Lawyers Seeking an Embarrassment of Riches From State

The continuing attempted $88.5-million rip-off of California taxpayers by a few politically connected lawyers, aided by two retired judges, should be an embarrassment to the entire legal profession.

It’s certainly a Sacramento scandal, even if temporarily submerged by the energy crisis.

Fortunately, some elected officials are bucking the greedy barristers, who are trying to collect on an $88.5-million award for getting an auto “smog impact” fee declared unconstitutional.

Controller Kathleen Connell has defied a Dec. 28 deadline for cutting the $88.5-million check and the attorneys’ demands that they be paid. “I am adamant about not paying this check until we’ve exhausted all our legal options” she says. “This [lawyer fee] is deeply offensive.”

Democrat Connell is allied with Republican Dean Andal. Both are members of the Board of Equalization, the tax agency sued by the lawyers in their challenge of the $300 smog fee imposed on out-of-state autos being registered in California.

After the smog fee was declared unconstitutional, an arbitration panel of three retired judges--created by Gov. Gray Davis and the Legislature--awarded the lawyers the incredible fee of $88.5 million.

“All the entities set up to protect the taxpayers failed,” says Andal. He criticizes the governor for advocating binding arbitration without a limit on the fee, the Legislature for passively following in lock-step, and his own board for not insisting on a fee limit.

“People entrusted with responsibility had conflicts of interest,” he adds. Conflicts like campaign contributions.

Davis received $221,000 for his 1998 election bid from the principal beneficiaries of the fee award: attorney Bill Lerach and the San Diego-based law firm of Milberg, Weiss, Berhad, Hynes and Lerach. That firm is a generous Democratic donor.

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To recap:

A Superior Court ruled the smog fee unconstitutional. The attorneys had only four clients, but the court ordered that all motorists who had paid the fee during the previous three years also receive a rebate. This made it a “class action” suit and, based on the total rebate cost of $363 million, the judge awarded the attorneys $18 million (5%).

The state appealed. The appellate court agreed the smog fee was illegal, but disagreed this was a class action case. Only the four plaintiffs, it ruled, were entitled to rebates--a total $1,200. The court delayed a decision on attorney fees.

Davis, on his own, decided that anybody who had ever paid the smog fee should get a rebate, plus interest. The Legislature set aside $665 million and--obliging the governor--inserted into the appropriation bill a provision to determine the attorney fees by binding arbitration.

The public was locked out of the arbitration process. All deliberations--even the resulting $88.5-million award--were supposed to have been secret. Andal and Connell assured that there were leaks.

A shocked Davis asked the arbitration panel to reconsider. It refused by a vote of 2-1. The two were retired appellate Justice John Trotter and retired Superior Court Judge Bonnie Lee Martin, both of Los Angeles. “The state chose to gamble and lost,” they wrote.

As if this were about poker--not logic and taxpayers’ money.

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In dissent, retired state Supreme Court Chief Justice Malcolm Lucas wrote about logic and taxpayers. “Every dollar awarded for attorneys’ fees is one less dollar for public services,” he noted.

Calling the fee award “unusual by any measure,” Lucas opined it “might be an unconstitutional gift of public funds.”

He suggested most of the payment was for “political lobbying” since politicians, not the courts, were responsible for the rebates. He doubted the Legislature legally could spend tax money for lobbying fees even if it wanted.

Lucas also noted the arbiters’ award amounted to an $8,800 hourly rate for the attorneys and added: “That may be too handsome. . . . I have a sense the public may raise a collective eyebrow.”

Indeed. And politicians answer to the public, even if retired judges do not.

Davis might sue to overturn the award, which he deems “outrageous.”

Andal plans to file a private suit. Among other things, he’ll contend the Legislature ceded too much power to the arbiters.

Senate GOP Caucus Chairman Chuck Poochigian of Fresno said Friday he’ll introduce a measure declaring the Legislature never intended for the attorneys to pocket more than $18 million--if that.

“Putting it charitably, this is ludicrous,” says Poochigian, a lawyer. “It’s an embarrassment for everybody.”

Everybody, apparently, except two retired judges and some greedy auto-fee chasers.