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Famous LA Lawyer on Trial & Eye-Popping Verdicts · Bloomberg Law

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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
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Speaker 1: Thomas Girardi now sits at the defendant's table in an
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Speaker 1: LA courtroom, a far cry from his days as a
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Speaker 1: famous lawyer getting gigantic verdicts for his clients and portrayed
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Speaker 1: in the Aaron Rokovich movie in two thousand and then
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Speaker 1: as the husband of one of the Real housewives of
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Speaker 1: Beverly Hills. The eighty five year old is being tried
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Speaker 1: for embezzling fifteen million dollars from his vulnerable clients to
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Speaker 1: fund his lavish lifestyle. Joining me his trial attorney, David
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Speaker 1: Ring of the LA firm of Taylor Ring. For people
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Speaker 1: who might not know, tell us about Tom Girardi. You know,
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Speaker 1: the star lawyer and his reputation.
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Speaker 2: Tom Girardi was a legend in Los Angeles legal circles.
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Speaker 2: He's a plaintiff's trial lawyer. He represented victims of horrific
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Speaker 2: accidents like plane crashes and horrible automobile accents and things
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Speaker 2: like that. And he'd been a legendary trio loor in
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Speaker 2: Los Angeles since the nineteen eighties. He was as big
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Speaker 2: as it gets in Los Angeles. He was politically connected.
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Speaker 2: He was well known to be connected with the courts
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Speaker 2: and the judges, and he was a very powerful man,
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Speaker 2: and so you know, he was untouchable. He was untouchable
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Speaker 2: in Los Angeles for many, many, many years until this
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Speaker 2: scandal imploded in twenty twenty.
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Speaker 1: Tell us about the scandal that sort of opened this
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Speaker 1: Pandora's box.
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Speaker 2: What caused the downfall of Tom Girardi in his law
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Speaker 2: firm was it all started with a particular lawsuit, the
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Speaker 2: Lion air plane crash, which happened in Jakarta, and Tom
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Speaker 2: Girardi in his firm, they would represent victims in big
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Speaker 2: airplane crashes like that, even if the crash happened halfway
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Speaker 2: across the world. And that litigation was centered in Chicago
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Speaker 2: in federal court, and ultimately it was settled. You know,
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Speaker 2: Boeing and some other defendants paid a lot of money,
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Speaker 2: and Tom Girardi represented families who had lost loved ones
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Speaker 2: in that plane crash. Now he represented them. He had
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Speaker 2: a co council in Chicago, Chicago firm, And when the
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Speaker 2: settlement was reached and the money was paid by the defendants,
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Speaker 2: Tom Girardi's firm didn't pay his clients, and one excuse
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Speaker 2: after another, this firm in Chicago started to get very
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Speaker 2: very upset because clients are supposed to be paid out
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Speaker 2: right away. And so this firm in Chicago went to
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Speaker 2: federal court and said, there is some suspicious going on here.
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Speaker 2: Tom Girardi's firm is not paying out money that they
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Speaker 2: have received to the clients. And the federal court judge
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Speaker 2: got very involved, went ballistic, and basically some ined Tom
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Speaker 2: Girardi and others to court and it all unfolded there
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Speaker 2: because it was a house of cards and it all
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Speaker 2: fell apart at that point, and it became clear that
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Speaker 2: Tom Girardi had been stealing money from clients and from
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Speaker 2: his firm.
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Speaker 1: Will you explain the basics of the prosecution's case against
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Speaker 1: him in the LA trial.
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Speaker 2: So right now in Los Angeles Federal Court, Tom Girardi
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Speaker 2: is being prosecuted for wire fraud. And the wire fraud involves,
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Speaker 2: you know, four or five clients. Look, he defraud a
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Speaker 2: whole lot more than four or five clients over the years,
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Speaker 2: but the prosecutors, the US Attorney's Office in Los Angeles
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Speaker 2: has narrowed it down to about four or five families
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Speaker 2: who basically had their funds, their settlements stolen by Tom Girardi,
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Speaker 2: you know. So he's accused of misappropriation of client funds
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Speaker 2: and wire fraud. And the amounting question this trial is
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Speaker 2: about fifteen million dollars. Again, you look at the long
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Speaker 2: term wrongdoings by mister Girardi and he absconded with a
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Speaker 2: whole lot more than fifteen million. But that's the part
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Speaker 2: of this case that's going on. So he's there in
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Speaker 2: court every day and prosecution is close to resting their case,
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Speaker 2: and they've put on these victims who have explained how
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Speaker 2: they weren't given their settlement funds and all the excuses
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Speaker 2: they were given over time. And they've also had witnesses
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Speaker 2: who are the lawyers for these victims after the fact,
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Speaker 2: who tried to help them get the money from Girardi,
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Speaker 2: you know, when they weren't being paid, and these lawyers
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Speaker 2: come and say the excuses we got were absurd. And
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Speaker 2: so that's what's taking place right now in Los Angeles.
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Speaker 2: Last thing is is Tom Girardi will then face another
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Speaker 2: criminal trial in Chicago arising out of what we talked
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Speaker 2: about earlier, the Lion airplane crash.
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Speaker 1: Is it basically like a Ponzi scheme that he allegedly operated.
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Speaker 2: I equate Tom Girardi to Bernie Mainoff, the same type
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Speaker 2: of personality, the same type of long running fraud, just
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Speaker 2: the absolute despicable conduct of stealing from your own clients
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Speaker 2: who you have a duty of loyalty to. And so yeah,
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Speaker 2: it basically was a Ponzi scheme. What Tom Girardi apparently
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Speaker 2: was doing was he spent extravagantly. We all know he
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Speaker 2: is married to Erica Jane from the Real Housewives, and
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Speaker 2: the amount of money that was flowing from Tom for
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Speaker 2: his lifestyle and for Erica Jane's lifestyle, and so he
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Speaker 2: would basically a settlement would come in, it would go
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Speaker 2: into the Girardi and Keys client trust fund, and Tom
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Speaker 2: Girardi would take some or all of it for his
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Speaker 2: own personal, improper purposes, and then would lie to the
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Speaker 2: client the money didn't come in yet, Oh there's a
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Speaker 2: hold up, Oh it's being taxed. All sorts of stories
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Speaker 2: not to pay them out. Then when another big settlement
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Speaker 2: came in, okay, he might pay out the person who'd
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Speaker 2: been complaining for a year or two, but now he'd
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Speaker 2: stiff that client from their settlement funds, So yeah, basically
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Speaker 2: a Ponzi scheme.
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Speaker 1: The prosecution is painting him as a celebrity attorney turned villain.
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Speaker 1: But the defendant sitting there in the courtroom is this
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Speaker 1: eighty five year old in mental decline. He's been diagnosed
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Speaker 1: with dementia, lives in a nursing home. So might the
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Speaker 1: jury feel sympathy for him or say why are they
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Speaker 1: going after him? At this point?
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Speaker 2: Here's how that plays out is because in this particular
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Speaker 2: Los Angeles trial, the crimes that Tom Dry's being accused
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Speaker 2: of committing date back to twenty ten, all right, and
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Speaker 2: there's no evidence that he had any real mental decline
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Speaker 2: until about twenty twenty. So he was perfectly fit twenty
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Speaker 2: ten through twenty twenty. He was in courts, he was
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Speaker 2: given speeches, he was politicians, fundraisers. Believe me, he was
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Speaker 2: in perfect mental health between twenty ten and twenty twenty
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Speaker 2: when some of these crimes were committed. And it really
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Speaker 2: was only until twenty twenty when, yeah, he absolutely did
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Speaker 2: have some sort of mental decline. And now they say
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Speaker 2: he has early on Alzheimer's or dementia, and he does
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Speaker 2: not look well at all in court. But what the
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Speaker 2: prosecution will do and has done, is say, you can't
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Speaker 2: look at this man for what he is right now
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Speaker 2: here today, look at what he's done over the past
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Speaker 2: fifteen years, back to twenty ten, when he was absolutely
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Speaker 2: positively competent.
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Speaker 1: The defense is blaming the XCFO, Christopher Caman, who's charged
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Speaker 1: with fraud for allegedly stealing from both client accounts and
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Speaker 1: the firm's operating fund. A judge has split Girardi's trial
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Speaker 1: from Cayman's, so that's quite advantageous to Girardi's defense. His
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Speaker 1: lawyer can point at Cayman as the real villain here.
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Speaker 2: Yes, so Tom Girardi really has two main points in
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Speaker 2: his defense in the trial. One is that, oh, you know,
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Speaker 2: he was unfit, he was mentally declining, he had dementia,
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Speaker 2: He didn't know what he was doing. He couldn't have
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Speaker 2: controlled these accounts or this money because he really couldn't
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Speaker 2: even handle his own day to day activities. That's a
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Speaker 2: big part of their defense. And the other part is
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Speaker 2: what you mentioned that the law firm Girardi and Keith
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Speaker 2: had a chief financial officer named Chris Cayman, and mister
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Speaker 2: Cayman is separately charged from mister Girardi for crimes that
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Speaker 2: mister Cayman committed, and so absolutely in this case, Tom
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Speaker 2: Girardi's defense is to point the finger at Chris Cayman,
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Speaker 2: the CFO, and say, you know what, he's the guy
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Speaker 2: who is stealing the money. He's the guy who you know,
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Speaker 2: wreaked havoc on the law firm's financial resources and the
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Speaker 2: client trust accounts. The problem with that is that it's
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Speaker 2: going to become pretty clear that the CFO, Chris Cayman,
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Speaker 2: he was conducting what they've called is a side fraud.
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Speaker 2: He knew that Girardi was playing Shenanigans with all the money.
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Speaker 2: I mean, he was a CFO, He knew what was
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Speaker 2: going on, and he knew he could get away with
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Speaker 2: from pezzling money. And so what he did He saw
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Speaker 2: this firm in disarray, knew what Girardi was doing, so
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Speaker 2: he started to steal money on his own. And that's
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Speaker 2: going to be a separate trial down the road against
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Speaker 2: mister Kaman, who had fled the country and they brought
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Speaker 2: him back here. But it certainly gives Tom Girardi's lawyers
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Speaker 2: some arguments in this particular trial. My personal opinion, I
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Speaker 2: don't think it's going to carry the day for Tom Girardi.
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Speaker 1: Apparently there is some evidence coming in. On the fifth
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Speaker 1: day of the trial, there was testimony about a secret
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Speaker 1: bank account that was hidden from Girardi. So the defense
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Speaker 1: is looking at that as evidence showing that Girardi wasn't
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Speaker 1: aware of all that was going on at the firm.
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Speaker 2: I'll tell you what, this very very very interesting development
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Speaker 2: in the case, this secret bank account, and we don't
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Speaker 2: know a lot about it yet. It really just surfaced
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Speaker 2: for the first time in the media, at least in
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Speaker 2: this lawsuit. No one had really heard about this secret
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Speaker 2: bank account before. But what it appears to have been
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Speaker 2: is part of perhaps Chris came in side fraud where
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Speaker 2: someone set up another bank account and a different bank
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Speaker 2: than the law firm routinely used and was siphoning money
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Speaker 2: over to this other bank account, and we don't really
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Speaker 2: know why. We do know that checks were written out
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Speaker 2: of it, we know clients were paid money out of it,
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Speaker 2: but we also know that didn't really start until close
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Speaker 2: to twenty nineteen or twenty twenty, and so again you
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Speaker 2: got to go back and look at the crimes that
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Speaker 2: are ledged against Girardi. And those days all the way
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Speaker 2: back to twenty ten in this case. So again, the
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Speaker 2: secret bank account very interesting, raises eyebrows for sure, but
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Speaker 2: I don't think it's enough to get Tom Girardi off.
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Speaker 1: The defense said during opening statements that the trial was
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Speaker 1: going to be technical and boring, and inundated the jury
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Speaker 1: with financial documents during one of the cross examinations. I mean,
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Speaker 1: juries see lots of financial documents and cases all the time,
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Speaker 1: and they also get bored all the time. Is that
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Speaker 1: a really effective strategy.
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Speaker 2: Well, I think you've seen two wildly different approaches from
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Speaker 2: the prosecution and the defense. The prosecution has put on
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Speaker 2: victims who've been very emotional on the stand because of
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Speaker 2: what they were put through, not only because either they
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Speaker 2: or their loved one was seriously hurt or injured, but
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Speaker 2: then they had to suffer through years of trying to
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Speaker 2: get their settlements from this law firm. So you saw
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Speaker 2: some really human emotions and some really compelling witnesses. And
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Speaker 2: then you have Tom Girardi's defense that is doing exactly that.
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Speaker 2: They're trying to put up a lot of financial figures
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Speaker 2: and documents and trying to confuse the jury, and you know,
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Speaker 2: maybe get them to think someone else did it, or
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Speaker 2: trying to put all sorts of charts and financial data
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Speaker 2: up there, perhaps an attempt to confuse. I don't know
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Speaker 2: if their goal is to bore them the death, that
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Speaker 2: would be a very good strategy, but it certainly is
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Speaker 2: to try to get them confused and to maybe not
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Speaker 2: fully understand where all this money is flowing from. But again,
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Speaker 2: as you said, hey, juries get it. I mean, this
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Speaker 2: is not an incredibly complicated financial case by any means.
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Speaker 2: It's easily understood, and the prosecution will make it easily understood.
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Speaker 1: But the defense only needs one juror to be confused
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Speaker 1: or not to see the scheme that was evolving, or
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Speaker 1: to feel sympathy for him.
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Speaker 2: Very true, I mean, the defense is all they need
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Speaker 2: for a quote unquote victory is one juror to say
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Speaker 2: I don't think he did it or I'm not convinced
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Speaker 2: beyond a reasonable doubt. And so that's likely their goal.
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Speaker 2: They likely don't think they have a shot at a
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Speaker 2: full acquittal, but they would certainly be happy with a mistrial.
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Speaker 2: But again, having followed the trial to this point in time,
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Speaker 2: I think the prosecution has really done a very good
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Speaker 2: job of putting on compelling evidence and testimony that kind
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Speaker 2: of shows how long these crimes were going on and
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Speaker 2: that Tom Girardi was directly involved in that, even when
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Speaker 2: he was absolutely competent.
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Speaker 1: What penalty might he face if convicted.
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Speaker 2: Well, his age plays a huge role in that, as
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Speaker 2: does his mental decline. So again that's something that is
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Speaker 2: handled by the federal judge federal sentencing guidelines. Tom Girardi's
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Speaker 2: in his early eighties. He clearly does have some form
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Speaker 2: of dementia at this point in time. It certainly appears
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Speaker 2: like it. So we don't know is a judge going
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Speaker 2: to put him on some sort of house arrest, Is
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Speaker 2: he going to send him to prison, Is he going
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Speaker 2: to send him to some other sort of facility that
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Speaker 2: takes care of him. Unknown at this time, but he's
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Speaker 2: going to get punished for sure.
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Speaker 1: Girardi had apparently over two hundred misconduct complaints before the
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Speaker 1: State Bar of California over four decades and managed to
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Speaker 1: avoid disciplinary action until the end. And the parents of
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Speaker 1: a son who died of cancer who was represented by Girardi,
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Speaker 1: filed a class action lawsuit against the State Bar of
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Speaker 1: California alleging gross negligence and reckless misconduct. What do you
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Speaker 1: think about that lawsuit?
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Speaker 2: I think it's definitely got legs. There has been a
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Speaker 2: lot that has come out against the California State Bar
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Speaker 2: since this Girarti scandal erupted four years ago, and it's
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Speaker 2: absolutely mind numbing and despicable what has been shown and
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Speaker 2: what's been shown this shows you how powerful Tom Girardi was.
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Speaker 2: Tom Girardi had the state Bar wrapped around his finger.
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Speaker 2: Tom Girardi had so many complaints made against him over
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Speaker 2: the course of twenty or thirty years, and yet maybe
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Speaker 2: none of them were uphell as being legitimate, when clearly
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Speaker 2: many were, and how did he get away with that?
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Speaker 2: He was the ultimate mastermind. This guy had so many connections.
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Speaker 2: He actually placed an investigator in the State Bar office
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Speaker 2: who was there handling complaints against Girbarti, and the investigator
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Speaker 2: was one of Tom Girardi's guys. He was loyal to
15:24
Speaker 2: Tom Girardi and he was taking kickbacks and all sorts
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Speaker 2: of things. Tom Girardi was very close with some of
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Speaker 2: these state bar judges. And so the system, now that
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Speaker 2: we've seen it exposed for what it was. It was
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Speaker 2: a sham and tom Girardi manipulated the state bar system
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Speaker 2: and he got away with it for thirty plus years,
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Speaker 2: despite having hundreds of complaints made against him. You know,
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Speaker 2: most lawyers in their career that do the type of
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Speaker 2: work that Tom Girardi did, they might have one or
15:55
Speaker 2: two complaints and they might not be legitimate complaints, or
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Speaker 2: maybe one or two of them are right, and the
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Speaker 2: state are supposed to investigate that and discipline the lawyer.
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Speaker 2: Tom Girardi had hundreds of complaints, one hundreds, and not
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Speaker 2: one thing was ever done to him. Shameful and a.
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Speaker 1: Lot more evidence to come in this trial. Thanks so
16:16
Speaker 1: much for being on the show, David. That's trial attorney
16:18
Speaker 1: David Ring of Taylor Ring in Los Angeles. A federal
16:22
Speaker 1: appeals court has rejected Chipotle Mexican Grill's attempt to force
16:26
Speaker 1: a former worker's sexual harassment and assault claims into arbitration
16:32
Speaker 1: under a landmark twenty twenty two law because of timing,
16:36
Speaker 1: setting the stage for more showdowns as judges further assess
16:40
Speaker 1: the law's reach. The Eighth Circuit ruled last week that
16:43
Speaker 1: the EFAA covers the former workers workplace assault claim against
16:48
Speaker 1: the restaurant chain, even though the allegedmist conduct occurred before
16:53
Speaker 1: the law took effect. Joining me is employment law attorney
16:56
Speaker 1: Anthony Oncidi, a partner at Prosscauer Rose. Tony start by
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Speaker 1: telling us about the Federal Arbitration Act and how it
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Speaker 1: works in employment cases.
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Speaker 3: Okay, so there is a federal law that's been on
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Speaker 3: the books for many, many years, over a century, actually
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Speaker 3: called the Federal Arbitration Act, and what that does is
17:16
Speaker 3: essentially permit or indeed compel arbitration, both in federal courts
17:22
Speaker 3: and state courts around the country with respect to situations
17:26
Speaker 3: in which, in this instance we're talking about an employer
17:29
Speaker 3: and an employee have entered into what's called a pre
17:33
Speaker 3: dispute arbitration agreement. But what does that mean. That means
17:35
Speaker 3: that nobody's yet fighting with one another about the employee
17:39
Speaker 3: and the employer perhaps have started out their relationship, the
17:42
Speaker 3: employee may have just been hired, and among the other
17:45
Speaker 3: documents that are circulated at the beginning of the relationship,
17:49
Speaker 3: there is what's referred to as an arbitration agreement, which
17:52
Speaker 3: says that if in fact, we ever have a dispute
17:54
Speaker 3: about anything today or sometime thereafter, you agree and we
17:59
Speaker 3: agree that rather than taking the dispute to court, we
18:02
Speaker 3: will have a private arbitrator or panel of arbitrators. Sometimes
18:06
Speaker 3: they're up to three arbitrators decide the dispute that we
18:10
Speaker 3: might have with one another. So that's what an arbitration
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Speaker 3: agreement is. In the Federal Arbitration Act permits that kind
18:16
Speaker 3: of arrangement. What has happened in recent years is that
18:21
Speaker 3: there's been a significant disconnect between the kinds of results
18:25
Speaker 3: that employees who file lawsuits in court get versus the
18:30
Speaker 3: kinds of results they get when they appear in front
18:33
Speaker 3: of an arbitrator. Who are arbitrators. They are typically retired
18:37
Speaker 3: judges or retired practitioners lawyers who decide these cases, and
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Speaker 3: they tend on average to be less susceptible to passion
18:47
Speaker 3: and prejudice, which sometimes occurs certainly in employment cases. And
18:51
Speaker 3: they also tend to although side with the employee or
18:54
Speaker 3: the employer on about the same regularity that would occur
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Speaker 3: in court. War Wards tend to be much lower with
19:03
Speaker 3: arbitrators as compared to juries. This has not gone unnoticed
19:07
Speaker 3: by plaintiff lawyers, who always take these cases on a
19:10
Speaker 3: contingency fee basis, or almost always which means they get
19:13
Speaker 3: up to thirty forty in California, sometimes fifty percent of
19:17
Speaker 3: what their clients recover. And plaintiff lawyers are not interested
19:21
Speaker 3: in going in front of an arbitrator who might give
19:24
Speaker 3: a quote unquote reasonable result. What they want to do
19:27
Speaker 3: is they want to hit it out of the park
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Speaker 3: if possible, and get a multimillion dollar verdict, which increasingly
19:33
Speaker 3: is becoming the case at least in California and some
19:35
Speaker 3: of the other big jurisdictions around the country. And so
19:39
Speaker 3: plaintiff lawyers in the organized consumer trial lawyers bar in
19:45
Speaker 3: California and elsewhere are very very opposed now to arbitration
19:49
Speaker 3: agreements because they would much prefer to be in front
19:52
Speaker 3: of a jury because they think that a jury is
19:55
Speaker 3: likely to give them a better result or they can
19:57
Speaker 3: extract a better settlement amount if the case is not
20:00
Speaker 3: going to go to an arbitrator and instead is going
20:02
Speaker 3: to go to a jury.
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Speaker 1: Okay, So that's the FAA tell us about this amendment
20:09
Speaker 1: to the FAA. The EFAA standing for ending Forced Arbitration
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Speaker 1: of Sexual Assault and Sexual Harassment Act.
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Speaker 3: Up to this point, the Federal Arbitration Act has protected
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Speaker 3: arbitration agreements so long as they don't have elements of overreaching,
20:26
Speaker 3: and there are instances where employers have overreached, meaning that,
20:30
Speaker 3: for example, they say that the employee has a limited
20:32
Speaker 3: period of time to file the claim less than they
20:34
Speaker 3: would otherwise have under the law, or it otherwise limits
20:37
Speaker 3: the awards that the employee can recover. They try to
20:40
Speaker 3: put a ceiling on it. Anything like that, quite predictably
20:43
Speaker 3: is going to be struck down by the courts. But otherwise,
20:45
Speaker 3: if it's a straight down the middle arbitration agreement that says,
20:48
Speaker 3: as I said at the beginning, if we have a
20:50
Speaker 3: dispute will go to arbitration, we won't go to court.
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Speaker 3: Most courts have upheld that, and they've used the Federal
20:55
Speaker 3: Arbitration Act to fend off attacks which have occurred at
20:59
Speaker 3: the legislator level and at the judicial level in states
21:03
Speaker 3: like California against arbitration. That was what the FAA was
21:06
Speaker 3: doing until twenty twenty one when this new act, this
21:13
Speaker 3: amendment to the statue, was passed, and this was in
21:17
Speaker 3: direct response to the me too movement, which we'll all
21:21
Speaker 3: recall began in the fall in Occober I believe of
21:24
Speaker 3: twenty seventeen with the Harvey Weinstein revelations. It seems like
21:27
Speaker 3: a long period of time from twenty seventeen to twenty
21:29
Speaker 3: twenty one, but sometimes the gears of the legislative machine
21:34
Speaker 3: turns slowly, and so this law gets to Congress in
21:38
Speaker 3: twenty twenty one, and essentially what they say is okay,
21:42
Speaker 3: the FAA will remain in place. It will continue to
21:44
Speaker 3: protect arbitration everywhere in the country except in cases in
21:48
Speaker 3: which there is a lawsuit involving sexual harassment or sexual assault.
21:54
Speaker 3: And that law became effective on March third, twenty twenty two.
21:58
Speaker 3: So since that effective date, any dispute that has arisen
22:02
Speaker 3: anywhere in the country that involves sexual harassment or sexual
22:05
Speaker 3: assault may no longer be compelled to arbitration. Based upon
22:09
Speaker 3: a pre dispute arbitration agreement the parties, they can themselves,
22:13
Speaker 3: after the dispute arises, agree to arbitrary a case. But again,
22:16
Speaker 3: once a lawyer gets involved on the part of the employee,
22:19
Speaker 3: that rarely happens because they're going to want to be
22:21
Speaker 3: in front of a jury, they're not going to want
22:23
Speaker 3: to be in.
22:23
Speaker 2: Front of an arbitrator.
22:24
Speaker 1: So this Eighth Circuit case is sort of about timing,
22:27
Speaker 1: tell us about it.
22:28
Speaker 3: Sure, So there's now this Eighth Circuit decision you're referring to.
22:32
Speaker 3: There's also an appellate court opinion in California from January
22:35
Speaker 3: twenty twenty four holding the same and we're seeing these
22:38
Speaker 3: cases begin to populate among the courts. This is a
22:42
Speaker 3: short term issue, as you might expect based upon the
22:46
Speaker 3: statute that we've been talking about. The question that is
22:49
Speaker 3: before the courts and that has so far been decided
22:51
Speaker 3: in favor of employees is exactly what is meant by
22:55
Speaker 3: a dispute when it arises, because what this statute says,
22:59
Speaker 3: and I think this is an example of, by the way,
23:01
Speaker 3: legislative malpractice. I can't believe that a statute like this
23:04
Speaker 3: would get passed and nobody would have stopped for twenty
23:07
Speaker 3: five seconds to think, Gee, what do we mean when
23:10
Speaker 3: we say dispute? Maybe we should define that.
23:12
Speaker 1: You really are surprised about that? Nothing surprised. Nothing surprises
23:16
Speaker 1: me about the way laws are written.
23:18
Speaker 3: I think you're absolutely right. Well, you know, I was
23:20
Speaker 3: lucky enough to have the late antonin Scalia as a
23:22
Speaker 3: law professor at the University of Chicago, and he used
23:25
Speaker 3: to always say when we encountered things like this, well
23:28
Speaker 3: close enough for government work. And I think what he
23:31
Speaker 3: meant by that was that the government can make things
23:33
Speaker 3: worse even when they're trying to make things better, and
23:35
Speaker 3: I think this is a good example of that. So anyway,
23:37
Speaker 3: there is this ambiguity, and the question is whether or
23:40
Speaker 3: not a dispute arises when, for example, an employee first
23:46
Speaker 3: suffers an incident of sexual harassment or sexual assault in
23:50
Speaker 3: the workplace, or maybe when the employee first complains about
23:54
Speaker 3: sexual harassment or sexual assault in the workplace. What the
23:57
Speaker 3: Eighth Circuit has said in this recent case, and they
24:00
Speaker 3: got this from a definition of dispute that they found
24:03
Speaker 3: in a law dictionary, which is always a little bit
24:05
Speaker 3: I think, although not wrong, it's also just a little
24:08
Speaker 3: bit maybe too fast, a little bit too easy to
24:11
Speaker 3: try to decide something like this on They said, well, gee,
24:14
Speaker 3: a dispute means a lawsuit. And so what they said
24:17
Speaker 3: is if the employee complains about the sexual harassment beforehand,
24:22
Speaker 3: or even lodges an internal complaint, that is not a
24:26
Speaker 3: quote unquote dispute. A dispute occurs when the employee actually
24:31
Speaker 3: files something basically files a lawsuit or administrative complaint with
24:35
Speaker 3: an agency or with the courts, And as you think
24:38
Speaker 3: about it, that's probably the latest that a quote unquote
24:42
Speaker 3: dispute might arise. So the result of that is that
24:45
Speaker 3: it sweeps more and more cases into the realm of
24:50
Speaker 3: this anti arbitration statue. This situation will all very quickly
24:55
Speaker 3: June go away, because soon all disputes that are being
24:59
Speaker 3: decided I did one way or the other will have
25:01
Speaker 3: occurred on or after March third, twenty twenty two. So
25:04
Speaker 3: this is a short term issue. I don't think it's
25:06
Speaker 3: going to ever get before, for example, the US Supreme Court.
25:09
Speaker 3: It has a very limited shelf life.
25:10
Speaker 1: Coming up next on the Bloomberg Law Show, I'll continue
25:13
Speaker 1: this conversation with employment law expert Anthony on CD some
25:17
Speaker 1: recent eye popping verdicts. I've been talking to employment law
25:22
Speaker 1: attorney Anthony on CD of prosskau or Rose about a
25:26
Speaker 1: federal appeals court ruling that the EFAA covers a former
25:30
Speaker 1: worker's workplace assault claim even though the allegimist conduct occurred
25:34
Speaker 1: before the law took effect. The Eighth Circuit is conservative.
25:40
Speaker 1: I think ten Republican appointed judges and one Democratic appointed judge.
25:45
Speaker 1: Are you surprised that this decision came from the Eighth Circuit?
25:49
Speaker 3: Not really. I mean, I don't subscribe to the theory
25:52
Speaker 3: that appointees of one party or the other with regularity
25:56
Speaker 3: always vote one way or the other. I mean, I
25:58
Speaker 3: think you might be able to say perhaps maybe more
26:00
Speaker 3: than fifty percent of the time you can find that.
26:03
Speaker 3: But even our own US Supreme Court, there have been
26:06
Speaker 3: somewhat surprising results from the so called conservative majority that
26:10
Speaker 3: have been pro employee, for example, or pro consumer. In
26:14
Speaker 3: some of these cases. There obviously is an absolute predictability
26:17
Speaker 3: with respect to the party that appointed the judge, and
26:20
Speaker 3: of course that's how it should be. There shouldn't be
26:22
Speaker 3: really any predictability, but unfortunately there is. I don't think
26:25
Speaker 3: what they did in this case, which is to go
26:27
Speaker 3: to a dictionary definition, is as I said, wrong. I
26:30
Speaker 3: don't think there's.
26:31
Speaker 1: Went to the dictionary every once in a while.
26:33
Speaker 3: It truly did, so, Tony.
26:36
Speaker 1: Are there any implications beyond this statute that we've been
26:40
Speaker 1: talking about the EFAA.
26:43
Speaker 3: Yeah, so I think it's the narrow end of the
26:46
Speaker 3: wedge here, and that is that essentially what that statute
26:50
Speaker 3: says without saying it is there's something quote unquote wrong
26:54
Speaker 3: with arbitration. Essentially, what it's saying is, if you've been
26:57
Speaker 3: the victim of sexual harassment or sexual assault, you are
27:00
Speaker 3: not required to go to arbitration. You can go to court.
27:05
Speaker 3: What it doesn't say is, well, what happens if you
27:08
Speaker 3: are the victim of racial harassment, or what if you
27:11
Speaker 3: are the victim of disability harassment in the workplace, or
27:15
Speaker 3: age harassment or discrimination. There's a whole panoply of other
27:19
Speaker 3: categories that we protect under the law, both state and federal,
27:23
Speaker 3: And if we've said that sexual harassment victims don't have
27:27
Speaker 3: to go to arbitration, we are suggesting there's something wrong
27:31
Speaker 3: with arbitration. I disagree with that proposition. I think that
27:34
Speaker 3: arbitration actually can be a very effective means of resolving disputes,
27:38
Speaker 3: and I think it can be fair and usually is
27:40
Speaker 3: fair for both sides. But if you essentially say there's
27:43
Speaker 3: something lesser than about arbitration, then everyone else is going
27:47
Speaker 3: to start lining up, as has already happened, to say, well, gosh,
27:52
Speaker 3: if sexual harassment victims don't have to go to arbitration,
27:55
Speaker 3: neither should racial or age discrimination or harassment victims have
28:00
Speaker 3: to go to arbitration, they too should be able to
28:02
Speaker 3: go to a jury, and it really opens up a
28:05
Speaker 3: huge door by which litigants can avoid arbitration entirely and
28:11
Speaker 3: find their way to a jury, which is simply going
28:15
Speaker 3: to increase enormously the cost of litigating these cases, the
28:19
Speaker 3: time it takes to resolve them, and the burdens that
28:22
Speaker 3: will be placed upon employers nationwide, the.
28:25
Speaker 1: Difference of opinion on arbitration between plaintiff's lawyers and defense lawyers,
28:30
Speaker 1: and never the twinshaill meet. And you've written about some
28:34
Speaker 1: of the eye popping verdicts in sexual assault and harassment cases.
28:39
Speaker 1: There was a nine hundred million dollar verdict recently.
28:42
Speaker 3: It was one single plaintiff, The facts were horrendous, and
28:45
Speaker 3: the defendant in the case has been sued multiple times.
28:49
Speaker 3: There are multiple multi million dollar judgments against him in
28:53
Speaker 3: the state of California. And my understanding, and I don't
28:56
Speaker 3: have a huge amount of information about this that my
28:58
Speaker 3: understanding is that their defense was not even mounted in
29:01
Speaker 3: this case. But in any event, it was a case
29:03
Speaker 3: again very serious allegations and obviously ultimately proof about alleged
29:08
Speaker 3: rape and sexual assault in the workplace, and a jury
29:12
Speaker 3: in June of this year awarded the plaintiff one hundred
29:14
Speaker 3: million dollars in competed story damages, which basically is emotional
29:17
Speaker 3: distress damages, and eight hundred million dollars in punitive damages.
29:21
Speaker 1: And of course most of it punitive to punish the defendant.
29:26
Speaker 1: But you see ie popping verdicts nowadays in other areas
29:30
Speaker 1: as well, not just employment, personal injury and torque cases.
29:34
Speaker 1: And what makes them ie popping a lot of the
29:37
Speaker 1: times is the punitive damages.
29:39
Speaker 3: One of the things that I have said in a
29:42
Speaker 3: couple of the articles I've recently written, in some of
29:44
Speaker 3: the speaking engagements I've had on this to various groups
29:47
Speaker 3: of lawyers, is that it's a very peculiar process, at
29:50
Speaker 3: least in California, where I'm most familiar. You get to
29:53
Speaker 3: the point in the trial where the plaintiff is going
29:57
Speaker 3: to ask for punitive damages, and under California law, for example,
30:00
Speaker 3: they have to show malice, oppression, or fraud. But you
30:03
Speaker 3: have to show one of those things Jusuet's malice most particularly,
30:06
Speaker 3: and everyone in the courtroom, the judge, the lawyers, if
30:10
Speaker 3: there are legal reporters in the courtroom, maybe even some
30:13
Speaker 3: of the observers are aware of the fact that there
30:15
Speaker 3: are constitutional limits on the amount of punitive damages that
30:19
Speaker 3: can be awarded in a case. This is something that
30:22
Speaker 3: people off the street i e. Jurors for example, don't
30:25
Speaker 3: usually know. And so the most important people in that courtroom,
30:29
Speaker 3: who are about now to make a decision about how
30:32
Speaker 3: much punitive damage dollars should be awarded, if any, are
30:35
Speaker 3: not told. No one tells them that there is this limitation,
30:39
Speaker 3: this constitutional limitation, both of the state and federal level,
30:42
Speaker 3: that prohibits an award of punitive damages that exceeds more
30:46
Speaker 3: than a so called one digit, single digit multiplier. What
30:51
Speaker 3: does that mean. That means it shouldn't be more than two, three, four, five,
30:55
Speaker 3: maybe nine. In the most ridiculously terrible cases times the
30:59
Speaker 3: compensate damages. So if you've got emotional to the stress
31:02
Speaker 3: damages of two hundred thousand dollars, say, or three hundred
31:05
Speaker 3: thousand dollars, the punitive damage award, if there is going
31:08
Speaker 3: to be one, and it doesn't have to be one,
31:09
Speaker 3: but if the jury wants to award, that should not
31:12
Speaker 3: be more than a single multiplier of that compensatory damage amount,
31:16
Speaker 3: but no one tells the jury that, And so what
31:18
Speaker 3: happens is you end up with punitive damages awards sometimes
31:22
Speaker 3: that are twenty thirty times the compensatory damages. And there's
31:26
Speaker 3: this conspiracy of silence in the court room that no
31:29
Speaker 3: one tells the jury in advance. And I think there's
31:31
Speaker 3: a peculiar reason for that, and that is that neither
31:34
Speaker 3: the plaintiff's lawyer nor the defense lawyer wants to talk
31:38
Speaker 3: about this limitation. Why Because the plaintiff lawyer doesn't want
31:41
Speaker 3: to put a ceiling on the amount of punitive damages
31:44
Speaker 3: even if they know they're not going to ultimately collect
31:46
Speaker 3: twenty times the compensitory damages. They're more than happy to
31:49
Speaker 3: use that as a leverage point in settlement, for example,
31:52
Speaker 3: after the trial. And the defense lawyer is not going
31:54
Speaker 3: to want to say it either, because it can become
31:56
Speaker 3: a floor and the jury can say, oh, so we
31:59
Speaker 3: can constitution only award five times punitive damages. Maybe they
32:03
Speaker 3: otherwise would have been inclined only to do two or
32:05
Speaker 3: three times, but now they figure, oh, well, I can
32:08
Speaker 3: go to five times and that'll be protected under a
32:10
Speaker 3: constitutional challenge. The other problem that I think defense lawyers
32:14
Speaker 3: have with this that is talking about these limits, is
32:17
Speaker 3: that there's nothing to stop the jury from inflating the
32:21
Speaker 3: amount of compensatory damages, because, for example, an emotional distress
32:25
Speaker 3: damages award the standards for how you translate the pain
32:30
Speaker 3: and suffering or the emotional distress the employee has suffered
32:34
Speaker 3: into dollars, there's no real reliable way of doing that
32:37
Speaker 3: or even guiding the jury, and so they may end
32:40
Speaker 3: up inflating that compensatory damages amount so that the punitive
32:44
Speaker 3: damages will still be a lower multiple, but the overall
32:47
Speaker 3: judgment could still be very, very high. And I think
32:50
Speaker 3: employer's counsel and defense counsel are reluctant therefore for that reason,
32:54
Speaker 3: to talk about those kinds of limits. So I think
32:56
Speaker 3: the judge really should be talking about these issues, or
33:00
Speaker 3: the legislature or whoever's writing jury instructions, because most jurisdictions,
33:04
Speaker 3: of course have patterned jury instructions which are pre made
33:07
Speaker 3: for a trial, and in California at least, there's no limitations.
33:10
Speaker 1: I know the Supreme Court has spoken about this. What
33:14
Speaker 1: is the highest allowable ratio between compensatory and punitive.
33:20
Speaker 3: It should not ever be more than nine times, and
33:23
Speaker 3: only the most extraordinary cases should be even close to
33:27
Speaker 3: nine times. What most of the courts that have looked
33:29
Speaker 3: at this have said is look at statutes, because a
33:33
Speaker 3: lot of statutes, for example, in the old days before
33:36
Speaker 3: everybody's looking for a huge punity of damage to awards,
33:38
Speaker 3: would have what would be, for example, a treble damages award.
33:42
Speaker 3: And we see that under some of the federal statutes
33:44
Speaker 3: in the labor area and the employment area, and a
33:46
Speaker 3: trust in other places. You may remember recently there were
33:50
Speaker 3: other big verdicts that were talked about where there was
33:51
Speaker 3: a tripling of the underlying damages. So statutory formulations usually
33:58
Speaker 3: have a three x the plier for you know, intentional
34:02
Speaker 3: or deliberate misconduct of some sort that might be prohibited
34:05
Speaker 3: under the law. And so a lot of courts have
34:07
Speaker 3: looked at that and said, well, that's probably about right.
34:10
Speaker 3: Maybe if there's you know, one hundred thousand dollars in
34:12
Speaker 3: emotional distress damages, maybe the punitive damages shouldn't be more
34:15
Speaker 3: than three times that. But the US Supreme Court didn't
34:18
Speaker 3: say that, and essentially what they said was it shouldn't
34:21
Speaker 3: be more than nine times, and it should very very
34:23
Speaker 3: rarely be more than three four or five something along
34:26
Speaker 3: those lines. Footnote. We did mention Justice Scalaire. I brought
34:29
Speaker 3: him up. He actually dissented, as did Clarence Thomas, to
34:33
Speaker 3: the Supreme Court's decision that there's a constitutional limit on
34:36
Speaker 3: punitive damages. They both said, as good strict constructionists might.
34:41
Speaker 3: They said, I've got to copy the Constitution in my
34:43
Speaker 3: breast pocket. I just looked. There's nothing in there about
34:46
Speaker 3: punitive damages. And so they actually dissented, even though you
34:49
Speaker 3: might think they might have been on the other side
34:51
Speaker 3: of this question. They dissented from the Supreme Court's decisions
34:54
Speaker 3: on this saying that there's nothing in the in the
34:57
Speaker 3: Constitution at all that limits punitive damages.
34:59
Speaker 1: Maybe there's thanks so much, Tony. That's employment Attorney Anthony Acidi,
35:04
Speaker 1: a partner at Prosscauer Rose. And that's it for this
35:07
Speaker 1: edition of the Bloomberg Law Podcast. Remember you can always
35:11
Speaker 1: get the latest legal news by subscribing and listening to
35:13
Speaker 1: the show on Apple Podcasts, Spotify, and at Bloomberg dot com,
35:18
Speaker 1: slash podcast Slash Law. I'm June Grosso, and this is
35:22
Speaker 1: Bloomberg