California chief judge calls for oversight of private judges

Private judging industry needs tougher oversight, California chief justice says, following a Times report last week on role played by hit judges in alleged scam of clients by Los Angeles attorney Tom Girardi with millions of dollars in settlement money.

Chief Justice Tani Cantil-Sakauye called the revelations about the conduct of retired justices, including a former state Supreme Court justice, “shocking” in a statement to The Times, acknowledging that “there there are no adequate safeguards regarding the activity of private judgment”.

For decades, Girardi has paid reputable private judges up to $1,500 an hour to help him administer mass tort cases involving thousands of clients. The Times described how Girardi swapped the names of these former lawyers to deflect questions about the missing money, and how in some cases they aided his embezzlement of client funds.

In a settlement in which a former appeals judge received $500,000 to oversee the distribution of funds, Girardi managed to divert millions of dollars from a settlement account for questionable purposes. A downtown jeweler was awarded $750,000 for what court records show was the purchase of diamond earrings for Girardi’s wife, Erika, of “The Real Housewives of Beverly Hills” fame.

Retired lawyers serving as arbitrators and mediators occupy an increasingly important and powerful place in the justice system, but their work mostly takes place behind closed doors and is rarely scrutinized by outsiders. Incumbent judges report to the State Commission on Judicial Performance, but private judges are not regulated by any specific government agency.

The California State Bar nominally has jurisdiction over private judges who retain their attorney’s license, but the agency acknowledged on Monday that it was “not aware of any prior investigation” into them. “There does not appear to be an overarching regulatory framework for private judgment or mediation,” the agency said in a statement.

Cantil-Sakauye, the chief justice, lamented the “multifaceted victimization of those injured” in the Girardi case. She did not offer a specific course of action to protect the public, but suggested that Sacramento lawmakers take the lead.

“I believe the Legislative Assembly is the competent authority to regulate the conduct of ombudsmen,” said Cantil-Sakauye, who announced last month that she planned to retire at the end of her term in January.

Some in Sacramento say they are ready to act.

“If I am re-elected, there will be hearings and there will be legislation,” said State Sen. Tom Umberg (D-Orange), chairman of the Senate Judiciary Committee.

He called the Times’ findings “shattering” and said: “It’s pretty clear to me that something needs to be done. Among the legislative measures, Umberg raised the possibility of mandatory disclosure of past relationships by an arbitrator or mediator.

Girardi has repeatedly used the expensive services of retired lawyers affiliated with Irvine-based JAMS, the nation’s largest private arbitration and mediation firm. Among them were JAMS co-founder and former chief executive John K. Trotter Jr., a retired California appellate judge and former state Supreme Court Justice Edward A. Panelli.

The Times described Panelli’s role in a $17 million settlement Girardi secured for elderly women who allegedly got cancer from a menopause drug. When some of the women suspected in 2014 that Girardi had failed to pay them everything they were owed, his firm blamed Panelli and said the retired judge had ordered them to “withhold” $1 million. The allegation was false, but the lawyer did not tell clients or the trial court and fought a subpoena for months before finally being forced to testify under oath. Only then did Panelli reveal that Girardi was lying.

Trotter, the former judge turned JAMS executive, also worked on settlements in which clients accused Girardi of stealing money. In a $66 million settlement with the maker of the diabetes drug Rezulin, Trotter was appointed in 2005 as a “special arbitrator” overseeing the distribution of money to clients, as well as Girardi and other attorneys charged of the case. In the years that followed, more than $15 million went to Girardi’s jeweler, for the diamond earrings, and to his company, for alleged expenses. Experts who reviewed financial records for The Times said the pattern of payments indicated fraud.

Both Panelli and Trotter declined interview requests regarding their relationship with Girardi. In statements, they said they had limited roles that they performed ethically. Asked to respond to the Chief Justice’s comments, JAMS (formerly known as Judicial Arbitration and Mediation Services) reiterated a previously released statement that its list of former judges “should adhere to the ethical standards they have sworn to respect under oath”.

Outgoing Assembly Judiciary Committee Chairman Mark Stone (D-Scotts Valley) agreed that the private judges’ dealings with Girardi were evidence of an unresolved issue.

“The fact that you have judges with a long-standing relationship with a lawyer like Tom Girardi and doing things for his benefit and for their personal benefit – there is currently no structure to hold anyone in these circumstances accountable,” said Stone said.

Stone, who is retiring this year, said he was skeptical of a legislative solution to the problem, given opposition to previously proposed legislation to bring more transparency and public safeguards to the industry. ‘arbitration. These measures, he said, have been vigorously opposed by companies and business groups who favor the system that allows them to resolve disputes out of the public eye, adding: “I am not sure that these ethical failings bother them as much”.

“These are very, very difficult bills to get through the Legislative Assembly because those who benefit from the operation of the arbitration system oppose us at every turn, and that to the detriment of consumers,” said Stone.

A longtime critic of the private judgment industry, former Santa Clara University Law School Dean Gerald F. Uelmen, said it makes sense to regulate the private judgment industry. , but advocates should expect strong opposition from sitting judges, some of whom see the private judgment — with its fluffy salaries — as a retirement plan.

“After years of working … for barely reasonable pay, when they retire they kind of get rich and they like it,” Uelmen said. “A lot of them are itching to retire and move on to this richer field – so I think some of the opposition will come from judges who want to do this and see it as a just reward for all their years. hard work.”

Los Angeles Times

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