Replacing One Wrong With Another

It’s a classic case of failing to tend the store. The state vault, in this instance. System out of control. Sacramento malfunctioning--at least for common taxpayers.

For some rich lawyers, it’s functioning just fine.

You may have read about it: Some private attorneys filed a suit asserting that a “smog impact” fee imposed on out-of-state cars being registered in California during the 1990s was unconstitutional. A state appellate court agreed and ordered that the attorneys’ four clients-- that’s all they represented--each be paid back their $300 fees.

The governor--on his own--consequently decided to return everybody’s fees, plus interest. The Legislature appropriated $665 million to rebate fees on 1.7 million vehicles.

Everybody agrees: These attorneys deserve some reward for prodding our elected representatives into righting an injustice. But $88.5 million? That’s what an arbitration panel of three retired judges awarded in secret.

$88.5 million? After the attorneys had said they’d settle for $25 million, a trial court had agreed to $18 million and the state Board of Equalization had offered $1 million?

There must be a lawyer joke in here somewhere, but there’s definitely a joke on the public. Here are some things Sacramento could do with $88.5 million:

* Pay 2,000 teachers for one year.

* Operate 20 schools for a year.

* Buy 300 new, clean fuel buses for the MTA.

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“Outrageous,” says state Controller Kathleen Connell, a Democrat who so far has refused to pay the $88.5 million. “It baffles the mind.

“The taxpayers had already been victimized when the state illegally collected the smog impact fee. Now, they’re getting a double slap in the face with this huge lawyers’ fee that has no historic precedent.”

Says Board of Equalization member Dean Andal, a Republican: “The whole thing smells to high heaven. It’s just a gift of public money to a major supporter of Gov. [Gray] Davis and you can’t put a pretty smell on that. It stinks.”

One of the law firm beneficiaries--Milberg, Weiss--is a big donor to Davis and Democrats, contributing nearly $1 million in political money since 1997. Partner Bill Lerach and the firm gave Davis a combined $221,000 when he ran for governor.

Davis has applied some deodorant, however, by joining the outraged. He agrees the attorneys’ award “goes beyond any notion of a reasonable fee. . . . [It’s] excessive by any reasonable standard.”

The governor has asked Atty. Gen. Bill Lockyer to seek reconsideration by the arbiters and urged Connell to freeze payment in the meantime.

Just as outrageous as the lawyers’ fee was the procedure by which it was awarded.

Not only was the arbitration binding, but there was no cap on the possible fee. Davis proposed this and the equalization board--a defendant in the case--signed off after a bitter debate, Connell and Andal battling on the losing side.

The Democratic-controlled Legislature went along like lemmings, amending the binding arbitration provision into a bill rebating the smog impact fee.

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There’s a suspicion that the private attorneys pushed their political allies for a friendly arbitration because they feared getting very little from the appellate court.

We may never know what really happened because the arbitration participants insisted on secrecy--even about the award. That’s another outrage and, moreover, fantasyland. This is about public money, after all. Connell and Andal made sure the arbiters’ decision leaked.

We do know the appellate judges had overturned the trial court ruling that this was a class action suit representing all payers of the smog fee. Class action status had been the basis for the trial judge’s awarding of $18 million in attorney fees. An appellate court hearing on the lawyer pay still was pending, but already there had been negative signals from the bench.

Enter Davis with his proposal for binding arbitration. “I expected that the fee award would be less [than $18 million],” Davis says, adding it’s why he chose former state Supreme Court Chief Justice Malcom Lucas as an arbiter. “[He’s] an eminent conservative jurist known for his defense of the public purse.”

But obviously Lucas and the other arbiters are mainly defenders of huge lawyer paydays. The lawyers, they reasoned, “faced a difficult and risky task” in challenging the smog fee. The resulting legislation “provided exceptional results.”

Sorry. Not $88.5 million worth. It may be legal, but it’s not logical. Not for us laymen taxpayers. It may not even be legal--a ceding of that much legislative authority.

If the arbiters refuse to reconsider, Connell and Andal will seek a court suit. A very public one.