Tuesday, May 13, 2008
Ortiz and Sharp claimed that PG&E's hired counsel routinely broke the law to gain inside information in order to win its cases. In the July 2 letter, Girardi told clients that he had confronted PG&E with the damning evidence: "This was certainly grounds for us to threaten separate litigation for invasion of privacy."
PG&E fired its law firm and hired another. On June 12, 1996, PG&E settled the Hinkley case with Girardi for $333 million, and delivered the money a few weeks later. It was trumpeted as the largest settlement of its kind.
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As the case unfolded, residents say, they began to feel increasingly removed from it. "We had no idea what was going on and weren't allowed to watch," said Lynn Tindell, a plaintiff. (The rules for viewing depend on how the lawyers and arbitrators structure each case, according to a spokeswoman at the American Arbitration Association, the State Bar and lawyers.)
Some plaintiffs attended the hearings, while others who called their lawyers' offices to find out the location of the private trials were discouraged from attending. "They wouldn't tell me," said resident Ron Gonzales. When he found out, he said, the attorneys changed the venue. "I told them it was against the law to keep this stuff from me." Plaintiffs relied on the attorneys' letters for details of the case.
Since no law governs procedures in these closed-door cases, pretty much anything goes -- even things that would not be allowed in court. There are no public records of the case. This is another troubling aspect of the system, said Chemerinsky. "In these kinds of cases, the court system has many protections -- some of which are absent in arbitration." Indeed, as the PG&E cases continued to be heard behind closed doors, the Hinkley victims felt left out of the process.
Still, many of them were delighted to hear of the settlement's general terms, figuring that a third-of-a-billion dollars would benefit them to the tune of a half-a-million each, minus their attorney's fees. But in August 1996 when they were informed of the amount of their award and the circumstances of their payment, many were shocked.
First, the plaintiffs were surprised when their attorneys told them they wouldn't be getting their money for five months. Under California State Bar Rule 4-100, an attorney has to release his client's money "promptly," as soon as the client asks for it. Although many factors could delay the distribution of funds for a few weeks, none of the legal experts Salon interviewed understood the lengthy hold period.
A staff attorney for the California State Bar's Professional Competency Unit, Randall Difuntorum, said that in 1997 the bar disciplined an attorney who had kept his client's award for an unusually long time -- six weeks -- before releasing it. While cautioning that he did not know the full details of the complex Hinkley case, John Sprankling, a professor of legal ethics at McGeorge School of Law in Sacramento, commented, "I don't understand the rationale for a six-month delay."
Lack, in the interview, said, "There were 650 cases! That was record time!" But he would not explain how the process of disbursement worked.
In a separate but similarly contentious interview, Ed Masry, the attorney Brockovich worked for, would not explain the process either. "Why are you being stupid?" he said. "It was a complicated $333 million settlement. Are you an idiot?"
The Hinkley clients tried to get answers by calling Masry's and Girardi's offices, but suddenly, they couldn't get through to anyone, not even Brockovich. "None of the attorneys would take our calls," said Carol Smith.
People needed their money to pay off debts; others wanted to buy new cars and appliances. The attorneys were besieged with over 100 phone calls from clients, lenders and creditors regarding the unreleased settlement awards. It got so bad that after Aug. 21, 1996, Lack's office wrote letters to clients telling them, "There simply isn't time to have these conversations."
Finally, on Jan. 2, 1997, nearly six months after PG&E had deposited the money, the attorneys mailed awards to their clients. It's not clear where the interest the money earned went. Girardi's office sent out a "global settlement statement" that seems to indicate that the accrued interest went into the money disbursed to residents of the town.
But some of the plaintiffs say their checks did not include interest; Tindell, Smith and others said the amount they received in January was the same amount as had been announced in August.
Many of the residents had a hard time reconciling the small amount of their checks with the enormous legal fees. Arbitrated cases are supposed to be quicker and cheaper than court trials. In this case, Masry, Girardi and Lack took 40 percent, or $133 million. The residents, of course, had agreed to this.
But then the clients were billed an extra $10 million for expenses, which weren't detailed. "I wrote Girardi a letter, asking for a statement of his accounting of the case," said Gonzales. But Girardi didn't provide one.
That left $196 million for the plaintiffs, or an average of about $300,000 per victim. The amounts varied. Dorothea Montoya received $60,000; Christine Mace got $50,000; Lynn Tindell $50,000; Tiffany Oliver got $60,000. All of these people were longtime residents who had suffered presumably documented medical problems. "It didn't make sense why my husband, who's had 17 tumors removed from his throat, got only $80,000," said Smith.
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