Legal Pad

Breyer Sounds off at First HP-Autonomy Hearing

[Vanessa Blum]

The line of lawyers waiting to enter appearances at Friday morning’s hearing before U.S. District Judge Charles Breyer extended well beyond the bar.

First came plaintiffs attorneys representing Hewlett Packard’s shareholders and employees in various suits over the company’s botched 2011 acquisition of the British software firm Autonomy.

Next, a parade of defense lawyers stepped up from AmLaw 100 firms including Morgan, Lewis & Bockius; Cooley; O’Melveny & Myers; and Skadden, Arps, Slate, Meagher & Flom on behalf of HP executives and board members.

Once the lengthy roll call ended, Breyer quipped, “That’s it?”

Clearly, the group needed organizing and Breyer focused Friday on housekeeping matters, particularly the selection of plaintiffs lead counsel.

It was the first hearing in the wave of litigation that followed HP’s November announcement of an $8.8 billion write down related to the Autonomy deal.

“It’s important that these actions be coordinated. They are all related. They all deal with some of the same issues and they have all been placed in this court,” Breyer said. “You can’t escape. You’re stuck with me for good or ill until the end of this litigation.”

Firms vying for lead role in the shareholder class action tussled over whose client held a larger financial interest in the litigation, which gives that party the presumptive status of lead plaintiff.

San Diego partner Blair Nicholas of Bernstein Litowitz Berger & Grossman insisted the biggest loser designation should go to a coalition of pension funds represented by his firm and Kessler Topaz Meltzer & Check.

The group, which includes public retirement funds in Oregon and Oklahoma and Dutch pension funds manager PGGM Vermogensbeheer, “not only has the single member with the largest losses, but the group itself has the largest losses,” Nicholas said.

Kaplan Fox & Kilsheimer New York partner Frederic Fox begged to differ.

“When you look at who has the single largest interest here by many different measures it is the Virginia retirement system,” Fox said, referencing his firm’s client.

Serving as lead counsel is a coveted position and usually leads to a greater share of attorneys fees.
Breyer did not rule, though he seemed inclined to select a single institutional investor over a collective.

Taking the opposite approach would encourage lawyers to sign up more and more clients to create the largest conglomerate, Breyer said.

Then again, he noted, trying to ascertain the largest investor depends on which accounting method is used.

“I’ve always thought the calculation of loss is extraordinarily difficult in a market situation,” Breyer said. “My view is you’ll never know. It’s the inexactitude and the vagaries of the market that make it so difficult to ascertain.”

Moving on to derivative actions, where investors sue officers and directors on behalf of the company, Breyer said he would likely give Burlingame-based Cotchett, Pitre & McCarthy the coveted role of lead counsel. Principals Joseph Cotchett and Mark Molumphy represent a Silicon Valley investment advisor and pledged to bring together an inclusive committee of lawyers to assist with case.

Not too inclusive, Breyer cautioned.

“I don’t like committees,” he said. “Committees are ways of vast sums of money waltzing out the door.”

Breyer’s favor toward Cotchett seemed to ruffle Maya Saxena, a name partner at Boca Raton’s Saxena White. Saxena, lawyer to the City of Birmingham Retirement and Relief System, seeks to share the lead counsel role with San Diego-based Robbins Arroyo.

“It sounds as though your honor has his mind made up,” Saxena began.

Breyer was jovial and told Saxena he could still be persuaded: “I can change my mind. I don’t even know half the time what my mind is.”

Finally, Breyer addressed lawyers from firms pursuing ERISA actions against HP, asking them to sort out for themselves which lawyer would be lead counsel.

Following the hearing, a crowd of lawyers pushed into an elevator. Instead of heading down as expected, the car shot up, leading one attorney — hopefully on the plaintiffs side — to crack a joke about the beleaguered Palo Alto tech firm.

The faulty elevator, the lawyer quipped, must be working on an HP operating system.

Lockyer Stumped by State Court Funding Woes

[Cheryl Miller]

Even the father of the state trial court funding system isn’t sure what to do about the judiciary’s budget woes.

State Treasurer Bill Lockyer, whose name adorns the 1997 bill that shifted court financing from the counties to the state, told the Assembly Judiciary Committee Tuesday that the only fix to massive budget cuts over the last five years is “just more general fund money.”

“When you have a $3 billion system and you pull $1 billion-plus out of it, it’s not done without enormous pain,” Lockyer said.

The former Senate president pro tempore led off a marathon hearing about the troubles courts and court users are facing because of staff layoffs and courtroom closures. And he readily admitted he had no magic cures in mind.

“It’s just the process of negotiating as hard as you can to get a fair share” in the budget, he said. “I don’t think there’s any other answer.”

Asked if shifting more budgeting control to local courts would help, Lockyer said that would be “bad policy mostly because they’re bad budgeters.”

“If people really want their way, to have a court responsible for their budget … then give it all back,” Lockyer said.  “Say ‘Fine. The state’s out of the business. We’re realigning similar to some of the changes made to the criminal justice system. Fine, you get it all back. Local property taxpayers get to pick up 100 percent. Have a good time.’ … That would be a mistake for you to make.”

Lockyer’s testimony followed the release Monday of an Assembly Judiciary Committee report that suggested the branch had made deep cuts to front-line services that hurt court users even though many of the reductions had been offset by money shifted from other sources.

Retired Judge Steven Jahr, administrative director of the Administrative Office of the Courts, conceded that the cutbacks could have been worse but argued that trial courts will still have to absorb $475 million in budget hits. And with certain line items like trial costs and judges’ salaries protected by law, court leaders have little choice but to reduce services that hurt the neediest users, he said.

Some cuts, he said, “we simply can’t say no” to.

'Harris' Already Being Invoked by Employment Counsel

[Scott Graham]

It didn't take long for the California Supreme Court's big employment discrimination decision, Harris v. City of Santa Monica, to prompt a request for a new trial.

Thursday afternoon -- less than seven hours after the high court issued Harris -- attorneys for Lucasfilm Ltd. incorporated the decision into a brief seeking relief from a $1.27 million pregnancy discrimination judgment.

In Veronese v. Lucasfilm, the First District Court of Appeal has already reversed the judgment obtained by Julie Gilman Veronese, ruling that the trial judge failed to instruct the jury on the business judgment rule, among other things. Veronese, represented by Altshuler Berzon and the Law Offices of Mayor Joseph L. Alioto and Angela Alioto, petitioned for review to the Supreme Court last month.

Lucasfilm filed its answer on Thursday. Among several reasons for denying review, it noted the jury was instructed with CACI 2500, which let it rule for Veronese if discrimination was a motivating factor in the employment action. "On Feb. 7, 2013, in Harris v. City of Santa Monica, No. S1081004, this court held that CACI 2500 is wrong," wrote attorneys Steven Drapkin of the Law Offices of Steven Drapkin and Paul Cane of Paul Hastings in their answer filed Feb. 7.

Because Harris requires that discrimination be a substantial motivating factor, Lucasfilm is entitled to a new trial, even if the Supreme Court were to agree with Veronese about the business judgment instruction, they contend. 

It's not clear how much relief Harris might ultimately convey to Lucasfilm, if a new trial were ordered on that ground. Of the $1.27 million awarded to Veronese, $1.15 million was for attorneys fees. And even post-Harris, Veronese could make a claim for fees.

First District May Have Vacancy Soon

[Scott Graham]

We’re hearing that James Marchiano, presiding justice of the First District Court of Appeal’s Division One, is nearing retirement. Marchiano was feted by his colleagues earlier this month and is said to no longer to be taking new cases, although it’s unclear whether he’s set a formal retirement date.

Marchiano did not respond to a voice mail or email Wednesday, and his Division One colleague, Justice Sandra Margulies, referred an inquiry to him.

A fixture in the Contra Costa County bench and bar, the affable Marchiano would mark 25 years of judicial service this summer. He served 10 years on Contra Costa County Superior Court before his appointment to the court of appeal by Gov. Pete Wilson in 1998 and subsequent elevation to the PJ role in 2002 by Gov. Gray Davis.

A Democrat who was twice appointed by Republican governors, Marchiano generally produced straightforward opinions free of ideological or rhetorical embroidery. He wrote the opinion last year upholding the involuntary manslaughter conviction and two-year sentence of BART officer Johannes Mehserle for the shooting of Oscar Grant. He ruled in 2011 that a cat owner could recover reasonable medical expenses for wrongful injury of the pet, even if they exceeded the pet's market value. And in 2009 he struck down a controversial state law that provided for incarceration of certain low-level substances abusers, on the grounds it was inconsistent with the 2000 drug diversion initiative Proposition 36.

“Even if these provisions of Senate Bill 1137 could be deemed to further Proposition 36's public health purpose, they would still be unconstitutional because they are inconsistent with the proposition's other primary purposes of saving jail cells for violent offenders and saving money with use of treatment instead of incarceration,” Marchiano wrote in Gardner v. Schwarznegger.

As a superior court judge, Marchiano was seen as the driving force behind a program that used direct calendaring, mediation and short trials with pro tem judges to reduce the court's civil backlog.

Marchiano was a litigator with Crosby, Heafey, Roach & May and Bledsoe, Smith, Cathcart, Boyd & Eliot before joining the bench.

In a 2001 profile of the judge, Kathleen Banke -- then a Crosby, Heafey appellate partner and today a Division One colleague of Marchiano's -- credited him with "the consummate judicial temperament."

As Marchiano put it, "You don't ever want to put down the lawyers." 

Judges Ready to Wine and Dine Lawmakers

[Cheryl Miller]

Want to hobnob with the chief justice? If you’re a state lawmaker and you’re in Sacramento on Wednesday, you’re in luck.

The State Bar, the Consumer Attorneys of California, the California Defense Counsel and the Open Courts Coalition are scheduled to host a meet-and-greet reception with the judicial branch leader for legislators. No official word on where the schmoozefest will take place, but we’re told that a “soulful Italian” eatery near the Capitol is the place to be.

Chief Justice Tani Cantil-Sakauye has made no secret of the fact that she wanted a chance to gather casually with lawmakers. She told the California Judges Association convention in October that she had “kind of whispered in the ears of a few attorney organizations that, ‘Gee, wouldn't it be nice if we paid for a reception and invited the Judicial Council and all the judges’” to meet the many new lawmakers who have joined the Assembly and state Senate this year.

“We want to make ourselves known,” she said, suggesting that a good “swag bag” would be a definite draw for attendees.

Sadly, the press has been barred from the social event.

“There’s no agenda and no speeches,” Bar spokeswoman Laura Ernde said in an email. “It’s just an opportunity for the chief and new lawmakers to mingle and get to know each other.”

No word on what kind of swag will be in the bags.

Charlie Spared Ruff (heh) Justice

[Vanessa Blum]

Things are looking up for Charlie.

The 22-month pitbull was scheduled for “destruction” by the City of San Francisco after attacking a police horse last year at Crissy Field. The dog’s fate hung in the balance Friday as a temporary restraining order barring the city from killing Charlie was about to expire.

City attorneys wanted U.S. District Judge Charles Breyer to clear the way for Charlie’s death sentence, calling it more humane than continuing to keep the canine confined.

But after seven hours of tense negotiations that lasted into Thursday night, the city agreed to a deal that spares Charlie’s life on the condition his owner, San Francisco resident David Gizzarelli, pays for the animal’s boarding at a suitable sanctuary.

Gizzarelli’s lawyer reported the settlement to Breyer at Friday’s hearing. The matter had been set for arguments on a motion for a preliminary injunction

“Charlie is not going to be killed,” Gizzarelli’s lawyer John Mounier Jr. pronounced after the hearing. Both sides promised more details once the papers were signed and the settlement was official.

Charlie got into trouble in August when he was playing off-leash in a designated area of Crissy Field. He spotted a horse carrying a park police officer and took off in a sprint.

According to court records, Charlie bit the horse, causing the animal to rear up and throw the officer to the ground, knocking the man unconscious.

Charlie then chased the horse for nearly two miles and continued to attack causing bleeding gashes to the horse’s legs, thighs and stomach.

At a subsequent hearing, Charlie was designated a vicious dog and ordered to be humanely put down.
Gizzarelli, who adopted Charlie as a puppy in March 2011, sued city officials in state court claiming his constitutional rights were violated when the city seized Charlie and issued a kill order without providing adequate notice or due process.

After the state claim was denied and with an appeal pending, Gizzarelli filed a federal complaint and sought a court order blocking the city from carrying out Charlie’s execution. 

The San Francisco City Attorney’s Office argued the government possessed authority to regulate dangerous dogs and asked Breyer not to interfere with the planned execution.

The case drew massive attention as a result of media coverage and an online “Save Charlie” campaign, which gained nearly 10,000 followers on Facebook.

Breyer said the matter generated as much public interest as any case of his judicial career and that emotional letters pleading for Charlie’s life poured into chambers from around the world.

“I’m really pleased there has been a resolution,” Breyer said, praising the work of U.S. Magistrate Judge Nathanael Cousins who led settlement talks.

“The credit goes to Judge Cousins,” he said. “But for his, no pun intended, doggedness, it would not have been resolved.”

Longtime Veterans' Rights Advocate Passes the Baton

[Cynthia Foster]

After decades of veterans’ rights pro bono work and an important win in an ongoing veterans’ class action against the United States government, Gordon Erspamer is off the case.

Erspamer retired from Morrison & Foerster on Jan. 1, he confirmed Wednesday, and said litigator James Bennett will be taking over as lead attorney for a class of more than 100,000 Vietnam War veterans who claim the government failed to warn them of the toxicity of biological weapons used in secret studies by the Central Intelligence Agency and others. U.S. District Judge Claudia Wilken of Oakland certified the class last October.

A separate case previously handled by Erspamer was shut down by the U.S. Supreme Court on Monday, when the justices declined to review a Ninth Circuit decision junking veterans’ allegations that the government mishandled benefits claims.

Erspamer stepped down from the partnership at MoFo five years ago, taking on a senior counsel role at the firm on a contract basis, but stayed active in the litigation on behalf of veterans. The work has been the cornerstone of his career, and he said that he’d have liked to continue on with the latest case but “that was not to be.” Erspamer said his contract with the firm expired on Dec. 31 and renewing it “would’ve required working something out with” MoFo.

Litigation co-chair Arturo Gonzalez, who worked with Erspamer on selecting Bennett to take over, said that when Erspamer signed the senior counsel contract five years ago the firm “understood that, for personal reasons, Gordy would no longer” work at the firm once it expired.

Erspamer said he has been dealing with some longstanding health issues and that he would take 2013 off, possibly to work on a novel about biological weapons testing on veterans. Gordon’s father, a Navy sailor, died of complications from radiation exposure in 1980.

Gonzalez said MoFo will continue to represent veterans groups on a pro bono basis.

“The firm’s commitment to the rights of veterans has never been stronger,” he said, “and we’re grateful that Gordy devoted a substantial amount of his time to helping those less fortunate, including our country’s veterans.”

After 11 Years, Seligman Puts Down His 'Dukes'

[Cynthia Foster]

With Brad Seligman headed for the bench, his giant case against Wal-Mart is changing hands.

Governor Jerry Brown announced he'd tapped Seligman for the Alameda Superior Court on Thursday. The Impact Fund founder is perhaps best known for Dukes v. Wal-Mart, the huge gender discrimination class action he filed in 2001. The suit, originally filed on behalf of more than 1 million female Wal-Mart employees, alleges the retail giant underpays and underpromotes female employees. Although the U.S. Supreme Court shut the national class action down, Seligman has been pursuing claims on behalf of a smaller class in the U.S. District Court for the Northern District of California.

Reached Friday, Seligman said he was in the process of informing defense counsel in Dukes that he’ll be off the case pending his swearing-in to the bench, and that Pasadena employment firm Hadsell, Stormer, Richardson & Renick will be taking over as co-lead counsel. Seligman’s firm, The Impact Fund, will still be counsel on the case, but will take a smaller role.

Seligman said he chose Hadsell Stormer because he knows the lawyers well and trusts them.

“They are one of the premier public interest firms in California,” he said. They have a “depth of experience litigating class action civil rights cases.”

According to the firm’s website, the 10-lawyer group has achieved several significant settlements in gender discrimination cases.

Hadsell Stormer partner Randall Renick will be the California co-lead counsel in the case, Seligman said, sharing duties with Washington, D.C. lawyer Joseph Sellers of Cohen Milstein.

Seligman is scheduled to be sworn in Monday morning.

“I’ve had five days to wrap up my practice,” he said, but he’s ready for his next career move. “I always wanted to leave [private practice] while I felt good, and I feel good,” he said.

 

Two Trials, Two Reversals for Prosecutorial Misconduct

[Scott Graham]

Getting a judgment actually reversed for prosecutorial misconduct is rare. How about twice in the same case?

On Thursday, the Sixth District Court of Appeal took the Santa Clara County district attorney's office to the woodshed for a second time in the case of Dariel Shazier, an alleged sexually violent predator. In 2006, the appellate court threw out Shazier's commitment order as an SVP based on former prosecutor Benjamin Field's having deliberately violated an in limine motion barring the discussion of punishment.

The DA's office retried the case, again obtained a commitment order, and is now once again in flagrante reverso. This time Chief Assistant DA Jay Boyarsky, who tried the case when he was a line DA, is taking the blame. Sixth District PJ Conrad Rushing's opinion says he committed "flagrant misconduct" by warning jurors to think about how friends and acquaintances would react to an acquittal.

"Public opinion is not a proper consideration for a jury," Rushing wrote in People v. Shazier. "This reasoning has been condemned as faulty since the time of ancient Greece."

Boyarsky also implyied Shazier had committed other crimes and told jurors Shazier was "grooming" them the same way he did his child victims.

Boyarsky and District Attorney Jeff Rosen graciously told the San Jose Mercury News that they respect the court's decision. "Any prosecutor in my office may err," Rosen says in the Mercury News' detailed article, "and when we do, we learn from it and improve."

Judge Alfonso Fernandez's also took some heat, though not as much as Boyarsky, for his handling of the case. "We observe that not one of [defense] counsel's well-taken objections was sustained by the court," Rushing wrote. "The court erred in overruling these objections."

 

Trial Court Funding Study? Don't Expect Much

[Cheryl Miller]

The Trial Court Funding Workgroup met for the second time on Tuesday, and it quickly became apparent that observers who are looking to the 10 panelists for sweeping recommendations to change California’s court financing system are probably watching the wrong show.

At its inaugural meeting on Nov. 6, the group talked about choosing two or three courts of similar size to compare their budgets, caseloads and staffing levels. At Tuesday’s meeting the proposal never surfaced for discussion. Last month state Finance Director Ana Matosantos said she would suggest a more specific scope for the group’s vaguely defined work assignment. As of Tuesday, the Finance Department, no doubt consumed now with drafting the state budget, had not provided any more specificity.

Asked about the group’s endgame, co-chair Phillip Isenberg on Tuesday said only, “Have you read the charge sheet?”

That “charge,” as defined by the governor’s revised May budget, is to evaluate the state’s compliance with the 1997 Trial Court Funding Act, which, among other things, shifted court funding responsibility from the counties to the state. The group, the budget said, “will conduct a statewide analysis of workload metrics, staffing standards, and other relevant data necessary to support a more uniform and efficient administrative system for the judiciary.”

On Tuesday, that translated into giving Jody Patel, chief of staff of the Administrative Office of the Courts, a huge work assignment, including summarizing areas where there has been uniformity among court services and looking for ways to measure the funding act’s promise of equal access to justice in the trial courts.

How that will translate into any final recommendations is unclear. What is clear is that there seems to be little appetite among group members to dictate a standardized workload for an individual court or judge. And that may disappoint some historically underfunded courts.

“Disparate impacts upon access to justice from county to county will continue until workload is considered when making funding decisions,” leaders from Lake County Superior Court wrote in a Dec. 7 letter to the working group. The court’s presiding judge, assistant presiding judge and executive officer said they have had to reduce staffing by 35 percent, furlough workers and slash public hours while “some trial courts have been able to maintain services to the public and provide wage and benefit increases to staff.”

“Without funding based at least in large part on workload, there cannot be equal justice for all Californians,” the Lake County court leaders wrote.

The working group meets again on Jan. 15. Members are expected to produce a report on their findings by April.