September 2004 - Los Angeles County Bar Association

Transcrição

Visit us online at www.lacba.org
September 2004 / $4
E A R N MCLE CR E D I T
REMEDYING
LAWYER
INCIVILITY
page 30
Debtors in
Pretension
Los Angeles lawyer Magdalena Reyes Bordeaux
explains how to expunge a fraudulent bankruptcy page 24
PLUS
The English Rule in California page 12
Substantive Consolidation page 18
Searching Regulations Online page 39
LexisNexis and the
Los Angeles County Bar Association
Working Together
To Support the Legal Profession
The LexisNexis™ Bar Association Member Benefit Program
is designed with many offerings to fit the customized needs
of Los Angeles County Bar Association members.
From the new attorney building a practice to the established
attorney who wants expanded research offerings, LexisNexis™
provides unique solutions as business needs change. Choose from
quality legal research sources including Shepard’s®, Michie™,
Mealey’s, and Matthew Bender®, exclusively on the LexisNexis™
Total Research System at www.lexis.com.
Find the exclusive benefits that are right for you!
Call For Details: 866-836-8116
Mention code 202370 when calling.
Bar Association
Member Benefit Program
www.lacba.org
LexisNexis, the Knowledge Burst logo, and Michie are trademarks, and Shepard’s and lexis.com are registered trademarks of
Reed Elsevier Properties Inc., used under license. Matthew Bender is a registered trademark of Matthew Bender Properties Inc.
© 2003 LexisNexis, a division of Reed Elsevier Inc. All rights reserved.
AL6297
RAISE THE BAR.
DISCOUNTS FOR FRIENDS OF THE COURT.
Nextel has tools to help you get things done faster. In court or on the road.
And now, members of the Los Angeles County Bar Association get discounts
on all Nextel® phones, rate plans and accessories.
BlackBerry 7510
TM
International Law
Only Nextel® walkie-talkies are international. With the walkie-talkie built into
every Nextel phone, including the i830 and the BlackBerry 7510™, you can connect
in under a second to Canada, Mexico, Argentina, Brazil and Peru. And when you’re
traveling in those countries, you can connect to the United States just as quickly.
All for a fraction of the cost of an international cellular call. You can even access
your email while you’re abroad.
NextMailSM
Send voice attachments to up to 30 recipients anywhere in the world – instantly.
Document meetings or send instructions to associates. With NextMailSM, your voice
travels with the push of one button. No dialing. No typing. Dictation goes straight
to their email address.
Split Billing
Maintain control over billing. You can split BlackBerry® email charges from cellular
and walkie-talkie charges, so there are separate bills for the firm and the associate.
For special discounts, call 866-805-9890 (reference MLSAB)
or visit nextel.com/lacba.
i830
Nextel is a proud sponsor of the
Los Angeles County Bar Association.
National Free Incoming Plan: Free Incoming calls are calls received while in the U.S. on Nextel’s Nationwide Network. Free Nationwide Long Distance includes domestic calls only. Unlimited Direct Connect minutes
are included in your local calling area only and do not include Group Connect calls, which are $0.15/min. Nationwide Direct Connect calls use the Direct Connect minutes in your plan and incur an additional access
charge of either: (i) $0.10/min. multiplied by the number of participants on the call; or, (ii) a monthly flat fee if you sign up for Unlimited Nationwide Direct Connect access. Nationwide Direct Connect calls are
charged to the call initiator. Group Connect charges are calculated by multiplying the minutes of use, number of participants and the applicable rate. Group Connect can only work with members of the same
network while in their home market. Nationwide service is not available for Group Connect calls. Cellular overage is $0.40/min. Cellular calls round to the next full minute. Unused minutes do not accumulate to
the next billing cycle. Nights are 9:00pm to 7:00am. Weekends begin Fri. at 9:00pm and end Mon. at 7:00am. Up to $0.15 per sent or received text message depending on message type. Wireless
number portability may not be available in all areas or for all numbers. Because number portability requires the efforts of multiple companies, the amount of time it takes to transfer your
number(s) will vary. Nextel’s Nationwide Network serves 296 of the top 300 markets. ©2004 Nextel Communications, Inc. NEXTEL, NEXTEL. DONE., DIRECT CONNECT, GROUP CONNECT, NATIONWIDE
DIRECT CONNECT NextMail and the Driver Safety logo are service marks, trademarks, and/or registered trademarks owned by Nextel Communications, Inc. MOTOROLA and the Stylized M Logo are
registered in the U.S. Patent & Trademark Office. The BlackBerry and RIM families of related marks, images and symbols are the exclusive properties of and trademarks or registered trademarks of
Research In Motion Limited — used by permission. All other product or service names are property of their respective owners. All rights reserved.
Together
We’re
Stronger
…and better able to fill
your insurance needs
The combined leverage, experience and resources of
the Los Angeles County Bar Association and Aon are
the surest way to get reasonable professional liability
coverage. Many underwriters have fully or partially
quit the business because of a reduction in surplus
capital. Consequently, law firms face higher premiums
for significantly reduced coverage...or no coverage at
all, forcing them to go out of business!
The solution is
AON ATTORNEYS’
ADVANTAGE
• Broad coverage
tailored to your needs
• Wide range of limits
and deductibles
• Competitive rates
Through this exclusive arrangement with the LACBA,
Aon, one of the largest providers of professional
liability insurance for attorneys around the country,
will survey the rates of a select group of highly rated
underwriters and locate the best malpractice protection
available to meet your special needs and budget.
Contact us today for a no-obligation quotation of rates.
• Personalized service
from your local Aon
broker/advisor
• Online application
process
• Risk management
quarterly newsletter
• Risk management
resources website
Call Toll-Free 800-634-9177
Fax Toll-Free 800-977-1112
Or Visit www.aonsolutions.com/aisp4
Attorney code #4B1AV003
to apply for a quote online
CA License #0795465
September 2004
Vol. 27, No. 6
FEATURES
24 Debtors in Pretension
BY MAGDALENA REYES BORDEAUX
Bankruptcy courts can use their general power to “accord relief” to reopen the case
of a fraudulent bankruptcy
30 Behavior Modification
BY JUDGE MICHAEL D. MARCUS
Existing rules and laws proscribe offensive conduct directed toward opposing
counsel as well as the court
Plus: Earn MCLE Legal Ethics Credit. MCLE Test No. 129 appears on page 33.
LosAngelesLawyer
The magazine of
The Los Angeles County
Bar Association
DEPARTMENTS
10 Barristers Tips
A full year of Barristers opportunities
41 Index to Advertisers
BY LUCI-ELLEN CHUN
42 Classifieds
12 Practice Tips
The English Rule in California courts
43 CLE Preview
BY NOAH B. SALAMON
18 Practice Tips
The impact of substantive consolidation in
bankruptcy
BY JOY E. MASON
Cover photograph by Tom Keller
39 Computer Counselor
Researching state and federal regulations
on the Internet
BY CAROLE LEVITT
44 Closing Argument
The double-edged sword of judicial
sentencing discretion
BY ALEX RICCIARDULLI
Quo Jure Corporation
1-800-843-0660
www.quojure.com
[email protected]
LAWYERS’ WRITING & RESEARCH
VISIT US ON THE INTERNET AT http://www.lacba.org/lalawyer
E-MAIL CAN BE SENT TO [email protected]
When you can’t do it yourself, but you still need a brief or
memo done—and done well, by experienced attorneys who
are skilled writers—turn to Quo Jure Corporation.
Quo Jure provides premium legal writing and research services
to practicing attorneys. Our work has contributed to milliondollar settlements and judgments. Oppositions to motions for
summary judgment are our specialty. Call for a free analysis
and estimate.
EDITORIAL BOARD
Chair
GARY RASKIN
Articles Coordinator
R. J. COMER
The Winning EdgeTM
1.877.553.1923
123EZcorp
INCORPORATION AS EASY AS 1-2-3
We provide the following services:
• Corporations
• Certificates of Good Standing
• Limited Liability Companies
• Tax Clearance Certificates
• S Corporation Elections
• Corporate Name availability
Checks
• Professional Corporations
• Limited Partnerships
• 501c3 Organizations
• Non Profit Corporations
• Corporate Name Reservation
• Comprehensive Trademark
Searches
• Religious Corporations
• Trademark Registrations
(Federal and California)
• General Partnerships
• Document Retrieval Services
• Fictitious Business Name
Statement (All Counties)
• Registered Agent Services (All
Jurisdictions)
• Limited Liability Partnership
• Corporate kits and supplies
• IRS and FTB Tax Forms (SS4, FTB
3500, FTB 3555L and Form
1023)
• Corporate Status Check
• Foreign Qualifications (All
JDX’s)
• Amendments
• Conversions
• Annual Minutes for Directors
and Shareholder’s meetings
• Statement by Domestic Stock
Corporation or LLC
• Statement by Foreign Stock
Corporation or LLC
• Certified Copies of Articles of
Incorporation
• CT-1’2 (Non Profits Only)
• RRF-1’s (Non Profits Only)
• Dissolutions
Call Toll Free 1-877-553-1923 or visit us at www.123ezcorp.com
4 Los Angeles Lawyer September 2004
LosAngelesLawyer
JERROLD ABELES
ELAINE R. ABBOTT
DANIEL L. ALEXANDER
HONEY KESSLER AMADO
ETHEL W. BENNETT
CHAD C. COOMBS
KEITH E. COOPER
ANGELA J. DAVIS
KERRY A. DOLAN
GORDON ENG
DANIEL A. FIORE
JOSEPH S. FOGEL
STUART R. FRAENKEL
MICHAEL A. GEIBELSON
TED HANDEL
DEAN HANSELL
JEFFREY A. HARTWICK
STEVEN HECHT
KATHERINE M. HIKIDA
ROXANNE HUDDLESTON
LAWRENCE J. IMEL
JOEL T. KORNFELD
JOHN P. LECRONE
HYACINTH E. LEUS
PAUL MARKS
ELIZABETH MUNISOGLU
RICHARD H. NAKAMURA JR.
DENNIS PEREZ
GERALD F. PHILLIPS
THADDEUS M. POPE
JACQUELINE M. REAL-SALAS
SUE CAROL ROKAW
KURT L. SCHMALZ
DAVID SCHNIDER
GRETCHEN D. STOCKDALE
KENNETH W. SWENSON
CARMELA TAN
BRUCE TEPPER
PATRIC VERRONE
STAFF
Publisher and Editor
SAMUEL LIPSMAN
Senior Editor
LAUREN MILICOV
Associate Editor
ERIC HOWARD
Art Director
LES SECHLER
Director of Design and Production
PATRICE HUGHES
Advertising Director
LINDA LONERO
Account Executive
MARK NOCKELS
Advertising Coordinator
WILMA TRACY NADEAU
Administrative Coordinator
MATTY JALLOW BABY
LOS ANGELES LAWYER (ISSN 0162-2900) is published monthly, except for
a combined issue in July/August, by the Los Angeles County Bar Association,
261 S. Figueroa St., Suite 300, Los Angeles, CA 90012, (213) 896-6503.
Periodicals postage paid at Los Angeles, CA and additional mailing offices.
Annual subscription price of $14 included in the Association membership
dues. Nonmember subscriptions: $28 annually; single copy price: $4 plus
handling. Address changes must be submitted six weeks in advance of next
issue date. POSTMASTER: ADDRESS SERVICE REQUESTED. Send address
changes to Los Angeles Lawyer, P.O. Box 55020, Los Angeles CA 90055.
Copyright ©2004 by the Los Angeles County Bar Association. All
rights reserved. Reproduction in whole or in part without permission is prohibited. Printed by Banta Publications Group, Liberty, MO. Member
Business Publications Audit of Circulation (BPA).
The opinions and positions stated in signed material are those of the
authors and not by the fact of publication necessarily those of the
Association or its members. All manuscripts are carefully considered by
the Editorial Board. Letters to the editor are subject to editing.
LOS ANGELES LAWYER IS THE OFFICIAL PUBLICATION OF
THE LOS ANGELES COUNTY BAR ASSOCIATION
261 S. Figueroa St., Suite 300, Los Angeles, CA 90012-2503
Telephone 213/627-2727
Visit us on the Internet at www.lacba.org
Structured
Settlements
Bridging the
gap between
“demand” and
“offer” to reach
a resolution.
ASSOCIATION OFFICERS:
• Product/General/Auto Liability
• Workers’ Compensation
Angel N. Viera, CSSC
• Wrongful death
(Bilingual)
• Medical Malpractice
CA Lic. 0D20706
• Minors’ Compromise
• Employment/Discrimination, Other
BRIDGE SETTLEMENT INSURANCE AGENCY
Call Toll Free 1-877-5-SETTLE • www.StructuredSettlements.com
President
JOHN J. COLLINS
President–Elect
EDITH R. MATTHAI
Senior Vice President
CHARLES E. MICHAELS
Vice President
GRETCHEN M. NELSON
Assistant Vice President
DANETTE E. MEYERS
MICHAEL E. MEYER
ALAN K. STEINBRECHER
Immediate Past President
ROBIN MEADOW
Executive Director
RICHARD WALCH
Associate Executive Director/General Counsel
W. CLARK BROWN
BOARD OF TRUSTEES
DON MIKE ANTHONY
LINDA D. BARKER
JOHN M. BYRNE
THOMAS P. CACCIATORE
LUCI-ELLEN M. CHUN
CLAIRE CIFUENTES
KATESSA C. DAVIS
KERRY J. DOCKSTADER
JEFFREY W. ERDMAN
GARY A. FARWELL
JAMES R. FELTON
RICHARD B. GOETZ
LAURENCE R. GOLDMAN
TOMAS A. GUTERRES
BRUCE G. IWASAKI
SAMANTHA PHILLIPS JESSNER
MITCHELL A. KAMIN
HERBERT KATZ
ELISHA FARA LANDMAN
LAWRENCE E. LEONE
CINDY J. MACHO
ELAINE W. MANDEL
PATRICK MCNICHOLAS
WINSTON A. PETERS
MARK L. SHARE
DOMINQUE R. SHELTON
BRIAN K. STEWART
KIM TUNG
ROBERT G. VAN SCHOONENBERG
GAVIN H. WASSERMAN
SCOTT E. WHEELER
JULIE K. XANDERS
AFFILIATED BAR ASSOCIATIONS
THAT’S WHAT WE DO, EVERY DAY. When your workload
exceeds your workforce, Special Counsel has the answers.
Leading law firms and corporate legal departments have come
to rely on our full range of legal workforce solutions. From
temporary staffing to direct hire, from litigation support to
document management and more, we handle it all. We do it
by containing costs so you can grow your bottom line. Call us
today and find out how we can do it for you.
(323) 658-6065
(800) 737-3436
(323) 658-6495 FAX
specialcounsel.com
A Member of the MPS Group
BEVERLY HILLS BAR ASSOCIATION
BLACK WOMEN LAWYERS ASSOCIATION OF LOS ANGELES, INC.
CENTURY CITY BAR ASSOCIATION
CONSUMER ATTORNEYS ASSOCIATION OF LOS ANGELES
CULVER/MARINA BAR ASSOCIATION
EASTERN BAR ASSOCIATION OF LOS ANGELES COUNTY
GLENDALE BAR ASSOCIATION
ITALIAN AMERICAN LAWYERS ASSOCIATION
JAPANESE AMERICAN BAR ASSOCIATION OF GREATER LOS ANGELES
JOHN M. LANGSTON BAR ASSOCIATION
KOREAN AMERICAN BAR ASSOCIATION OF SOUTHERN CALIFORNIA
LAWYERS’ CLUB OF LOS ANGELES COUNTY
LESBIAN AND GAY LAWYERS ASSOCIATION OF LOS ANGELES
LONG BEACH BAR ASSOCIATION
MEXICAN AMERICAN BAR ASSOCIATION
PASADENA BAR ASSOCIATION
SAN FERNANDO VALLEY BAR ASSOCIATION
SAN GABRIEL VALLEY BAR ASSOCIATION
SANTA MONICA BAR ASSOCIATION
SOUTH ASIAN BAR ASSOCIATION OF SOUTHERN CALIFORNIA
SOUTH BAY BAR ASSOCIATION OF LOS ANGELES COUNTY, INC.
SOUTHEAST DISTRICT BAR ASSOCIATION
SOUTHERN CALIFORNIA CHINESE LAWYERS ASSOCIATION
WHITTIER BAR ASSOCIATION
WOMEN LAWYERS ASSOCIATION OF LOS ANGELES
Is A Malpractice Insurance Crisis
Looming In Your Horizon?
Are You Ready?
Over 15 11 carriers have withdrawn from the California market. Will your carrier be next?
The changes in the marketplace are troubling. It is an unknown future.
Non-renewals are commonplace. Some carriers can’t secure
sufficient reinsurance to operate their professional liability programs.
A major carrier was recently declared insolvent. Other carriers have been
downgraded by A.M. Best. Severe underwriting restrictions
are now being imposed. Rates are not certain.
It’s all very unsettling.
Be prepared. Be informed.
Lawyers’ Mutual Policyholders are . . .
. . . and have been for the past 25 years
Secure Your Future.
Insure With Lawyers’ Mutual.
Investigate Lawyers’ Mutual.
Call us directly at (800) 252-2045.
Find us at www.lawyersmutual.com
Email us at [email protected]
LAWYERS’ MUTUAL INSURANCE COMPANY 3110 West Empire Avenue, Burbank, CA 91504
Professional
Arbitrator
and Mediator
Steven Richard Sauer, Esq.
“He is truly a master
in his art.”
Settled over 5,000 Federal
and State Litigated Cases
323.933.6833
Fax
323.933.3184
E-mail
[email protected]
4929 Wilshire Blvd., Suite 740 Los Angeles, CA 90010
From the Chair
BY GARY S. RASKIN
ver since the passage of the 1986 Discovery Act, lawyers and litigants
have abused the written discovery process for civil cases in California
state courts. In the past, this abuse could be neutralized through
patience, skill, and perseverance. Now, that is no longer true.
Recently, the legislature passed statutes that shorten the time
between the filing of a complaint and trial. However, the timing for the discovery
process and discovery enforcement remains unchanged. Moreover, the legislature has
amended statutes to expand the amount of notice that must be provided for all
motions, including a significant increase in the notice that must be provided for
motions for summary judgment.
Under Rule 209(b)(1) of the California Rules of Court, courts are supposed to
dispose of 75 percent of all unlimited civil cases within 12 months. For that reason,
and because of the pressure placed on judges to clear overcrowded dockets, most
judges set trial dates that are within one year of the filing of an action.
A one-year trial fuse usually results in a six-month discovery window. Pleadings
frequently are not set for several months because parties file demurrers, motions to
strike, cross-complaints, or amended pleadings. Although written discovery may be
served before the pleadings are set, in many cases this is impractical. In addition,
motions for summary judgment, which usually need to be filed after discovery is completed, must be heard at least 30 days prior to trial and on at least 75 days’ notice.
Six months may be sufficient to complete discovery if no one abuses the process.
However, abuse—which comes in the form of delays, evasion, frivolous objections,
and excessive requests—is rampant. Under a very common scenario, if a responding party seeks at least one extension to respond and then provides deficient
responses, at least five months will elapse between service of one round of discovery and a ruling on a motion to compel. Even if a motion to compel is filed and
granted, it is likely that the order will not include sanctions, because most judges
have neither the time nor the inclination to analyze whether sanctions are warranted.
Abuse, therefore, is rewarded.
There appears to be no relief in sight. Indeed, on June 28, 2004, the Second District
Court of Appeal, in Best Products, Inc. v. Superior Court, ruled that boilerplate objections were sufficient to preserve claims of privilege. The court held that when the
responding party fails to provide support for its boilerplate objections, the only remedy is to file a motion to compel further responses. After that motion is granted, if
the responding party does not provide appropriate further responses, the remedy is
to file a second motion that seeks issue, evidence, terminating, or monetary sanctions. Technically, the court’s analysis is correct. Practically, it flies in the face of what
can be accomplished during the small window of time provided for discovery.
The discovery process must be modified. The first step is to adopt a version of
the discovery and disclosure rules contained in the Federal Rules of Civil Procedure.
Unlike California’s rules, the federal rules require the parties affirmatively to disclose
the evidence and witnesses that support their claims. Affirmative disclosure removes
the gamesmanship inherent in any process that places the burden on a party to seek
information and then force compliance. Also, the federal rules limit the amount of
discovery that may be conducted without leave of court, as opposed to the state court
system that permits unlimited discovery unless a motion for protective order is granted.
If the legislature is unwilling to modify the discovery process, California courts
need to change their attitudes toward discovery practices and the gamesmanship that
currently exists. Until changes occur, abuse is rewarded, the practice of law is
demeaned, and the pursuit of justice is harmed.
■
E
Gary S. Raskin is a principal of Garfield Tepper & Raskin, where his primary area of practice
is entertainment litigation. He is the chair of the 2004-05 Los Angeles Lawyer Editorial Board.
Switch to Verizon Wireless.
Upgrade to the color screen BlackBerry 7750™ today.
The BlackBerry 7750™ handheld gives you wireless access
to e-mail, calendar, contacts and key legal applications
– in color – just about anywhere your practice takes you.
• Make and receive wireless phone calls
• Increase responsiveness with “always-on” technology
• Stay sharp with on-the-spot access to legal reference
documents
• Raise profitability with case management,
time entry and billing tools
• Switch with ease – the BlackBerry 7750™ works
with existing servers
Contact our dedicated business team today to learn how
Verizon Wireless solutions can take your practice to the next
level. Valuable corporate discounts are available.
BlackBerry 7750 with color display
™
1.866.822.9558
verizonwireless.com
Or contact your dedicated Verizon Wireless
Business Sales Representative.
Important Consumer Information: Subject to Customer Agreement, service plans, terms and conditions of BlackBerry® product brochure and credit approval. Coverage & service not
available in all areas. Must be within National Enhanced Service Rate & Coverage Area to receive e-mail. Individuals with Desktop Redirector must have desktop PC on and in a
condition to receive e-mail. Voice calls cannot be received when an email or other data transmission is occuring. The BlackBerry and RIM families of related marks, images and
symbols are the exclusive properties of and trademarks or registered trademarks of Research In Motion Limited—used by permission. ©2004 Verizon Wireless.
Barristers Tips
BY LUCI-ELLEN CHUN
A Full Year of Barristers Opportunities
THE BARRISTERS SECTION OF THE ASSOCIATION has recently
changed its membership requirements. You are a member of the
Barristers if you are a member of the Association and are either 36
years of age or younger or have been admitted to practice for 10 years
or less. The mission of the Barristers is to provide opportunities for
new and young lawyers to develop their legal skills through education and to promote public service projects. This year, we have an
ambitious program planned. The Barristers will focus on programs
to enhance the professional and personal lives of new lawyers in three
basic areas.
First, the Barristers will provide opportunities for its members to
become better lawyers. Our Bench and Bar Committee will organize
round table programs to expose new lawyers and law students to judicial perspectives. We will cosponsor a Los Angeles Superior Court
walk-through on August 28, 2004, and the spring of 2005 and an
appellate court program in the spring of 2005. We will encourage other
sections to offer young attorneys Nuts and Bolts programs, offering
the opportunity to learn from and interact with seasoned practitioners. Also, the Barristers will work with the ABA, which will be
hosting two conferences in Los Angeles in October.
Our Continuing Legal Education Committee will expand our
programs by offering CLE courses on Ethics, Elimination of Bias, and
Prevention of Substance Abuse starting in the fall of 2004. In
December 2004, we will feature our acclaimed Nuts and Bolts Basic
Litigation Skills Program, which is a three-day course designed to
review or teach how to be an effective litigator and features some of
the very best lawyers and judges in our community. The Professional
Development Committee will offer free programs such as Image
Development and Personal Branding, Understanding Jury Behavior,
and Financing Your First Home. In addition, our Online Resources
Committee is developing new and innovative ways to use the
Association Web site, including the Your First series, giving Barristers
24-hour access to checklists and articles. To see what the committee
has developed, visit www.lacba.org/yourfirst.
Second, the Barristers will make a difference in the lives of children, particularly at-risk foster children. The Barristers will promote the Court Appointed Special Advocates (CASA) program. Each
month in Los Angeles County, several hundred hurt, frightened, and
confused children enter the dependency court system. These foster children have been removed from the custody of their parents because
of abuse, neglect, or abandonment. Judges in the dependency court
rely on CASAs to make key decisions that affect the lives of these children and their families—for example, where the child will live, whom
the child may see, and what medical, educational, and mental health
services should be provided for the child.
In collaboration with the Alliance for Children’s Rights, we will
train attorneys to represent foster children pro bono on November
20, 2004, for National Adoption Day. The Barristers also recruits attorneys and coordinates training sessions conducted by Public Counsel’s
Children’s Rights Project to represent children in tort matters.
The Barristers Children’s Rights Committee identifies and develops programs to fill the unmet needs of children. Through the Kids’
Court project, the committee works directly with child witnesses in
criminal trials to prepare and comfort them prior to testifying. The
Know Your Rights project facilitates workshops aimed at empowering
foster youth residing in group homes by educating them about their
rights and the resources that are available to them.
The Lawyers for Literacy Committee, in partnership with the
Screen Actors Guild Foundation, will go to schools throughout Los
Angeles County to teach children to read. Also, we will expand our
Pro Bono Committee to host Dialogues on Freedom with the ABA,
an event to take place on September 13, 2004, for which we will recruit
attorneys and judges to speak with high school students about the principles of a democratic society. In collaboration with the Western
Law Center for Disability Rights, we will organize disability rights
programs. Barristers also will participate in National Law Day,
which will be on May 1, 2005, by assisting the community at Aska-Lawyer events throughout Los Angeles, and provide support to the
Barristers Domestic Violence Project.
In conjunction with Public Counsel, we will promote 1) the
Community Development Project to provide legal assistance to nonprofit community organizations, 2) the Debtor Assistance Project,
which assists lower-income debtors confronting bankruptcy, and 3)
the Homeless Prevention Law Project in conjunction with PATH—
People Assisting the Homeless, a legal clinic in Hollywood.
Becoming better lawyers and giving to the community are worthy goals. However, it is essential for a young professional to plan for
the future, addressing family issues such as parenthood and the practice of law and financing a first home. Programs addressing these issues
will be offered in the fall of 2004.
Finally, we want to have fun and interesting events for young
lawyers and law students. We have monthly networking mixers
Downtown and on the Westside with several affiliate associations.
Look for our special networking mixer with the bench and bar in the
spring of 2005.
The Barristers is a proud sponsor of the Fifty-Fifth National
Moot Court Competition Western Regional Finals, which will be held
November 12-13, 2004, at Southwestern University School of Law.
Each year, the Barristers invite members of the judiciary and legal community to act as volunteer judges and to grade appellate briefs.
The Barristers creates opportunities to meet other young lawyers,
to interact with and learn from judges and seasoned practitioners, to
develop legal and leadership skills, and to help the community. We
invite you to get involved. You do not have to be a new lawyer to volunteer for our pro bono projects; everyone is welcome. If you would
like more information about any of our committees or activities, please
visit our Web page at www.lacba.org/barristers. Also, please feel
free to contact me at [email protected].
■
Luci-Ellen Chun is 2004-2005 president of the Barristers.
Let’s Celebrate
the Soul in Solo
Other lawyers say you’re a maverick. Maybe they have
you figured right: You go your own way, make your own
decisions — blaze your own law practice. lexisONE® likes
your style. It’s why we offer LexisNexis™ research priced by
the day, week or month for solos. With our research packages, you’re free to access the LexisNexis research tools and
materials you need, for the times you need them.
Access:
• LexisNexis™ Enhanced Case Law
• Annotated Rules and Statutes
• Shepard’s® Citations Service
• Public Records
• Administrative Materials
• Journals and Law Reviews
• News
• Matthew Bender® Analytic Content
• Expert Witness Directories
• Verdicts and Settlements
The price won’t hold you back. Research packages from
lexisONE include free printing and unlimited searching, and
access to the LexisNexis™ Total Research System — to help you
stay ahead of the pack. LexisNexis research from lexisONE.
You can go your own way. lexisONE. Let’s Solo.
www.lexisone.com/solo
The Resource for Small Law Firms
LexisNexis and the Knowledge Burst logo are trademarks, and Shepard’s and lexisONE are
registered trademarks of Reed Elsevier Properties Inc., used under license. It’s How You Know
is a trademark of LexisNexis, a division of Reed Elsevier Inc. Matthew Bender is a registered
trademark of Matthew Bender Properties Inc.
© 2003 LexisNexis, a division of Reed Elsevier Inc. All rights reserved.
AL6271
Practice Tips
BY NOAH B. SALAMON
CALIFORNIA COURTS HAVE HELD that the so-called English Rule,
which provides that the loser pays the winner’s attorney’s fees, can
apply in a trial in California. As a result, California trial counsel,
already reeling from defeat at trial, have been faced with the prospect
of paying the other side’s fees as well.
For trial lawyers, this provides another reason to examine conflict
of law issues very early in the development of a case, since the availability of attorney’s fees has crucial implications, even at the prefiling stage, on a wide range of strategic and procedural issues.1 For transactional attorneys, it highlights the need to consider conflicts issues
when dealing with non-California entities. The inclusion in a contract
of a boilerplate choice of law provision calling for application of foreign law could mean that any litigation arising out of that contract—even if brought in California—would be conducted pursuant
to a foreign loser-pays rule. Given the interstate and global nature of
business—especially since the rise of Internet commerce—it is vital
to develop a working knowledge of the fee-shifting rules of other jurisdictions, including other states, and the likelihood that a California
court would apply those rules to a case in California.
The deceptively simple first step in the analysis involves characterizing the issue as substantive or procedural. As the Ninth Circuit
noted: “A substantive choice of law analysis is required…only if the
availability of attorney’s fees is considered to be a substantive rather
than a procedural issue under California law.”2
Although many attorneys probably suspect that the issue of attorney’s fees is a procedural rather than a substantive aspect of California
law—and indeed, attorney’s fees have been characterized as procedural in some contexts3—this approach is incomplete. An issue may
be considered substantive for choice of law purposes even if it is considered procedural for other purposes,4 and a simple reliance on
how an issue has been characterized in other contexts is incomplete.
Some courts have chastised an uncritical adherence to precedents
that classify a given issue as procedural or substantive, regardless of
what purposes were involved in the earlier classifications. “Thus, for
example, a decision classifying burden of proof as ‘procedural’ for local
law purposes, such as in determining the constitutionality of a statute
that retroactively shifted the burden, might mistakenly be held controlling on the question whether burden of proof is ‘procedural’ for
choice-of-law purposes.”5
In disputes involving foreign fee-shifting rules, courts in California
and elsewhere have found—implicitly or explicitly—the issue to be
substantive and have conducted a substantive choice of law analysis,
finding in several instances that the foreign fee-shifting rule applied.6
In the first published California case addressing this issue, Cutler
v. Bank of America National Trust and Savings Association,7 the
Northern District of California applied the English Rule on attorney’s
fees to an action brought in California by a Spanish plaintiff against
Bank of America resulting from the theft of items from the plaintiff’s
safe deposit box in a London branch of the bank. In addressing the
fees issue, the court noted:
Applying the governmental interest approach which currently
governs choice of law in California courts, California, as the
forum, clearly has an interest in judicial administration and in
the regulation of its bar. But England has a strong interest in
regulating tortious conduct within its boundaries and in compensating foreign visitors injured there, an interest which is
effected through its system of awarding damages. English
judges have recognized that the system for awarding attorneys’
fees influences the necessity for awards of punitive damages.
Since punitive damages are unavailable in this case, a failure
to award attorneys’ fees could substantially impair England’s
tort law policies of deterrence and compensation.8
The court noted that: “California’s only connections with the case
are the Bank of America’s California headquarters, which defendant has conceded is not significant for choice of law purposes…and
its role as the forum state.”9 The court acknowledged the “substantial policy reasons” underlying California’s rejection of the English
Rule but concluded that “selective application of England’s rules of
tort compensation to cases brought in California constitutes the
more substantial impairment here.”10
In Karkar v. Citicorp,11 the Central District of California awarded
attorney’s fees to the prevailing party pursuant to a contractual
choice of law provision calling for application of English law to disputes arising out of the contract. The loser appealed, and the Ninth
Circuit, in a brief statement, upheld the trial court’s fee award:
This case was decided by the trial court…with the law of
England being applied under the parties’ choice of law provision in the contract, the subject of this case. The law of
England would permit the court in its discretion to award attorNoah B. Salamon is adjunct professor of law at Loyola Law School.
KEN CORRAL
The English Rule in California Courts
neys’ fees. The trial court exercised
that discretion by awarding attorneys’
fees (costs) to Karkar. There was no
abuse of discretion in the trial court’s
award.12
And in Amstrad plc v. Western Digital
Corporation,13 a breach of contract action
brought by an English company against a
hard disk drive manufacturer in Southern
California, the court held that the successful
defendant was entitled to its attorney’s fees
under the English Rule. As in Karkar, the
court focused on the existence of a contractual choice of law provision that called for
application of English law:
California recognizes the right of parties to a contract to agree that [attorney’s fees] may be awarded for the
prevailing party. This is exactly what
[the parties] did in this contract.
Reasonable attorney fees are within
[the] discretion of the court. The concept of an award of attorney fees pursuant to the contractual agreement of
the parties is recognized in California.
This is not against the fundamental
public policies of the State of California.14
The Ninth Circuit’s decision in Arno v.
Club Med Boutique, Inc.,15 refusing to apply
the fee-shifting provisions of French law, is
also instructive. The Arno case involved a
California resident, Arno, who claimed she
was sexually harrassed by a supervisor while
working for Club Med in Guadeloupe
(Caribbean islands that are legally part of
France). In Arno’s first appeal, the Ninth
Circuit decided that Guadeloupe’s interest in
“encouraging local industry and reliably
defining the duties and scope of liability of an
employer doing business within its borders”
trumped California’s interest in “providing
compensation to its residents,” so that French
law applied to plaintiff’s tort claims. The
court stated, however, that, under the governmental interest test, California law, not
French law, would apply to Arno’s contract
claims.16 The case settled, and the parties
reserved the issue of attorney’s fees.17 The district court, applying California’s substantive
choice of law test, found that neither jurisdiction had an interest in the issue of fees, and
that, consequently, California law applied as
the law of the forum. Accordingly, the court
denied the request for fees.
The Ninth Circuit affirmed “on somewhat different grounds.”18 First, the court
noted that while California courts had “suggested” that the attorney’s fees issue was procedural in other contexts: “We need not
decide whether the issue of attorneys’ fees is
substantive or procedural under California
law. Under either analysis the California rule
on attorneys’ fees would apply. If the issue of
attorneys’ fees is procedural, then the California rule would apply as the law of the
forum. If the issue is substantive, then the
California courts would apply the interest
analysis of Reich v. Purcell to determine
whether the French or the California rule
would apply. Such an analysis yields the conclusion that the California rule on attorneys’
fees would apply.”19
The court then undertook a complex
analysis of the policies underlying Guadeloupe’s version of the French fee-shifting
provision, noting that it “was enacted to alleviate inequities in the then existing French
scheme of attorney compensation” and was
therefore addressed to particular exigencies
in France. The court distinguished the Cutler
case, noting that the French fee-shifting
scheme was “not enacted as a component of
France’s tort compensation system but as a
general device to compensate prevailing parties in civil actions” while the English Rule is
“integrally related to England’s law of tort
compensation.”20
Accordingly, the Ninth Circuit found:
“France would appear to have no interest in
the application of its law to the fee arrangements between Arno and her attorney in
California.…The interests that required application of French law to the substance of the
claim are therefore not implicated by the
choice of law applicable to attorneys’ fees.”21
The court found that California, on the other
hand, had some interest in regulating Arno’s
relationship with her attorney, including the
manner in which the attorney was compensated. Accordingly, California law applied
to the fee request, and the district court was
correct in applying the American Rule to
deny fees.22
Interpreting the Rulings
A comparison of Arno and Cutler demonstrates the need for a thorough examination
of the motivations that prompted the foreign jurisdiction to adopt the particular feeshifting provision. If, as in France, the provision is intended to alleviate a specifically
French problem relating to attorney compensation, the rule may be less likely to be
imported. If, as in England, the rule is integral to the tort system, the rule may be more
likely to be imported.23
Furthermore, a comparison of Arno and
Cutler with Karkar and Amstrad highlights
an important nuance: If the dispute arises
from a contract containing an effective choice
of law provision selecting foreign law, the
existence of the clause changes the applicable
choice of law analysis. In California, such contractual choice of law provisions are routinely upheld—regardless of the governmental interests involved or the balance of the
contacts with the interested states, unless:
[T]he chosen state has no substantial
relationship to the parties or the transaction and there is no other reasonable
basis for the parties’ choice, or…application of the law of the chosen state
would be contrary to a fundamental
policy of a state which has a materially
greater interest than the chosen state in
the determination of the particular
issue and which, under the rule of §
188, would be the state of the applicable law in the absence of an effective
choice of law by the parties.24
This is a stringent test. Although California courts have refused to apply the parties’ chosen law to the issue of enforceability
of a nonreciprocal attorney’s fees clause, noting that California Civil Code Section 1717
represents a fundamental public policy against
such clauses,25 the California cases awarding
attorney’s fees pursuant to foreign fee-shifting rules strongly suggest that no fundamental policy prohibits a California court
from applying the English Rule.26
Another Ninth Circuit case warrants mention, especially since it highlights the fact
that versions of the English Rule are found in
places besides the United Kingdom and other
countries. Alaska has adopted a version of the
English Rule—Alaska Civil Rule 82—which
has given rise to interesting choice of law
issues.27 In Sparling v. Hoffman Construction
Company, Inc.,28 the Ninth Circuit upheld
application of Alaska’s Civil Rule 82 to a
case involving a contract calling for application of Alaska law.29
Courts outside California
Courts outside California have also faced
this issue. In Katz v. Berisford International
plc,30 a suit arising from a contract containing a provision calling for application of
English law, the Southern District of New
York found that the prevailing American
plaintiff was entitled to recover attorney’s
fees from the English defendant.31 The court
noted that “the parties’ choice of English
law should be interpreted as encompassing the
English rule that the prevailing party may
recover its attorneys’ fees.”32
In Csaky v. Meyer,33 the Southern District
of New York, applying New York’s “interest
test” conflicts rule, found that the English
Rule applied to a contract dispute arising
from a bid made telephonically from New
York for an item on auction in England. The
auction catalog, which the defendant received
in England, provided that the auction company could sue a delinquent buyer for breach
of contract “together with the costs of such
proceedings on a full indemnity basis.”34
Since “the contract at issue was drafted and
distributed in England in connection with
the auction of goods in England,” the English
Los Angeles Lawyer September 2004 13
DISABILITY
CLAIMS ADVICE
PROVIDED
ART FRIES, RHU
1-800-567-1911
www.afries.com
Rule on attorney’s fees applied.35 In another
case from the Southern District of New York,
RLS Associates, LLC v. The United Bank of
Kuwait plc,36 the defendant sought fees under
the English Rule after winning summary judgment in a case in which English law applied
to the substantive claims, pursuant to a choice
of law clause in the contracts.37 In the interests of judicial economy, the court held the
matter in abeyance pending disposition of
the plaintiff’s appeal, and at this writing no
ruling has issued on this point.
In Boyd Rosene & Associates, Inc. v.
Kansas Municipal Gas Agency,38 the Tenth
Circuit relied on the existence of a contractual choice of law clause in finding that the
issue of attorney’s fees was substantive for
choice of law purposes, even though Oklahoma courts had characterized the attorney’s
fees issues as procedural for retroactivity purposes. The court noted:
In the choice-of-law context, most
matters are treated as substantive.
Only in particular instances should a
court consider a matter to be procedural. If a case “has foreign contacts
and…many issues in the case will be
decided by reference to the local law of
another state,” a state should label an
issue “procedural” and thus apply its
own law only when to do so would
serve the purpose of efficient judicial
administration.39
Moreover, if the parties have “contracted
with an eye toward” the law of the chosen
forum by including a contractual choice of
law clause, “their expectations about the
applicability of those choice-of-law provisions are a significant factor in the determination of whether an issue is substantive or
procedural for choice-of-law purposes.”40
The court cited an unpublished decision from
Delaware involving a defendant’s request for
attorney’s fees under a choice of law clause
providing for application of Texas law (which
allowed the prevailing party in a breach of
contract proceeding to recover reasonable
attorney’s fees).41 In the Delaware case, the
court noted:
The core analysis of the question
whether a forum rule applies in the
adjudication of a foreign law claim is
not, as sometimes occurs, to try to
determine whether an issue is “procedural” but…to ask whether the issue
is one that constitutes or is vitally
bound up with the adjudication of the
asserted substantive right.…The more
typical holding—which for example
comes up in the federal diversity jurisdiction cases—is that a statutory right
to attorneys fees is, like all other statutory entitlements, a matter of substantive right.42
Though attorney’s fees might be considered
procedural in some contexts, the court noted
that the existence of a contractual choice of
law claim “makes this a very different kind
of case.”43
In Airgo, Inc. v. Horizon Cargo Transport,
Inc.,44 the Supreme Court of Hawaii held
that Texas law—which governed the case
pursuant to a contractual choice of law provision—governed the attorney’s fees issue.
Similarly, in DeRoburt v. Gannett Company,
Inc.,45 the court had applied the law of Nauru
(an island nation in the South Pacific) to a libel
suit brought by the president of Nauru against
Gannett Co., Inc., a Delaware and New York
corporation, and Guam Publications, Inc., a
Hawaii and Guam corporation and a subsidiary of Gannett. On the successful defendant’s motion for attorney’s fees under
Nauru’s version of the English Rule, the court
noted:
First, applying Nauru law [on attorney’s fees] is wholly consistent with
the parties’ justified expectations and
a concern for predictability. After insisting for four years that Nauru law is the
applicable law, plaintiff certainly cannot claim that application of Nauru
law to the question of attorneys’ fees
is unexpected. Second, Nauru’s practice of awarding attorneys’ fees to the
prevailing party is integrally connected
with Nauru’s overall scheme for tort
compensation and therefore reflects
an important foreign governmental
interest. Hawaii’s countervailing interest in applying the American rule
regarding attorneys’ fees does not
appear substantial under the circumstances of this case.46
These cases illustrate an equitable dimension to this issue: courts have shown some disinclination to allow a party to push for application of foreign law selectively, distancing
itself from the foreign fee-shifting provisions
after losing the case.47 Indeed, one of California’s axioms of law, found at the back of
the California Civil Code, is appropriate:
“He who takes the benefit must bear the burden.”48 This principle has even been applied
to attorney’s fees requests in California.49
Lawyers are trained to hate surprises and
to prepare to avoid them. Losing, then being
forced to pay the other side’s attorney’s fees,
might be the cruelest surprise of all. On the
other hand, some clients might prefer to gain
leverage by making a credible threat during
settlement negotiations that the loser-pays
rule would apply to any litigation.50 Either
way, a solid knowledge of the chance that the
loser-pays rule would apply to a dispute could
prove very valuable.
■
1
Construction
Litigation
or
Mediation
More than 40 years of construction
expertise provides you and your
client with formidable forensic expert
witnesses, compelling litigation
support...or skillful mediation of
complex and highly technical issues.
Forensic Expert Witnesses
Mediation
Michael S. Poles GC, CM, RCI, DABFET, ACFE
CONSTRUCTION EXPERT / MEDIATOR
PHONE: 323-874-8973
FAX: 323-874-8948
WEB: www.mpgroup.com
EMAIL: [email protected]
1202 Greenacre Avenue
West Hollywood, California 90046-5708
Mediation Practice Areas
Construction - Premises Liability - Real Estate
Health Care - Medical Malpractice - Elder Care
See, e.g., Bensen v. American Ultramar Ltd., 1997 U.S.
Helping you run your
law firm as a business
One Source.
Expert Witness Directory
— Time & Billing
— Case Management
— Accounts Receivable
— Accounts Payable
— General Ledger
— Conflict
FREE
TRAINING
— Contacts
WITH
— Trust
INSTALL
— Reports
and much more…
Great Support
Completely Integrated
Low learning Curve
Enhance Productivity
Increase Profits/Billable Hours
Free Monthly Support
Recoup Cost in 3 Months or Less
PowerLaw, Inc.
FINANCIAL SOFTWARE FOR LAW FIRMS
Over 200 qualified expert witnesses,
in one reliable source. Contact
Forensic Expert Witness Association
today for your free desktop copy:
949.640.9903
[email protected]
858.259.5298
[email protected]
www.powerlaw.com
Chapters in Orange County, Los Angeles and Northern California
When tomorrow
is not an option.
Rely on the same-day court filing specialists.
(Formerly Fax & File)
Call 1-415-491-0606 or visit www.onelegal.com
Dist. LEXIS 8196, at *35-37 (S.D. N.Y. 1997) (denying attorney’s fee request based, in part, on untimeliness of request and failure to plead fee request as part
of special damages under FED. R. CIV. P. 9(g)); United
Indus., Inc. v. Simon-Hartley, Ltd., 91 F. 3d 762, 76466 (5th Cir. 1996) (affirming district court’s denial of
fee request under English Rule based on failure to specially plead request as required by FED. R. CIV. P. 9(g)
and untimeliness under FED. R. CIV. P. 54(d)(2)).
2 Arno v. Club Med Boutique, Inc., 134 F. 3d 1424,
1425 (9th Cir. 1998).
3 See, e.g., id. (citing cases).
4 See, e.g., Boyd Rosene & Assocs., Inc. v. Kansas
Mun. Gas Agency, 174 F. 3d 1115, 1119-28 (10th Cir.
1999) (The availability of attorney’s fees was substantive for choice of law purposes even though it was
considered procedural for purposes of retroactivity.).
5 RESTATEMENT (SECOND) OF CONFLICT OF LAWS §122
cmt. b. See also Sun Oil Co. v. Wortman, 486 U.S. 717,
726 (1988) (“Except at the extremes, the terms ‘substance’ and ‘procedure’ describe very little except a
dichotomy, and what they mean in a particular context
is largely determined by the purposes for which the
dichotomy is drawn.”). For a discussion of choice of
law issues related to the proposed incorporation of
Alaska’s fee-shifting rule in a federal question case, see
Home Sav. Bank, F.S.B. v. Gillam, 952 F. 2d 1152,
1162-63 (9th Cir. 1991).
6 But see, e.g., Bensen v. American Ultramar Ltd.,
1997 U.S. Dist. LEXIS 8196, at *42-51 (S.D. N.Y.
1997). The decision characterizes the fees issue as procedural in the context of a request for fees under the
English Rule.
7 Cutler v. Bank of Am. Nat’l Trust & Sav. Assoc., 441
F. Supp. 863 (N.D. Cal. 1977).
8 Id. at 865 (citations omitted).
9 Id.
10 Id. at 866.
11 Karkar v. Citicorp, 1994 U.S. App. LEXIS 29255
(9th Cir. 1994).
12 Id. at *7.
13 Amstrad plc v. Western Digital Corp., Orange
County Sup. Ct. Case No. 701123.
14 Notice of Ruling re Western Digital’s Initial Motion
for Attorneys’ Fees, Amstrad plc v. Western Digital
Corp., Orange County Sup. Ct. Case No. 701123
(Nov. 15, 1999).
15 Arno v. Club Med Boutique, Inc., 134 F. 3d 1424
(9th Cir. 1998).
16 Id. at 1424-25; Arno v. Club Med Inc., 22 F. 3d
1464, 1468 (9th Cir. 1994).
17 Arno, 134 F. 3d at 1425.
18 Id.
19 Id. at 1425-26 (citations omitted).
20 Id. at 1426.
21 Id.
22 Id.
23 See also Legacy Partners, Inc. v. Travelers Indem. Co.
of Ill., 2003 U.S. App. LEXIS 24853, at *6-9 (9th Cir.
2003) (citation omitted) (The Texas law regarding
recoupment of attorney’s fees applied to the suit against
insurer when the policy was negotiated and executed
in Texas, performance was due in Texas, and, unlike
French attorney’s fees rule at issue in Arno, Texas feeshifting provision was “both mandatory and specific
to Texas insurance law. In such cases, California courts
consider damages to be substantive and not procedural.”).
24 R ESTATEMENT (S ECOND ) OF C ONFLICT OF L AWS
§187(2). See Nedlloyd Lines B.V. v. Superior Court, 3
Cal. 4th 459, 464-65 (1992) (adopting approach to contractual choice of law provisions set forth in RESTATEMENT (SECOND) OF CONFLICT OF LAWS §187, “which
reflects a strong policy favoring enforcement of such
provisions”).
25 See Ribbens Int’l, S.A. de C.V. v. Transport Int’l Pool,
Inc., 47 F. Supp. 2d 1117 (C.D. Cal. 1999).
26 Contractual choice of law clauses are examined
under the test articulated in text. In tort cases, California
follows what the Ninth Circuit called the “amorphous
and somewhat result-oriented approach” known as the
“governmental interest” test. Arno, 22 F. 3d 1467. For
perceived differences between this test and the general
approach described in RESTATEMENT (SECOND) OF
CONFLICT OF LAWS, see Dixon Mobile Homes, Inc. v.
Walters, 48 Cal. App. 3d 964, 972 (1975). With regard
to the rule generally applicable in contract cases
(although California courts have widely used the governmental interest test), see, e.g., Application Group,
Inc. v. Hunter Group, Inc., 61 Cal. App. 4th 881
(1998); Stonewall Surplus Lines Ins. Co. v. Johnson
Controls, Inc., 14 Cal. App. 4th 637, 645 (1993);
Dixon Mobile Homes, 48 Cal. App. 3d at 972 (governmental interest analysis applies to contracts and
tort cases); Northland Ins. Co. v. Guardsman Prods.,
Inc., 141 F. 3d 612, 616-17 (6th Cir. 1998); and Nestle
U.S.A. v. Travelers Cas. & Surety Co., 1998 U.S. Dist.
LEXIS 17287, at *6-7 (C.D. Cal. 1998). The Ninth
Circuit observed, in 1993, some “difference of opinion”
regarding the applicable choice of law test in contract
cases. Arno, 22 F. 3d at 1468 n.6.
27 See Alaska Judicial Council, Alaska’s English Rule:
Attorney’s Fee Shifting in Civil Cases—Executive
Summary (1995), available at http://www.ajc.state.ak
.us/Reports/testmain.htm. Other states have limited
versions of the English Rule—for example, Oklahoma
awards attorney’s fees to prevailing parties in certain
civil actions for labor or services or on certain accounts,
bills, and contracts. See OKLA. STAT. tit. 12, §936.
28 Sparling v. Hoffman Constr. Co., Inc., 864 F. 2d 635
(9th Cir. 1988).
29 Id. at 641.
30 Katz v. Berisford Int’l plc, 2000 U.S. Dist. LEXIS
9535 (S.D. N.Y. 2000).
31 Information on the parties’ citizenship is contained
in a previous opinion, Katz v. Berisford Int’l., plc,
1998 U.S. Dist. LEXIS 15367, at *3-4 (S.D. N.Y.
1998).
32 Katz, 2000 U.S. Dist. LEXIS 9535, at *23.
33 Csaky v. Meyer, 1995 U.S. Dist. LEXIS 11841 (S.D.
N.Y. 1995).
34 Id. at *3. Although the English usage of the word
“costs” includes attorney’s fees, a pleading request
for costs of litigation in an American court has been
deemed inadequate to include a request for attorney’s
fees under the English Rule. United Indus., Inc. v.
Simon-Hartley, Ltd., 91 F. 3d 762, 765 (5th Cir.
1996). See also Bensen v. American Ultramar Ltd.,
1997 U.S. Dist LEXIS 8196, at *38 n.29 (S.D. N.Y
1997).
35 Csaky, 1995 U.S. Dist. LEXIS 11841, at *4. The
court also noted that, in context, the reference in the
catalog to “costs” was clearly meant to include attorney’s fees.
36 RLS Assocs., LLC v. The United Bank of Kuwait plc,
2003 U.S. Dist. LEXIS 21140 (S.D. N.Y. 2003).
37 See RLS Assocs., LLC v. The United Bank of Kuwait
plc, 2003 U.S. Dist. LEXIS 17207 (S.D. N.Y. 2003).
38 Boyd Rosene & Assocs., Inc. v. Kansas Mun. Gas
Agency, 174 F. 3d 1115 (10th Cir. 1999).
39 Id. at 1120.
40 Id. at 1126. See also id. at 1121; Alyeska Pipeline
Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 259 n.31
(1975) (noting that a federal court sitting in diversity
would be required to apply a state law granting attorney’s fees as a substantive, rather than procedural,
aspect of the forum state’s law).
41 El Paso Natural Gas Co. v. Amoco Prod. Co., 1994
WL 728816 (Del. Ch. 1994).
42 Id. at *4-5, cited in Boyd Rosene & Assocs., 174 F.
CONSTRUCTION INDUSTRY PROFESSIONALS AND ATTORNEYS
6.75 Hours of MCLE/CE Credit
Avoiding and Resolving
Construction Claims
Saturday, September 11, 2004 • 8:30-4:30 • Universal Hilton Hotel
TOPICS WILL INCLUDE:
■
Effective Documentation in Public Contracts
■
Proactive v. Reactive ADR Methodology
■
Negotiating Commercial & Retail Contracts
■
The Role of an Effective Expert
■
Avoiding Residential Claims with
Customer Care
■
Hot Topics in Construction Law
■
Insurance, Surety & Bonds
■
Project Neutrals in Major Construction
Projects
■
Inside the Contractor's State License Board
PLUS two exciting guest speakers including: “Hollywood & Highland On Stage:
From Script To Oscar. Spotlight on The Tension which Made the Movie” Starring
Glenn Hickman of McCarthy Building Companies.
General Tuition–$250; LACBA Members and Support Organizations–$220;
DRS Associates and Real Property Members–$200; LACBA CLE+PLUS–$170.
3d at 1121, 1127.
43 Id. at *5.
44 Airgo, Inc. v. Horizon Cargo Transp., Inc., 66 Haw.
590, 670 P. 2d 1277 (1983).
45 DeRoburt v. Gannett Co., Inc., 558 F. Supp. 1223
(D. Haw. 1983).
46 Id. at 1227. See also J. Barbour & Sons, Ltd. v.
Taftco, Inc., 1989 U.S. Dist. LEXIS 5133, at *6-7
(E.D. Pa. 1989) (applying English Rule to request for
security bond when contract at issue contained contractual choice of law clause providing for English
law). But see Bensen v. American Ultramar Ltd., 1997
U.S. Dist. LEXIS 8196, at *42-51 (S.D. N.Y. 1997)
(refusing to apply English Rule on attorney’s fees).
47 Any other rule might encourage foreign companies
to bring their best cases in their home courts, where they
could be assured of recovering attorney’s fees, and
their weaker cases in American courts, where they
might hope to selectively argue for application of the
American Rule if they lost.
48 CAL. CIV. CODE §3521.
49 Heppler v. J.M. Peters Co., Inc., 73 Cal. App. 4th
1265, 1292 (1999). However, California courts have
also said that a separate choice of law analysis is
required for the attorney’s fees issue, which—as in the
Arno case—may dictate that the right to attorney’s fees
is governed by a different law than the law that governs the substantive issues in the case. Arno v. Club Med
Inc., 134 F. 3d 1424 (9th Cir. 1998) (choice of law
analysis dictated applying California law regarding
attorney’s fees even though French law applied to tort
claims).
50 The American Corporate Counsel Association has
repeatedly proposed adoption of the English Rule. See
ACCA Online, Tort Reform Proposal 2000, at ¶7,
available at http://www.acca.com/networks/litigation
/comments/tort.html.
Co-Sponsors
Los Angeles County Bar Dispute Resolution Services, Inc
Arbitration Mediation and Conciliation Center (AMCC)
Los Angeles County Bar Association Real Property Section
American Arbitration Association
Pepperdine's Straus Institute for Dispute Resolution
Supporting Organizations
American Institute of Architects–Los Angeles
American Institute of Architects–Pasadena-Foothill
Associated Builders and Contractors
Associated General Contractors
Building Industry Association–Southern California
Building Industry Association–San Diego
California Plumbing and Mechanical Contractor Association
Engineering Contractors’ Association
Home Builders Association–Central Coast
Los Angeles Community College District
Los Angeles Unified School District
National Association of Minority Contractors
National Association of Women in Construction
Western Council of Construction Consumers
In Association with
American Technologies
EMP Consultants
Forensic Analytical
MC Consultants
Rimkus Consulting Group
For more information, call 213.896.6441. To register online, please visit our our Web site at www.lacba.org.
PROGRAM PLANNING COMMITTEE: Lee Jay Berman, Mediator, Chair; Michael J. Bayard, Mediator, Arbitrator; Gemma
George, LACBA-DRS; Michael Powell, AAA; Karen Smith, AMCC
If you are interested in learning more about the benefits of sponsorship or to become a Supporting Organization or Associated
Vendor, please contact Lee Jay Berman, Program Director at: 213-383-0438 or [email protected]
Practice Tips
BY JOY E. MASON
The Impact of Substantive Consolidation in Bankruptcy
MOST BUSINESSES UNDERTAKE EXTENSIVE MEASURES to ensure affiliated entities. In essence, the court is piercing several corporate
the creditworthiness of their borrowers and customers when making veils to satisfy the debts of a related entity.9 For example, when a corinvestment decisions. These measures afford businesses the opportunity poration is a mere instrumentality or alter ego of the bankrupt corto consider a variety of factors for assessing the potential risk in a busi- poration and has no independent existence, equity favors treatment
ness transaction. However, these factors do not take into account the of the separate corporate entities as one entity.10
potential that even the most financially sound businesses may find
Entities subject to substantive consolidation include individuals,
themselves consolidated with the bankruptcy reorganization of a partnerships, corporations, and their affiliates. The relationship
related corporate entity.
between the entities to be consolidated is more important than the
A bankruptcy court may issue an order for substantive consoli- corporate status of each entity. Indeed, whether an entity is distindation, which effects a merger of the estates of related debtors to cre- guishable from its affiliates is more important than whether the
ate a single estate for the remainder of the
bankruptcy proceedings. This process also may
involve the inclusion of nondebtors that are
Given their dramatic effect, motions for substantive consolidation
related to the debtors. The focus of substantive
consolidation is to ensure the equitable treatment of all creditors. The principle of equality
should be granted sparingly and only under unusual circumstances.
of distribution to similarly situated creditors is
one of the central objectives of the Bankruptcy
Code. Therefore, substantive consolidation
must not effectively benefit one group of creditors to the detriment entity is labeled a partnership, corporation, or subsidiary.11
of similarly situated creditor groups.
There are two similar, but not identical, circuit level tests for
No express statutory authority empowers bankruptcy courts to determining whether substantive consolidation is appropriate. Both
order substantive consolidation.1 Rather, this authority arises from tests weigh the benefits to be achieved from substantive consolidation
the broad equity jurisdiction of the bankruptcy court conferred by 11 against the harms that would result from substantive consolidation.
USC Section 105(a), which provides that the court “may issue any The Eleventh Circuit test for substantive consolidation is articulated
order, process, or judgment that is necessary or appropriate to carry in Eastgroup Properties v. Southern Motel Association Ltd.12 and conout the provisions of this title.” Thus, the standards for invoking the tains four factors. The test requires the proponent to show two facremedy of substantive consolidation have evolved through case law tors: 1) a substantial identity between the entities to be consolidated,
as opposed to legislation.2
and 2) the necessity of substantive consolidation to avoid a harm or
When cases are substantively consolidated, the consolidated assets realize a benefit.
Once these two elements have been established, the burden shifts
form a single fund from which the claims against all the consolidated
debtors are satisfied.3 Creditors of the separate entities before con- to the opponent to show the other two factors: 1) creditors relied on
solidation become joint creditors with all creditors of the consolidated the separate credit of one of the entities, and 2) the creditors will be
debtors upon consolidation. These joint creditors share equally in the prejudiced by consolidation. If the opponent successfully carries its
assets of the consolidated estate.4 Upon substantive consolidation, burden, the court can order substantive consolidation only if the benclaims by debtor companies against one another and duplicative efits of consolidation heavily outweigh the harm.13
claims against related debtors are eliminated.5 Courts may order less
A presumption exists that creditors have not relied solely on the
than complete substantive consolidation and place conditions on credit of a particular entity that is subject to substantive consolidathe consolidation.6
tion.14 When objecting to a request for substantive consolidation, a
Substantive consolidation threatens to prejudice the rights of creditor that claims reliance on an entity’s separateness must demoncreditors because separate debtors ordinarily will have different ra- strate both an inquiry into that entity’s independent financial health
tios of assets to liabilities (or levels of solvency). The creditor of a and an absence of evidence, such as guarantees or consolidated finandebtor whose asset-to-liability ratio is higher than that of its affilia- cial statements, that would tend to indicate interrelationships within
ted debtor will receive a proportionately smaller satisfaction of its claim a larger enterprise.15 When creditors have not relied on the credit of
because the asset-to-liability ratio of the merged estates will be lower.7 a particular entity, the practical economic and operational realities
Given their dramatic effect, motions for substantive consolidation of a single enterprise suggest the need for a consolidated approach
should be granted sparingly and only under unusual circumstances.8 for multiple bankruptcies within the enterprise. Moreover, in these
Determining Applicability
In certain instances, courts may disregard the separate identities of
Joy E. Mason is an associate in the Bankruptcy and Creditors’ Rights department at Arnstein & Lehr, LLP in Chicago.
L O S
A N G E L E S
C O U N T Y
B A R
A S S O C I A T I O N
37th Annual
Securities Regulation Seminar
Price
$ 200
$ 225
$ 250
$1,200
Early registration for all by Sept. 10, 2003
CLE+PLUS Cardholders
Sponsoring Section Members
$ 325 Other LACBA Members
$ 375 All Others
$ 395 At the door payment for all
Buy five tickets at a reduced rate, and get the sixth ticket free
(all five tickets must be purchased together and by October 1, 2004 to
receive the special free offer)
Call for special rates for government employees & law students
Friday, October 15, 2004
8:30 a.m. – 5:00 p.m.
Continental Breakfast and
Luncheon Program Included
Topics
Sponsored by the
Business & Corporations Law Section
and the U.S. Securities
& Exchange Commission
Public Companies
and the Officers and Directors in
the Current Regulatory
Environment
California Department
of Corporations
State Bar of California
Business Law Section
North American Securities
Administrators Association, Inc.
NASD
Program Registration
6.75 hours
CLE credit
including
1 hour ethics
For phone registration with Visa,
Mastercard or American Express:
call (213) 896-6560, M – F, 9 am – 4 pm.
Telephone registration closes at noon
on the day before the program.
You may also register by
visiting our Website at
http://www.lacba.org
No refunds after
October 1, 2004.
Program Steering Committee
Speakers Include:
John F. Hartigan
Seth Aronson
O’Melveny & Myers LLP
Andrew E. Bogen
Gibson Dunn & Crutcher LLP
Gerald E. Boltz
Bryan Cave LLP
Duke K. Bristow
UCLA Anderson School of
Management
Brian G. Cartwright
Latham & Watkins LLP
Martin P. Dunn
Deputy Director, SEC Division
of Corporate Finance
PROGRAM CHAIR
Morgan, Lewis & Bockius LLP
Randall R. Lee
SEC LIAISON
Securities and Exchange Commission
TeLae M. Ellis
P R O G R A M A D M I N I S T R AT O R
COMMITTEE MEMBERS
Robert Braun
Jeffer, Mangels, Butler &
Marmaro LLP
Ingrid A. Meyers
Brian Thompson
California Department of
Corporations
Lani Woltman
NASD
Dhiya El-Saden
Moderator
Gibson, Dunn & Crutcher LLP
Michael S. Emen
Senior Vice President
The Nasdaq Stock Market, Inc.
Robert C. Friese
Shartsis Friese & Ginsburg LLP
Joseph Giunta
Moderator
Skadden, Arps, Slate, Meagher
& Flom, LLP
Developments in Securities
Law
■ Representing
Co-Sponsored by the
Millennium Biltmore Hotel
506 South Grand Avenue
Los Angeles
■ Recent
Breakout Session One
• Corporation Finance Roundtable
• Dual SEC and Criminal Investigations
• Mergers and Acquisitions Workshop
Breakout Session Two
• Trends in Equity and Debt Financing
• Corporate Governance Workshop
• Securities Litigation Update
■ Enforcement
Developments
■ Ethics
and the Securities Lawyer in
the Current Environment
Program Code 008680
Jan L. Handzlik
Kirkland & Ellis
John F. Hartigan
David J. Johnson
O’Melveny & Myers LLP
Mary Ellen Kanoff
Latham & Watkins LLP
Michael C. Kelley
Sidley Austin Brown & Wood LLP
Randall R. Lee
Director, SEC Pacific Regional
Office
Richard J. Maire, Jr.
Manatt, Phelps & Phillips, LLP
Brian J. McCarthy
& Flom LLP
Peter M. Menard
Sheppard, Mullin, Richter &
Hampton LLP
Gregg A. Noel
& Flom LLP
Michael J. O’Sullivan
Moderator
Munger, Tolles & Olson, LLP
Robert Rosen
Rosen & Associates, Inc.
Sandor E. Samuels
Countrywide Financial Corp.
Hon. Stanley Sporkin
Weil, Gotshall & Manges LLP
Thomas L. Taylor, III
Linda Thomsen
Deputy Director, SEC Division of
Enforcement
Richard J. Welch
Brigham McCutchen LLP
Gregory J. Weingart
Chief, Major Frauds Section
U.S. Attorney Office,
Central Division of California
William P. Wood
California Corporations
Commissioner
Debra W. Yang
United States Attorney,
Central District of California
so-called nonreliance cases, substantive consolidation is compelling because it would be
artificial to treat related entities as separate simply as a result of the “fortuitous” occurrence
of bankruptcy.16
The Second Circuit test for substantive
consolidation was formulated in In re
Augie/Restivo Baking Company, Ltd.17 The
test requires that one of two alternate grounds
be present. Proponents must show that 1)
the creditors dealt with the entities as a single economic unit and did not rely on their
separate identity in extending credit, or 2) the
affairs of the debtors are so entangled that
substantive consolidation will benefit all creditors, because the process of disentangling is
either impossible or would be so costly as to
consume the debtors’ assets.18 The Ninth
Circuit has adopted the Second Circuit test.19
While courts have granted substantive
consolidation on the grounds that the financial records and affairs of the debtors were so
entangled that to untangle them would jeopardize any recovery to creditors,20 proponents of the remedy must frame their arguments carefully. In In re DRW Property
Company, the debtors sought to substantively consolidate debtor entities with 109
related partnerships.21 The proponents of
substantive consolidation argued that the
expense of unscrambling the debtor entities’
relationships would consume all the assets
available for creditors. Despite expert testimony that disentangling the books and
records of the debtors would require six additional months of audit work costing approximately $2 million, the court held that the
accounting difficulties alone were insufficient
to invoke an order of substantive consolidation.22 Thus, an argument for substantive
consolidation premised primarily on accounting difficulties may be insufficient grounds for
substantive consolidation when the reliance
interests of creditors are threatened. Indeed,
proponents of substantive consolidation who
base their argument solely on accounting
problems are seldom successful, due to the
high standards to which courts hold proponents of consolidation.23
Proponents of substantive consolidation in
cases that depend primarily on the issue of
alter ego typically cite from among the following factors:
1) The parent owns all or a majority of the
capital stock or ownership interest of the
subsidiary.
2) The owner and the subsidiary have common officers and directors.
3) The owner finances the subsidiary.
4) The owner is responsible for the incorporation or formation of the subsidiary.
5) The subsidiary has grossly inadequate capital.
6) The parent pays the salaries, expenses, or
losses of the subsidiary.
7) The subsidiary has substantially no business except with the parent.
8) The subsidiary has essentially no assets
except for those conveyed by the parent.
9) The parent refers to the subsidiary as a
department or division of the parent.
10) The directors or officers of the subsidiary
do not act in the interests of the subsidiary but
instead take directions from the parent.
11) The formal legal requirements of the subsidiary as a separate and independent corporation are not observed.24
Many of these factors are present in cases
involving affiliated debtors—such as those
involving an incorporation caused by a parent, common officers and directors, intercorporate claims, or consolidated financial
statements or tax returns—and therefore
should be afforded less weight than the test
factors in a court’s determination of whether
to order substantive consolidation.
Substantive consolidation may be a useful device for creditors seeking to increase
their debt recovery, particularly when a solvent nondebtor’s assets are added to an insolvent debtor’s limited pool of assets. However,
the substantive consolidation of a nondebtor
estate with that of a debtor in situations that
do not involve the issue of alter ego produces jurisdictional and conceptual difficulties in bankruptcy. Substantive consolidation
of debtors and nondebtors is ordered only
when unusual circumstances are present.
Decisions concerning substantive consolidations involving nondebtors have been left to
the complete discretion of bankruptcy judges
and, not surprisingly, have yielded inconsistent results.25
Most courts that permit substantive consolidation of debtor and nondebtor estates
rely on the U.S. Supreme Court’s decision in
Sampsell v. Imperial Paper Corporation.26
In Sampsell, the Supreme Court upheld the
bankruptcy referee’s consolidation of the
estate of an individual debtor with the assets
of a nondebtor corporation that was wholly
owned by the debtor and his family. The
Court found that substantive consolidation of
a nondebtor corporation with the individual bankrupt’s estate was proper because 1)
the transfers of property to the nondebtor corporation were not made in good faith but
rather for the purpose of placing the property
beyond the reach of the original debtor’s
creditors, and 2) the effect of the transfers was
to hinder, delay, or defraud the individual’s
creditors. In upholding consolidation, the
Court noted that the “power of the bankruptcy court to subordinate claims or to adjudicate equities arising out of the relationship
between the several creditors is complete.”27
Many issues remain unresolved in this
area. For example, if a court orders sub-
stantive consolidation for a nondebtor, it is
uncertain whether all the nondebtor’s assets
can be brought into the bankruptcy case or
only those assets related to the debtor. No
court has determined whether a nondebtor
would be deemed a separate debtor or
whether the nondebtor somehow would be
appended to the debtor’s existing case.28
The Doctrine at Work
A range of recent cases demonstrates the
impact of the doctrine of substantive consolidation in complex commercial bankruptcies. In In re World Access, Inc., a bankruptcy case pending before the Northern
District of Illinois, the creditors’ committee
and the debtors prepared a plan of reorganization that contemplated the consolidation
of five debtors.29 The creditors’ committee and
the debtors jointly filed a motion for substantive consolidation, insisting that in a consolidated case, creditors would receive a
greater recovery than they would in standalone reorganizations.
Several factors illuminated the relatedness of the debtors. The debtors’ cash management system was completely integrated,
the debtors had overlapping boards and common officers, all the subsidiaries operated
on a single integrated network, the debtors
utilized a single accounting software platform, and the debtors maintained unallocated overhead and filed consolidated tax
returns.
An institutional investor of one of the
debtors opposed the motion for substantive
consolidation, largely because the investor
would receive more on its claim in a standalone liquidation than in a substantive consolidation. Due to the sophisticated network
and accounting system utilized by the debtors,
the investor maintained that the separate
assets and liabilities of the debtors could be
ascertained without great difficulty.
The court agreed with the investor and
denied substantive consolidation. The court
found that the creditors’ committee and the
debtors did not establish the criteria for meeting either the Eastgroup or Augie/Restivo
tests and concluded that substantive consolidation would not ensure equitable treatment
of all creditors.
In In re Kmart Corporation, another
bankruptcy case that is pending before the
Northern District of Illinois,30 the committee
of unsecured creditors argued that the separate corporate entities of Kmart and its subsidiaries should be disregarded and that their
assets should be consolidated for the benefit
of all creditors. The committee demonstrated
that most general unsecured creditors dealt
with the Kmart entities as a single economic
unit and did not extend credit in reliance
upon their separate corporate identities.
Historically, the Kmart entities have issued
consolidated financial statements and filed
consolidated federal tax returns.
Further, Kmart’s corporate department
provided “back office” services to all Kmart
entities, which share a centralized cash management system. However, Kmart’s prepetition lenders obtained separate subsidiary
guarantees from each of Kmart’s subsidiaries.
Each subsidiary was a party to its own separately identified real estate leases and executory contracts, and each owned inventory
and real estate. Substantive consolidation
would have eliminated the subsidiary guarantees, and the prepetition lenders would
have been left with a single claim against the
consolidated pool of assets, which would be
diluted by the claims of the other unsecured
creditors. In Kmart, however, a dispute over
substantive consolidation was avoided by a
compromise reached between the debtors
and creditors of the estates.
In the highly publicized Enron bankruptcy
case, 31 the creditors’ committee and the
debtors undertook a joint due diligence
process to ascertain whether substantive consolidation was an appropriate remedy for
some or all of the debtors. The parties
reviewed and considered the debtors’ books
and records, public filings, key contracts,
and other documents, as well as the facts
and legal theories underlying various related
inter-estate issues. In addition, joint interviews of current and former employees were
conducted, the parties analyzed the relevant
legal standards, and evaluated the relationships between certain of the debtors and their
largest creditors. The facts disclosed by this
process weighed on both sides of the substantive consolidation issue.
First, separate books and records were
maintained by each of the debtors prepetition,
although consolidated federal tax returns
were filed. Second, most of the debtors filed
individual state tax returns. Third, each of the
debtors observed corporate formalities,
including conducting periodic board meetings
and annual shareholder meetings. Fourth,
some overlap existed among the officers and
directors of the debtors. Finally, the majority
of debtors participated, either directly or
indirectly, in a centralized cash management
system.
To avoid protracted and expensive litigation, the creditors’ committee and the
debtors reached a settlement regarding the
issue of substantive consolidation. The settlement provided that although substantive
consolidation would not be ordered, certain
claimants would receive a portion of their distributions based upon a hypothetical pooling
of assets and liabilities of the debtors.
In another recent high profile bankruptcy
case, In re WorldCom, Inc.,32 substantive
✒ Litigation support
✒ Expert witness
✒ Forensic accountants
✒ Family law matters
✒ Business valuations
✒ Loss of earnings
✒ Damages
When you need more than just
numbers... you can count on us...
Contact Michael Krycler
PHONE (818) 995-1040
FAX (818) 995-4124
E-MAIL [email protected]
VISIT US @ www.KETW.COM
15303 VENTURA BOULEVARD, SUITE 1040
SHERMAN OAKS, CALIFORNIA 91403
We
Understand
Bankruptcy
O VE R 2 5 Y E A R S O F S U C C E S S
The Legal Side and
The Human Side
Clients troubled by debts?
We are experts at:
• Debt Restructuring Plans
• Chapters 7, 11, and 13 Relief
• Conservative Asset Protection
Refer your clients with
confidence:
• AV Rating
• Free Consultations
• Reasonable Fees
Professional, Compassionate Solutions
Laurence D. Merritt
Attorney at Law
Phone: 818.710.3823 • email: [email protected]
Internet: www.legalknight.com
Formerly with Merritt & Hagen
consolidation was approved through the
debtors’ plan of reorganization. The
WorldCom enterprise contained over 400
legal entities, of which 222 are debtors. Each
of the debtors operated under common senior
management and had never prepared separate
legal entity financial statements for public
financial reporting purposes. The debtors
were operationally integrated, utilized a complex accounting system, were unable to create accurate or reliable historical separate
legal entity financial statements, and lacked
internal accounting controls. The debtors
and creditors reached a compromise after
concluding that, absent substantive consolidation, there was likely to be massive intercreditor litigation regarding the validity and
enforceability of intercompany claims as well
as extensive litigation over intercompany
payments and the transfers of billions of dollars in assets that occurred in various restructuring transactions. The costs associated
with litigating these disputes would have
resulted in a diminution of enterprise value,
which would adversely affect all creditor
recoveries.
In re Bonham, the case in which the Ninth
Circuit adopted the Second Circuit test,
involved a debtor who was the sole shareholder of two businesses, through which she
operated a failed Ponzi scheme. The scheme
involved the purchase and resale of airline frequent flier miles. The debtor indiscriminately
gave contracts to investors from both of the
debtor’s entities regardless of the entity with
which the investors paid.
The Bonham court found that substantive
consolidation was appropriate because both
factors of the Second Circuit test were satisfied: 1) no creditor could demonstrate that it
had relied on the separate credit of the
debtor’s wholly owned and controlled entities,
and 2) the assets and liabilities of the debtor
and her affiliated entities were hopelessly
entangled. The court determined that the
burden rests on the creditors to overcome
the presumption that they did not rely on
the separate credit of the two entities sought
to be consolidated. Further, the court held that
the sole aim of substantive consolidation is
fairness to creditors, not a formalistic costbenefit analysis.33
Courts are sensitive to creditors’ expectations of seeking satisfaction from the specific entity to which the creditor has extended
credit. Creditors’ reliance on the separateness of their debtors is important because
voluntary creditors assess the risks of lending
to a particular debtor and adjust the terms of
the credit agreement accordingly.34 Substantive consolidation undermines the value
of such risk calculations by creating a new
entity from which the creditors must look for
payment. If a solvent subsidiary is consoli-
dated with its insolvent parent, creditors of
the subsidiary suffer a decreased return on
their claims because the assets of the subsidiary must be used to satisfy claims of the
creditors of both the subsidiary and the parent. Perhaps a more substantial threat is the
recognition of priority claims after substantive consolidation. Claims of priority creditors of a poorer company will be paid before
the claims of general creditors of a wealthier
company.
Despite these concerns, courts also are
recognizing an increasing need for substantive
consolidation due to the growing prevalence
of parent and subsidiary corporations with
interwoven directorates. Furthermore, courts
have been reluctant to deny substantive consolidation if there is a strong showing of the
benefits of substantive consolidation, even
when there is potential prejudice to objecting
creditors. Indeed, when substantive consolidation facilitates and expedites the reorganization process involving several related
debtors, substantive consolidation may be
authorized, because separate plans of reorganization would not be feasible.35
The absence of legislative guidance with
respect to substantive consolidation in bankruptcy has become increasingly conspicuous.
The often inconsistent decisions in substantive consolidation cases herald a demonstra-
ble need for statutory guidance.
■
18
Id. at 518.
In re Bonham, 229 F. 3d 750 (9th Cir. 2000).
20 Chemical Bank N.Y. Trust Co. v. Kheel, 369 F. 2d
845, 847 (2d Cir. 1966).
21 In re DRW Prop. Co., 54 B.R. 489, 495-97 (Bankr.
N.D. Tex. 1985).
22 Id.
23 Matter of Gulfco Inv. Corp., 593 F. 2d 921, 927
(10th Cir. 1979).
24 In re Tureaud, 45 B.R. 658, 662 (Bankr. N.D. Okla.
1995), aff’d, 59 B.R. 973 (N.D. Okla. 1986) (citing Fish
v. East, 114 F. 2d 177 (10th Cir. 1940) and In re
Guyco Inv. Corp., 593 F. 2d 921 (10th Cir. 1979)).
25 See In re Alico Mining, Inc., 278 B.R. 586, 588
(Bankr. N.D. Fla. 2002) (“[S]ubstantive consolidation
is a remedy entirely independent of, and inconsistent
with the involuntary petition remedy, and thus, is an
alternative means to bring nondebtor’s assets into a
debtor’s estate.”).
26 Sampsell v. Imperial Paper Corp., 313 U.S. 215
(1941).
27 Id.
28 In re Lease-A-Fleet, Inc., 141 B.R. 853, 864 (Bankr.
E.D. Pa. 1992).
29 In re World Access, Inc., 301 B.R. 217 (Bankr. N.D.
Ill. 2003).
30 In re Kmart Corp., Case No. 02-02474 (Bankr.
N.D. Ill., filed Jan. 22, 2002).
31 In re Enron Corp., Case No. 01-16034 (AJG) (Bankr.
S.D. N.Y., filed Dec. 2, 2001).
32 In re WorldCom, Inc., Case No. 02-13533 (AJG)
(Bankr. S.D. N.Y., filed July 21, 2002).
33 In re Bonham, 229 F. 3d 750, 767, 771 (9th Cir. 2000).
34 Chemical Bank N.Y. Trust Co. v. Kheel, 369 F. 2d
845, 848-49 (2d Cir. 1966).
35 In re Standard Brands Paint Co., 154 B.R. 563, 571
(Bankr. C.D. Cal. 1993).
19
1
In re Augie/Restivo Baking Co. Ltd., 860 F. 2d 515,
518 (2d Cir. 1988).
2 Sampsell v. Imperial Paper & Color Corp., 313 U.S.
215 (1941); Augie/Restivo, 860 F. 2d 515.
3 Augie/Restivo, 860 F. 2d at 518.
4 In re DRW Prop. Co., 54 B.R. 489, 494 (Bankr.
N.D. Tex. 1985); In re Snider Bros. Inc., 18 B.R. 230,
234 (Bankr. D. Mass. 1982).
5 DRW, 54 B.R. at 494.
6 In re Parkway Calabasas Ltd., 89 B.R. 832, 837
(Bankr. C.D. Cal. 1988); In re Continental Vending
Mach. Corp., 517 F. 2d 997, 1001 (2d Cir. 1975);
Chemical Bank N.Y. Trust Co. v. Kheel, 369 F. 2d 845,
847 (2d Cir. 1966).
7 Snider, 18 B.R. at 234.
8 Chemical Bank, 369 F. 2d at 847; In re Donut Queen,
Ltd., 41 B.R. 706, 709 (Bankr. D. N.Y. 1984).
9 Continental Vending, 517 F. 2d at 1000.
10 Matter of Gulfco Inv. Corp., 593 F. 2d 921, 928
(10th Cir. 1979).
11 5 COLLIER ON BANKRUPTCY ¶1100.06[1], at 1100-46
(L. King ed., 15th ed. 1979).
12 Eastgroup Props. v. Southern Motel Ass’n Ltd., 935
F. 2d 245 (11th Cir. 1991).
13 Id. at 251-52.
14 Matter of Lewellyn, 26 B.R. 246, 251 (Bankr. S.D.
Iowa 982).
15 In re Donut Queen, Ltd., 41 B.R. 706, 710 (Bankr.
D. N.Y. 1984).
16 Landers, A Unified Approach to Parent, Subsidiary,
and Affiliate Questions in Bankruptcy, 42 U. CHI. L.
REV. 589, 630-31 (1975).
17 In re Augie/Restivo Baking Co., Ltd., 860 F. 2d
515, 518 (2d Cir. 1988).
by Magdalena Reyes Bordeaux
D E BTO R S I N
Pretension
In light of the growing incidence of identity theft,
practitioners need to understand how to expunge
a fraudulent bankruptcy
Magdalena Reyes Bordeaux is a staff attorney with the Legal Aid Foundation of Los Angeles and specializes in consumer bankruptcy
litigation. Bordeaux wrote this article as the staff attorney with Public Counsel’s Debtor Assistance Project. She thanks U.S.
Bankruptcy Court Judge Maureen Tighe and Clifford S. Bordeaux for their contributions.
HADI FARAHANI
I
dentity theft in the bankruptcy courts is a growing crime that often leaves unsuspecting consumers facing devastating consequences. Currently, when someone files for bankruptcy, there are no identification procedures at
the time of filing to verify that the name on the petition is in fact the name of the person filing for bankruptcy
relief. Accordingly, it is relatively simple for an identity thief to file a bankruptcy petition using a stolen identity.
However, a victim of identity theft in a bankruptcy proceeding can clear up a tarnished record by filing a motion to
expunge a fraudulent bankruptcy.
Typically, identity thieves file for bankruptcy relief to delay a foreclosure or eviction.1 Under 11 USC Section 362,
a bankruptcy filer can obtain one of the most powerful injunctions available under federal law—the automatic stay.2
The automatic stay halts all collection actions and suspends any foreclosure proceedings.3 As a result, identity thieves
filing for bankruptcy are able to benefit from the legal protections available under the automatic stay without having
the bankruptcy filing damage their credit records.
When a bankruptcy petition is filed with the court, a mandatory hearing known as the 341(a) meeting of creditors is scheduled.4 Identity thieves, however, often fail to appear at the 341(a) hearing to avoid detection of their crime.5
When a case is subsequently dismissed for failure to appear, identity thieves are able to walk away with little fear that
their fraud will be uncovered. The victims, however, now have a bankruptcy filing on their records. Bankruptcy filings stay on a person’s credit report for up to 10 years, so a fraudulent bankruptcy can create serious damage for a
long time.
Bankruptcy-related identity fraud occurs
in various forms.6 The methods employed
by the perpetrators of this crime include:
• Filing for bankruptcy using the name and/or
Social Security number of another person. It
is not uncommon for thieves to use the names
and numbers of relatives—particularly a parent, sibling, or child—because the information
is easily accessible.7
• Incurring debt under a false name and then
filing for bankruptcy, using that name to discharge the debt.8
• Transferring property into the name of a rel-
file a motion to reopen the case before filing
a motion to expunge.17
Reopening a Closed Bankruptcy Case
Pursuant to 11 USC Section 350(b), a bankruptcy case may be reopened “to administer
assets, accord relief to the debtor, or for other
cause.” Moreover, Rule 5010 of the Federal
Rules of Bankruptcy Procedure confers standing to the victim of identity theft to file a
motion to reopen.18 In identity theft cases,
victims have two grounds upon which to
request that the court reopen their bankruptcy
parties to reopen a bankruptcy case when a
petitioner has used a false Social Security
number.24 Once a court has granted a victim’s
motion to reopen, a motion to expunge the
fraudulent bankruptcy can be filed with the
court. The court will then have the opportunity to rule on the merits of the expungement
motion at a subsequent hearing.
Filing a Motion to Expunge
In federal court, expungement of court
records is allowed when the remedy is necessary and appropriate to preserve basic legal
The Office of the U.S. Trustee for the Central District of California—a component
of the U.S. Department of Justice charged with the supervision and
administration of bankruptcy cases—found an alarming increase in the
number of bankruptcies filed using false names or false Social Security numbers.
ative or friend, and then filing for bankruptcy
using that person’s name and/or Social
Security number to avoid foreclosure.9
In extreme cases, identity thieves obtain
driver’s licenses, attain employment, apply for
apartments, and take on credit card debts
using the victim’s identity. When a fraudulent
bankruptcy petition is filed with the court, it
can be part of a complex scheme of impersonation that may have been ongoing for years.10
The Office of the U.S. Trustee for the
Central District of California—a component
of the U.S. Department of Justice charged
with the supervision and administration of
bankruptcy cases—found an alarming
increase in the number of bankruptcies filed
using false names or false Social Security
numbers.11 The Fraud Section of the office
received 68 identity theft complaints in 1995,
99 in 1997, and 88 in 1998.12
The increasing problem of identity theft in
the bankruptcy courts has prompted the
Office of the U.S. Trustee to examine and
track the problem more closely. In 2001, the
office launched a six-month Debtor
Identification Pilot Program to assess the
prevalence of misidentified debtors and incorrect Social Security numbers on bankruptcy
petitions.13 The program required bankruptcy
filers to provide proof of identity at 341(a)
hearings14—and found inaccurate names or
Social Security numbers in approximately
1,225 bankruptcy cases. Close to 20 percent
of these cases involved questionable names
and identification documents or possible falsification of Social Security numbers.15
Filing a motion to expunge the fraudulent
bankruptcy with the bankruptcy court can be
an effective remedy for victims.16 If a victim
uncovers a fraudulent bankruptcy after the
case has been closed, it will be necessary to
cases: to “accord relief to the debtor,” and
for “other cause.”19
Victims can request that a motion to
reopen be granted to “accord relief” from
having a fraudulent bankruptcy continue to
appear on their credit records. Accordingly,
victims can demonstrate that unless the bankruptcy court gives them the opportunity to
reopen their cases in order to file a motion to
expunge, the fraudulent bankruptcy will continue to damage their credit.
Also, although the bankruptcy code does
not define “other cause,” the decision to
reopen a case on that ground lies within the
discretion of the bankruptcy court and will be
reversed only for an abuse of that discretion.20 Since the bankruptcy court is a court
of equity, it may and should grant relief when
appropriate to safeguard public and private
interests and to protect the court’s jurisdiction
from misuse.21 In identity theft cases, the
bankruptcy court addresses both of these
concerns by reopening a bankruptcy case.
First, the court safeguards the public by not
allowing a fraudulent bankruptcy to remain
on the public record. Second, the court protects its jurisdiction from misuse by preventing an identity thief from abusing the system.
A motion to reopen is a procedural motion
that is not determinative of the substantive
merits of relief sought by the moving party.
A motion to reopen only gives the party the
ability to request further relief with the
court.22 The court in In re Stark stated that
“the bankruptcy court should exercise its
equitable powers with respect to substance
and not technical considerations that will
prevent substantial justice.”23
Bankruptcy courts nationwide, recognizing that identity theft is a growing problem
in bankruptcy proceedings, have allowed
rights.25 This equitable remedy exists to vindicate the basic legal rights that are secured
by the U.S. Constitution or by statute.26
Under 11 USC Section 107(b)(2), the
bankruptcy court can protect a person with
respect to scandalous or defamatory matters. In identity theft cases, a fraudulent bankruptcy filing constitutes a defamatory matter.
Since 11 USC Section 105(a) gives the court
equitable powers to issue any order to carry
out the provisions of Title 11, the bankruptcy
court has equitable discretion to grant a victim’s motion to expunge a fraudulent bankruptcy from the public record.
Although no appellate bankruptcy cases
provide direct guidance on the issue of
expunging a bankruptcy case fraudulently
filed by an identity thief, there are cases that
deal with expungement in other criminal and
constitutional contexts.27 The U.S. Court of
Appeals for the Third Circuit and the District
of Columbia Circuit have used a balancing
test to determine whether the harm caused to
an individual by the existence of the records
at issue outweighs the utility to the government of the maintenance of the records.
The Third Circuit in Paton v. La Prade28
considered several factors: 1) the accuracy and
adverse nature of the information, 2) the
availability and scope of dissemination of
the records, 3) the legality of the methods by
which the information was compiled, 4) the
existence of statutes authorizing the compilation and maintenance, and prohibiting the
destruction, of the records, and 5) the value
of the records to the government. Moreover,
the District of Columbia Circuit in Chastain
v. Kelley29 stated in dicta that the right not to
be adversely affected by the information in the
future may exist if the information is 1) inaccurate, 2) acquired by fatally flawed proce-
dures, or 3) prejudicial without serving any
proper purpose of the government.
In adopting the balancing approaches of
the Third Circuit in Paton and the D.C.
Circuit in Chastain, victims of identity theft
in bankruptcy can demonstrate that the harm
caused by having a fraudulent bankruptcy filing appear on their credit records far outweighs the utility of the government to maintain fraudulent records. In identity theft cases,
the fraudulent bankruptcy record is false and
misleading regarding the victim. Thus, maintaining a false record will only perpetuate
the fraud on the victim, creditors, and the
public. More importantly, the harm caused to
victims is substantial, because this information will be detrimental to the victims’ credit
records and will have a negative impact on
their access to credit, including making it
difficult or expensive to finance the purchase
of a home or automobile. In these cases, a
fraudulent bankruptcy constitutes a defamatory matter that will continue to cause a
victim substantial harm for years. Hence,
expunging a fraudulent bankruptcy is both
necessary and appropriate.
The problem of identity theft has become
so severe that some government agencies
have assisted identity theft victims in filing
motions to expunge with the bankruptcy
court. In July 2002, the Office of the U.S.
Trustee for the Central District of California
reopened a case for a debtor whose name
and Social Security number were used by
another person. The fraudulent filing caused
the victim substantial difficulties with creditreporting agencies, and the perpetrator was
later arrested. The office later filed a motion
to expunge the fraudulent bankruptcy to protect the victim’s credit record, and the motion
was granted by the bankruptcy court. In
Newark, New Jersey, the Office of the U.S.
Trustee helped an identity theft victim remove
a false bankruptcy filing from his credit report.
And in Detroit, Michigan, the Office of the
U.S. Trustee assisted an identity theft victim
whose name was falsely used on a chapter 13
bankruptcy petition.30
Steve Fisher
Deposition Summaries
Providing comprehensive, accurate, and
easy to read deposition summaries for all
types of civil cases since 1987.
SPIEGEL
PROPERTY DAMAGE
CONSULTING & FORENSICS
✔ MOLD REMEDIATION
✔ WATER DAMAGE
✔ SEWAGE BACKFLOW
✔ FIRE & SMOKE DAMAGE
✔ FLOORING FORENSIC
✔ INDUSTRY STANDARDS OF CARE
✔ CAUSE AND ORIGIN
✔ CONSTRUCTION DEFECTS
✔ DETAILED CONSTRUCTION
ESTIMATES
BRIAN SPIEGEL, CR, CIE, CMR
DAVID SPIEGEL, CR, CIE, CMR
818/563-4496
[email protected]
Lic. Gen. Contr. #299472
For rate information, summary samples,
and client testimonials, please visit
www.deposummary.com
800-266-8988
FAX 909-591-7274 • [email protected]
www.propertydamageinspections.com
CONSULTANTS/EXPERT WITNESS
CORPORATE
LAW
EXPERT
WITNESS
34 Years Experience in the Boardroom
• Member, Corporations Committee of the
Business Law Section, State Bar of California
• Author, Lecturer, Consultant
• Editor of the Southern
California Law Review
Rogers, Sheffield campbell, llp
B. Keith Martin, Esq.
caltech bsee • usc jd
(805) 963-9721
[email protected]
www.high-techlawyer.com
Clearing Up Credit Reports
Victims who try to clear up their records on
their own with creditors and credit-reporting
agencies are often unsuccessful. In 2003, a
client contacted Public Counsel after being victimized by the crime of identity theft in bankruptcy and after repeatedly trying to resolve
the problem on her own. She had informed
each of the credit-reporting agencies that she
had been a victim of identity theft and provided proof, including copies of police reports
and declarations. However, she was still unable
to remove the fraudulent information from her
credit records. Despite her efforts, creditreporting agencies continued to list the fraudLos Angeles Lawyer September 2004 27
TAX CONTROVERSIES
IRS, FTB, SBOE, EDD
■ Return Preparation/Late Returns–Non-Filers
■
G. L. HOWARD, CPA
562 431-9844 x11 • [email protected]
10417 LOS ALAMITOS BOULEVARD, LOS ALAMITOS CALIFORNIA 90720
MEDIATOR–ROBERT H. GANS, M.D., LL.B., FCLM
OVER 30 YEARS EXPERIENCE IN THE
PRACTICES OF LAW AND MEDICINE
Telephone: 310-247-1883
Fax: 310-247-1888
E-mail: [email protected]
Web site: www.ganslaw.com
433 N. Camden Drive, Suite 600
Beverly Hills, CA 90210
Judgments Enforced
Law Office of Donald P. Brigham
23232 Peralta Dr., Suite 204, Laguna Hills, CA 92653
P: 949.206.1661
F: 949.206.9718
[email protected]
ulent bankruptcy filing, which adversely
affected her credit record. As a result, some
creditors cut off all lines of communication
with the victim, while other creditors refused
to extend her any additional credit because
they believed she had filed for bankruptcy.
Unless the bankruptcy court grants a
motion to expunge the fraudulent bankruptcy
from her public record, there may be no
other legal remedy available to solve her
problem. Indeed, the harm to the victim will
be substantial if the motion to expunge is
not granted. Moreover, in most cases, it will
be evident to the court that the harm to the
victim far outweighs any interest the government may have in preserving a record of
a fraudulent bankruptcy filing.
When the bankruptcy court grants a
motion to expunge a fraudulent bankruptcy
filing, the order submitted to the court should
seek specific relief that will enable victims to
clear up their tarnished credit records. An
expungement order should request that the
court expunge all references to the fraudulent
case from the case dockets as well as the
court’s automated systems. In addition, the
expungement order should request that the
hard copy of the file be sealed for all purposes,
and that all credit-reporting agencies delete
every reference to the fraudulent bankruptcy
filing from a victim’s file.31
A request to remove information about a
fraudulent bankruptcy filing should be sent
to the three major credit-reporting agencies:
Experian, Trans Union, and Equifax. Because
information reported by each credit-reporting agency may vary, requests should be sent
to all three to ensure maximum accuracy in
a victim’s records.32
The Fair Credit Reporting Act (FCRA)
requires that consumer-reporting agencies
adopt reasonable procedures for meeting the
needs of commerce for consumer credit and
requires credit-reporting agencies to follow
reasonable procedures to ensure the greatest
possible accuracy of the information in their
reports.33 Under the FCRA, credit-reporting
agencies that continue to report a fraudulent bankruptcy after an order to expunge has
been granted could be civilly liable to the
individual, and that liability may include
actual damages, punitive damages, and attorney’s fees.34
Identity thieves in bankruptcy court run
very little risk that the court will uncover
their fraud. However, a remedy is available in
the bankruptcy court, pursuant to 11 USC
Sections 105 and 107, to expunge a fraudulent bankruptcy from the public record. Filing
a motion to expunge can be an effective
mechanism for identity theft victims to mitigate their damages.
■
AV Rated
1
Jane E. Limprecht, Fresh Start or False Start?—
Identity Theft in Bankruptcy Cases, 19 ABI J. no. 10,
at 3 (Dec./Jan. 2001), available at http://www
.usdoj.gov/ust/press/articles/idtheftfinal.htm.
2 See The Final Report of the Bankruptcy Foreclosure
Scam Task Force, 32 LOY. L.A. L. REV. 1063, 1068
(1998).
3 11 U.S.C. §362.
4 11 U.S.C. §341(a). However, when extenuating circumstances prevent the debtor from appearing in person, such as military service, terminal illness, or incarceration, the trustee can make arrangements for an
independent third party to be present at the debtor’s
location to administer the oath and verify the debtor’s
identity as well as the debtor’s Social Security number.
Memorandum from U.S. Trustee for the Central District
of California, to Chapter 7 Panel Trustees and Chapter
13 Standing Trustees (Mar. 13, 2002) (on file with
author).
5 Limprect, supra note 1, at 3.
6 In re Minetos, 248 B.R. 729, 730 (Bankr. S.D. N.Y.
2000). Martha Davis & Jane Limprecht, Beyond
Identifying the Problem: Debtor ID Initiatives Move
Ahead, 22 ABI J. no. 3 (Apr. 2003), available at
http://www.usdoj.gov/ust/press/articles/ debtorid0303
.html. U.S. DEPARTMENT OF JUSTICE U.S. TRUSTEE
P ROGRAM , 2001 A NNUAL R EPORT OF S IGNIFICANT
ACCOMPLISHMENTS (2001) [hereinafter 2001 ANNUAL
REPORT]. Maureen Tighe & Emily Rosenblum, What
Do You Mean I Filed Bankruptcy?—Or How the
Law Allows a Perfect Stranger to Purchase an
Automatic Stay in Your Name, 32 LOY. L.A. L. REV.
1009, 1012 (1999) (citing Memorandum from the
Fraud Section, Office of the U.S. Trustee, Los Angeles
(Feb. 6, 1998) (on file with LOY. L.A. L. REV.)).
7 Limprect, supra note 1, at 2.
8 Id. at 3.
9 Id.
10
Id.
Press Release, U.S. Attorney for the Central District
of California, Federal Authorities Announce Criminal
Fraud Cases Against Some Filing Bankruptcy in
Nation’s Busiest Court (Oct. 31, 2001), available at
http://www.usdoj.gov/usao/cac/pr2001/163.html.
12 Tighe & Rosenblum, supra note 6, at 1102.
13 2001 ANNUAL REPORT, supra note 6.
14 Press Release, Executive Office for the U.S. Trustee’s
Office, Personal Bankruptcy Filers Will Be Required to
Show Proof of I.D., Based on Results of Pilot Study (Jan.
3, 2002), available at http://www.usdoj.gov/ust
/press/pr20020103.htm.
15 Id.
16 11 U.S.C. §105(a) allows the court to issue any
order, process, or judgment necessary or appropriate
to carry out the provisions of Title 11.
17 11 U.S.C. §350(b).
18 Federal Rule of Bankruptcy Procedure 5010 allows
a case to be reopened on motion of the debtor or other
party in interest pursuant to 11 U.S.C. §350(b).
19 11 U.S.C. §350(b).
20 In re Shondel, 950 F. 2d 1301, 1304 (7th Cir. 1991).
21 Hull v. Powell, 309 F. 2d 3, 5 (9th Cir. 1962);
Stuhley v. Hyatt, 667 F. 2d 807, 809 (9th Cir. 1982).
22 In re Abbott, 183 B.R. 198, 200 (citing In re Daniels,
34 Bankr. 782, 784 (9th Cir. B.A.P. 1983)); In re
Germaine, 152 Bankr. 619, 624 (9th Cir. B.A.P. 1993).
23 In re Stark, 717 F. 2d 322, 323 (7th Cir. 1983) (per
curiam) (citing Kenneally v. Standard Elecs. Corp.,
364 F. 2d 642, 647 (8th Cir. 1966)).
24 In re Riccardo, 248 B.R. 717, 721 (Bankr. S.D.
N.Y. 2000).
25 In re Whitner, 57 B.R. 707, 710 (Bankr. E.D. Va.
1986) (citing Livingston v. U.S. Dep’t of Justice, 759
F. 2d 74, 78 (D.C. Cir. 1985) (quoting Sullivan v.
Murphy, 478 F. 2d 938, 968 (D.C. Cir. 1973)).
11
26
Fendler v. Bureau of Prisons, 846 F. 2d 550, 554 (9th
Cir. 1988); Chastain v. Kelly, 510 F. 2d 1232, 1235
(D.C. Cir. 1975).
27 Walker v. United States, 116 F.R.D. 149, 150-51
(S.D. N.Y. 1987); Sullivan, 478 F. 2d at 968.
28 Paton v. La Prade, 524 F. 2d 862, 868-69 (3d Cir.
1975) (The plaintiff sought to have FBI records of a misguided investigation expunged.).
29 Chastain, 510 F. 2d at 1235-36 (The plaintiff sought
to have FBI records of his suspension and dismissal
expunged after he was reinstated with back pay.).
30 Davis & Limprecht, supra note 6, at 2.
31 Exceptions to the request should be specified.
Government prosecutorial agencies may need references in the file for investigations and prosecutions of
potential crimes, and clients may need the information
to prove damage actions as well as possible contempt
actions against a petition preparer that may have been
involved in perpetrating the fraud.
32 These requests should be executed by certified return
receipt mail so that counsel and their clients have a
record.
33 15 U.S.C. §1681e(b). Congress enacted the FCRA
in 1970 because of concerns about abuses in the consumer reporting industry. Congress found that, in too
many instances, agencies were reporting inaccurate
information that was adversely affecting the ability of
individuals to obtain employment. See Dalton v. Capital
Associated Indus., Inc., 257 F. 3d 409, 414 (4th Cir.
2001). See also Angie A. Welborn, Identity Theft and
the Fair Credit Reporting Act: An Analysis of TRW v.
Andrews and Current Legislation, CRS REPORT FOR
CONGRESS, Feb. 27, 2003 (citing Pub. L. No. 91-91-508,
tit. 6, §84, Stat. 1128, 15 U.S.C. §§1681 et seq.),
available at www.house.gov/htbin/crsprodget?/rs
/RS21083.
34 15 U.S.C. §1681n & o.
MCLE ARTICLE AND SELF-ASSESSMENT TEST
By reading this article and answering the accompanying test questions, you can earn one MCLE legal ethics credit.
To apply for credit, please follow the instructions on the test answer sheet on page 33.
b y J U D GE M I CH A E L D. M A RCUS
BEHAVIOR
MODIFICATION
Laws are already in place
to RESTRAIN ATTORNEYS who engage in
uncivil and offensive behavior
T
he plea for improvement in attorney behavior is longstanding. It is a fixture of discussions in legal periodicals
and the basis for codes of civility suggested by bar associations and the courts.1 But this rising tide of commentary
and efforts to effect change has had no substantial impact
on improper attorney behavior. Since unpleasant and inappropriate
attorney conduct continues unabated, despite all the well-intended
exhortations and proposals, it is time to look for other ways to combat attorney misbehavior. Ironically and fortunately, there is no need
to create new standards or laws, since effective alternatives already
exist in the Business and Professions Code, the Rules of Professional
Conduct, and case law.2
Improper and unethical attorney conduct can take many forms and
occurs in every phase of litigation, from the filing of the initial pleading to an appeal from a final judgment. Misconduct occurs when attorneys file actions and assert defenses that are either not legal and just
or are without probable cause and for the purpose of harassment,3
engage in or oppose discovery without substantial justification,4
have a conflict of interest with a current or former client,5 communicate with a represented party,6 unnecessarily attack the honor or
reputation of a witness,7 intentionally elicit inadmissible evidence,8
suppress evidence that they have a legal obligation to reveal or produce,9 communicate with a juror during trial,10 and make false statements of fact in final argument.11
However, the misbehavior that attracts the most attention and can
make the practice of law unpleasant emerges from acrimonious and
unnecessarily combative contacts between opposing counsel and
between counsel and the court. These fractious situations and the
improper behavior they engender have a more immediate need of being
corrected.
Prohibitions for Opposing Counsel
Attorneys misbehave toward one another in a myriad of ways,
including making misrepresentations to opposing counsel. The applicable statutes for addressing this problem are Business and Professions
Michael D. Marcus, a retired judge of the California State Bar Court, is a
mediator and arbitrator with ADR Services, Inc. in Los Angeles. He is the vice
chair of the Los Angeles County Bar Association’s Professional Responsibility
and Ethics Committee.
Code Sections 6068(d) and 6106. The former states that attorneys shall
“employ, for the purpose of maintaining the causes confided to him
or her such means only as are consistent with truth, and never to seek
to mislead the judge or any judicial officer by an artifice or false statement of fact or law.” The first part of that duty has been interpreted
to mean that attorneys shall “employ only such means as are consistent
with the truth when representing a client.”12
Business and Professions Code Section 6106, while more general
in its scope (“The commission of any act involving moral turpitude,
dishonesty or corruption…constitutes a cause for disbarment or suspension”), also prohibits the making of misrepresentations to opposing counsel.13 Accordingly, it is misconduct for an attorney to falsely
misrepresent the financial status of a client’s business to a third party
and his or her attorney,14 to falsely represent to opposing counsel that
the attorney has the authority to settle a case,15 and to misrepresent
to an attorney for a company that there is evidence of misconduct by
that company.16 Such “acts [of dishonesty] manifest an ‘abiding disregard of the “fundamental rule of
ethics—that of common honesty—
without which the profession is
worse than valueless in the place it
holds in the administration of justice.”’”17
One area no longer expressly
covered by California law is attorney boorishness or offensive conduct, because that part of Business
and Professions Code Section
6068(f), which provided that “it is
the duty of an attorney to…abstain
from all offensive personality,” was
deleted by the legislature in 2001. Although the California Supreme
Court previously relied upon that portion of the statute for imposing discipline against attorneys in two separate cases and more
recently referenced it concerning the outrageous conduct of a prosecutor that led to the reversal of a death penalty prosecution,18 the
legislature was apparently more impressed by a Ninth Circuit decision that found the term “offensive personality” to be unconstitutionally vague.19
The absence of a statute proscribing offensive behavior, however, should not be read as general approbation for such conduct,
because statutory language still exists that mandates that attorneys
must “maintain the respect due to the courts of justice and judicial
officers”20 and that attorneys shall “advance no fact prejudicial to the
honor or reputation of a party or witness, unless required by the justice of the cause with which he or she is charged.”21 Consequently,
attorneys who wish to act like fools do so at their own peril, since
remedies remain for regulating their abusive behavior, whether at a
deposition or in court.
Attorney mistreatment of other attorneys during court proceedings may not necessarily be more common than it is in pretrial litigation, but it certainly is more visible. Vilifying or demeaning opposing counsel during trial is unfortunately not uncommon when the
competitive juices are flowing and the outcome of a case is most conspicuously at risk. Bad judgment, the pressure of the moment, or inexperience can cause attorneys to charge opponents with suborning perjury, engaging in deception, or fabricating a defense.22 Calling
opponents names and demeaning their objections is also improper.23
“Such behavior only serves to inflame the passion and prejudices of
the jury, distracting them from fulfilling their solemn oath to render
a verdict based solely on the evidence admitted at trial.”24
Attacks on the integrity of counsel can lead to mistrials or reversals of judgments and convictions.25 Moreover, the trial court must
notify the State Bar if those events occur.26
While the integrity of counsel should be above attack at trial, it
can still be argued appropriately that “it’s [their] job to throw sand
in your eyes”27 and that “an experienced defense counsel will attempt
to ‘twist’ and ‘poke’ at the [opponent’s] case.”28 It is also appropriate for counsel to attack the credibility of opposing witnesses, including experts.29 The distinction is that these arguments as well as the
attacks on witness credibility, if supported by the evidence and inferences drawn from that evidence, are not an attempt to impugn the
honesty of counsel.30
When an attorney attacks the credibility of opposing counsel in
front of a jury, the trial court should sustain an objection to the
improper statement and then instruct the jury to disregard it. Although
prejudice has been theoretically avoided at that point,31 it may also
be appropriate and necessary for the court to warn the offender that
further similar misconduct could lead to a contempt citation, a mistrial, or both. However, criminal trial judges should proceed cautiously
in threatening misbehaving prosecutors or defense counsel with a mis-
Vilifying or demeaning opposing
counsel during trial is UNFORTUNATELY
NOT UNCOMMON WHEN THE COMPETITIVE
JUICES ARE FLOWING and the outcome of
a case is most conspicuously at risk.
trial because any discharge of a jury after it has been sworn may result
in a dismissal of the charges when they are refiled unless the defendant consented to the discharge or “manifest” (i.e., legal) necessity
existed for the mistrial.32
The failure to timely object to an attorney’s improper comments
coupled with a failure to request an admonition when the misconduct
occurs before a jury may be considered a waiver on appeal of the
issue.33 Courts have found exceptions to the requirement of an objection and a request for admonition when an admonition would not
have cured the alleged harm,34 or when an objection would have been
futile because the trial judge would have overruled it.35 Additionally,
in civil proceedings, the misconduct of counsel may be considered as
grounds for a new trial even when an objection to the misconduct had
not been made.36
Still, neither trial nor appellate judges should remain uninvolved
when confronted with misconduct by a lawyer and an adversary who
does not make a timely objection. In that situation, the trial judge on
his or her own initiative should intercede to halt the prejudicial conduct,37 and the appellate court should address the misconduct if it was
flagrant and repeated.38
Apparently, criminal trial judges do not have the same sua sponte
obligation to intervene as do their civil counterparts because, it has
been reasoned, criminal defense “counsel might have had a tactical
reason for not objecting.”39 Notwithstanding that observation, and
even if the nonobjecting defense attorney was intentionally laying the
groundwork for an appeal based on his or her own ineffective assistance,40 the better practice would be for the criminal trial judge to
rein in the abuses in the absence of an objection.
Ensuring Proper Conduct toward the Court
Attorneys sometimes forget that respect is also owed the judicial officers before whom they appear. Although judicial rulings may not
always meet attorneys’ expectations, and attorneys should be given
substantial freedom of expression in representing their clients,41 it is
still their duty to “maintain the respect due to the courts of justice and
judicial officers.”42
The purpose of rules prohibiting statements that impugn the
integrity of judges is not to shield them from unpleasant or offensive
criticism but, rather, to preserve public confidence in the fairness and
impartiality of our system of justice.43 Consequently, although “an
attorney is entitled to advocate respectfully and in good faith his contentions on behalf of his client even though asserted inadequacies in
the action taken by the court are pointed out,”44 at some point the
attorney must defer to that ruling, even if it is erroneous.45 Counsel
who continue complaining after their objections have been preserved
for appeal face a contempt citation for contemptuous or insolent
behavior.46
In applying these standards to attorney speech, a court held that
an attorney did not overstep the bounds of propriety by arguing in
good faith that a court order defeated the ends of justice.47 And the
supreme court held that a trial court erred in holding an attorney in
contempt for objecting in the jury’s presence regarding comments made
by the court on the evidence—an event that occurred when the jury
was already in lengthy deliberations.48
On the other hand, it is improper to exhibit a sneering and contemptuous attitude toward the court,49 to accuse a judge of unlawful or illegal behavior,50 to write that a judge was “petty,”51 to allege
that a judge improperly favored one side over the other,52 to claim
that a judge misused his or her position to financially help a litigant,53
to assert that “[t]his court obviously doesn’t want to apply the
law,”54 to accuse a judge of being intellectually dishonest,55 to claim
that the client had not received a fair trial,56 to yell at and interrupt
a judge in front of a jury,57 and for a male attorney in a fit of pique
to tell a female judge, “you’re not my mother.”58
A trial judge may admonish an attorney for his or her misconduct
in the presence of a jury for the purpose of correcting the message given
by that behavior to the jurors that they, too, may disregard the
court’s directives and ignore its authority.59 In doing so, the judge
should not make discourteous and disparaging remarks that might
discredit the attorney or create the impression that the court is siding with the opponent.60
Besides the sanction of contempt for impugning the integrity of
the judiciary, the court can also strike any pleading or brief in which
an abusive remark is made.61 A final order of contempt against an
attorney that may warrant discipline under the Business and
Professions Code must be reported to the State Bar.62
Just as attorneys cannot make misrepresentations to opposing counsel, they certainly cannot make them to judicial officers.63 And the
obligation to avoid deceitful statements is in the negative as well as
in the affirmative; in other words, it includes the “suppression of that
which it is one’s duty to declare as well as in the declaration of that
which is false.”64 Consequently, there is no distinction among concealment, half-truths, and false statements of fact.65 The duty of
vigorous advocacy cannot justify such misconduct.66 The legislature
is so critical of conduct involving an intent to deceive the court that
it made its commission a misdemeanor.67
Misrepresentations occur when attorneys tell the court that a
witness was under subpoena when he or she was not;68 make false
statements in an adoption proceeding;69 make false statements to a
bail commissioner;70 fail to advise the court where a client can be
reached;71 conceal opposing counsel’s continuance request, which leads
to the opponent’s default;72 file a civil complaint with facts known
to be false;73 allege identical property damage in separate claims
arising out of separate automobile accidents;74 make a false statement
concerning a client’s financial condition;75 sign a declaration for a
declarant;76 misrepresent grounds for a continuance;77 fail to advise
the court on a motion to dismiss, following a successful demurrer, that
the plaintiff had already filed a timely amended complaint;78 misrepresent facts at a settlement conference;79 and fail to tell the court
that another judge has issued a stay order in the case.80
Once an attorney has made a misrepresentation, albeit an unintentional one, he or she has an affirmative duty, after becoming
aware of the misrepresentation, to “immediately inform the court and
to request that it set aside any orders based upon such misrepresentation; also, counsel should not attempt to benefit from such improvidently entered orders.”81
Distinct from the duty of an attorney not to mislead a judicial officer by “an artifice or false statement of fact and law” is the duty not
to “intentionally misquote to a tribunal the language of a book,
The POWER of Persuasion
P
otentially draconian consequences may result from misconduct committed by one attorney against another. For example, Business and Professions Code Section 6106 provides that the commission of any act involving moral turpitude
or dishonesty shall be cause for disbarment or suspension. The availability of these sanctions, however, does not mean
that the attorney on the receiving end of out-of-court attorney misconduct should seek punishment for an opponent’s first
misstep. Rather, the statutes, rules, and case law should serve initially as guides for ethical legal behavior for all counsel.
Their existence should be a wake-up call for those attorneys who have borne the brunt of acts of misconduct and for those
who have been the transgressors.
Before filing a motion for sanctions, the aggrieved attorney should bring the applicable statute, rule, or case law to the
offender’s attention. That person should be advised in a nonpatronizing fashion that his or her conduct appears to be a violation of an ethical standard. A subsequent request for sanctions should be made only if the miscreant has not changed his
or her behavior. Nonetheless, as every attorney knows who has ever filed such a request, a motion for sanctions may be given
short shrift by the court, which already hears far too many unsubstantial ones. Consequently, motions for sanctions should
be supported by applicable statutes, rules, and case law in addition to a recitation of the relevant facts.
Only as a last resort, and never for the purpose of seeking an edge in a civil proceeding, should counsel threaten an opponent with reporting his or her conduct to the State Bar’s Office of Chief Trial Counsel. That threat could be a violation of Rule
5-100 of the California Rules of Professional Conduct.1—M.D.M.
1 Rule 5-100 of the California Rules of Professional Conduct states, “A member shall not threaten to present criminal, administrative, or disciplinary charges to obtain an
advantage in a civil dispute.”
MCLE Answer Sheet #129
MCLE Test No. 129
The Los Angeles County Bar Association certifies that this activity has been approved for Minimum
Continuing Legal Education legal ethics credit by the State Bar of California in the amount of 1 hour.
BEHAVIOR MODIFICATION
Name
Law Firm/Organization
Address
City
1. The Rules of Professional Conduct do not apply to
criminal law prosecutors.
True.
False.
11. A contempt citation that does not warrant discipline
under the Business and Professions Code need not
be reported to the State Bar.
True.
False.
2. The obligation not to make misrepresentations to
opposing counsel is found in Business and Professions
Code Sections 6068(d) and 6106.
True.
False.
12. Attorneys have an obligation to tell the court, when
asked, where clients can be reached.
True.
False.
3. Offensive conduct by attorneys is specifically prohibited by Business and Professions Code Section
6068(f).
True.
False.
13. An attorney has no obligation to advise the court
that the attorney made an innocent misrepresentation that led to a court order.
True
False.
4. An attorney can demean an opponent’s objections
but cannot call an opponent names.
True.
False.
14. The duty of an attorney to not cite an overruled decision arises from case law.
True.
False.
5. If an attorney’s attacks on the integrity of opposing
counsel cause a mistrial, the trial court must notify
the State Bar about the attorney’s misconduct.
True.
False.
15. When appearing ex parte in a matter, an attorney
must advise the court of any controlling authority that
squarely contradicts the attorney’s position.
True.
False.
6. Although an attorney cannot attack the integrity of
opposing counsel, it is proper to argue to a jury that “it’s
[my opponent’s] job to throw sand in your eyes.”
True.
False.
16. The appearance of a government representative
regarding a motion to disclose peace officer personnel
records is an exception to the rule prohibiting ex parte
communications with the court.
True.
False.
7. Attorneys, in representing their clients, are entitled
to substantial freedom of expression before a trial
court.
True.
False.
8. Counsel’s failure to 1) timely object to an opponent’s improper comments and 2) request an admonition regarding the comments will always result in a
waiver of the issue on appeal.
True.
False.
9. Once an attorney has objected to an erroneous ruling by the court, the attorney must stop arguing that
point.
True.
False.
10. A trial judge may admonish an attorney in front of
the jury about the attorney’s misconduct.
True.
False.
State/Zip
E-mail
Phone
State Bar #
Instructions for Obtaining MCLE Credits
17. The only consequence for the failure to obey a valid
court order is contempt.
True.
False.
18. The litigation privilege in Civil Code Section 47(2)
extends to disciplinary prosecutions for attorney misconduct committed during a court proceeding.
True.
False.
19. The commission of any act involving moral turpitude
can be grounds for disbarment or suspension.
True.
False.
20. Threatening an opponent with reporting his or her
conduct to the State Bar is not grounds for discipline.
True.
False.
1. Study the MCLE article in this issue.
2. Answer the test questions opposite by marking
the appropriate boxes below. Each question has
only one answer. Photocopies of this answer
sheet may be submitted; however, this form
should not be enlarged or reduced.
3. Mail the answer sheet and the $15 testing fee
($20 for non-LACBA members) to:
Los Angeles Lawyer
MCLE Test
P.O. Box 55020
Los Angeles, CA 90055
Make checks payable to Los Angeles Lawyer.
4. Within six weeks, Los Angeles Lawyer will
return your test with the correct answers, a
rationale for the correct answers, and a certificate
verifying the MCLE credit you earned through this
self-assessment activity.
5. For future reference, please retain the MCLE
test materials returned to you.
Answers
Mark your answers to the test by checking the
appropriate boxes below. Each question has only
one answer.
1.
■ True
■ False
2.
■ True
■ False
3.
■ True
■ False
4.
■ True
■ False
5.
■ True
■ False
6.
■ True
■ False
7.
■ True
■ False
8.
■ True
■ False
9.
■ True
■ False
10.
■ True
■ False
11.
■ True
■ False
12.
■ True
■ False
13.
■ True
■ False
14.
■ True
■ False
15.
■ True
■ False
16.
■ True
■ False
17.
■ True
■ False
18.
■ True
■ False
19.
■ True
■ False
20.
■ True
■ False
Let the lawyer who
wrote the book
handle your client’s
non-profit
formation!
CHARITABLE / RELIGIOUS / EDUCATIONAL
• 100% success rate for over 33 years–
sail through the IRS and FTB!
• Only a 10-day turnaround to
complete the applications–no
waiting, no hassles!
• Lower overall cost–no one is better
at getting the job done right the
first time!
EXPERIENCE / KNOWLEDGE / CONFIDENCE
Marshall A. Glick
attorney at law
6345 Balboa Blvd., Suite I-300
Encino, CA 91316
(818) 345-2223
[email protected]
http://www.glicklaw.com
statute, or decision”82 and “knowing its invalidity, [not] cite as authority a decision that
has been overruled or a statute that has been
repealed or declared unconstitutional.”83
Consequently, an attorney committed misconduct where he did not advise the trial
court that a rehearing of a supreme court
decision had been granted.84
As a corollary to these rules regarding
the citing of legal authority, “attorneys have
an ethical duty to reveal to the court before
which they are appearing any controlling
precedent which squarely contradicts their
position.”85 Attorneys with expertise in a
specific area of the law may have a heightened
obligation to educate the court on relevant
issues.86 While the obligation to cite pertinent
precedent is obviated when opposing counsel is present,87 the better approach, however,
is for the attorney to advise the judge about
all controlling precedent, even when opposing counsel is present and when it is against
the attorney’s position, because the court
should be made aware of that law. This notice
serves to affirm to the court that counsel is
ethical and prepared—qualities that will benefit the attorney in the present case and in all
future appearances before the same judicial
officer.
Another form of misconduct by attorneys
before the judiciary occurs when attorneys do
not comply with court orders. Although
Business and Professions Code Section 6103
makes the willful disobedience of a valid
court order grounds for suspension or disbarment,88 few lawyers apart from those who
practice in the State Bar Court and few jurists
other than those who serve on the State Bar
Court know of the section’s availability or significance. Instead, most lawyers and judges
believe that the only consequence for the failure to obey a court order is contempt.89
Although a void order can be contested,90
disobeying the possibly defective order while
challenging its validity is an action taken at
counsel’s peril if he or she incorrectly assesses
the situation. The more prudent course is to
obey and appeal the edict.91
Ex Parte Communications
* NEW! NOW INCLUDED, OPTION TO EARN 24 MCLE CREDITS *
Don’t miss the next exam! Call 800-430-3588 Today.
Attorney misconduct involving the court also
includes unauthorized ex parte communications. Contacts with a judge regarding the
merits of a contested matter are prohibited
unless all counsel have consented to the communication,92 or the opposing party was
informed about when and where the application for an ex parte hearing would be made
within a reasonable time before the hearing,
or the party seeking the hearing made a good
faith but unsuccessful effort to notify the
opposing party, or “for reasons specified”
the requesting party “should not be required
to inform the opposing party or the oppos-
ing party’s attorney” 93 of the meeting.
Additionally, a corporate or government representative in response to a motion for disclosure of a trade secret or for peace officer
personnel records may appear in camera for
a determination of the materiality of the
information sought.94
Statutes, case law, and court rules applicable to criminal proceedings provide numerous other exceptions to the general rule prohibiting ex parte contacts with the court. For
defendants and defense counsel, these exceptions include providing a defendant’s confidential financial statement for a determination
whether or not to appoint counsel,95 allowing a defendant the opportunity to tell the trial
court why continued representation by
appointed counsel will substantially impair his
or her right to effective counsel,96 advising
that the client may testify untruthfully,97
showing good cause for the nondisclosure
or regulation of discovery,98 seeking the
appointment of a second attorney,99 and
making an offer of proof as to why inconsistent defenses at trial require that the charges
be severed.100
Prosecutors may have ex parte communications with the court to ask that a witness
who has refused to answer a question on
self-incrimination grounds be ordered to
answer the question or produce evidence,101
to seek the approval and signature of a judge
on a witness immunity order,102 to obtain
the approval and signature of a judge for a
search warrant,103 to obtain a ruling as to
whether or not an informant is material to a
defendant’s guilt,104 and to show good cause
for the nondisclosure or regulation of discovery.105
Compliance with two of the exceptions in
Rule 379 of the California Rules of Court—
notification of the hearing a reasonable time
before the hearing and a good faith but unsuccessful effort to notify the opposing party—
should not be sufficient for an ex parte communication, because a last-minute notification
and a good faith notification attempt still
impose an unnecessary burden on the counsel and party who receive or should have
received the ex parte notice. These exceptions should be reserved for “a bona fide
emergency such that the lawyer’s client will
be seriously prejudiced by a failure to make
the application or communication on regular
notice.”106
Attorneys should not expect that the protection afforded by the litigation privilege in
Civil Code Section 47(2) will immunize their
misconduct involving other attorneys or judicial officers. The litigation privilege does not
extend to either criminal or disciplinary prosecutions for misconduct.107 Although there is
no authority as to whether or not the litigation privilege can be raised in contempt pro-
EXPERT WITNESS — Claims Consultant
EXPERIENCE
INTEGRITY
HONESTY
OVER 40 YEARS EXPERIENCE as a claims adjuster, licensed in three states
and qualified in state and federal courts. Expert in good faith/bad faith,
standards and practices and standard in the industry. Specialties in
property/casualty construction defect, fire/water, uninsured/underinsured
motorist, warehouse and cargo claims. Litigation support, case review and
evaluation claim consultation, coverage review and evaluations.
Contact Gene Evans at E. L. Evans Associates
Phone (310) 559-4005 / Fax (310) 390-9669 / E-mail [email protected]
3 3 1 0 A I R P O R T AVENUE, S U I T E 2 , S A N T A M O N I C A , C A L I F O R N I A 9 0 4 0 5
TRUST DEED FORECLOSURES
Win More Motions!
“Industry Specialists For Over 15 Years”
CA Law & Motion Authorities.......$119.95
& Eisinger we specialize in the Non-Judicial
Foreclosure of obligations secured by real property
Aor trealWitkin
and personal property (mixed collateral).
CA Motions in Limine......................$119.95
When your client needs a foreclosure done professionally and at the lowest possible cost, please call us at:
CA Motions to Terminate..................$99.95
1-800-950-6522
We have always offered free advice to all attorneys.
&
WITKIN
EISINGER, LLC
(Over 1,000 pages of pre-researched citations)
(Supporting & opposition citations & samples)
(Summary judgment “bible” with samples)
CA Interrogatory Index.....................$89.95
(Support for objections, motions, privileges, etc.)
8 8 8 . 5 7 7 . 3 7 7 1
www.litigationone.com
RICHARD G. WITKIN, ESQ. ✦ CAROLE EISINGER
LAL6
JACK TRIMARCO & ASSOCIATES
POLYGRAPH/INVESTIGATIONS, INC.
9454 Wilshire Blvd.
Sixth Floor
Beverly Hills, CA 90212
(310) 247-2637
Jack Trimarco - President
Former Polygraph Unit Chief
Los Angeles F.B.I. (1990-1998)
CA. P.I. # 20970
Member Society of Former Special Agents
Federal Bureau of Investigation
1361 Avenida De Aprisa
Camarillo, CA 93010
(805) 383-8004
email: [email protected]
www.jacktrimarco.com
Former Polygraph Inspection Team Leader
Office of Counter Intelligence
U.S. Department of Energy
ceedings, there is sound reason to support an
argument that it should not apply, because the
policies of protecting the integrity of the
administration of justice and the courts are
common to both discipline and contempt
proceedings.108
The statutes, case law, and rules regarding what is and is not proper attorney conduct toward fellow attorneys and the courts
are unambiguous. They will be a breath of
fresh air to some and a surprise for others,
but, for all attorneys, they embody principles
by which attorneys should conduct their
practices. Nonetheless, it is not expected
that the knowledge and use of these authorities will have an immediate salutary effect on
the conduct of counsel. Indeed, that would
be a very naive expectation. But what is certain is that the statutes, case law, and rules
that are already in place are meaningful and
useful in a way not always fully grasped by
attorneys and the courts. When invoked
appropriately, these existing laws and rules
governing attorney misconduct should prove
over time to be increasingly effective in raising the ethical standards of advocacy and
improving relations between all members of
the legal system.
■
1 See, e.g., LOS ANGELES SUP. CT. R. OF CT. 7.12; Los
Angeles County Bar Association Litigation Guidelines,
adopted by the Association’s Board of Trustees in
1989 and endorsed by the U.S. District Court for the
Central District of California, available at
http:/www.lacba.org/showpage.cfm?pageid=46.
2 Except where noted, all statutes, rules, and cases
apply to both civil and criminal lawyers, including
prosecutors. See CAL. RULES OF PROF’L CONDUCT R. 1100(A) (stating, in part, that the CAL. RULES OF PROF’L
CONDUCT are binding on all members of the State
Bar).
3 BUS. & PROF. CODE §6068(c); CAL. RULES OF PROF’L
CONDUCT R. 3-200(A).
4 CODE CIV. PROC. §2017(c).
5 CAL. RULES OF PROF’L CONDUCT R. 3-300, R. 3-310.
6 CAL. RULES OF PROF’L CONDUCT R. 2-100.
7 BUS. & PROF. CODE §6068(f).
8 People v. Bonin, 46 Cal. 3d 659, 689 (1988).
9 CAL. RULES OF PROF’L CONDUCT R. 5-220; In re
Ferguson, 5 Cal. 3d 525, 532 (1971).
10 CAL. RULES OF PROF’L CONDUCT R. 5-320.
11 CAL. RULES OF PROF’L CONDUCT R. 5-220(B).
12 In the Matter of Katz, 3 Cal. State Bar Ct. Rptr. 430,
435 (1995).
13 Id.
14 Id.
15 Levin v. State Bar, 47 Cal. 3d 1140, 1144 (1989).
16 Barton v. State Bar, 2 Cal. 2d 294, 297 (1935).
Barton falsely represented that he had affidavits from
clients establishing that an oil company had been mislabeling its gasoline and that the clients were damaged
as a result. Barton later told opposing counsel that he
was involved in a “shake down.”
17 Levin, 47 Cal. 3d at 1147 (citing Coppock v. State
Bar, 44 Cal. 3d 665, 679-80 (1988) (quoting Tomlinson
v. State Bar, 13 Cal. 3d 567, 577 (1975)).
18 Heavey v. State Bar, 17 Cal. 3d 553, 559-60 (1976);
Hogan v. State Bar, 36 Cal. 2d 807, 809-10 (1951);
People v. Hill, 17 Cal. 3d 800, 819-20 (1988).
19 United States v. Wunsch, 84 F. 3d 1110, 1119-20
(9th Cir. 1995).
20 BUS. & PROF. CODE §6068(b).
21 BUS. & PROF. CODE §6068(f).
22 People v. Bell, 49 Cal. 3d 502, 538 (1989) (prosecutor contended that defense counsel had suborned perjury, fabricated a defense, and engaged in deception);
People v. Herring, 20 Cal. App. 4th 1066, 1077 (1993)
(It is misconduct to argue that defense counsel tell
their clients what to say, plan their defenses, and do not
want the jury to hear the truth.); Love v. Wolf, 226 Cal.
App. 2d 378, 391 (1964) (counsel accused of suborning perjury); Las Palmas Assocs. v. Las Palmas Ctr.
Assocs., 235 Cal. App. 3d 1220, 1246 (1991) (counsel accused of not being forthright on three occasions—one supposedly involving the suppression of evidence and two others regarding pleading and discovery
issues).
23 Love, 226 Cal. App. 2d at 391.
24 Las Palmas Assocs., 235 Cal. App. 3d at 1246.
25 People v. Hill, 17 Cal. 3d 800 (1988); Love, 226 Cal.
App. 2d 378.
26 BUS. & PROF. CODE §6086.7(b).
27 Herring, 20 Cal. App. 4th at 1077.
28 People v. Medina, 11 Cal. 4th 694, 759 (1995).
29 People v. Arias, 13 Cal. 4th 92, 182 (1996).
30 People v. Cummings, 4 Cal. 4th 1233, 1303, n.49
(1993).
31 People v. Wash, 6 Cal. 4th 215, 263 (1993); People
v. Jones, 15 Cal. 4th 119, 168 (1997).
32 Arizona v. Washington, 434 U.S. 497, 505 (1977)
(manifest necessity standard); People v. Fields, 13 Cal.
4th 289, 299-300 (1996) (legal necessity standard).
33 Sabella v. Southern Pac. Co., 70 Cal. 2d 311, 317
(1969); People v. Johnson, 47 Cal. 3d 1194, 1236-37
(1989).
34 Hoffman v. Brandt, 65 Cal. 2d 549 (1966); People
v. Price, 1 Cal. 4th 324, 447 (1991).
35 Sabella, 70 Cal. 2d at 319 (citing Love v. Wolf, 226
Cal. App. 2d 378 (1964)); People v. Hill, 17 Cal. 3d
800, 820-22 (1988).
36 Malkasian v. Irwin, 61 Cal. 2d 738, 747 (1964).
37 Sabella, 70 Cal. 2d at 321, n.8.
38 Simmons v. Southern Pac. Transp., 62 Cal. App. 3d
341, 355 (1976).
39 People v. Carrera, 49 Cal. 3d 291, 321 (1989).
40 See Strickland v. Washington, 466 U.S. 668, 687-89
(1984).
41 Gallagher v. Municipal Court, 31 Cal. 2d 784, 79596 (1948) (attorney for a third party repeatedly objected
to questions asked by judge of jurors supposedly contacted by the third party). See also In re Buckley, 10 Cal.
3d 237, 249 (1973) (holding that “the system is built
upon the belief that the truth will best be served if
defense counsel is given the maximum possible leeway
to urge in a respectful but nonetheless determined
manner, the questions, objections, or argument he
deems necessary to the defendant’s case…”).
42 BUS. & PROF. CODE §6068(b). See also People v.
Massey, 137 Cal. App. 2d 623, 625 (1955) (holding
that attorneys, as officers of the court, owe a duty of
respect to the court).
43 Standing Committee v. Yagman, 55 F. 3d 1430, 1437
(9th Cir. 1995).
44 In re Hallinan, 71 Cal. 2d 1179, 1184 (1969) (More
is needed for a contempt citation than that the attorney’s tone of voice was contemptuous.).
45 Hawk v. Superior Court, 42 Cal. App. 3d 108, 126
(1974).
46 CODE CIV. PROC. §1209(a)(1).
47 Raiden v. Superior Court, 34 Cal. 2d 83, 86-87
(1949).
48 Cooper v. Superior Court, 55 Cal. 2d 291, 302
(1961).
49 Rose v. Superior Court, 140 Cal. App. 418, 425-26
(1934).
50 Ramirez v. State Bar, 28 Cal. 3d 402 (1980)
Anita Rae Shapiro
SUPERIOR COURT COMMISSIONER, RET.
PRIVATE DISPUTE RESOLUTION
PROBATE, CIVIL, FAMILY LAW
PROBATE EXPERT WITNESS
TEL/FAX: (714) 529-0415 CELL/PAGER: (714) 606-2649
E-MAIL: [email protected]
http://adr-shapiro.com
FEES: $300/hr
(improper to accuse appellate justices of acting “unlawfully,” “illegally,” and being “parties to the theft” of
property belonging to the attorney’s clients).
51 Hogan v. State Bar, 36 Cal. 2d 807, 809-10 (1951).
52 Sears v. Starbird, 75 Cal. 91, 92-93 (1888) (supreme
court brief stricken when attorney alleged that the
trial judge had improperly favored other side).
53 In the Matter of Humphrey, 147 Cal. 290, 294-95
(1917).
54 In re Buckley, 10 Cal. 3d 237, 248-50 (1973) (statement contemptuous on its face because it suggested that
“the judge knew the law but deliberately chose to
ignore it”).
55 People v. Chong, 76 Cal. App. 4th 232, 236 (1999).
56 Hanson v. Superior Court, 91 Cal. App. 4th 75
(2001).
57 Boysaw v. Superior Court, 23 Cal. 4th 215, 218-23
(2000). In Boysaw, the supreme court annulled a contempt order because the trial court did not first state
that the attorney had been warned that his tone of voice
was objectionable. The contempt order would have
been upheld, however, “had the trial court rested its
finding of contempt upon petitioner’s direct refusal to
obey the court’s order not to continue arguing its evidentiary ruling, or upon the rude, hostile, and disrespectful content of petitioner’s response.”
58 McCann v. Municipal Court, 221 Cal. App. 3d
527, 540-41 (1990). This outlandish comment was
preceded by “I will not move on until you haul me
away” and “you’re not going to convict my client.”
59 Chong, 76 Cal. App. 4th at 244.
60 Id.
61 Baldwin v. Daniels, 154 Cal. App. 2d 153, 155-56
(1957). The court of appeal noted that, in counsel’s
brief, he repeated scandalous remarks that the trial court
had previously ordered stricken from the complaint.
This led the appellate court to strike the brief in its
entirety. See also Sears v. Starbird, 75 Cal. 91, 92-93
(1888).
62 BUS. & PROF. CODE §6086.7(a).
63 See BUS. & PROF. CODE §6068(d) (misrepresentations
to a court) and CAL. RULES OF PROF’L CONDUCT R. 5200(B) (adds misrepresentations to a jury).
64 Daily v. Superior Court, 4 Cal. App. 2d 127, 131
(1935).
65 Franklin v. State Bar, 41 Cal. 3d 700, 709 (1986) (citing Grove v. State Bar, 63 Cal. 2d 312, 315 (1965)).
66 Bryan v. Bank of Am., 86 Cal. App. 4th 185, 193
(2001).
67 BUS. & PROF. CODE §6128(a).
68 In the Matter of Farrell, 1 Cal. State Bar Ct. Rptr.
490, 497 (1991).
69 Burns v. State Bar, 213 Cal. 151 (1931).
70 DiSabatino v. State Bar, 27 Cal. 3d 151 (1980).
71 Davidson v. State Bar, 17 Cal. 3d 570 (1976).
72 Grove v. State Bar, 63 Cal. 2d 312 (1965).
73 Pickering v. State Bar, 24 Cal. 2d 141, 144 (1944).
74 Scofield v. State Bar, 62 Cal. 2d 624, 628 (1965).
75 Dixon v. State Bar, 32 Cal. 3d 728 (1982).
76 Garlow v. State Bar, 30 Cal. 3d 912 (1982).
77 Vaughn v. Municipal Court, 252 Cal. App. 2d 348,
358 (1967).
78 Datig v. Dove Books, 73 Cal. App. 4th 964 (1999).
79 In the Matter of Jeffers, 3 Cal. State Bar Ct. Rptr.
211, 219-20 (1994).
80 Glade v. Glade, 38 Cal. App. 4th 1441, 1457, n.16
(1995) (no prejudice resulted from attorney’s silence
because judge would have granted summary judgment
had he known of the order).
81 Datig, 73 Cal. App. 4th at 981.
82 CAL. RULES OF PROF’L CONDUCT R. 5-200(C).
83 CAL. RULES OF PROF’L CONDUCT R. 5-200(D).
84 Ainsworth v. State Bar, 46 Cal. 3d 1218, 1224-25,
1233-34 (1988).
85
In the Matter of Riley, 3 Cal. State Bar Ct. Rptr. 91,
109 (1994).
86 In the Matter of Harney, 3 Cal. State Bar Ct. Rptr.
266, 283 (1995) (concealment of MICRA limitations).
87 Shaeffer v. State Bar, 26 Cal. 2d 739, 747-48 (1945).
88 Business and Professions Code §6103 states, “A
willful disobedience or violation of an order of the court
requiring him to do or forbear an act connected with
or in the course of his profession, which he ought in
good faith to do or forbear constitute causes for disbarment or suspension.”
89 CODE CIV. PROC. §1209(a)5.
90 People v. Gonzalez, 12 Cal. 4th 804, 808 (1996).
91 In re Berry, 68 Cal. 2d 137, 148-49 (1968).
92 CAL. RULES OF PROF’L CONDUCT R. 5-300(B)(2).
93 CAL. R. OF CT. 379(a).
94 EVID. CODE §§915(b), 1045(b).
95 PENAL CODE §987(c).
96 People v. Marsden, 2 Cal. 3d 118 (1970); CAL. R.
OF CT. 33.5(a).
97 People v. Brown, 203 Cal. App. 3d 1335, 1338
(1988).
98 PENAL CODE §1054.7.
99 Keenan v. Superior Court, 31 Cal. 3d 424, 430
(1982).
100 People v. Memro, 11 Cal. 4th 786, 851 (1995).
101 PENAL CODE §1324.
102 Id.; People v. Boehm, 270 Cal. App. 2d 13, 20
(1969).
103 PENAL CODE §1523.
104 EVID. CODE §§915(b), 1042(d).
105 PENAL CODE §1054.7.
106 LOS ANGELES SUP. CT. R. 7.12(j)(3).
107 Silberg v. Anderson, 50 Cal. 3d 205, 218-19 (1990).
108 Mowrer v. Superior Court, 3 Cal. App. 3d 223, 230
(1969); Chadwick v. State Bar, 49 Cal. 3d 103, 111
(1989).
Computer Counselor
BY CAROLE LEVITT
Researching State and Federal Regulations on the Internet
IN 2003, THE MEDICARE Prescription Drug, Improvement, and
Modernization Act became law. It allowed senior citizens to procure
a discount card for prescription drugs. An attorney who, for example, is advising the owner of a pharmacy on this new law may be
inclined to search the U.S. Code as a first step in researching the new
law. There, however, the attorney is likely to find few answers for the
client’s questions, other than that the Secretary of Health and Human
Services is charged with establishing regulations to implement the discount card plan. In order to give advice about the plan, the lawyer
would need to find the secretary’s regulations. To do so, the lawyer
may visit the Code of Federal Regulations (CFR) at www.gpoaccess
.gov/cfr, which is where the rules and regulations created by the
departments and agencies of the federal government are codified.
The CFR Web site has a database for current CFRs and another
for historical CFRs that dates back to 1996. The prescription drug
card regulations are fairly new, so the attorney would select the current CFR database. Users can browse the current CFR database or
search by citation, key words, phrases, agency’s name, or identification code. To search by agency’s name, enclose it in quotation marks
(e.g., “department of health and human services”). This technique also
works for phrases generally. An agency name search can also be
combined with a word or phrase search (e.g., “department of health
and human services” and “medicare card”). At the start of a search,
researchers do not always know the agency name or citation, so a key
word or phrase search is likely. In the example, a key word search for
“medicare and drug and card and discount” (without the quotation
marks) garners 27 results. A quick review of the descriptions of the
results brings the researcher to two relevant sections.
Unfortunately, only the citation search and the browse function
are available for searching the historic CFRs. The key word, phrase,
and agency name searches are not options. To search by citation, go
to www.gpoaccess.gov/cfr/retrieve.html and select a year and then enter
the title, part number, and section number or subpart into the search
boxes. To browse, go to www.access.gpo.gov/nara/cfr/cfr-table-search
.html#page1 and select specific titles and years. One can browse a specific title from 1996 to the most recent available, or one can browse
through all 50 titles in a specific year.
To learn whether a particular regulation has recently been repealed,
amended, proposed, or adopted as a final rule, search the daily
update to the CFR by visiting the current Federal Register (FR) database (www.gpoaccess.gov/fr/index.html). To research earlier regulations, visit the historic FR databases at www.gpoaccess.gov/fr/search
.html. The historic and the current FRs can be searched with key words
or phrases and Boolean connectors. Phrases are enclosed by quotation marks. Searching for “medicare and drug and card and discount”
(without the quotation marks) in the current FR, for example, a
researcher may obtain a workable number of results. There are several other ways to search the current and historic FR databases,
such as browsing (www.gpoaccess.gov/fr/browse.html) their tables of
contents or searching by: 1) citation to a volume and page number
(for example, select a volume number and enter “page 12345” in
quotes into the search box), 2) citation to a title and part (e.g., 40 CFR
part 55), and 3) agency name (in quotation marks). The FR is also
the site to visit to search for presidential documents such as executive orders and notices.
The FR’s advanced search option (found at www.gpoaccess
.gov/fr/advanced.html) is also available for years back to 1995. The
advanced search allows researchers to check selections from a menu.
For example, one can check one or more years in the volume/year portion of the menu to search one or more years simultaneously. This is
particularly useful when the date that a specific regulation was added,
repealed, amended, or proposed is unknown to the researcher. Very
often, a researcher only wants to view regulations that became final.
To do this, one can restrict a search to “final rules” by checking the
appropriate item in the search menu.
Instead of key word searching the FR to find out whether (or how
or when) a specific CFR section was affected, researchers can browse
through the list of sections affected (LSA), which is found at
www.gpoaccess.gov/lsa/index.html. The LSA, which is in numerical
citation order, displays any proposed, new, or amended federal regulation that has been published in the Federal Register since 1986.
The LSA can also be searched by subject.
To access all federal regulations (CFR, FR, and LSA) in one place,
users can bookmark the GPO Access Web site (www.gpoaccess.gov
/executive.html). Another tool for researchers is E-CFR (found at
www.gpoaccess.gov/ecfr), a prototype site for searching CFRs. It is
not the official CFR; the benefit of using it instead of the existing CFR
databases is that users are able to access the most up-to-date information without having to check both the FR and LSA. On this new
site, the Office of the Federal Register incorporates changes to the current CFR database as they become effective.
California
California’s equivalent to the CFR is the California Code of
Regulations (CCR). The CCR database, maintained and updated
weekly by West Group, is available for free at http://ccr.oal.ca.gov.
It contains all regulations formally adopted by 200 state agencies
except Title 24, California Building Standards, which is published separately and is not part of the Web site. On the left side of the home
page are links labeled Agency List for CCR and California Code of
Regulations. By selecting Agency List for CCR one can view all the
regulations adopted by a specific agency. By selecting California
Code of Regulations, several search options are made available,
including browsing the table of contents, searching key words or
phrases through the entire CCR, searching key words or phrases in
a title or titles, searching key words or phrases in a specific title and
section, and viewing recent changes only.
Carole Levitt is president of Internet For Lawyers (www.netforlawyers.com)
and coauthor of The Lawyer’s Guide to Fact Finding on the Internet.
While searching is fairly easy to learn,
figuring out how to view the results is not. If
you search the words “bilingual education,”
for example, the table of contents for the
entire CCR is displayed in the left frame,
and Title 2 and Title 5 each show a number
to the left (which is the number of results in
those titles). To view a result, click on the title
and then click on the arrow on the bottom left
side of the screen, under the search box.
When the cursor is over the arrow, the words
“Next hit” are displayed. To continue viewing each result (or hit), click on the arrow
again. To go back to a prior result, click on
the arrow pointing to the left. The left arrow
is not labeled either, but if you hover over it,
the words “Previous hit” are displayed. Search
terms in the results are highlighted.
The California Regulatory Notice Register
(CRNR) is the weekly update to the
California Code of Regulations. Updates are
posted with a week’s delay. The full text of the
CRNR is posted back to 2002 at www
.oal.ca.gov/reg_notice.htm, but each week
must be browsed individually.
Other Sources
In addition to searching the Code of Federal
Regulations and the Federal Register, it is
sometimes advisable to visit the Web site of
the agency that is relevant to one’s search.
Only the regulations that relate to that agency
will be posted there, and that may make a
search less onerous.
The quickest way to locate the URL of a
judicial, executive, legislative, independent, or
quasi-official agency, or of a board, commission, or committee—assuming one knows
all or part of its name—is to use the U.S.
Federal Government Agencies Directory at
www.lib.lsu.edu/gov/fedgov.html. At this site,
users can search by key word to find a relevant agency, for example using the term
“health” to find the Department of Health
and Human Services. If the researcher knows
the full name of the agency sought, another
technique is to review the Index of U.S.
Government Departments and Agencies at
www.firstgov.gov/Agencies.shtml. For those
who do not know which agency is the best
candidate for research, the Firstgov site allows
use of key words that describe the topic. For
example, a search for “medicare drug discount” led to “medicare.gov.”
To access the administrative codes and
regulations as well as statutory codes, bills,
and constitutions of the states, online
researchers may use the collection of links at
the Full-Text State Statutes and Legislation
page found at www.prairienet.org/~scruffy/f
.htm or on Findlaw (at http://findlaw.com
/casecode/#statelaw). To find state, county,
and city agencies, boards, and commissions,
a good starting place is the State and Local
Government on the Net page at http://www
.statelocalgov.net. The site allows users to
search by state or topic. To search by topic,
for example, select “agriculture,” and then
click on Go. Links to the agriculture department of every state will appear.
In addition to regulations, state and federal agency sites may include laws, administrative decisions, a directory of staff members,
and reports. For example, the California
Department of Justice’s Attorney General site
(http://caag.state.ca.us/index.htm) offers a
searchable database of Attorney General
Opinions (http://caag.state.ca.us/opinions
/index.htm), contact information, press
releases, and reports.
While staying up-to-date on federal and
state regulations can seem daunting, an easy
and free way to stay informed is by subscribing to the free daily e-mail that originates
from the Federal Register’s table of contents
(http://listserv.access.gpo.gov). Although the
California Regulatory Notice Register does
not have a similar e-mail feature, one can
visit its site and browse the table of contents
on a weekly basis. For the lawyer who needs
to find the latest regulations affecting a client,
the Internet is replete with free sources of
information.
■
Index to Advertisers
123EZCorp, p. 4
MP Group, p. 15
Tel. 877-553-1923 www.123ezcorp.com
Tel. 323-874-8973 www.mpgroup.com
Aon Direct Administrators/LACBA Professional Liability, p. 2
Nextel Communication, p. 1
Tel. 800-634-9177 www.attorneys-advantage.com
Tel. 866-805-9890 reference MLSAB www.nextel.com/lacba
AT&T Wireless, Inside Back Cover
Noriega Clinics, p. 42
Tel. 213-253-2400 www.attwireless.com
Tel. 323-728-8268
Ballenger, Cleveland & Issa LLC, p. 8
One Legal, Inc., p. 16
Tel. 310-873-1717
Tel. 415-491-0606 www.onelegal.com
Bridge Settlement Corporation, p. 6
Ostrove, Krantz & Ostrove, p. 27
Tel. 877-5-SETTLE www.structuredsettlements.com
Tel. 323-939-3400 www.lawyers.com/ok&olaw
Law Office of Donald P. Brigham, p. 28
Pacific Health & Safety Consulting, Inc., p. 34
Tel. 949-206-1661 e-mail: [email protected]
Tel. 949-253-4065 www.phsc-web.com
Commerce Escrow Company, p. 37
PAYCHEX, p. 23
Tel. 213-484-0855 www.comescrow.com
Tel. 626-304-1370 www.paychex.com
Diversified Risk Management, Inc., p. 28
PowerLaw, Inc., p. 16
Tel. 800-810-9508 www.diversifiedriskmanagement.com
Tel. 760-931-4820 www.powerlaw.com
E. L. Evans Associates, p. 35
QLTT International, p. 34
Tel. 800-430-3588 www.qltt.com
Forensic Expert Witness Associates, p. 16
Quo Jure Corporation, p. 4
Tel. 949-640-9903 www.forensic.org
Tel. 800-843-0660 www.quojure.com
Forensics Consulting Solutions, LLC, p. 14
Rogers, Sheffield & Campbell, p. 27
Tel. 602-354-2772 www.forensicsconsulting.com
Tel. 805-963-9721 www.high-techlawyer.com
Fragomen, Del Rey, Bernsen & Loewy, LLP, p. 29
Rutter Hobbs & Davidoff, Incorporated, p. 21
Tel. 310-820-3322 www.fragomen.com
Tel. 310-286-1700 www.rutterhobbs.com
Art Fries-Disability Claim Consultant, p. 14
Sales Tax Resource Group, p. 35
Tel. 949-673-7190 www.afries.com
Tel. 714-377-2600 www.salestaxresource.com
G. L. Howard CPA, p. 28
Sanli Pastore & Hill, Inc., p. 16
Tel. 310-571-3400 www.sphvalue.com
Steven L. Gleitman, Esq., p. 15
Steve Fisher Deposition Summaries, p. 34
Tel. 310-553-5080
Tel. 818-563-4496 www.deposummary.com
Ivener & Fullmer, p. 38
Steven R. Sauer APC, p. 8
Tel. 310-477-3000 www.usworkvisa.com
Jack Trimarco & Associates Polygraph, Inc., p. 36
Stephen Sears, CPA-Attorney at Law, p. 36
www.searsatty.com
Jeffrey Kichaven, p. 35
Anita Rae Shapiro, p. 37
Tel. 310-556-1444 www.jeffkichaven.com
Tel. 714-529-0415 www.adr-shapiro.com
Krycler, Ervin, Taubman & Walheim, p. 22
Special Counsel, p. 6
Tel. 818-995-1040 www.ketw.com
Tel. 323-658-6065 www.specialcounsel.com
LACBA Business & Corp. Section, p. 19
Spiegel Property Damage Consulting and Forensics, p. 34
Tel. 213-896-6560 www.lacba.org
Tel. 800-266-8988 www.propertydamageinspections.com
LACBA DRS, p. 17
Stonefield Josephson, Inc., p. 5
Tel. 213-896-6567 www.lacba.org/drs
Tel. 866-225-4511 www.sjaccounting.com
LawMarkets.com, p. 15
ULTIMO Organization, Inc., p. 40
Tel. 888-700-8800 www.lawmarkets.com
Tel. 714-560-8999 www.geotechnical.com
lawnetinfo.com, p. 14
Verizon Wireless, p. 9
Tel. 818-727-1723 www.lawnetinfo.com
Tel. 866-899-2862 www.verizonwireless.com
Lawyers’ Mutual Insurance Co., p. 7
Vision Sciences Research Corporation, p. 22
Tel. 800-252-2045 www.lawyersmutual.com
Tel. 925-837-2083 www.vsrc.net
LexisNexis, Inside Front Cover, p. 11
Washington Mutual/Ted Burkow, p. 21
www.lexis.com
Tel. 310-777-2327 www.wamuloans.com/ted.burkow
Arthur Mazirow, p. 27
West Group, Back Cover
Tel. 800-762-5272 www.westlaw.com
Laurence D. Merritt, p. 22
Witkin & Eisinger, LLC, p. 36
Tel. 818-710-3823 www.legalknight.com
Tel. 310-670-1500
Classifieds
Counseling and Psychotherapy
A LAWYER’S COUNSELOR. Obtain expert help and
understanding in gaining relief from job and career
concerns, stress, self-defeating patterns, anger,
procrastination, and relationship conflict. Richard
Gottfried, JD, MBA, MFT (Lic.# MFC32871). Confidential. (310) 207-5177.
Experts and Consultants
CONSTRUCTION EXPERTS: More than 40 years of
construction expertise provides you and your client
with formidable forensic expert witnesses and
compelling litigation support of complex and
highly technical issues. Contact MPGroup/Michael
S. Poles, GC, CM, RCI, DABFET, ACFE, Construction
Expert/Mediator. Telephone: (323) 874-8973. Web:
www.mpgroup.com.
NEED AN EXPERT WITNESS, legal consultant, arbitrator, mediator, private judge, attorney who out-
sources, investigator, or evidence specialist? Make
your job easier by visiting www.expert4law.org.
Sponsored by the Los Angeles County Bar Association, expert4law—the Legal Marketplace is a comprehensive online service for you to find exactly the
experts you need.
family law marketing tool; more calls from your
advertising investment; exclusive calling areas;
www.1800divorce.info or 1-800-738-3764 for availability and testimonials.
Insurance Investigation
LEGAL ASSISTING TO ATTORNEYS. Do you need
an experienced person to do legal copy editing,
document analysis/reading, file review, phone
interviewing, etc? Experience in P.I., plaintiff causes,
and other. Can work from home, part-time, etc. (310)
218-6653 or (310) 325-7874.
E.L. EVANS ASSOCIATES. Good faith/bad faith reinvestigation of files, analysis and evaluation of
investigations, standards in the industry, standards and practices, litigation support, case
review, and evaluation. Service area: Southern California. 3310 Airport Avenue, Box 2, Santa Monica,
CA 90405, (310) 559-4005, fax (310) 390-9669, email: [email protected]. Contact Gene Evans.
Law Firm Marketing
1-800-DIVORCE—Available in most parts of California as your family law phone number; best ever
Legal Assistant Services
Office Space
SOUTHERN CALIFORNIA. FREE. Executive Suite
Offices Guide. Eighty-page booklet lists over 150
buildings in Los Angeles, Orange, San Diego Counties and the Inland Empire that offer executive
suites. Guide includes office prices, amenities
offered, photos, maps, and contacts. Mailed the
same day ordered. Call 24 hours: (800) 722-5622.
PLEASE SUPPORT THOSE THAT SUPPORT THE LOS ANGELES COUNTY BAR ASSOCIATION!
CLINICA PARA LOS LATINOS • SERVING THE LATIN COMMUNITY
NORIEGA
CHIROPRACTIC CLINICS, INC.
Is proud to announce the Grand Opening of
SAN FERNANDO HEALTH CENTER
500 S. BRAND BOULEVARD
SAN FERNANDO, CA 91340-4002
(818) 838-1158
Personal Injury and Worker’s Comp cases accepted on lien basis.
*MONTEBELLO HEALTH
SERVICES
901 W. Whittier Blvd.
Montebello, CA 90640
(323) 728-8268
EL MONTE HEALTH
CENTER
2163 Durfee Rd.
El Monte, CA 91733
(626) 401-1515
HUNTINGTON PARK
HEALTH CENTER
3033 E. Florence Ave.
Huntington Park, CA 90255
(323) 582-8401
POMONA HEALTH
CENTER
1180 N. White Ave.
Pomona, CA 91768
(909) 623-0649
VICTORY HEALTH
CENTER
6420 Van Nuys Boulevard
Van Nuys, CA 91401
(818) 988-8480
CRENSHAW HEALTH
CENTER
4243 S. Crenshaw Blvd.
(323) 291-5733
*ONTARIO HEALTH
SERVICES
334 N. Euclid Ave.
Ontario, CA 91764
(909) 395-5598
HIGHLAND PARK HEALTH
CENTER
5421 N. Figueroa St.
(Highland Park Plaza)
Highland Park, CA 90042
(323) 478-9771
SO. CENTRAL HEALTH
CENTER
4721 S. Broadway
(323) 234-3100
WHITTIER HEALTH
SERVICES
13019 Bailey Ave. Suite F
Whittier CA 90601
(562) 698-2411
1-800-624-2866
*Medical facilities in Montebello and Ontario only
CLE Preview
Workplace Investigations
ON SATURDAY, SEPTEMBER 18, the Labor and Employment Law Section will
present a program on the latest legal developments in workplace investigations.
Find out from in-house counsel what the management and legal considerations
are and what to do with the results of investigations to help best protect the
employer. Hear from plaintiff’s counsel about counseling an employee during an
investigation, attacking an investigation, and using a poor investigation to turn
the jury to the employee’s side. Listen and question a panel of independent
neutral investigators who will explore the practical aspects of investigations,
from privilege to counsel participation, reports, and more.
The speakers for this program will be Catherine A. Balin, Rupert A. Byrdsong,
Araceli K. Cole, D. Jan Duffy, Katherine J. Edwards, Barbara Yanow Johnson,
Christine Masters, Michael A. Robbins, and Michael L. Wolfram. The program
will take place at the Southwestern University School of Law, 675 South
Westmoreland Avenue, Room 311, in Los Angeles. On-site registration and
breakfast will begin at 8:30 A.M., with the program continuing from 9 A.M. to
12:30 P.M. The registration code number is 008654.
$50-CLE+PLUS members
$100- Labor and Employment Law Section members
$135-Association members
$170-all others
3.25 CLE hours
Boilerplate in Corporate Agreements
ON WEDNESDAY, SEPTEMBER 15, the Business and Corporations Law Section,
with the cosponsorship of the Corporate Law Departments and the Barristers
Sections, will present a program titled “Boilerplate: Drafting the Back End of
Corporate Agreements.” This program will cover many of the provisions that are
found toward the end of corporate documents, including the assignment,
counterparts, force majeure, notices, severability, and waiver provisions. The
program will take place at the LACBA/Lexis Publishing Conference Center, 281
South Figueroa Street, Downtown. On-site registration and lunch will begin at
11:30 A.M., with the program continuing from noon to 1:30 P.M. The registration
code number is 8312. CLE+PLUS members may attend for free ($15 meal not
included). The prices below include the meal.
$60—sponsoring and cosponsoring section members
$70—LACBA members
$80—all others
1.5 CLE hours
A REFRESHER COURSE
ON TREATIES
On Saturday, September 11,
the International Law Section
will present a discussion on
treaty making and treaty
research featuring speaker
Amber Lee Smith, who is the
foreign and international law
librarian at the Los Angeles
County Law Library.
The program will take place
at the LACBA/Lexis Publishing
Conference Center, 281 South
Figueroa Street, Downtown.
Please note that this is a
brown bag lunch. No meal will
be provided. On-site
registration will begin at 11
A.M., with the discussion
starting at 11:30 and
continuing to 1:30 P.M. The
registration code number is
008656. CLE+PLUS members,
International Law Section
members, and LACBA members
may attend for free.
2 CLE hours
The Los Angeles County Bar Association is a State Bar of California MCLE approved provider. To register for the programs listed
on this page, please call the Member Service Department at (213) 896-6560 or visit the Association Web site at http://forums.lacba.org/calendar.cfm .
For a full listing of this month’s Association programs, please consult the County Bar Update.
Closing Argument
BY ALEX RICCIARDULLI
The Double-Edged Sword of Judicial Sentencing Discretion
WHAT CAN A JUDGE DO when he or she believes that a sentence is contention that courts are inherently or constitutionally vested with
unjust? In today’s criminal courts the answer is clear: Judges must fol- ultimate authority in fixing sentences or imposing penalty enhancing
low the law even if they disagree with it. Judges have no “inherent factors for conduct made criminal by legislative enactment.”
Even without invoking an inherent power, judges have ways to
authority” to disregard mandatory sentencing laws. To be sure, a judge
is not obligated to impose a sentence that violates the Eighth avoid enforcing laws they do not like in order to give the defense a
Amendment’s bar on cruel and unusual punishment. But the Consti- benefit of the doubt. Judges can, for example, penalize prosecutors
tution only bars punishments that are grossly disproportionate to an by not granting continuances, deny challenges for cause during jury
offense, which means that harsh sentences—such as one for 25 years selection, and overrule objections to defense testimony in trials.
Tanner’s good riddance to inherent judicial power was well
to life for stealing golf clubs, when applied to a defendant with a lifedirected. The lack of such authority is a logical product of the checks
long record of felonies and violence—pass constitutional muster.
It is no surprise that prosecutors favor
this lack of inherent judicial power, but
defense counsel should be pleased as well.
If judges have the ability to ignore laws that work against a defendant,
Those who support the doctrine of judicial
inherent authority because they believe it
invariably inures in favor of defendants
they will also be able to ignore ones that give defendants a break.
are fooling themselves. In the long run,
inherent power leads to both harsher sentences and a judiciary completely subservient to public whim. When judges take it upon themselves to dis- and balances at the bedrock of American government. Giving judges
obey the law, their legitimacy is undermined, prompting voters to rise the power to depart from sentences would invariably lead to disparities
up and oust them. The popular revolt that swept away Chief Justice in punishment, as similarly situated defendants would be treated
Rose Bird in 1986 is, perhaps, the classic example.
differently based solely on the predilections of the sentencing judge.
What good is inherent power when a judge who exercises it
Tanner, however, does not go far enough. It is insufficient to
might well wind up getting fired? The judges who fill the shoes of require that judges obey the letter of the law; they should also respect
ousted colleagues will likely bend over backwards to avoid any its spirit. Disobeying the spirit of the law, like having inherent senappearance of favoring the defense. In addition, the threat of losing tencing authority, is a double-edged sword. If judges have the abila judicial election creates a chilling effect on the exercise of legitimate, ity to ignore laws that work against a defendant, they will also be able
statutory authority to mitigate sentences. The net results are more to ignore ones that give defendants a break. A statute like Proposition
prison terms and less individualized decision making.
36, for example, which requires that convicted defendants be sentenced
Surprisingly, at one time California actually flirted with giving to drug treatment rather than incarceration, is eviscerated when a judge
judges inherent authority to deviate from mandatory sentencing decides to jail a defendant pending trial in order to “shock” him or
laws, even ones that did not violate the Eighth Amendment. The ori- her into quitting drugs. Since this practice is not expressly barred by
gin of this brief experiment goes back to the mid-1950s, when a statute Proposition 36, it is within the letter of the law, but definitely violates
was enacted requiring a prison sentence for possession of drugs if the its spirit. The judge may well believe that this action is helping the
culprit had a prior drug conviction. Judges chafed at this restriction, defendant’s rehabilitation, but that is irrelevant. The road to perdiand the issue eventually reached the California Supreme Court. In tion is paved with best intentions.
People v. Burke,1 the court held that judges not only had statutory
The duty to obey both the law and its spirit is a compact between
power to avoid prison sentences but also inherent power to do so. In a judge and society that fosters respect and deference. Every time a
Burke’s view, courts had “constitutionally vested judicial power” to judge defies a law, he or she taps into the reservoir of trust that the
“prescribe the sentence which must be imposed,” and “[s]uch adju- public has conferred on the judiciary. One day, in a close case in which
dication and judicial determination are inherently and essentially the defendant truly merits the judge’s compassion, the judge might
the province of the court.” The statutory power to reduce a sentence find that the power to act has gone dry. The rule that judges must obey
has survived to the present. Subject to appellate review for abuse of the law benefits everyone in the system, including the defense. ■
discretion, a judge under Penal Code Section 1385 can dismiss pri1 People v. Burke, 47 Cal. 2d 45 (1956).
ors and other enhancements “in furtherance of justice.”
However, Burke’s creation of an inherent power to deviate did not 2 People v. Tanner, 24 Cal. 3d 514 (1979).
endure. The supreme court in People v. Tanner,2 in ruling that judges
Alex Ricciardulli is a Los Angeles County public defender and adjunct professor
had no power to avoid the “use a gun, go to prison” law, expressly
at Loyola and USC Law Schools. He is also coauthor of California Criminal Law.
held that judges had no inherent sentencing authority, rejecting “any
When your association membership
saves you money on wireless service,
it’s an easy call to make.
Members of the Los Angeles County Bar Association can save with AT&T Wireless.
Choose from a range of already affordable calling plans and get a 5% discount on
qualified wireless service charges each month.
TO SIGN UP AND SAVE CALL: 1 800 459-6524
© 2003 AT&T Wireless. All Rights Reserved. General requirements: Requires credit approval, $36 Activation Fee, annual contract, $175 cancellation fee and a compatible phone. Subject
to service terms and conditions and the calling plan brochure for the specific plan you choose. Service not available for purchase or use in all areas. May not be available with other
offers. 5% Discount: Available only to active members of associations participating in the AT&T Wireless Association Program or its predecessor. Discount is activated only when you
call the toll-free membership verification number listed above. Discount is only available on select AT&T Wireless digital calling plans and only applies to qualified charges as defined in
your association’s AT&T Wireless Services Wireless Association Agreement. It may take up to 90 days for the discount to appear on your account. Other terms, conditions and restrictions
apply—contact your association or your local AT&T Wireless Account Representative.
The future of law is in your hands.
When you support the Foundation of the State Bar of California you promote public
trust in and equal access to the Rule of Law through law-related community projects,
law school scholarships, and law-related education programs for high school students
and the public. Please stay involved. For information on how you can support the
Foundation of the State Bar of California, visit www.foundationstatebarcal.org.
A message from West, a corporate sponsor of the Foundation of the State Bar of
California, providing legal publishing and related services to California lawyers.
Differences that matter.
© 2003 West, a Thomson business L-304311/12-03
west.thomson.com 1-800-762-5272

September 2004 - Los Angeles County Bar Association

Transcrição

Documentos relacionados

resume - WordPress.com

ACTIVITY: Diving / spearfishing CASE: GSAF ND.0110 DATE: Late

November 1, 2015

ST. JOACHIM CHURCH

Risk and Global Economic Architecture: Why Full Financial

Technical Explanation_CAL_2014-10-16_final

Regulating collateral, bankruptcy and the case of Brazil

Heart to Hand - Saint Thomas Aquinas Cathedral

St. Augustine Roman Catholic Church

630 - April 19th, 2009, Divine Mercy Sunday.pub

Choice of Law in Practice – a Global Empirical Survey Luiz Gustavo

- Demarest

St. Edward Parish News - St. Edward Catholic Church

Radio Cassette Player [] []

lowering

CERTIFIED FOR PUBLICATION IN THE COURT OF

January 1 2014 (B) - San Gabriel Valley Examiner