Keese head Thomas Girardi.
A three-judge panel said that Lack and Traina engaged in “conduct unbecoming a member of the court’s bar” when they knowingly relied on spurious evidence to appeal a decision dismissing an action to enforce a Nicaraguan judgment in litigation over the effects of pesticide use on banana plantation workers.
Imposing $390,000 in sanctions against the firms and counsel, the panel also faulted Girardi, who had no active role in the appeal, with recklessness for authorizing Lack’s firm to sign his name on briefs that turned out to contain falsehoods.
Lack and Girardi’s firms agreed with a Nicaraguan law firm in 2000 to represent Nicaraguan claimants in litigation concerning the effects of the pesticide Dibromochlorpropane. The agreement gave Lack’s firm complete responsibility for the complaint and all other filings, and the following year the Nicaraguan firm, representing 466 plaintiffs, sued several American companies in Nicaragua for injuries allegedly caused by their use of DBCP.
Lack identified five proper defendants—Dole Food Company, Shell Oil Company, Shell Chemical Company, Dow Chemical Company and Standard Fruit Company—but the complaint filed in Nicaragua named “Dole Food Corporation,” a non-existent entity, and failed to name Shell Chemical.
Dole Food Company attempted to intervene, but the Nicaraguan court denied the request, reasoning that the complaint did not name the company.
The Nicaraguan court issued a $489 million default judgment naming “Dole Food Corporation” and “Shell Oil Company,” and one of the Nicaraguan firm’s attorneys obtained a writ of execution naming the same defendants.
Plaintiffs’ American counsel apparently never actually reviewed the judgment or writ, and in 2003 Lack’s firm obtained an affidavit from a notary public in Nicaragua purporting to provide an exact translation of the writ. However, it contained significant differences, naming as defendants “Dole Food Company” and “Shell Chemical Company.”
In 2003, Lack and Girardi sought to enforce the Nicaraguan judgment in the Los Angeles Superior Court, but their complaint included only an incomplete English portion of the affidavit, which was incorrectly identified as the writ.
When Dow and Shell Chemical removed the action to federal court and moved to dismiss, the plaintiffs sought remand to the state court, falsely asserting in briefs prepared by Traina that the complaint attached the actual judgment and writ, and that the writ named Dole Food Company and Shell Chemical.
Then-U.S. District Judge Nora Manella of the Central District of California, however, denied the remand motion and dismissed, finding that Dole Food was not a “local defendant” that would destroy diversity jurisdiction because it was not a party.
The plaintiffs appealed and, in a brief authored by a junior associate at Lack’s firm, repeated falsehoods presented to the district court. The junior associate later raised concerns about his firm’s position, but drafted another brief at Traina’s direction arguing that the complaint properly alleged that plaintiffs had a final money judgment against Dole.
Shell sought sanctions against plaintiffs’ counsel after it obtained a copy of the writ in a separate action.
In 2005, about one week before oral argument before the Ninth Circuit, State Bar President Howard Miller, a member of Girardi’s firm, was asked to argue the appeal. However he determined that it should be dismissed after reviewing the record.
The following month, a Ninth Circuit panel composed of Judges William A. Fletcher, Marsha S. Berzon and N. Randy Smith issued an order to show cause directed at Girardi, Miller, Lack, Traina and the junior associate, directing them to show why they should not be required to pay the appellees’ fees and expenses and why they should not be sanctioned.
The court discharged the order as to Miller and appointed Ninth Circuit Judge A. Wallace Tashima as special master. Tashima concluded that Girardi “recklessly” made false statements, while the three attorneys from Lack’s firm did so “knowingly, intentionally and recklessly.” He recommended $390,000 in sanctions against the firms and counsel, which the firms said they would not oppose, and appointment of a disinterested prosecutor.
The Ninth Circuit in 2008 appointed UC Hastings law professor Rory K. Little, and he concluded that Tashima’s findings regarding counsel’s state of mind were “accurate and provable by clear and convincing evidence.”
Adopting Tashima and Little’s conclusions, the Ninth Circuit panel said that a public reprimand was appropriate for Girardi given his role. But it said suspension was appropriate for Lack and Traina.
“The history of the enforcement action demonstrates the multiple occasions on which they chose to remain willfully blind to the fact that they were making false statements,” the panel said. “By the time they appeared in this court, the attempt to salvage their case became indistinguishable from a knowing submission of false documents.”
The panel also agreed to a private reprimand for the junior associate “for allowing his superiors to overcome his sound instincts and for his role in drafting briefs that contained false statements.”
Lack and Traina, as well as their counsel, Robert C. Baker of Baker, Keener & Nahra, could not be reached for comment.
Girardi, however, told the MetNews that he was “pleased the court validated the testimony that I had no active part or knowledge of any of the acts that were the subject of the inquiry.”
Citing Miller’s analysis, he said his firm could make a good argument that, had they known of the facts, they would have persuaded co-counsel not to file the appeal.
He added, however:
“On the other hand, my name was placed on a brief with only a generic authorization. The court clearly found that to be inappropriate and I am deserving of the admonishment. I believe that the decision is a great warning to lawyers to be careful, thoughtful, and concerned whenever briefs are filed even if co-counsel are filing the briefs.”
The case is In re Girardi, 08-80090.
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