Secrecy Debate Running Into Some Troubled Waters

After writing six weeks ago against secrecy of settlements in civil lawsuits--specifically State Farm’s attempt to conceal a $100-million payment to earthquake victims--I began to hear that in some cases secrecy might be warranted.

Los Angeles trial attorney Larry Feldman told me that in wrongful termination suits confidentiality is advisable, because a victorious plaintiff might otherwise find it difficult ever to be hired again.

New York attorney Gene Anderson, an ardent foe of expunging court records, said secrecy is nonetheless mandated in suits against White House employees who sign commitments not to divulge secrets and then do. What good is a suit against them if the secrets become part of the public record?

I have no trouble with such exceptions. It’s a rare principle that should hold in every case, particularly when it’s carried to extremes.

Still, mostly, I believe openness should prevail in lawsuits.

The question is raised in a striking way in a controversy now unfolding in the Mojave Desert town of Hinkley, where citizens two years ago won a $333-million settlement in a toxic pollution case against Pacific Gas & Electric Co.

In this lawsuit over ground water contamination, it isn’t a rich corporation or a judge that has sealed settlement information.

It’s the plaintiffs’ lawyers themselves.

The lead attorneys, Walter J. Lack, Thomas V. Girardi and Edward L. Masry, have barred any word to the 650 plaintiffs of what other plaintiffs, except for their minor children, have received.

“Any inquiries about what other people may have been awarded will be ignored,” the attorneys told clients soon after the settlement.

The attorneys even warned that plaintiffs shouldn’t tell each other what they had won. Otherwise, they said, they might be sued by PG&E; under terms of the settlement (although a PG&E; attorney told me this was “ridiculous”).

With some of the individual plaintiffs getting $40,000 and others $1 million or more, according to decisions by a panel of private judges who reviewed medical records, the issue of confidentiality has, two years later, blossomed into a major legal scrap.

A Bakersfield lawyer, Michael P. Dolan, says he represents more than 100 plaintiffs and plans to file suit against the attorneys, charging unfair distribution of the settlement.

In a preemptive strike, Dolan was himself recently sued by the Lack, Girardi and Masry firms for slander and unfair competition.

However, the suit has been dismissed in Los Angeles and may not be refiled in Dolan’s home county of Kern, where juries are less friendly to big-city lawyers.

Masry, who in a letter accused Dolan of “deliberate falsehoods, lies and fraudulent statements,” has meanwhile invited him and all 650 clients to a showdown debate in Barstow on Aug. 6.

Masry says that at this meeting Dolan may question him and he will question Dolan, and he promises to videotape the exchange.

Dolan says he hopes to be there.

Much of the debate will center on who among the plaintiffs got what in the settlement--and also on their attorneys’ fees.

The fees are a big issue. They totaled $133.6 million, and Dolan charges that a private arbitrator, retired state Appeals Court Justice John K. Trotter of JAMS/Endispute, acted improperly when he agreed to raise the minors’ attorneys’ fees from 25% of recovery to 33%. (Adults paid 40%.)

JAMS Executive Vice President Bruce Edwards says he talked to Trotter and that he acted “appropriately . . . upon a showing of good cause” to raise the fees. Edwards did not say what the cause was.

Masry and Lack say that in not passing out a list of individual distributions to all plaintiffs, they acted in accord with ethics rules on secrecy set by the State Bar and the Business and Professions Code.

But some clients are livid.

Dolan set up meetings for me in Hinkley with some of them.

Kim Lytle told me, “A lot of people who live right here got nowhere near the money someone got who just visited” the town and claimed exposure to bad water.

And Muriel Marcum said that while she received $250,000, “someone in my family got $1 million, without medical records.”

No matter how large the settlement, some of the clients say they are unhappy because their attorneys had said they would get more.

“One of our lawyers said once we were looking at $50 million,” said Murele Flowers. “We got just $1.5 million. My daughter-in-law was told she might get $13 million, and her whole family got $180,000.”

Lack, who points out the PG&E; settlement was historically the largest per capita recovery by plaintiffs in any U.S. toxic pollution lawsuit, has occasionally become testy in his response to malcontents among the plaintiffs.

In a letter he sent to Marcum when the controversy began, he wrote, “You tell us that you deserved much better legal representation. . . . I am disgusted by such a statement, which betrays your utter lack of knowledge or appreciation for [our] monumental efforts.”

As for her complaint that her particular medical condition merited more money, Lack replied, “You hardly do your case any good by blaming PG&E; for everything when a good deal of the symptoms you have suffered from during your life could be related to any number of other causative events.”

That sounds mighty like a frequent corporate defense in toxic pollution cases.

But the greater point is how lawyers who try to maintain secrecy among their plaintiffs can succeed in engendering greater suspicions and bitterness.

Lack told me he has 50 letters from clients urging him not to give way, saying they don’t want other plaintiffs to know what they got.

In a second phase of the Hinkley case, against Betz Laboratories, Los Angeles Superior Court Judge Frances Rothschild has ordered the plaintiffs’ lawyers to provide a copy of the distribution list to Betz and PG&E.;

This won’t go to the clients, but it does represent a small breach in the secrecy. Good for her!

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Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060, or by e-mail at ken.reich@latimes.com.