Suit Accuses Northrop of Malicious Prosecution
Two Orange County attorneys figured they had struck gold a few years ago when they began representing nearly two dozen small companies around the country that had bought office computer equipment from Northrop Corp.
The computers, designed for medical office bookkeeping and backed by one of the largest aerospace firms in the nation, were losing records and incorrectly billing patients so often that doctors were practically standing in line for legal help.
But the lawsuits seemed thwarted at every turn. Northrop attorneys repeatedly refused an arbitrator’s orders to produce documents that attorneys David Pastrana and Ronald Stock said would show the company had failed to test its computers and knew they were defective when they shipped them to customers.
The company filed papers to remove the arbitrator who was hearing the case, claiming he was taking a drug for epilepsy and offering as evidence a doctor’s assertion that 30% of non-institutionalized epileptics are “mentally abnormal.”
Northrop Files Suit
Then, Northrop attorneys filed a lawsuit against the arbitrator. They also sued a former computer engineer who was providing key evidence to plaintiffs in the cases, accusing him of disclosing trade secrets and demanding $5 million in damages. They threatened to sue employees who had offered to help. Finally, they sued Pastrana and Stock for $15 million, forcing their removal from the case.
In a $34-million lawsuit filed against Northrop on Friday in Los Angeles Superior Court, the two attorneys accused the giant defense contractor of waging an illegal campaign of legal harassment designed to thwart customers’ ability to recover damages through the courts.
The lawsuit, similar to a complaint filed four months ago in Orange County, claims there is evidence that Northrop’s attorneys paid witnesses to change their testimony, illegally destroyed evidence and altered key documents in an attempt to gain an advantage in the computer cases, which have since been settled for undisclosed sums.
‘Attempt to Obstruct’
“Essentially, Northrop Corp. through its lawyers engaged in a total attempt to obstruct justice through the intimidation of witnesses, judges and the prior plaintiffs’ attorneys,” said Robert S. Kilborne, the prosecuting trial lawyer for attorney Herbert Hafif, who took over the cases and is now representing the two Orange County lawyers in their malicious prosecution and racketeering suit.
Northrop spokesman Tony Contafio said the company would have no comment on the case because it does not discuss pending litigation.
But he confirmed that Cutler & Cutler, the Los Angeles law firm named as one of the primary co-defendants in the lawsuit, is no longer representing the corporation in the computer cases. Spokesmen for Cutler & Cutler also declined comment.
There has been no evidence on public record that attorneys for Northrop destroyed or altered documents pertaining to the computer systems.
But a recent declaration filed by Kilborne in Norwalk Superior Court contains an account of a private hearing before Judge Mario Fukuto in which attorneys for the law firm that replaced Cutler & Cutler disclosed that they had found such evidence.
The transcript of the September, 1985, hearing has reportedly been sealed by the court. But the public declaration said Northrop attorney Ronald Olsen revealed that a paralegal worker had informed him that “certain documents” pertaining to the case had been altered or destroyed.
Fukuto turned the report over to the Los Angeles County district attorney for investigation, according to the declaration.
Insufficient Evidence
Deputy Dist. Atty. Stanley Weisberg said both his office and the grand jury looked into the allegations in Pastrana’s and Stock’s suit, calling several witnesses for testimony, but concluded there was not sufficient evidence to file criminal charges.
The results of the inquiry were turned over to the State Bar for further investigation, Weisberg said.
Robert Banghart, a former computer engineer who has joined in the lawsuit filed Friday, claims Northrop was attempting to prevent him from testifying when the company filed its lawsuit against him.
Moreover, at least two other employees who appeared for depositions in the case were threatened with being added as defendants in the suit against Banghart, the new lawsuit alleges.
Job Fears Cited
Another employee, Barbara Rhodes, was told by her former Northrop boss that if she testified, she would never work in the computer industry again and her daughter “would be in some danger,” the suit alleges. Rhodes testified in an earlier case that she was “convinced” the phone call was an attempt to prevent her from testifying.
The lawsuit also alleges that Northrop attorneys, through “an unknown female agent,” contacted a juror in one of the computer cases and offered a bribe, claiming to be from Hafif’s law offices. The juror was subsequently dismissed from the case and the telephone call was not traced.
Only a few of the computer cases went to full trial without settlement, and they resulted in awards of less than $100,000.
Joseph Jacob Aron, the arbitrator Northrop attorneys had sought to disqualify because of his alleged bias and epilepsy, awarded several Wisconsin physicians $18.3 million, but the award was overturned on appeal. Aron has since filed a countersuit against Northrop, alleging conspiracy, slander and abuse of process.
