January 21, 2001
Governor's pals cash in on a $88.5 million bite out of taxpayers
Michael A. Glueck
* Dr. Glueck, a physician who lives in Newport Beach, writes locally and nationally on health-care and legal reform issues.
Just when you thought it was safe to come out after the county's torrential rains, the head of the legal cobra again raises its head and devours your money. Five law firms, including the infamous firm of Milberg Weiss Bershad Hynes and Lerach of San Diego, joined together in 1995 and sued the state of California over the $300 "smog impact'' fee charged for out-of-statevehicles registering in California.
The ultimately successful suit claimed that the fee was unconstitutional. Initially, there were only four clients who were awarded a return of the their fees totalling $1,200. However, Governor Davis decided to return money to all those who paid the fee, plus interest.
This resulted in a $665 million settlement for the 1.7 million vehicle owners who paid the fee. Perhaps by more than mere coincidence, one of the firms, Milberg Weiss, etc., is a major donor to Davis and other Democrats. The firm and its notorious partner, Bill Lerach, gave Davis $221,000 in the 1998 campaign and $20,000 since he took office. An additional $50,000 went to Attorney General Bill Lockyer in 1998 for his campaign.
The problems started when it came time to negotiate attorney fees. In 1998, a Sacramento Superior Court judge gave the lawyers $18 million (5 percentof the then settlement of $363 million). In March of 2000, the lawyers were prepared to accept $25 million. In April of 2000, the State Board of Equalization said the lawyers deserved no more than $1 million because no judge agreed that this qualified as a class action. Governor Davis recommended that the issue be settled by binding arbitration, an unusual step considering these matters are typically handled in the courts or through settlement negotiations.
A three-person arbitration panel was assembled - one retired judge selected by Davis, one retired judge selected by the attorneys and a third former judge agreed to by both parties. The hearings took place behind closed doors with the final decision being confidential. This put the state in a powerless position of having to agree to follow a panel's decision without any recourse.
The settlement was confidential until an L.A. newspaper filed a California Public Records request and received the information from Controller Kathleen Connell. The panel awarded the attorneys 13.3 percent of the settlement of $665 million, equaling $88.5 million. The firms had requested 17.5 percent or $116 million. Davis claims that he expected the award to come back at $18 million or less. This means that on average the attorneys are being paid $8,800 dollars per hour right out of the taxpayers' wallets. Connell was scheduled to write the check by Dec. 28, but didn't at Governor Davis' request. Connell is teaming up with Davis and the State Board of Equalization member Dean Andal to protest the outrageous fee.
Andal said, "The message that should be sent is that you may win, you may get attorney fees but it isn't a lottery and you shouldn't be able to buy it with campaign contributions and lobbyists. "All the entities set up to protect the taxpayers failed. People entrusted with responsibility had conflicts of interest."
The panel of three arbiters rebuts that, "The state chose to gamble and lost.
"A party to a binding arbitration agreement should not be allowed to renege merely because it is displeased with the award."
Certainly the attorneys are entitled to a reasonable fee. But is almost $90 million reasonable? Approximately 10 percent, or almost $9 million, of that will come from Orange County taxpayers. We should all be "outraged'' to use the favorite expression of the lawyers.
How many schools, teachers, textbooks, medications for the poor and elderly, policemen, firemen or portion of a power plant might $88,500,000 buy? Might not $8,850,000 pay off a chunk of the Orange County debt? Many persons in the state work hard for $8,800 a year.
The State Board of Equalization has met once to discuss whether to challenge the arbitration award in court. They are scheduled to meet again Jan. 23. Board Member Claude Parrish is considered a swing vote on this issue concerning your money. If you feel this settlement is unjustified you should call Parrish at (310)217-6815.
The dissenting arbiter, retired state Supreme Court Chief Justice Malcolm Lucas said, "Every dollar awarded for attorneys is one less dollar for public services."
We the people couldn't have said it any better. Make that phone call to Parrish today or kiss your sweet money goodbye.
Copyright 2000 The Orange County Register Please send comments to ocregister@link.freedom.com
