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THE MAGAZINE OF THE LOS ANGELES COUNTY BAR ASSOCIATION
JULY/AUGUST 2013 / $4
PLUS
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“Bankruptcy Proof”
Loans
Aaron’s
Law
page 25
page 32
Role of Juries
in Patent Cases
page 13
Community
Property Debt
page 17
Landlord
Liability for
Tenant
Discrimination
page 20
Interesting
Times
Los Angeles lawyer
Patricia Egan Daehnke
is LACBA’s 2013-14
president page 9
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F E AT U R E S
20 Scouting for Liability
BY KEVIN D. HUGHES
Landlords of public accommodations should document complaints of
discrimination and consider corrective action
25 Bankruptcy Shelters
BY JOHN C. KEITH
However real estate lenders may try to prevent it, borrowers may be able to
obtain the protection of bankruptcy court
Plus: Earn MCLE credit. MCLE Test No. 226 appears on page 29.
32 Unauthorized Excess
BY JAMES JUO
Critics of the CFAA have argued that its broad provisions allow for overzealous
enforcement
38 Special Section
2013 Guide to Investigative Services
Los Angeles Lawyer
D E PA RT M E N T S
the magazine of
the Los Angeles County
Bar Association
July/August 2013
9 President’s Page
Addressing the profound challenges that
the legal profession faces
17 Practice Tips
Enforcement of debt against the
community property of debtor spouses
BY PATRICIA EGAN DAEHNKE
BY MATTHEW C. MICKELSON
12 Barristers Tips
Make the Barristers a first step toward
professional achievement
52 Closing Argument
Can task billing be a cure for the
unhappiest job in America?
BY MARK A. KRESSEL
BY EDWARD S. RENWICK
13 Practice Tips
Weighing the role of juries in patent cases
51 Index to Advertisers
Volume 36, No. 5
COVER PHOTOGRAPH:
TOM KELLER
BY REZA MIRZAIE
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4 Los Angeles Lawyer July/August 2013
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Copyright © 2013 by the Los Angeles County Bar Association. All rights
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Telephone 213.627.2727 / www.lacba.org
LACBA OFFICERS
President
PATRICIA EGAN DAEHNKE
President-Elect
LINDA L. CURTIS
Senior Vice President
PAUL R. KIESEL
Vice President
MARGARET P. STEVENS
Treasurer
MICHAEL K. LINDSEY
Assistant Vice President
BRIAN S. CURREY
Assistant Vice President
CHRISTINE C. GOODMAN
Assistant Vice President
SAJAN KASHYAP
Immediate Past President
RICHARD J. BURDGE JR.
Executive Director/Secretary
SALLY SUCHIL
Associate Executive Director/Chief Financial Officer
BRUCE BERRA
Associate Executive Director/General Counsel
W. CLARK BROWN
BOARD OF TRUSTEES
HARRY W. R. CHAMBERLAIN
BRIAN K. CONDON
DUNCAN W. CRABTREE-IRELAND
DANIEL M. CROWLEY
REBECCA A. DELFINO
ANTHONY DE LOS REYES
HOWARD S. FISHER
RICHARD B. GOETZ
JACQUELINE J. HARDING
MARK A. KRESSEL
DEVON MYERS
JUAN A. RAMOS
DAVID K. REINERT
DIANA K. RODGERS
JENNIFER S. ROMANO
HARVEY I. SAFERSTEIN
SUSAN KOEHLER SULLIVAN
TERESA TRACY SULLIVAN
BRENDA E. SUTTON-WILLS
DAVID A. TILEM
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6 Los Angeles Lawyer July/August 2013
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L
et’s hear it for pro bono lawyers! And no, I am not talking about those private counsel among us who have
large receivables outstanding and uncollected. I am
talking about National Pro Bono Week, which is sponsored
annually by the American Bar Association and is scheduled
to take place early this autumn.
Admittedly, exhortations to have lawyers provide free legal services are not
rare. One does not need to peruse too many legal periodicals before finding an article extolling the virtues of providing legal services, on an unpaid basis, to those who
cannot afford to hire a lawyer. Nevertheless, I believe there are some compelling reasons to take on pro bono cases that people don’t often hear.
First, pro bono cases provide young lawyers—especially litigators—with the kind
of experience for which no one would be willing to hire them on a paid basis. Let’s
face it—legal education still lacks the experiential rigor of, say, medical school residency programs. The result is that many lawyers are foisted upon an unsuspecting
public without a clue about how to practice law. If few people want to hire a
novice, how is the novice to gain experience? One answer is pro bono cases. Most
pro bono clients will be extremely grateful to have a young but inexperienced
lawyer learn the ropes on their legal matter and won’t mind some hiccups along the
way. Most new lawyers will fight hard to get the best possible outcome for their first
real clients. It’s a win-win situation.
Second, pro bono cases can actually be financially rewarding. My law firm has
obtained legal fee awards for our clients in a number of pro bono cases. The law
does allow for it in many situations—even if the client has not incurred a legal obligation to pay attorney’s fees. In one pro bono litigation that lasted nine years, the client
prevailed in a jury trial (with a defense verdict), and then sought the recovery of “private attorney general” legal fees for its troubles. The trial court awarded more than
$1 million in legal fees, and the award was upheld on appeal (and, best of all, actually paid by the opposing party). So yes, pro bono cases can and do pay.
Third, pro bono service may end up being mandatory for lawyers at some point
in the future. In New York state, it is now a condition of initial licensing that
lawyers passing the bar examination have provided 50 hours of law-related pro bono
work. Here in California, our State Bar’s Board of Trustees is currently considering
whether to adopt a rule similar to the New York rule. One well-positioned appellate justice has opined that the New York rule was an instance of the “camel’s nose
under the tent,” and that mandatory pro bono may be a thing of the future, a condition to the privilege of practicing law.
Finally, pro bono work is good for the profession. I was going to write “good for
the soul,” but for now I will avoid philosophical musings. The mortgage modification
scandals of the past few years have done nothing good for the reputation of our calling. Now, more than ever, lawyers need to redouble their efforts to live up to these words,
found in the Civility and Professionalism Guidelines that were adopted by our State
Bar in 2007: “An attorney should be mindful that, as individual circumstances permit, the goals of the profession include improving the administration of justice and
contributing time to persons and organizations that cannot afford legal assistance.”
In short: more pro bono representation, fewer lawyer jokes. That’s a win-win too! ■
For Resolute Systems, LLC administered matters:
Mike Weinzerl ([email protected]
1.877.FAIR.ADR (1.877.324.7237)
www.theholmeslawfirm.com
California • Chicagoland • New York Metro • Atlanta
8 Los Angeles Lawyer July/August 2013
Paul S. Marks is the chair of the Editorial Board of Los Angeles Lawyer magazine and a partner with Neufeld Marks, a boutique law firm located in Little Tokyo. He serves as a commissioner on the California Commission on Access to Justice.
president's page
BY PATRICIA EGAN DAEHNKE
Addressing the Profound Challenges That the Legal Profession Faces
WE CONTINUE TO LIVE IN INTERESTING TIMES, and the challenges
we face as members of the Los Angeles legal community did not get
less interesting during the past year. Unprecedented state budget cuts
have forced court staff layoffs, trial court closures, and restructuring
throughout the Los Angeles Superior Court (LASC). The need for pro
bono legal services continues to rise as financial support and funding for these critical services decline. The number of new law school
graduates entering the work force still outnumbers that of the number of legal jobs available to them. The now outgoing president, Dick
Burdge, described these issues in his President’s Page last summer, and
as I look forward to my own year as president of LACBA, I intend
to make it a priority to continue to address these urgent issues.
Another priority for me as LACBA’s 2013-14 president is the
issue of gender pay equity and the retention of women in the legal profession. Equal pay for equal work is a fundamental tenet all lawyers
should wholeheartedly embrace, yet female lawyers continue to be paid
less than their male counterparts. The related question of why women
continue to leave the legal profession in large numbers is one that needs
to be addressed and studied, even if there are no easy answers.
These challenges are ongoing, and they are complicated. The
solutions are imperfect, but working together through our LACBA
sections, committees, affiliates, and pro bono projects, we members
of LACBA have joined forces to contribute. I pledge to continue the
momentum we have gained in many of these areas and remain committed to facilitate action and education on these issues, consistent
with LACBA’s core missions to serve our profession and facilitate access
to justice.
Court Budget Cuts
We all knew changes were coming and further budget cuts were
looming; nonetheless, most lawyers present at the several presentations I attended late last year sat in stunned silence listening to Judge
Lee Edmon (who has served as the presiding judge of the LASC and
president of LACBA) describe the Court Consolidation Plan, which
entailed a wholesale reorganization of our courts to address the significant budget shortfall for the fiscal year of 2013-14. This plan began
to be implemented in March and is anticipated to continue through
the end of June 2013.
Since 2008, California trial courts have suffered a reduction in funding of approximately 24 percent. The projected net reduction in
funding to the trial courts for the fiscal year 2013-14 is currently about
$500 million. The budget shortfall for LASC for July 2013 through
June 2014 is projected to be $195 million. The court is balancing its
budget in the current year by spending its reserves. However, as
Presiding Judge David Wesley explained at the LACBA Litigation
Section’s Annual Bench Meets Bar luncheon, the governor and the legislature took the reserve away and mandated that the court could no
longer maintain a reserve large enough to help in tough times.
Accordingly, the court must spend its remaining reserves by June 2014.
Since the budget cuts began in 2008, the court has suffered the loss
of 887 skilled court staff. Some courtrooms were closed. Informal juvenile traffic court was eliminated, and its dedicated referees were laid
off. The court also eliminated court reporters for civil trials. Even after
previous and permanent budget reductions of $110 million, at the start
of the fiscal year this July the court faces a projected budget deficit
of $85 million. Without the ability to spend reserves, the court has
to cut staff, and that means cutting services.
In November last year, a dramatic budget reduction plan was
approved. The consolidation plan anticipates reducing another 511 staff
positions through courthouse closures and consolidation of services.
By July, eight courthouses will be closed completely (Huntington
Park, Whittier, Pomona North, Malibu, West Los Angeles, San Pedro,
Beacon Street, and Kenyon Juvenile), and most court work will have
been removed from two others (Beverly Hills and Catalina). Certain
case types will be heard at only a few core courthouses. For example,
small claims cases will be consolidated into six courthouses: Lancaster,
Downtown, Alhambra, Norwalk, Van Nuys, and Inglewood. Last year,
61,603 small claims were filed, so each bench officer will handle
about 11,000 cases a year, and people will have to travel as far as 24
miles to file a claim. By July, the court will have lost 25 percent of its
staff positions to the past five years of budget cuts.
Unlawful detainers are being heard in just five locations: Lancaster,
Downtown, Pasadena, Long Beach, and Santa Monica. Last year there
were 67,182 of these cases filed. There are large caseloads for each
bench officer, and people will have to travel up to 32 miles to come
to court. Limited collection cases are now being handled in only two
courtrooms in Chatsworth and Norwalk. There are 83,059 collections cases, and people will travel up to 46 miles to go to court. All
remaining limited civil cases will be heard Downtown.
General civil will have a reduction in court staff in all civil departments, including reporters, except for a small pool. Civil courts now
have no court reporters at all. There are now 29 stand-alone trial courts
(10 downtown and 19 throughout the county), and they will serve
as outlets for the trials from the dedicated courts. These courtrooms
will be staffed by a single judicial assistant.
There are 59 individual calendar courts located in every district in
the county. However, to maintain an equal distribution of cases throughout these remaining courts, all personal injury cases will be heard in
the Downtown Central Civil courthouse and three master calendar
courts. Last year there were 18,622 personal injury cases filed, and people will have to travel up to 67 miles to file a personal injury case.
There will be similar consolidations in criminal and traffic operations, requiring the transfer of hundreds of thousands of cases. The
plan’s reduction and reconfiguration of civil operations will occasion
greater delays in getting motions heard and getting cases to trial. The
court will be identifying even further cuts to operations while still
attempting to meet its obligations to the citizens of Los Angeles
Patricia Egan Daehnke is the 2013-14 president of LACBA. She may be reached
at [email protected].
Los Angeles Lawyer July/August 2013 9
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County. One big cut already made was elimination of the court’s ADR program, which
provided a vital and necessary service to many
citizens. As Judge Wesley has observed, “We
are now being forced by budget cuts to make
changes that will disadvantage litigants, attorneys, justice system partners, and all court
users across the spectrum and across our
court.” As of July 1, 177 people will lose their
jobs, 139 people will be demoted or suffer
pay cuts, and 223 people will be transferred.
Although the governor recently agreed to
restore some court funding, that will not stop
the reductions in access to justice that the cuts
have brought.
In the face of these severe challenges, Judge
Wesley remains confident and optimistic that
we will be able to keep the justice system surviving, if not thriving. The judges are dedicated
to working with LACBA to find new efficiencies. Judge Wesley has stated he can be optimistic about the future because of the incredible talent of our judges and the unwavering
support of LACBA and our legal community.
LACBA continues with renewed energy
to actively support our court by educating
the legal community about the changes and
participating in working groups of lawyers
charged with advising the court on various
issues involved in implementing the Court
Consolidation Plan. Senior Vice President Paul
Kiesel is cochair of the Open Courts Coalition,
a bipartisan group of attorneys, business leaders, labor representatives, former legislators,
and retired members of the judicial community whose sole focus is to raise awareness in
the legislature of the need for adequate funding for the courts. LACBA officers and section
leaders actively support the Open Courts
Coalition’s activities and help spread the word
to our affiliate bars and other local bar associations and legal service providers. LACBA
leaders have spoken in support of adequate
funding for the courts on numerous occasions, and we plan to continue those efforts.
You can join us in supporting our court. If you
have any ideas on ways to help, please contact
me or any of the LACBA officers.
Gender Pay Equity
In 1963, President John F. Kennedy signed the
Equal Pay Act, which promised pay parity for
women. Fifty years later, women still earn
only 77 cents to a man’s dollar. Research by
the American Bar Association and other independent groups consistently shows that
women earn substantially less than men in the
country’s largest law firms. This disparity
continues even when hours and business
development are equal. Perhaps even more disturbing is the increasing trend of women leaving law firms and the practice of law. As only
the 11th woman elected to serve as president
of LACBA since its inception in 1878, I echo
10 Los Angeles Lawyer July/August 2013
the sentiment of former LACBA president
Gretchen Nelson, who stated in 2007: “I simply cannot, and I will not, sit by and watch
women check out of the practice of law.”
Does the compensation gap cause women
to leave law firms? Are women lawyers leaving the legal profession or reinventing it?
These are complex issues that affect everyone.
One thing is clear: The continuing exodus of
women from the legal profession is having an
immediate and far-reaching impact upon our
judicial system. We need diversity in our bar
and on the bench in order to provide true
access to justice. I am committed to promoting this dialogue through our Diversity in
the Profession Committee, the LACBA
/WLALA Joint Task Force on the Retention
and Promotion of Woman Lawyers, and a
new ad hoc President’s Advisory Committee
prioritizing the issue of gender pay equity
and retention of women in the profession.
Pro Bono Legal Services
Access to justice has been adversely affected
by the economic downturn. Traditional
sources for funding pro bono legal services
have dried up. As law firms strive to survive
the economy, it remains important to support
pro bono service, which is central to our professional obligation. LACBA members have
given tremendous support to our pro bono
projects, including the Domestic Violence
Project and the Immigration Legal Assistance
Project. But we need more volunteers. The
number of domestic violence victims lining up
at the courthouse has increased dramatically
this past year. Likewise, our many immigrants need immediate assistance. LACBA
remains committed to providing opportunities for lawyers to perform pro bono service.
Our pro bono coordinator, Laurie Aronoff,
assists members in finding appropriate opportunities at one of LACBA’s pro bono projects or at a local legal services organization.
The board of the Los Angeles County Bar
Foundation, which this year celebrates its
50th anniversary, has renewed the Foundation’s commitment to support LACBA’s projects. When they ask you to contribute, please
make every effort to do so.
New Lawyers
Law school graduates continue to outnumber the legal jobs that are available to them.
The LACBA Career Center provides a great
resource for new lawyers. While searching,
new lawyers who join LACBA will be kept
up-to-date and connected to the Los Angeles
legal community. Like all LACBA members,
new lawyers may avail themselves of the benefits of timely information related to their
practice. For example, the Daily EBriefs,
which include summaries of the cases decided
in the previous 24 hours by the U.S. Supreme
Court, Ninth Circuit Court of Appeals,
California Supreme Court, and California
Court of Appeal, are a free service to all
members of LACBA. Likewise, through Know
Your Judges, LACBA provides access to information about local judges that is unavailable elsewhere.
Equally important are the innumerable
opportunities to meet colleagues and make
new friends and mentors through LACBA’s
many sections and committees. The Barristers
Section is dedicated to helping young lawyers
create satisfying careers by offering committees, leadership opportunities, support services, and social activities. The Barristers
offers many opportunities to improve skills
and make lifetime friends. I began my LACBA
involvement as a member of the Barristers and
as a Barristers Section member of LACBA’s
Delegation to the Conference of Delegates to
the State Bar. Being involved in LACBA
truly changed my life. My future husband,
Kevin, spotted me at the State Bar President’s
reception at the Museum of Modern Art in
San Francisco and decided…well, that is a
story for another day. Find me at the next
LACBA event, and I will tell you the story
if you are interested. I look forward to seeing you soon.
■
Los Angeles Lawyer July/August 2013 11
barristers tips
BY MARK A. KRESSEL
Make the Barristers a First Step toward Professional Achievement
AS THE INCOMING PRESIDENT of the Barristers Section of LACBA,
I invite the new and young attorneys of Los Angeles to learn about
and participate in our activities. Our membership includes any attorney who is under 36 or who has been practicing for five years or less.
We are the only LACBA section focused exclusively on the needs of
new and young attorneys, and our section provides these attorneys
with opportunities for networking, pro bono and community service,
and leadership in the profession.
Many new attorneys do not yet understand the value of being part
of a bar association, much less a section that is not specific to a particular practice area. Some of you have begun working at a law firm
and may feel that your firm supplies all the connections and case
assignments you need. Many of you have not yet found your first job
and feel that you are too busy job hunting and volunteering to have
the luxury of attending bar activities. But regardless of what you are
doing at this early point in your career, the Barristers provides you
an opportunity today to begin to take control of what you will be
doing in the future. Engagement in the Barristers gives you a chance
to meet other new and young attorneys to develop connections outside your immediate network. Meeting other new attorneys allows
you to avoid feeling isolated at your firm or alone in your efforts to
find work. The Barristers can help you find the kind of close social
community that was more readily available in law school. The
Section also provides opportunities to let your leadership skills
shine, so that you can make contributions to the legal community
even as a newcomer and begin to develop a professional reputation
that you carry with you as your career evolves. Indeed, in a profession that generally places a high premium on seniority and experience, the Barristers is unique in providing meaningful opportunities
for new and young lawyers to lead, to be visible, to develop the profession, and to help people in need.
How to Get Involved
Getting involved with Barristers can take many forms, whether
attending an MCLE event, stopping by our monthly happy hours, or
joining a committee. Here is a descriptive list of our committees and
events:
• The Legal Profession Committee presents programming on the hotbutton issues facing the legal community today. Past programs have
included panels on finding a job in a difficult legal market and starting a solo practice. This summer, the committee will host a clinic on
managing law school debt. The committee also organizes Barristers’
Annual Summer Party at the House of Blues.
• The Networking Committee hosts networking events geared to new
and young attorneys. This year, the committee popularized our
monthly Thirsty Thursdays—happy hour mixers on the first Thursday
of every month held simultaneously in hot spots in Century City and
Downtown. The committee also hosts mixers to raise money and
awareness for some of LACBA’s various community legal services organizations, such as the Domestic Violence Project.
12 Los Angeles Lawyer July/August 2013
• The Pro Bono Committee connects young attorneys with volunteer
opportunities by teaming with legal services programs to provide free
or low-cost MCLE trainings focused on serving the legal needs of lowincome or underprivileged individuals. This year, the committee
organized Law Day 2013, a day-long training series promoting pro
bono work among newly admitted attorneys. The committee also
hosted a panel on In Re Garcia, the pending California Supreme Court
case to decide whether an undocumented immigrant can be admitted to the state bar, which was followed by a training on providing
pro bono assistance to immigrants seeking relief under the Obama
Administration’s deferred action plan.
• The MCLE Committee hosts educational programs to deliver continuing education to new and young attorneys. This year, the committee premiered its New Attorney Litigation Survival Guide—
Getting a Litigation Job and Doing It Well. The committee also
offers MCLE programs to help our members obtain those hard-toget credits in substance abuse and elimination of bias in the legal profession.
• The Law Student Outreach Committee connects area law students
with the bar association and ensures that Barristers programming is
relevant to law students. Over the years, we have participated in law
school panels about job opportunities and in student bar association
social events.
• The Government Relations Committee provides a forum for new
and young lawyers to develop leadership skills by interacting with
elected officials from across the political spectrum. This year, the committee cohosted a mixer with Los Angeles County Supervisor Mark
Ridley Thomas.
• The Bench and Bar Committee connects the courts with newer members of the bar. This year the committee held the first of what we hope
to be annual mixers organized for Barristers and other area young
lawyers to meet local judicial officers.
The Barristers are more than event planners, however. This year
the Barristers partnered with area law schools to provide mock job
interviews for law students. Over the years, Barristers have also
walked in the Los Angeles AIDS Walk, sent members to participate
in Dialogues on Freedom, and provided mentoring at local high
schools.
I urge new and young attorneys to find out more about the
Barristers. Get involved. Check out some of our events, or start
dropping by our Thirsty Thursday happy hours—maybe you will
become a regular. If our committees sound interesting to you, let us
know which committees you are most interested in joining. If you have
new ideas for programs or activities, let us know, and maybe you can
start to shape the future direction of our section. We look forward
to working with you as we continue our 80-year tradition of fun and
excellence in serving the new and young attorneys of LACBA.
■
Mark A. Kressel is an associate at the law firm of Horvitz & Levy LLP, specializing
in civil appeals.
practice tips
BY REZA MIRZAIE
Weighing the Role of Juries in Patent Cases
AS FEDERAL CIRCUIT HAS STATED, “No warrant appears for distin- jury does not necessarily have the right to decide all issues that
guishing the submission of legal questions to a jury in patent cases from underlie a claim that gives right to a jury trial. Rather, juries typically
such submissions routinely made in other types of cases.”1 Studies con- are allowed to decide issues of fact but not law.
Since the ratification of the Seventh Amendment, courts have gradfirm that patent owners can increase their chances of prevailing at trial
when they choose to have their case heard by a jury instead of a judge.2 ually placed more significance on the law-or-fact distinction. In Georgia
It should therefore come as no surprise that when patent owners v. Brailsford, a U.S. Supreme Court case decided three years after the
assert claims against an accused infringer, they very frequently exer- Seventh Amendment was ratified, the Court appeared determined to
cise their right to a jury trial. In patent infringement trials, juries are set few, if any, limits on the jury’s decision-making power. Presiding over
still frequently empaneled, but their decision-making authority has the jury trial, the Court—the only federal court in the nation at the
diminished. In the not-so-distant past, most issues in a patent trial were time—gave the following jury instructions: “[According to] the good
for the jury to decide. Over the years, however,
courts have taken many issues out of the jury’s
hands. To understand why, it is helpful to underA jury does not necessarily have the right to decide all issues
stand the historical development of jury trials
in patent cases.
The right to trial by jury in patent cases is
that underlie a claim that gives right to a jury trial.
derived from the Seventh Amendment to the
U.S. Constitution, which states: “In Suits at
common law, where the value in controversy
shall exceed twenty dollars, the right of trial by jury shall be preserved, old rule…on questions of fact, it is the province of the jury, on quesand no fact tried by a jury, shall be otherwise re-examined in any Court tions of law, it is the province of the court to decide. But…you have
of the United States, than according to the rules of the common nevertheless a right to take upon yourselves to judge of both.”7
law.” In 1791, the members of the Constitutional Convention agreed
Since Georgia v. Brailsford, the Court has made clear that the
upon this language to address the fears of the Antifederalists that the jury’s decision-making power is far from unlimited. In Hickman v. Jones,
Constitution gave too much power to the federal judiciary. However, the Court made clear that courts and juries indeed have separate and
in an attempt to please all interested parties, the drafters of the distinct duties and that courts must “decide questions of law.” The Court
amendment used vague language to allow future courts to determine further held that juries “should take the law as laid down by the court
precisely how the right would be preserved.
and give it full effect. But its application to the facts—and the facts themOver the years, courts generally have applied a two-part inquiry selves…is for them to determine. [These] checks and balances…are indisto determine whether a litigant has a Seventh Amendment right to a pensable to the harmony and proper efficacy of the system.”8 As a result,
jury trial. First, courts compare the pending action to the closest ana- even in a jury trial, if an underlying issue is one of law rather than fact,
log brought in the courts of England in the eighteenth century, before the court is charged with being the ultimate arbiter.
the merger of law and equity. Second, courts analyze whether the remPatent infringement is an area of litigation that usually involves
edy sought is legal or equitable in nature.3 In general, if the action numerous, multilayered issues, which has made it a lively battleground
and remedy sought are equitable rather than legal, the litigant has no to set the boundaries of law-or-fact analysis. In the vast majority of
cases, patent holders will request relief in the form of money damright to a jury.
Courts have applied the same two-part inquiry to patent cases. ages for acts of infringement that have occurred and will occur
Courts historically have held that if a patent owner brings an infringe- before judgment, as well as an injunction against the infringing acts
ment action and seeks damages, which is a legal claim for relief, the that may occur before the patent expires. These claims for relief
patent owner can assert a right to a trial by jury.4 But when a patent imply numerous underlying issues. For example, a critical question
owner seeks only equitable relief, such as an order enjoining the in any patent case is: What is the precise scope of the patents at issue?
accused infringer from committing infringing acts, the patent owner A patent holder can only exclude others from entering within the fence
has no right to a jury trial.5 When a patent owner asserts a mixture surrounding the patented property. Once the boundary is precisely
of both types of claims, courts have held that all issues common to determined, the patent owner must show that the accused products
both types of claims should first be tried to a jury.6 For example, in or services infringe on that boundary. If the patent owner can show
a typical “mixed” patent case, all causes of action relating to the dam- that the infringement was committed in a willful manner, the owner
ages claim for relief generally should go to the jury first. After the jury is entitled to judgment on that issue, along with treble damages.9
trial, a court may properly decide the claim for injunctive relief.
A court’s inquiry into the issue does not end there. Even if a jury Reza Mirzaie is an intellectual property litigator in the Los Angeles office of
right exists, courts must determine the precise scope of that right. A Knobbe Martens LLP.
Los Angeles Lawyer July/August 2013 13
The issues are multilayered for defendants
as well. In the vast majority of cases, accused
infringers assert at least two basic defenses:
noninfringement and invalidity. The first
defense is an assertion that the accused products or services do not infringe any properly
construed patent claim. The second defense,
invalidity, is an assertion that, for one or
more reasons, the Patent and Trademark
Office (PTO) should not have granted the
patent. The most common of these reasons are
that the alleged patented invention 1) covers
subject matter that is not patentable, 2) is not
novel in view of the prior art, and 3) is obvious in view of the prior art. Another defense,
inequitable conduct, is an assertion that the
patent was fraudulently obtained with an
intent to deceive the PTO. In addition to
being affirmative defenses, these basic defenses
frequently are asserted by accused infringers
as counterclaims under the Declaratory
Judgment Act.10
Most of the above assertions have legal
and factual aspects to them. To make matters
even more complicated, it is difficult to draw
bright lines between law and fact. As one
commentator put it, “‘No two terms of legal
science have rendered better service than
“law” and “fact.”…They readily accommodate themselves to any meaning we desire to
give them.…The man who could succeed in
defining them would be a public enemy.’”11
For litigators, the important point is that
judges and juries usually analyze these questions differently and may come to different
conclusions based on the same set of facts.12
Accordingly, knowing which entity will be the
ultimate arbiter for a particular issue may be
critical to the outcome of a case.
Decreasing the Jury’s Role
In the early days of patent litigation, identifying the decision maker in a patent infringement
case was relatively simple. If there was a proper
jury demand, the jury likely would be deciding almost every issue. This included issues of
infringement,13 invalidity,14 damages,15 and
even an early analog to inequitable conduct.16
But over the years, courts have taken many
issues out of the jury’s hands. The courts have
used at least two different means to do so.
The principal means with which courts
have chipped away at the jury’s decisionmaking power is defining an issue as legal
rather than factual. In A & P Tea Company
v. Supermarket Corporation, an early decision
foreshadowing the trend in defining issues
as legal, the U.S. Supreme Court held that the
ultimate question of whether a patent is valid
is one of law, not fact.17 As Justice William
O. Douglas wrote in his concurring opinion,
whether a patent is valid “is that question
which the Court must decide. No ‘finding of
fact’ can be a substitute for it in any case. The
14 Los Angeles Lawyer July/August 2013
question…goes back to the constitutional
standard in every case. We speak with final
authority on that constitutional issue, as we
do on many others.”18 To Justice Douglas, the
issue of patent validity arose from the constitutional directive to issue valid patents and
thus properly belonged to the courts.
Using similar reasoning, the Supreme
Court continued to chip away at the jury’s
role. In Graham v. John Deere Company,
the Court reiterated that the question of
whether an alleged invention is invalid due to
obviousness is an issue of law.19 On the other
hand, the Court also reiterated that the ultimate question of obviousness involves several
underlying factual inquiries, including 1) the
scope and content of the prior art and 2) the
differences between the alleged patented
invention and the prior art. Later, in a trilogy
of cases, the Court again made clear that the
question of whether an alleged invention was
invalid for failing to cover patentable subject
matter is also an issue of law.20
In 1982, Congress created the Federal
Circuit, which would serve as the exclusive
appellate court for patent infringement trials.
It did not take long for the Federal Circuit to
further diminish the jury’s role in patent
cases. In one of its early decisions, the Federal
Circuit held that whether a patent or prior
publication is prior art is also a question of
law.21 Shortly thereafter, in GardCo Manufacturing, Inc. v. Herst Lighting Company, the
Federal Circuit made clear that the doctrine
was an issue of law as well.22 The court reasoned that the doctrine of inequitable conduct
stems from the doctrine of unclean hands,
which historically was decided by a judge in
a court of equity. The court went even further
and held that it was not improper to hold a
bench trial on inequitable conduct before the
jury trial on other issues. In the court’s opinion, the issues in the inequitable doctrine
analysis were not “so common” with the
issues of fact in that case so as to impinge on
a patent owner’s jury right.23
The next big decision regarding the lawor-fact dichotomy in patent cases came from
the Supreme Court in 1996. In Markman v.
Westview Instruments, Inc., the Court decided
that the critical issue of construing the scope
of a patent is a question of law.24 As an initial matter, the Court stated that “when an
issue ‘falls somewhere between a pristine
legal standard and a simple historical fact, the
fact/law distinction at times has turned on a
determination that, as a matter of the sound
administration of justice, one judicial actor is
better positioned to decide the issue in question.’” The Court then held that judges were
better capable of determining the acquired
meaning of patent terms. The Court reasoned that judges, who are “unburdened by
training in exegesis,” construe written instru-
ments more frequently and better than jurors.
The Court also held that “[p]atent construction in particular ‘is a special occupation,
requiring, like all others, special training and
practice. The judge, from his training and
discipline, is more likely to give proper interpretation to such instruments than a jury.’”
In so holding, the Court seemed to suggest
that some issues may be too complex for a
jury to decide, and we all are better off allowing judges to decide those issues. Since
Markman, some commentators have suggested that perhaps there is (or at least should
be) a “complexity exception” to the Seventh
Amendment’s right to a jury.25
The law-or-fact battle continues today. In
2012 in Bard Peripheral Vascular, Inc. v. W.L.
Gore & Associates, Inc., the Federal Circuit
held that the ultimate question of whether
infringement was willful is an issue of law.26
The court explained that willfulness ultimately
involves the question of whether a reasonable
person would have believed there was a high
likelihood of infringement. Borrowing generally from the rationale applied by the Supreme
Court in Markman, the Federal Circuit held
that judges, not juries, were better equipped to
properly resolve the reasonableness question.
In addition to defining issues as legal ones,
there is a more recent and subtler way in which
courts appear to be diminishing the jury’s role,
and that is by granting pretrial motions to
preclude from the jury evidence or argument
regarding factual issues. These pretrial filings
typically take the form of a motion in limine
or a Daubert motion to preclude one side from
presenting evidence or argument to a jury that
concerns a particular factual issue.27 A district court, using its inherent power as the
gatekeeper of evidence for trial, will preclude
if the evidence or argument at issue violates one
or more substantive or procedural standards.
Today, these motions are common in relation
to patent infringement damages and have been
granted with significantly increased frequency
since a series of recent Federal Circuit decisions
emphasized the need for greater rigor in reviewing damages claims.
In Lucent Technologies Inc. v. Gateway
Inc., the Federal Circuit applied that rigor by
using two different principles to overturn a
jury award of $358 million.28 First, the court
held that the patent owner did not satisfy
the entire market value rule. Under that rule,
a patent owner who seeks damages based
on the entire market price of an infringing
product that included unpatented components must prove that the patented component is the basis for customer demand for the
product. Second, the court held that the
patent owner improperly based its damage
claim on past license agreements because the
circumstances involving those past licenses
were not sufficiently comparable to the cir-
cumstances involving the infringement at
issue. The Federal Circuit has reiterated these
principles in several decisions after Lucent.29
Since Lucent and its progeny, district
courts have been granting pretrial motions
with relative regularity.30 Because the net
effect of granting such motions is to diminish, or sometimes eliminate, the jury’s power
to decide damages and other factual issues,
this recent trend has further eroded the jury’s
role in patent infringement trials.
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Advice for Litigators
In view of the different roles of judge and jury,
patent litigators can employ various strategies
to maximize their chances of obtaining favorable results. First, during pretrial, litigants
should consider filing motions to preclude
certain evidence or argument from being presented to the jury. For example, patent owners may want to move to bifurcate from the
jury trial evidence or argument concerning
any allegations of inequitable conduct against
them. Allowing jurors to hear evidence or
argument on this issue may adversely taint the
jury’s decisions on other factual issues, including patent validity. Accused infringers, on
the other hand, could use the recent trend of
decisions on motions in limine and Daubert
motions to attempt to exclude evidence on
issues such as damages. After all, a successful motion to exclude evidence or argument
on damages could decrease a patent owner’s
chances of obtaining meaningful remedies
from the accused infringer.
Second, in trial, litigants should pay special attention to how issues are presented to
the jury. On this issue, the verdict form is critical because the manner in which the questions are presented in the verdict form can
have a significant impact on winning or
losing. Both sides should place a premium on
negotiating a verdict form that is favorable
to their case. If they fail to do so, each should
try hard to persuade the judge that its
proposed verdict form is the one that is faithful to the law and provides a lesser probability of resulting in jury confusion or a mistrial. Generally speaking, a patent owner
should vie for a short, simple verdict form,
preferably with single questions on any legal
issue, such as, “Is patent claim ‘x’ valid?”
Anecdotal and empirical data suggest that the
average juror comes to trial with a bias in
favor of the plaintiff, which in a patent
infringement trial is the patent owner.31 Thus,
the shorter and simpler the verdict form, the
easier it should be for that bias to be left
undisturbed. Moreover, the nature of a single-question verdict form makes a verdict
difficult to disturb on appeal because the
Federal Circuit typically must assume that
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winner. Conversely, an accused infringer
likely should prefer a series of detailed questions that pertain to each invalidity defense
it has raised. This approach tends to give the
accused infringer more opportunities to
reverse the average juror’s initial bias. To
the extent the accused infringer fails to
reverse that initial bias, the approach tends
to give the accused infringer a better chance
at reversing the jury verdict after trial.
Third, for posttrial motions and appeals, litigants should preserve the record throughout
every phase of the case. Because a failure to
do so could result in waiver, litigants must
take measures to preserve even if they think
the evidence or argument at issue would
not be compelling if presented to a jury. In
the past, when more issues were in the jury’s
hands, district and appellate courts were
reluctant to reverse a jury’s decision after
trial. Today, however, litigants have a far
more realistic opportunity to change the
outcome of a case after the jury trial because
there are so many issues that courts can
decide as a matter of law. Put differently,
while the jury trial used to be viewed as the
whole ball game, it should now be viewed
as the fourth or fifth inning. The Federal
Circuit gives no deference to decisions resting on issues of law, so litigants also should
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focus on legal issues when deciding posttrial
strategy.
■
1 Connell v. Sears, Roebuck & Co., 722 F. 2d 1542,
1547 (Fed. Cir. 1983).
2 See, e.g., Philippe Signore, On the Role of Juries in
Patent Litigation (Part 1), 83 J. PAT. & TRADEMARK OFF.
SOC’Y 791 (2001), available at http://www.oblon
.com/sites/default/files/news/256.pdf.
3 See, e.g., Tull v. United States, 481 U.S. 412, 417
(1987).
4 See Markman v. Westview Instruments, Inc., 517
U.S. 370, 377 (1996) (Patent infringement cases with
damages claim for relief “must be tried to a jury, as their
predecessors were more than two centuries ago.”).
5 See, e.g., Brian D. Coggio & Timothy E. DeMassi, The
Right to a Jury Trial in Actions for Patent Infringement
and Suits for Declaratory Judgment, 13 FORDHAM
INTELL. PROP. MEDIA & ENT. L. J. 208-11 (2002) (citing cases).
6 See Beacon Theatres, Inc. v. Westover, 359 U.S. 500,
504 (1959).
7 Georgia v. Brailsford, 3 U.S. 1 (1794).
8 Hickman v. Jones, 76 U.S. 197, 2012-02 (1869); see
also Sparf v. United States, 156 U.S. 51, 101 (1895).
9 35 U.S.C. §284.
10 28 U.S.C. §§2201-2202.
11 S.A. Weiner, The Civil Jury Trial and The Law-Fact
Distinction, 54 CAL. L. REV. 1867, 1869 n.8 (1966)
(quoting GREEN, JUDGE AND JURY 270 (1930)).
12 See generally Kimberly A. Moore, Judges, Juries,
and Patent Cases—An Empirical Peek inside the Black
Box, 99 MICH. L. REV. 365 (2000) [hereinafter Moore].
13 Continental Paper Bag Co. v. Eastern Paper Bag Co.,
210 U.S. 405, 415-16 (1908).
14 See, e.g., Thompson Spot Welder Co. v. Ford Motor
Co., 265 U.S. 445, 447 (1924).
15 Seymour v McCormick, 57 U.S. 480, 490 (1853).
16 In re Lockwood, 50 F. 3d 966, 975 n.9 (1995) (discussing eighteenth-century common law writ of scire
facias).
17 A & P Tea Co. v. Supermarket Corp., 340 U.S. 147,
155 (1950).
18 Id. at 156.
19 Graham v. John Deere Co., 383 U.S. 1, 17 (1966).
20 Gottscchalk v. Benson, 409 U.S. 63 (1972); Parker v.
Flook, 437 U.S. 584 (1978); Diamond v. Diehr, 450 U.S.
175 (1981).
21 Panduit Corp. v. Dennison Mfg., Co., 810 F. 2d
1561, 1568 (Fed. Cir. 1987).
22 GardCo Mfg., Inc. v. Herst Lighting Co., 820 F. 2d
1209, 1212 (Fed. Cir. 1987).
23 Id.
24 Markman v. Westview Instruments, Inc., 517 U.S.
370, 384-91 (1996).
25 See Jennifer F. Miller, Should Juries Hear Complex
Patent Cases?, 2004 DUKE L. & TECH, REV. 4, 5 (2004);
see also Markman, 517 U.S. at 388; Miller v. Fenton,
474 U.S. 104, 114 (1985).
26 Bard Peripheral Vascular, Inc. v. W.L. Gore &
Assocs., Inc., 682 F. 3d 1003, 1006-09 (Fed. Cir. 2012).
27 Daubert motions are used to exclude the testimony
of expert witnesses. Daubert v. Merrell Dow Pharms.
Inc., 509 U.S. 579, 589 (1993).
28 Lucent Techs. Inc. v. Gateway Inc., 580 F. 3d 1301
(Fed. Cir. 2009).
29 See ResQNet.com, Inc. v. Lansa, Inc. 594 F. 3d 860
(Fed. Cir. 2010); Uniloc USA v. Microsoft Corp., 632
F. 3d 1292 (Fed. Cir. 2011); Laserdynamics, Inc. v.
Quanta Computer, Inc., 694 F. 3d 51 (Fed. Cir. 2012).
30 See, e.g., Dataquil Ltd v. High Tech Computer Corp.,
No. 08-cv-543 (S.D. Cal. Dec. 1, 2011); Mformation
Techs. v. Research in Motion, Ltd., No. 08-04990
(N.D. Cal. Mar. 29, 2012).
31 Moore, supra note 12, at 368.
practice tips
BY MATTHEW C. MICKELSON
Enforcement of Debt against the Community Property of Debtor Spouses
RICHARD EWING
ALTHOUGH SOME CLEAR RULES govern the enforcement of debts
against property held by a debtor’s spouse in California, numerous
subtleties apply regarding how and to what extent that property is
available to creditor claims. In some instances, debts can be enforced
against a married couple almost as if they were the same person. In
others, a spouse’s property is completely untouchable by the other
spouse’s creditors. To satisfy an obligation held by a creditor, attorneys should therefore explore the possibility of collection against a
debtor’s spouse or domestic partner.
Creditors are not restricted to enforcing a judgment against a debtor
alone. The community property of a debtor’s spouse or domestic partner may be available as well. The community property interests of the
debtor and nondebtor spouse are generally liable for debts incurred
by either spouse either before or during the marriage and prior to separation, whether the debt is based on contract, tort, or another foundation.1 As a result, spouses may find themselves liable for debts
incurred before they married (or even met) their partners. In other
words, a spouse “marries into” his or her partner’s debts, including
child support debts from a previous relationship—an issue that everyone should consider when getting married. One federal case has suggested, however, that due process requires that liability from marrying into debt be attached to the nondebtor spouse only if that person
is named as a defendant in a lawsuit. Registered domestic partners
in California are also liable to third-party creditors to the same
extent as a married partner.2
There is one qualification to this general rule of community property liability for spousal debts. If the debt is the result of a tort of the
spouse, and the tort was not the result of an activity undertaken by
the tortfeasor for the benefit of the community, then community
property may be taken only if the separate property of the tortfeasor spouse is insufficient to pay the obligation.3 The same statute holds
that if the tort was the result of an activity undertaken on behalf of
the community, the creditor must first satisfy the debt by applying community property. Only if that is insufficient can the creditor pursue
the separate property of the tortfeasor. This rule could delay collection from a tortfeasor who has separate property.
A complaint filed in California against a debtor need not name the
nondebtor spouse in order to later allow judgment enforcement
against the community assets. (This is not the case in some other community property states, for example Arizona.) In fact, in California
it is improper to add the nondebtor spouse as a defendant if only the
community will be held liable for the debt.4 A creditor does not
have to worry about joining a debtor’s spouse in a lawsuit against a
debtor. The creditor can wait until after judgment to enforce against
the community property.
Community Property
After establishing that the community is liable for a debt, the creditor must determine which community assets can potentially be seized.
The following community property assets are typically susceptible to
execution or other legal process from a creditor:
• Wages. Since wages are generally community property, a nondebtor spouse’s wages are subject to garnishment.5 One significant
exception is that if the nondebtor spouse “married into” a debt that
arose prior to the marriage, his or her wages cannot be garnished so
long as the earnings are placed into a bank account standing solely
in the name of the nondebtor spouse and are not commingled with
other community property beyond “insignificant” amounts.6
Otherwise, wages are fully subject to garnishment, although a creditor must obtain a court order before an earnings withholding order
is issued.7
• Formally titled real and personal property. A creditor may fully
enforce a judgment against real or other property formally titled in
the name of the community. However, if the nondebtor spouse’s
property is held in some other fashion (such as in joint tenancy), it
is presumed to be separate property.8 Evidence that the spouses
intended the property to be community property, however, will disMatthew C. Mickelson is a sole practitioner in Encino who specializes in
general civil litigation, debt collection, and appeals.
Los Angeles Lawyer July/August 2013 17
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18 Los Angeles Lawyer July/August 2013
pel the presumption and establish the property as community.9 For example, a creditor
can obtain evidence that a home was meant
to be owned by the spouses as husband or
wife, or establish that the spouses intended
any sale or transfer of any portion of the
property would require both spouses’ knowledge and approval. These details tend to
show that the spouses intended to hold the
house as community property, regardless of
the form of title.
• Business property. In circumstances in which
a business is separately owned and operated
by a nondebtor spouse, the profits generated
by the business may be community property
and available to the creditor of the debtor
spouse.10 This is true regardless of the fact that
the profits are solely in the hands of the nondebtor spouse. However, the title presumption
may limit a creditor’s ability to utilize this remedy. For example, when shares of a corporation are solely owned in the nondebtor
spouse’s name, it may be impossible to have
them seized and sold unless the creditor can
obtain proof that both spouses intended that
the shares be considered community property,
despite the fact they are titled in only one
spouse’s name.
• Other property. Most personal property
purchased during a marriage is community
property.11 Notably, money in bank accounts
held jointly between spouses is presumptively
community property.12 In fact, a bank garnishment is effective against all property held
in a bank account jointly held by the judgment
debtor and any other person, including a
nonspouse.13 Surprisingly, a bank levy will be
effective against a nonjudgment debtor
spouse’s bank account, even if it is held in his
or her name alone, so long as the creditor files,
with the levy, a declaration attesting that the
person holding the bank account is the spouse
of the judgment debtor.14 A spouse holding
traceable separate property seized from a
bank account would need to lodge a thirdparty claim in order to have the property
released from the sheriff.15
Separate Property Liability
A nondebtor spouse’s separate property is
generally not subject to liability for the debtor
spouse’s debts.16 Separate property can consist of property acquired before marriage,
bequests, or gifts received during marriage,17
as well as assets obtained after separation.18
However, whether or not a separation has
occurred terminating the community estate is
a question of fact, especially if a final separation or divorce judgment has not been
entered. Even if a divorce petition has been
filed, there may not be a true separation by
the parties so as to end the community property characterization of property acquired
by the parties.19 A creditor should consider
whether a debtor has commenced a sham
divorce in order to protect the earnings or
property of the debtor’s spouse, especially if
the debtor and spouse continue living together
even after their divorce filing or continue to
hold themselves out as a married couple.
Once a judgment of dissolution has been
entered, a nondebtor spouse is only liable
for debts that have been assigned to him or
her. Nevertheless, it may be possible to make
a nondebtor former spouse liable for debt
under a fraudulent transfer theory.20 Liens
previously placed on the community property
may be enforced regardless of whether the
nondebtor spouse was assigned the debt.21
There is a notable exception in which a
party’s separate property is liable for a debt
incurred by the spouse, and that is for the
“necessaries of life.”22 The phrase “necessaries of life” is not described in the statute,
but it appears to cover medical care,23 including dental care.24 It would also seem to mean
expenditures for food, clothing, and shelter.25 However, one case addressing a claim
of exemption from wage garnishment has
suggested that the term of art “necessaries of
life” may encompass “[m]any things, such as
recreation, music lessons and insurance.”26
Unlike community property, liability on separate property may be imposed only if the
nondebtor spouse is named as a party in the
action.27
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Fraudulent Transfer and Bankruptcy
A marital settlement agreement in a dissolution may change community property into
separate property and appoint it to the nondebtor spouse. At the same time, the marital
settlement agreement may fail to allocate the
preseparation debt to the same spouse. Marital settlement agreements are often negotiated
during the divorce proceedings and incorporated wholesale into a final judgment for
approval by the family court. Under the Family Code, the judgment will terminate a creditor’s ability to seize that property.28 However,
if the transfer of assets was fraudulent under
the Uniform Fraudulent Transfer Act, or
under the principles of common law fraud,
a creditor may be able to set aside the transfer.29 For example, when a marital settlement agreement allocates all or most of the
community property to the nondebtor spouse,
but none of the debt, a strong inference of
fraudulent transfer would arise. Similarly,
transmutation agreements between current
spouses that make community property into
separate property of the nondebtor spouse can
also be considered fraudulent transfers and
attacked as such.30
Sometimes a nondebtor spouse will file for
bankruptcy to stop the enforcement of a debt
against the community property in his or her
(Continued on page 24)
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Los Angeles Lawyer July/August 2013 19
by Kevin D. Hughes
Scouting for
LIABILITY
A recent Ninth Circuit decision declined to
consider a landlord’s accountability for the
discriminatory policies of a tenant
made headlines by overruling a trial court’s decision that San Diego was engaging in discrimination by leasing city property to the Boy Scouts of America, an organization that recently partially changed its longstanding
policy of not allowing gays, agnostics, or atheists to participate as volunteers or members. 1 The plaintiffs—
a lesbian couple, an agnostic couple, and their scouting-aged sons—filed suit seeking to require San Diego
to enforce the lease’s antidiscrimination provision.2 The Ninth Circuit denied relief, finding no evidence that
the Boy Scouts had actually discriminated on the leased premises, but the case raises the question of
whether a landlord may be held to account for the discriminatory conduct of its tenant. This is particularly
relevant to the owners of shopping centers whose multiple tenants provide public accomodations to customers of protected statuses.
Shopping centers are places of public accommodation, and therefore subject to antidiscrimination
laws.3 However, a shopping center owner is not liable, as a general rule, to a tenant’s customers for injuries
suffered on the leased premises as a result of a condition that comes into existence after the tenant has taken
possession.4 The rationale is that a landlord cannot fairly be held accountable for an injury it had no right
or ability to prevent.5 By signing a lease and thereby surrendering possession and control of the premises
to the tenant, the landlord generally gives up the right and ability to correct conditions that arise thereafter.6
Because a tenant’s discriminatory conduct is a condition that necessarily arises only after the tenant takes
possession, this general rule of nonliability would tend to protect landlords in most cases of tenant discrimination. There are two exceptions to the general rule, however: lease renewal and lease enforcement.
In some jurisdictions—most notably California and New York—landlords have been held liable for their
failure to correct conditions they might have discovered through a reasonable inspection prior to renewal
of an existing lease.7 The reasoning is that when a lease is up for renewal, a landlord regains the right to
Kevin D. Hughes is a litigation partner with Tisdale & Nicholson, LLP, in Century City, where he specializes in the representation of commercial real estate owners and property managers.
20 Los Angeles Lawyer July/August 2013
MICHAEL CALLAWAY
LAST DECEMBER, in Barnes-Wallace v. City of San Diego, the Ninth Circuit
reenter the premises and the ability to correct
any dangerous conditions it may find there.8
While the term “dangerous conditions” typically refers to physical hazards such as broken stairway banisters, it has been interpreted to cover a broad range of causes of
harm, providing reason to conclude it may be
applied to discriminatory conduct.
The landlord’s responsibility to inspect
prior to lease renewal is limited to what is reasonable under the circumstances. The owner
“need not take extraordinary measures or
make unreasonable expenditures of time and
money in trying to discover hazards unless the
floor to be littered with produce, as well as
whether the floor was unreasonably slippery
in that condition.11
If a landlord has no reason to suspect discriminatory conduct on the part of the tenant, then a basic walk-through of the premises
would likely suffice as a reasonable inspection.
However, if circumstances prior to renewal
indicate a potential problem, the landlord
may be faulted for not questioning the tenant
about its practices, investigating any complaints, or inspecting the premises for evidence
such as discriminatory signage, and perhaps
even for not taking the time to observe ten-
language in the renewed lease to the effect that
discrimination shall constitute a material
breach and default entitling the landlord to
terminate, or 4) simple nonrenewal of the
tenant’s lease. In Portillo, the court required
nonrenewal, concluding, “The risk of harm
to the general public [posed by the dog]
clearly outweighs the presence of a particular tenant on the premises.”15 In a number of
cases in which the landlord was aware of a
tenant’s failure to comply with a particular
safety law, courts have imposed upon the
landlord a duty either to compel compliance
with the law or to terminate the tenancy.16
What corrective measures a court may require
a landlord to take in a discrimination context
necessarily depend upon the circumstances.
Statutory or Tort Damages
circumstances so warrant.”9 In Portillo v.
Aiassa, the court of appeal affirmed a jury verdict holding the landlord liable for injuries suffered by a delivery person attacked in a tenant’s liquor store by the store’s guard dog. The
court identified several questions the landlord
had failed to ask in the landlord’s inspection
of the premises prior to lease renewal, including any questions about the dog’s history,
whether and by whom it had been trained,
why the Beware of Dog sign had been posted,
whether the newspaper article posted at the
store’s entrance accurately portrayed the dog’s
dangerous propensities, whether the dog
could be insured, and whether anyone other
than the tenant and his family members could
attest to its behavior.10
In Lopez v. Superior Court, the court
ruled that, prior to lease renewal, the owner
of a property upon which a tenant operated
a produce market ought to have inspected not
only the slick nature of the cement floor the
customer had slipped and fallen upon but
also the tenant’s business operations, and
specifically whether it was common for the
22 Los Angeles Lawyer July/August 2013
ant operations.
As a general rule, a shopping center landlord owes a legal duty to take reasonable
measures to correct, or to ensure that a tenant has corrected, conditions that create a reasonably foreseeable risk of harm before admitting members of the public onto the
property.12 The denial of public accommodations on the basis of a protected status is
outlawed by state and federal statutes13 and
entitles victims in most, if not all, states to
recover compensation.14 Consequently, if discriminatory conduct is reasonably foreseeable
on a particular leased premises, a court may
deem that to be the sort of risk of harm
against which a landlord is required to take
reasonable steps to protect the public.
The measures a landlord could be required
to take to correct discriminatory conduct
include 1) obtaining written assurance from
the tenant that discriminatory practices have
been discontinued and that culpable employees have been terminated, 2) obtaining the tenant’s written commitment to require sensitivity
training for employees, 3) the insertion of
Antidiscrimination laws often allow for the
recovery of statutory damages as well as attorney’s fees, but these laws generally require
proof of intentional discriminatory conduct.
A landlord’s failure to prevent discrimination by a third party generally will not constitute a statutory violation.17 However, the
failure to prevent the tenant’s discrimination
may subject the landlord to tort liability if a
tenant’s discriminatory conduct against members of the public is reasonably foreseeable,
and if a landlord negligently fails to take steps
to correct the conduct. A discriminatory
denial of public accommodations would tend
to cause emotional harm only and not physical injury. To recover damages for the negligent infliction of emotional distress, the
harm suffered generally must be severe and
usually, but not always, must be accompanied
by some physical manifestation.18
The defendant’s failure to prevent a third
party from causing harm has been the predicate for a claim of negligent infliction of emotional distress in only two reported cases.19 In
both, the court implicitly accepts that the failure to prevent is actionable by itself, but in neither case does the court directly address the
issue of whether the failure to prevent harmful conduct is actionable in itself, and neither case involves shopping centers.
Antidiscrimination Provisions in Leases
A second exception to the general rule of a
landlord’s nonliability is lease enforcement.
The lease itself can give the landlord the right
and authority to reenter the premises and
enforce a prohibition (e.g., against discrimination) or declare a default and terminate the
tenancy. However, if the landlord fails to
enforce the lease or to terminate the tenancy
when the landlord has the legal right to do so,
the landlord can face liability for any injuries
the tenant’s breaching conduct later causes.20
In Resolution Trust Corporation v. Rossmoor,
the court of appeal identified four criteria
for determining whether a landlord had acted
with ordinary care in the context of an alleged
failure to enforce a lease provision: 1) the likelihood of injury, 2) the probable seriousness
of the injury, 3) the burden of reducing or
avoiding the risk, and 4) the landlord’s degree
of control over the risk-creating condition.21
Another issue, which was not addressed
in Rossmoor, is whether the third party complaining that the landlord failed to enforce the
lease has standing to make that claim as a
third-party beneficiary to the lease. In BarnesWallace (the Boy Scouts case), the Ninth Circuit assumed, without deciding, that the plaintiffs were in fact third-party beneficiaries
entitled to enforce the lease’s antidiscrimination provision. In the shopping center context, a court may conclude that an antidiscrimination provision in a lease for premises
open to the public is intended, at least in
part, to benefit and protect customers. However, no reported decision has resolved this
issue. Moreover, if the lease contains language generally disclaiming any third-party
beneficiaries, this could deny a plaintiff recovery regardless of whether the circumstances
suggest that members of the public were in
fact intended to benefit from an antidiscrimination provision.
Proving liability for failure to enforce a
lease can be easier than proving liability for
failure to correct a condition prior to renewal.
The tenant need not have been in possession
for an entire lease term prior to the incident,
and there is no need to prove that the harmful condition predated the lease renewal date.
On the other hand, a landlord has no duty to
investigate a breach of the lease without some
notice that a breach may have occurred, and
a landlord likely would have no liability for
failure to enforce the lease without proof of
actual knowledge that a breach had
occurred.22
A claim for failure to enforce a lease is
essentially a cause of action for breach of contract. As a general rule, emotional distress
damages are not recoverable for breach of
contract.23 Many jurisdictions have recognized exceptions to this general rule, however,
including under circumstances in which the
contractual undertaking is nonpecuniary in
nature and in which the contracting parties
contemplated that the breach would result in
emotional distress.24 In the context of an
antidiscrimination provision in a shopping
center lease, the contractual undertaking—
not to discriminate—is nonpecuniary, and it
is reasonable to conclude that the landlord
and tenant would have contemplated that
breach of the antidiscrimination provision
would result in emotional distress.
Alternatively, a shopping center customer
asserting a breach of contract claim could
choose to forgo monetary relief, and instead
sue simply for a court order requiring the
landlord to enforce the lease, as did the
plaintiffs in the Boy Scouts case.
Insurance and Record Keeping
Standard shopping center leases require the
tenant to obtain commercial general liability
insurance. However, CGL policies generally
exclude coverage for harassment or discrimination, so landlords would be well advised
to require tenants to supplement their CGL
coverage with third-party employment practices liability insurance, which covers customer discrimination claims. The lease should
also require that 1) the landlord be named as
an additional insured, 2) proof of coverage be
provided each year, 3) the landlord be notified immediately of any lapse in coverage, and
4) the tenant be subjected to penalties, such
as rent increases, in the event coverage lapses.
Finally, the lease should, and typically does,
require that the tenant indemnify the landlord
for any claims arising from the tenant’s use
or occupancy of the premises.
Meanwhile, the landlord should conduct
a reasonably thorough inspection of the
premises in each of three scenarios: 1) before
handing over possession, 2) before entering
into any renewal, and 3) whenever there is
reason to suspect a breach of the lease that
might create third-party liability. Each inspection needs to be well documented. Separately,
the landlord should document any complaint
made against a tenant, respond to any complaint, and document the substance of that
response, whether it be a simple conversation
with the tenant or something more in-depth,
such as an investigation. If corrective action
is contemplated, legal counsel should be consulted. In all these matters, good record keeping is critical. In the event of a lawsuit, thorough, well-organized records demonstrate
competent, diligent management. They also
provide proof of inspections and corrective
measures. Perhaps most importantly, good
documentation makes it far more difficult
for a plaintiff to fabricate or exaggerate evidence of prior tenant misconduct, prior customer complaints, or the alleged inadequacy
of the landlord’s response.
■
1
On May 23, the Boy Scouts of America voted to end
its policy of forbidding the participation of openly
gay members but kept the policy of banning gay leaders as well as agnostic and atheist leaders or members.
See, e.g., http://www.nytimes.com/2013/05/24/us/boyscouts-to-admit-openly-gay-youths-as-members.html
?_r=0.
2 Barnes-Wallace v. City of San Diego, 704 F. 3d 1067,
1086-87 (9th Cir. 2012).
3 See, e.g., Unruh Civil Rights Act, codified at CIV.
CODE §§51, 52; In re Cox, 3 Cal. 3d 205, 208 (1970)
(Shopping centers are “business establishments” subject to the Unruh Civil Rights Act.).
4 RESTATEMENT (SECOND) OF TORTS, §§355 et seq.;
Uccello v. Laudenslayer, 44 Cal. App. 3d 504, 510
(1975).
5 PROSSER, LAW OF TORTS 400 (4th ed. 1971).
6 Id.
7 Burroughs v. Ben’s Auto Park, 27 Cal. 2d 449 (1945);
Mora v. Baker Commodities, Inc., 210 Cal. App. 3d
771, 781 (1989); Lusk v. Peck, 132 A. D. 426, 116 N.Y.
S. 1051, aff’d, 199 N.Y. 546, 93 N.E. 377 (1909);
Corrigan v. Antupit, 131 Conn. 71, 37 A. 2d 697
(1944).
8 Only California, New York, and Connecticut have
reported decisions recognizing the lease renewal exception, but no jurisdiction has actually rejected the analysis in the context of a commercial premises open to the
public.
9 Portillo v. Aiassa, 27 Cal. App. 4th 1128, 1135-36
(1994).
10 Id. at 1136.
11 Lopez v. Superior Court, 45 Cal. App. 4th 705,
715-16 (1996).
12 Darrington v. Wade, 161 Utah Adv. Rep. 32, 812 P.
2d 452 (Utah App. 1991). See also N.Y. P.J.I.—Civil
2:101 (3d ed. 2000); CACI No. 1006.
13 See, e.g., 42 U.S.C. §2000a; CIV. CODE §51; N.Y. CIV.
RIGHTS §40; N.Y. EXEC. §296. As a recent example of
the enforcement of antidiscrimination laws in a retail
setting, in April, the Washington State Attorney General
sued a florist for violating that state’s Consumer Protection Act (WASH. REV. CODE. §§19.86 et seq.) by refusing to provide flowers for a same-sex wedding. See,
e.g., http://abcnews.go.com/Business/washington-florist
-sued-refusing-provide-flowers-sex-wedding/story?id
=18922065.
14 See, e.g., CIV. CODE §52; N.Y. CIV. RIGHTS §40-d.
15 Portillo v. Aiassa, 27 Cal. App. 4th 1128, 1135
(1994).
16 Grant v. Hipsher, 257 Cal. App. 2d 375 (1967)
(safety of swimming pool on premises of a residence
owned by defendants but occupied by tenant); Finnegan
v. Royal Realty Co., 35 Cal. 2d 409 (1950) (fire safety);
Longway v. McCall, 181 Cal. App. 2d 723 (1960)
(elevator safety).
17 Coward v. Town and Village of Harrison, 665 F.
Supp. 2d 281 (S.D. N.Y. 2009) (intentional discriminatory conduct is required to establish a violation of
federal Civil Rights Act); Harris v. Capital Growth
Investors XIV, 52 Cal. 3d 1142, 1172-73, 1175 (1991)
(A plaintiff seeking to establish a case under the California civil rights statute must plead and prove intentional discriminatory conduct); Westbrook v. City
Univ. of N. Y., 591 F. Supp. 2d 207 (2008) (active participation in the discriminatory conduct required for violation of New York civil rights statute).
18 Molien v. Kaiser Found. Hosp., 27 Cal. 3d 916
(1980); Ornstein v. New York City Health and Hosp.
Corp., 10 N.Y. 3d 1, 852 N.Y. S. 2d 1, 881 N.E. 2d
1187 (2008).
19 Burrow v. Postville Cmty. Sch. Dist., 929 F. Supp.
1193 (N.D. Iowa 1996) (A student claimed that a
school’s negligent failure to prevent sexual harassment caused emotional distress.); Wall v. Fairview
Hosp. and Healthcare Servs., 584 N.W. 2d 395, 408
(1998) (A psychiatric patient claimed that a nurse’s failure to prevent her from living with a dangerous fellow
patient caused her emotional distress.).
20 Resolution Trust Corp. v. Rossmoor Corp., 34 Cal.
App. 4th 93, 102 (1995) (landlord not negligent for failure to terminate lease).
21 Id. at 103-04.
22 Id. at 102, 104-05.
23 24 WILLISTON ON CONTRACTS §64:7 (4th ed. 2000);
AM. JUR. 2d Fright, Shock, and Mental Disturbance §23
(1968).
24 RESTATEMENT (FIRST) OF CONTRACTS §341; University
of S. Miss. v. Williams, 891 So. 2d 160 (2004);
Westervelt v. McCullough, 68 Cal. App. 198, 228 P.
734 (1924).
Los Angeles Lawyer July/August 2013 23
Enforcement of Debt against the Community
Property of Debtor Spouses
(Continued from page 19)
possession and will characterize certain property as community in the bankruptcy. Usually,
only creditors of a particular debtor may file
claims in bankruptcy or have standing to
intervene in a bankruptcy case. In a situation
in which the bankruptcy estate possesses
community property subject to enforcement,
however, a creditor of the debtor spouse has
standing to file a claim in the bankruptcy
estate or to intervene in the bankruptcy to
protect its interests.31 It is therefore proper for
a creditor of the debtor spouse to file a claim
in the debtor spouse’s bankruptcy as to a
community property interest that is liable
under Family Code Sections 760 and 910.32
The affected community property will be distributed to claimants pursuant to the rules
provided in 11 USC Section 726(c).
Creditors should consider the following
factors in determining whether to collect
against a debtor’s spouse or domestic partner:
• Determine the kind of property held by
the debtor’s spouse. Is it real property held as
community property with the debtor? Does
the spouse have a wage job? Does the spouse
own a business? Some or all of this property
may be available to the!creditor.
! • ••
• Is the debt incurred founded on tort or
contract? Community property is always
available to satisfy contract debts but may not
be available to satisfy tort debts.
• Did the debt arise before the marriage? If
so, there may be problems in collecting from
the nondebtor spouse’s wage earnings.
• Has there been a transfer of community or
separate property to a nondebtor spouse
without consideration? If so, fraudulent transfer law may serve as a remedy to recover
those funds.
With these principles in mind, a creditor can
increase the likelihood of recovery by seeking
out the assets of both the debtor as well as the
debtor’s spouse or domestic partner.
■
1 F AM . C ODE §§902, 910; Litke O’Farrell LLC v.
Tipton, 204 Cal. App. 4th 1178, 1181-82 (2012); see
also United States v. Berger, 574 F. 3d 1202, 1203 (9th
Cir. 2009) (An innocent nondebtor spouse’s community property interest can be taken to satisfy criminal
restitution.).
2 FAM. CODE §297.5, §915; Reynolds & Reynolds Co.
v. Universal Forms, Labels & Sys., Inc., 965 F. Supp.
1392, 1396 (C.D. Cal. 1997). However, no appellate
case, state or federal, so holds.
3 FAM. CODE §1000(b).
4 Reynolds & Reynolds Co., 965 F. Supp. at 1396;
Oyakawa v. Gillette, 8 Cal. App. 4th 628, 631-32
(1992).
5 Marriage of Harrison, 179 Cal. App. 3d 1216, 1226
(1986).
••
•
••
•
6 FAM. CODE §911.
7 CODE
CIV. PROC. §706.109.
of Brooks and Robinson, 169 Cal. App. 4th
176, 186-87 (2008); see also Abbett Elec. Corp. v.
Storek, 22 Cal. App. 4th 1460, 1466-68 (1994).
9 Marriage of Brooks and Robinson, 169 Cal. App. 4th
at 189-90.
10 Beam v. Bank of Am., 6 Cal. 3d 12, 17 (1971).
11 FAM. CODE §760.
12 PROB. CODE §5305(a); FIN. CODE §6852(b).
13 CODE CIV. PROC. §700.160(b)(1).
14 CODE CIV. PROC. §700.160(b)(2).
15 CODE CIV. PROC. §§720.110 et seq.
16 CODE CIV. PROC. §913.
17 FAM. CODE §770(a).
18 FAM. CODE §771(a).
19 See Marriage of Marsden, 130 Cal. App. 3d 426,
435-36 (1982).
20 Mejia v. Reed, 31 Cal. 4th 657, 668-69 (2003).
21 FAM. CODE §916(a)(2).
22 FAM. CODE §914(a).
23 Collection Bureau of San Jose v. Rumsey, 24 Cal. 4th
301 (2000).
24 Credit Bureau of Santa Monica Bay Dist., Inc. v.
Terranova, 15 Cal. App. 3d 854 (1971).
25 See RUTTER GROUP, ENFORCING JUDGMENTS AND
DEBTS §3:21.
26 J.J. Macintyre Co. v. Duren, 118 Cal. App. 3d.
Supp. 16, 18 (1981).
27 Reynolds & Reynolds Co. v. Universal Forms, Labels
& Sys., Inc., 965 F. Supp. 1392, 1396 (1997).
28 FAM. CODE §916(a)(2).
29 Mejia v. Reed, 31 Cal. 4th at 668-69.
30 FAM. CODE §851; State Bd. of Equalization v. Woo,
82 Cal. App. 4th 481, 484 (2000).
31 11 U.S.C. §541(a)(2).
32 11 U.S.C. §102(2) (A claim against the debtor means
a claim against the property of the debtor.).
8 Marriage
Prepared to make
a meaningful
difference in the
lives of others
“I
AM
READY.”
Hansdeep Singh ’08
Co-Founder
International Center for Advocates
Against Discrimination
• •
• •
Learn more about Deborah at www.cwsl.edu /IamReady
24 Los Angeles Lawyer July/August 2013
MCLE ARTICLE AND SELF-ASSESSMENT TEST
By reading this article and answering the accompanying test questions, you can earn one MCLE credit.
To apply for credit, please follow the instructions on the test answer sheet on page 29.
by John C. Keith
BANKRUPTCY
SHELTERS
Public policy continues to weigh against the absolute
effectiveness of bankruptcy remote entities
PROBABLY for as long as there has been a
bankruptcy law, lenders have attempted to
make their loans “bankruptcy proof.” The
means by which lenders have tried to do so
have become more sophisticated in response
to the hostility of bankruptcy courts to contractual waivers of bankruptcy law protections. In more recent years, and particularly
in the context of loans secured by real property, lenders have fostered the creation of a
“bankruptcy remote,” special purpose entity
(SPE) as the borrower, whose internal governing documents effectively give the lender
veto power over the entity’s authority to file
a bankruptcy petition.
The SPE is a recent variation on the theme
of protecting lenders against debtor bankruptcy. The relative dearth of case law
addressing the effectiveness of this permutation of bankruptcy proofing may indicate
that it is having its desired effect of inhibiting debtors from filing for bankruptcy protection. If history is a guide, however, lenders
should not be overconfident of the ability of
any mechanism, no matter how clever, to
keep them out of bankruptcy court. When
subjected to enough pressure, efforts to make
loans bankruptcy proof have generally tended
to fail.
The availability of bankruptcy protection
affects the balance of power in debtor-creditor relations, since bankruptcy law offers
numerous protections to the defaulting borrower. Perhaps apart from the ability in certain types of bankruptcy cases to obtain a discharge of prepetition (i.e., prebankruptcy)
debts, paramount among these protections is
the automatic stay under Bankruptcy Code
Section 362. Generally speaking, while a
bankruptcy case is pending, an automatic
stay prohibits any action to enforce the
debtor’s prepetition debt, including the commencement or continuation of litigation, as
well as nonjudicial enforcement mechanisms
such as foreclosure. If a debtor has significant
debt secured by collateral (whether real or personal property), the bankruptcy filing is commonly prompted by the secured creditor’s
efforts to foreclose upon its security interest.
Although the same principles apply when
the debt is secured, cases in which the debt is
secured by real property often bring the power
of the automatic stay into sharp relief. In
those cases, borrowers routinely file a bankruptcy petition the day before a trustee’s sale
is set to proceed, thereby stopping the foreJohn C. Keith is a business and bankruptcy litigator practicing at the Los Angeles law firm of Valensi
Rose, PLC.
Los Angeles Lawyer July/August 2013 25
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closure process.
While lenders are often successful in
obtaining relief from the automatic stay,
thereby enabling them to resume foreclosure
or other enforcement efforts, the outcome
of the relief from stay process is never certain,
and the process itself will generally require
contested motion practice before the bankruptcy court. Thus, even when relief from stay
is granted—a “good” result for the lender
under the circumstances—the borrower’s
bankruptcy filing will delay loan enforcement.
No to Contractual Waivers
Given the added risk, delay, and expense that
a bankruptcy filing creates for creditors, it is
not surprising that lenders have long engaged
in efforts to make their loans bankruptcy
proof. These efforts have taken many forms.
One common device has been to insert an ipso
facto clause into the loan documents. The
clause provides that a borrower’s bankruptcy
filing, or even a borrower’s insolvent financial
condition, constitutes a breach. Another common device has been to require, as a condition of the loan, that the borrower agree in
advance to waive one or more of the benefits
of bankruptcy law, such as the right to oppose
relief from the automatic stay or the ability
to obtain the discharge of a particular debt or
of debts in general. Unfortunately for lenders,
courts have generally rejected these sorts of
provisions as being against public policy.1
At least as far back as 80 years ago, interpreting the Bankruptcy Act (a predecessor
to the current Bankruptcy Code), the Southern
District of New York held, in In re Weitzen,
that an “agreement to waive the benefit of
bankruptcy is unenforceable,” because “[t]o
sustain a contractual obligation of this character would frustrate the object of the
Bankruptcy Act.”2 Citing to an even earlier
case, from the Supreme Judicial Court of
Massachusetts,3 the Weitzen court further
stated that “[i]t would be repugnant to the
purpose of the Bankruptcy Act to permit the
circumvention of its object by the simple
device of a clause in the agreement, out of
which the provable debt springs,” since the
“Bankruptcy Act would in the natural course
of business be nullified in the vast majority of
debts arising out of contracts, if this were permissible.”4 Over the ensuing decades, numerous courts have reached much the same conclusion and invalidated all sorts of provisions
inserted into loan documents that would
operate to waive one or another of the benefits of bankruptcy law.5
SPEs
While courts have generally rejected advance
contractual waivers of the benefits of bankruptcy, lenders have had somewhat more suc28 Los Angeles Lawyer July/August 2013
cess in bankruptcy proofing loans through the
creation of bankruptcy remote, SPE borrowers. An SPE “is an independent legal
entity that can be used to mitigate the disruption caused by a bankruptcy filing by all
or some of the members of a corporate
group.”6 “Essentially, a lender may be more
inclined to provide a secured loan to an independent entity rather than to a complex corporate group with several creditors.” 7
“Ideally, the SPE will be a newly created cor-
ruptcy proofing device. The SPE’s organizational documents required that the secured
lender’s designee on the board of directors
consent to any bankruptcy filing. Each of
the 11 SPE debtors was owned or controlled
at one time by the same principal, and each
was subject to a limitation on commencing a
bankruptcy. When the SPE’s properties were
in foreclosure and the board concluded that
following the designated procedures to commence voluntary bankruptcy would be futile,
SPEs are generally designed to be
“bankruptcy remote,” in that
restrictions on the SPE’s activities
make it less likely to become
insolvent, and in that if the SPE
does become insolvent, it is
difficult for a majority of board
members or managers to put the
business into bankruptcy.
poration, limited liability company, partnership, nonprofit, business trust, or limited liability partnership,” although, “most
commonly, SPEs are either limited partnerships or limited liability companies.”8
SPEs are generally designed to be “bankruptcy remote,” in that restrictions on the
SPE’s activities make it less likely to become
insolvent, and in that if the SPE does become
insolvent, it is difficult for a majority of board
members or managers to put the business
into bankruptcy.9 “The SPE’s corporate documents will generally contain restrictive provisions requiring that the SPE be limited to its
stated purpose of holding the collateral assets,
therefore restricting it from engaging in outside activities,” and thereby “reducing the
risk of the SPE becoming insolvent.”10 In
addition, an SPE’s antibankruptcy provisions
will generally require that in order to file for
voluntary bankruptcy, the SPE’s directors or
partners must unanimously consent with an
“independent” director, partner, or managing
member who is generally “designated by the
lender and can presumably veto any suggestion of the SPE filing a voluntary bankruptcy
petition.”11 SPEs have served as a securitization tool for some time,12 so they have had
at least some success.
Kingston Square Associates
In re Kingston Square Associates13 is an illustration of the limitations of an SPE as a bank-
the principal paid a law firm to solicit unsecured creditors to file involuntary chapter
11 petitions. Some trade creditors and professionals who worked for the debtors filed
the petitions, and the secured lenders sought
to dismiss the involuntary cases on the ground
that the collusion between the debtors and the
petitioning creditors constituted bad faith
under Bankruptcy Code Section 1112(b).
The court held “that a bankruptcy petition
will be dismissed if both objective futility of
the reorganization process and subjective bad
faith in filing the petition are found.”14
Accordingly, the court further held that
“although the debtors plainly orchestrated the
filing of the involuntary petitions, they had
reason to believe that reorganization was
possible and did not circumvent any courtordered or statutory restrictions on bankruptcy filings such that, absent any evidence
of objective futility of the reorganization
process, the cases ought not be dismissed
now.”15 No formal record had been developed regarding the futility of reorganization,
and there were indications that reorganization
was possible (e.g., a favorable appraisal and
expressions of interest in purchasing the properties), so the court denied the motions to dismiss.
The court was fairly dismissive of the
lenders’ argument against permitting debtors
to circumvent the antibankruptcy provisions
in their governing documents. “The Movants
MCLE Test No. 226
The Los Angeles County Bar Association certifies that this activity has been approved for Minimum
Continuing Legal Education credit by the State Bar of California in the amount of 1 hour.
MCLE Answer Sheet #226
BANKRUPTCY SHELTERS
Name
Law Firm/Organization
1. The general prohibition under the Bankruptcy Code
on actions undertaken to enforce or collect upon a
debtor’s prebankruptcy debt while a bankruptcy case
is pending is called:
A. The statute of repose.
B. The automatic stay.
C. The standstill period.
D. None of the above.
2. This general prohibition includes not only the commencement or continuation of litigation against a bankruptcy debtor but also nonjudicial enforcement mechanisms such as foreclosure.
True.
False.
3. When a bankruptcy court grants a creditor permission to resume efforts to collect its debt while the bankruptcy case is still pending, the creditor has been given:
A. The green light.
B. Standstill relief.
C. Relief from stay.
D. None of the above.
4. The common name for a provision in a loan document
to the effect that a borrower’s bankruptcy filing (or
insolvency) constitutes a breach is:
A. An ipso facto clause.
B. A default provision.
C. A penalty clause.
D. None of the above.
5. Courts will generally enforce the provision described
in question 4.
True.
False.
6. Courts will generally enforce loan document provisions to the effect that, if a debtor does file bankruptcy,
it waives certain benefits of bankruptcy law.
True.
False.
7. A single purpose entity (SPE) is a type of borrower that
some secured lenders favor to mitigate the disruption
caused by a bankruptcy filing by all or some of the
members of a corporate group.
True.
False.
8. Most commonly, SPEs are either _____.
A. Public or private corporations.
B. Nonprofit corporations or business trusts.
C. Limited partnerships or limited liability
companies.
D. None of the above.
9. Provisions in an SPE’s corporate documents to make
the SPE less likely to become insolvent and more difficult for it to go into bankruptcy are commonly referred
to as ____ .
A. Ipso facto clauses.
B. Bankruptcy remote provisions.
C. Antialienation provisions.
D. None of the above.
10. SPEs are a securitization tool for lenders.
True.
False.
11. In In re Kingston Square Associates, the bankruptcy court held that a bankruptcy petition should be
dismissed upon finding subjective bad faith in filing.
True.
False.
12. The Kingston Square Associates court dismissed the
bankruptcy cases because the debtors solicited creditors to file involuntary bankruptcy petitions against
them.
True.
False.
13. In re General Growth Properties, Inc., involved provisions in the organizational documents of the SPEs that
required the unanimous consent of one or more nominally independent directors or managers before the
SPEs could file for bankruptcy.
True.
False.
14. The General Growth Properties court held that it was
bad faith for the debtors to circumvent the efforts of their
secured lenders to make their loans bankruptcy proof.
True.
False.
15. The Kingston Square Associates and General Growth
Properties courts determined that the attempts of the
secured lenders to make their loans bankruptcy proof
were against public policy.
True.
False.
16. In In re DB Capital Holdings, LLC, the court upheld,
against a public policy challenge, a provision in an
LLC’s operating agreement prohibiting the LLC from filing for bankruptcy or consenting to any bankruptcy
filed against it.
True.
False.
17. The DB Capital Holdings court found that the operating agreement’s antibankruptcy provision had been
inserted at the behest of the debtor’s secured lender.
True.
False.
18. The secured lender in DB Capital Holdings was
successful in keeping the borrower out of bankruptcy
court.
True.
False.
19. If a lender’s “independent” designee with the SPE
borrower vetoes a bankruptcy filing that would be in the
borrower’s best interest, the lender or its designee
may be liable for breach of fiduciary duty.
True.
False.
20. Some LLC operating agreements name a designee
of the lender as a member of the LLC even though the
designee is not required to make a capital contribution.
True.
False.
Address
City
State/Zip
E-mail
Phone
State Bar #
INSTRUCTIONS FOR OBTAINING MCLE CREDITS
1. Study the MCLE article in this issue.
2. Answer the test questions opposite by marking
the appropriate boxes below. Each question
has only one answer. Photocopies of this
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3. Mail the answer sheet and the $20 testing fee
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test materials returned to you.
ANSWERS
Mark your answers to the test by checking the
appropriate boxes below. Each question has only
one answer.
1.
■A
2.
■ True
■B
■C
■D
3.
■A
■B
■C
■D
4.
■A
■B
■C
■D
5.
■ True
■ False
6.
■ True
■ False
7.
■ True
8.
■A
■B
■C
■D
9.
■A
■B
■C
■D
10.
■ True
■ False
11.
■ True
■ False
12.
■ True
■ False
13.
■ True
■ False
14.
■ True
■ False
15.
■ True
■ Fals
16.
■ True
■ Fals
17.
■ True
■ False
18.
■ True
■ False
19.
■ True
■ False
20.
■ True
■ False
■ False
■ False
Los Angeles Lawyer July/August 2013 29
may feel bruised because the Respondents
outmaneuvered what the Movants thought
was an iron-clad provision in the corporate
by-laws preventing a bankruptcy filing, but
this does not mean that, without more, the
petitions must be dismissed.”16 The court
also had harsh words for the lenders’ designee
on the board, stating that “he completely
ignored the limited partners’ plight in the
face of foreclosure actions instituted by the
group which placed him on the boards of
directors…and saw to it that he was paid
fees, even though the consequence of foreclosure would be not to simply injure but to
eliminate the limited partners’ interests.” As
the court put it: “If he was the ‘independent’
director, it was in name only.”17 One issue on
which the court expressly refused to opine was
whether it should nullify the bankruptcy
proof provision in the debtors’ bylaws.18
In 2009, In re General Growth Properties,
Inc.,19 revisited the question whether bankruptcy cases should be dismissed for bad
faith if debtor SPEs have maneuvered around
antibankruptcy provisions in their organizational documents. Relying in part on Kingston
Square Associates, the court denied the
secured lenders’ motions to dismiss the chapter 11 cases of various debtors owned directly
or indirectly by General Growth Properties,
Inc. (GGP), a real estate investment trust and
the parent of approximately 750 wholly
owned subsidiaries, joint venture subsidiaries,
and affiliates. The bankruptcy cases commenced in the wake of the credit market crisis, which prevented GGP and hundreds of its
affiliated entities from refinancing their debt
and led them to file what was then the largest
real estate bankruptcy case in history.20 The
debtors were project-level SPEs holding single real estate assets (e.g., shopping centers,
more than 200 of which the group of companies owned or managed). In some cases,
provisions in the organizational documents of
the SPEs indicated that they were intended to
be bankruptcy remote. Specifically, much as
in Kingston Square Associates, there were
provisions requiring the unanimous consent
of one or more “independent” directors or
managers before the SPEs could file for bankruptcy.
Although the two cases resolved in much
the same way, General Growth Properties
in some respects contrasts with Kingston
Square Associates. In Kingston Square
Associates, the debtors concluded that they
could not file a voluntary bankruptcy case in
the face of the veto power of the secured
lender’s board designee, so they proceeded to
orchestrate an involuntary bankruptcy filing. In General Growth Properties, instead of
bypassing an uncooperative board member,
the debtors simply removed the lenders’
designees and replaced them with more coop30 Los Angeles Lawyer July/August 2013
erative board members, who then approved
the voluntary bankruptcy.21
The court in General Growth Properties
assessed the merit of that rather bold maneuver and rejected the lenders’ argument of bad
faith. The court held that “it cannot be said
that the admittedly surreptitious firing of the
two ‘Independent Managers’ constituted subjective bad faith on the part of the Debtors
sufficient to require dismissal of these cases,”
since “[t]he corporate documents did not
prohibit this action or purport to interfere
with the rights of a shareholder to appoint
independent directors to the Board.”22 As
support for this conclusion, the court reasoned
that “the Independent Managers did not have
a duty to keep any of the Debtors from filing
a bankruptcy case,” but instead “[a]s managers of solvent companies charged to act in
the same fashion as directors of a Delaware
corporation, they had a prima facie fiduciary
duty to act in the interests of ‘the corporation
and its shareholders.’”23
The court also relied on Kingston Square
Associates, which the General Growth
Properties court described as involving a far
more egregious action that was “suggestive of
bad faith.” As the court noted, the debtors’
collusion with the petitioning creditors in
Kingston Square Associates was still insufficient to warrant dismissal, since “the collusion was not rooted in a ‘fraudulent or deceitful purpose’ but designed ‘to preserve value
for the Debtors’ estates and creditors.’”24
The court found that the debtors’ bankruptcy
filings were likewise designed to preserve
value for their estates and creditors. As the
court stated forcefully: “It is clear, on this
record, that Movants have been inconvenienced by the Chapter 11 filings.…However, inconvenience to a secured creditor is not
a reason to dismiss a Chapter 11 case.”25 As
in Kingston Square Associates, the court did
not address whether the bankruptcy remote
provisions in the SPEs’ governing documents
ought to be unenforceable in the first place as
a matter of public policy.
DB Capital Holdings
In a 2010 opinion, the bankruptcy appellate
panel for the Tenth Circuit, in In re DB
Capital Holdings, LLC,26 upheld against a
public policy challenge a provision in an
LLC’s operating agreement prohibiting the
LLC from filing a bankruptcy petition or
consenting to any bankruptcy filed against it.
The debtor was a Colorado LLC formed to
develop two condominium buildings. After
defaulting on its secured loans and facing
receivership, the LLC filed a chapter 11 case
through its manager. The court granted a
motion to dismiss that one of the LLC’s members filed on the ground that the manager had
acted without authorization and in bad faith.
In doing so, the court rejected the debtor’s
argument that the antibankruptcy provision
in the operating agreement should be void as
against public policy. The court reasoned
that “all of the case law upon which Manager
relies for this assertion ‘involves a debtor’s
agreement with third parties to waive the
benefits of bankruptcy,’” and the “Debtor
has not cited any cases standing for the proposition that members of an LLC cannot agree
among themselves not to file bankruptcy,
and that if they do, such agreement is void as
against public policy, nor has the court located
any.”27 In response to the debtor’s argument
that the antibankruptcy provision had in fact
been inserted into the operating agreement at
the behest, and solely for the benefit of, the
secured lender, the court said it found no
evidence to support that contention.
Therefore, the court declined to opine
“whether, under the right set of facts, an
LLC’s operating agreement containing terms
coerced by a creditor would be unenforceable.”28 Arguably in dicta, the court further
supported its conclusion by reasoning that the
operating agreement limited the manager’s
authority to operating the business “as
presently conducted” and prohibited him
from doing “any act that would make it
impossible to carry on the ordinary business
of the Company,” two provisions the court
found incompatible with the manager’s filing
of a bankruptcy case.
Antibankruptcy Provisions
DB Capital Holdings indicates that, under the
right set of facts, a court may enforce, even
against a public policy challenge, provisions
in a borrower’s organizational documents
that effectively prevent the borrower from voluntarily filing bankruptcy. However, lenders
ought not rely too heavily on this holding.
Apart from being unpublished, the holding is
also rather narrow, in that the court expressly
declined to say whether antibankruptcy provisions would be enforceable if there was
evidence that they were coerced.29 It seems
that in most cases the borrower would be able
to present such evidence.30 It also seems that,
if this evidence were presented, a court ought
to invalidate an antibankruptcy provision.31
To do otherwise would elevate form over
substance, since a provision of this kind
achieves the same result as the advance contractual waivers that courts have routinely
rejected as against public policy.
Much as in Kingston Square Associates,
the DB Capital Holdings debtor ultimately
became involved in an involuntary bankruptcy case filed by unsecured creditors.32 In
DB Capital Holdings, during relief from stay
proceedings the bankruptcy court rejected
as against public policy the debtor’s purported waiver, as part of a prepetition for-
bearance agreement, of its right to oppose stay
relief, as too closely approximating a waiver
of the right to file bankruptcy in the first
place.33 These cases illustrate that even the
most ironclad protections against a borrower
voluntarily placing itself in bankruptcy will
not necessarily keep the borrower out of
bankruptcy court, since its other creditors
may place it there if they feel threatened by
a dominant secured creditor.
In addition, lenders inserting themselves
or their designees into the borrower’s management as “independent” directors or managers, with veto power over the borrower’s
ability to file bankruptcy, ought to be wary of
what may come from the exercise of that
power. To the extent a lender or a lender’s
agent is deemed to have exercised managerial authority over a borrower, it naturally
follows that the lender may be subject to
fiduciary duties. If, by refusing to authorize
a bankruptcy, the lender has elevated its own
interests above those of its principal, the
lender may be liable for breach of fiduciary
duty.34 This principle is broad and would
seem to apply regardless of the precise nature
of bankruptcy proofing device.35
Ultimately, lenders should probably
assume that any loan they make could draw
them into bankruptcy court, no matter how
hard they try to avoid it. Lenders can attempt
to minimize the fallout by avoiding riskier
loans or by hedging or insuring against the
riskier loans they do make. While recognizing the creativity that goes into devising bankruptcy proofing provisions (which may serve
their purpose well enough, though by no
means perfectly), one may ask whether the
energy that goes into crafting bankruptcy
proof loans would be better spent elsewhere.
An attorney with clients who are considering
becoming a lender’s designee to an SPE borrower would be well served to advise them to
balance the benefits of the post36 against their
fiduciary obligations.
■
9 Id.
27 Id.
10 Id.
28 Id.
at 228.
at 230-31.
11 Id. at 231-32. The precise designation of the lender
designee depends upon the type of business organization. For example, corporations are governed by a
board of directors, and a lender designee at an SPE corporation would generally be referred to as an independent director. LLCs, by comparison, are owned
by members and can be either member-managed or
manager-managed. Certain members may act simultaneously as managers or be endowed by the LLC’s
operating agreement with specified managerial powers.
Thus, the lender designee may be referred to as an
“independent manager,” an “independent member,”
or “independent managing member.” The lender or its
designee may be a “special purpose member” of the
LLC.
12 Id. at 228.
13 In re Kingston Square Assocs., 214 B.R. 713 (Bankr.
S.D. N.Y. 1997).
14 Id. at 734.
15 Id. at 714-15.
16 Id. at 736.
17 Id.
18 Id. at 737.
19 In re General Growth Props., Inc., 409 B.R. 43
(Bankr. S.D. N.Y. 2009).
20 Jesse Cook-Dubin, New York Bankruptcy Court
Topples Contractual Barriers to Filing Chapter 11:
Part II, AM. BANKR. INST. J. 16 (Dec./Jan. 2010).
21 In re General Growth Props., Inc., 409 B.R. at 6769.
22 Id. at 68.
23 Id.
24 Id.
25 Id.
26 In re DB Capital Holdings, LLC, 463 B.R. 142,
2010 WL 4925811 (10th Cir. B.A.P. Dec. 6, 2010).
at *3.
29
See Alvin L. Arnold & Marshall E. Tracht,
Bankruptcy: LLC Agreement Can Waive Right to
Bankruptcy, REAL EST. L. REP. 8 (Jan. 2011); Steven G.
Horowitz, LLC Agreement Prohibiting Bankruptcy
Filing Held Enforceable, COMMERCIAL REAL ESTATE
FINANCING: STRATEGIES FOR CHANGING MARKETS AND
UNCERTAIN TIMES, ST053 ALI-ABA 171, 174-75 (2012)
[hereinafter Horowitz] (“[T]he decision should not be
viewed as granting carte blanche approval to pre-petition agreements waiving bankruptcy protection.”).
30 Horowitz, supra note 29, at 174-75.
31 Sheldon L. Solow & Uday Gorrepati, Can Lenders
Prevent LLC Bankruptcy Filings? A Recent Decision
Highlights the Debate, 128 BANKING L.J. 220, 224
(2011) [hereinafter Solow & Gorrepati].
32 In re DB Capital Holdings, LLC, 454 B.R. at 809.
33 Id. at 814-16.
34 Solow & Gorrepati, supra note 32, at 224.
35 A special purpose member is a member of the LLC
only in the most abstract sense. Generally speaking, the
special purpose member is not required to make any
capital contribution, and the operating agreement specifies that, except for the right to authorize or reject any
proposed bankruptcy filing, the special purpose member has none of the rights or duties generally attributed
to LLC members or managers. A prudent lender would
also have the operating agreement provide that it could
not be amended without the consent of the special
purpose member, so that management could not do
away with this bankruptcy veto by amending the operating agreement.
36 In Kingston Square Associates, the lenders’ “independent director” on the borrowers’ boards, a former
vice president of the lenders, was paid $25,000 a year
for his service on the board, even though, as the court
itself observed, he did very little to earn that money.
1
See In re Cole, 226 B.R. 647, 652 (B.A.P. 9th Cir.
1998).
2 In re Weitzen, 3 F. Supp. 698 (S.D. N.Y. 1933).
3 Federal Nat. Bank v. Koppel, 253 Mass. 157 (1925).
4 In re Weitzen, 3 F. Supp. at 698-99.
5 See, e.g., In re Cole, 226 B.R. at 651-52; In re Shady
Grove Tech Ctr. Assocs. Ltd. P’ship, 216 B.R. 386, 390
(Bankr. D. Md. 1998); In re Gulf Beach Dev. Corp., 48
B.R. 40, 43 (Bankr. M.D. Fla. 1985); In re Tru Block
Concrete Prods., Inc., 27 B.R. 486, 492 (Bankr. S.D.
Cal. 1983); In re Pease, 195 B.R. 431, 435 (Bankr. D.
Neb. 1996); Giaimo v. Detrano (In re Detrano), 222
B.R. 685, 688 (Bankr. E.D. N.Y. 1998); Shaw Steel, Inc.
v. Morris (In re Morris), 1998 WL 355510, at *8
(Bankr. N.D. Ill. June 30, 1998); Johnson v. Kriger (In
re Kriger), 2 B.R. 19, 23 (Bankr. D. Or. 1979).
6 Samantha J. Rothman, Lessons from General Growth
Properties: The Future of the Special Purpose Entity,
17 FORDHAM J. CORP. & FIN. L. 227, 229 (2012).
7 Id.
8 Id. at 230.
Los Angeles Lawyer July/August 2013 31
by James Juo
UnauthorizedExcess
After the death of Aaron Swartz, lawmakers have
proposed reforms to the Computer Fraud and Abuse Act
32 Los Angeles Lawyer July/August 2013
extortion by threat of damage to a computer.9 In addition
to traditional computer hacking, the statute also has
been asserted against employees who take trade secrets
stored on their employer’s computer before leaving to join
the competition.10 In 1984, Congress enacted the CFAA
to criminalize the hacking of computers in connection with
national security, financial records, and government property.11 The statute was originally designed to cover unauthorized access of such protected computers having a
specified federal interest.12
The CFAA has been expanded a number of times.13
For example, a 1994 amendment expanded the statute to
allow private entities to assert a civil cause of action and
obtain compensatory damages and other equitable relief.14
In 1996, the CFAA was further amended to expand the
class of protected computers to include any computer
“used in interstate or foreign commerce or communication.”15 In the space of a dozen years, the scope of this
criminal statute has gone from a limited set of protected
computers to possibly every computer in the United States
connected to the Internet.16
Without or Exceeding Authorization
The CFAA prohibits “access without authorization” and
“exceed[ing] authorized access” to a protected computer.17 But the CFAA has been called “remarkably
vague” on this point.18 What does it mean to access a computer without authorization or to exceed authorized
James Juo is a partner at Fulwider Patton LLP, a Los Angeles
law firm specializing in intellectual property, including patents
and trademarks.
HADI FARAHANI
AT AGE 14, Aaron Swartz was working with leading technologists to craft standards for openly sharing information on the Internet.1 He then helped Lawrence Lessig with
Creative Commons, which promotes the use of simple,
standardized copyright licenses that give the public permission to share and use creative works.2 At 19, he was
a founding developer of Reddit, a widely used social
news Web site where users can post news links and vote
on them.3 Aaron later became a political activist for
Internet freedom and social justice issues and formed the
advocacy group Demand Progress.4 At 26, facing a criminal trial under the Computer Fraud and Abuse Act
(CFAA) for allegedly circumventing computer restrictions to an online database of academic articles, Aaron
Swartz hanged himself in January.5
Since then, Internet groups have criticized the U.S.
Department of Justice for its prosecution of Swartz,
although several legal commentators have noted that the
CFAA had been interpreted broadly by some courts to
cover similar conduct in other cases.6 According to
Jennifer Granick, the Director of Civil Liberties at the
Stanford Center for Internet and Society, the CFAA has
become a legal regime that as often as not is “used against
whistleblowers, disloyal employees, and activists.”7
“Aaron’s Law” has become a rallying cry to reform the
CFAA.
The CFAA is a computer trespass statute that has
been called “one of the broadest federal criminal laws currently on the books.”8 Prohibited conduct under the
CFAA includes theft of computer data, unauthorized
access with intent to defraud, unauthorized access resulting in destruction, trafficking in computer passwords, and
access? Exactly what makes one person’s
access authorized and another’s unauthorized (or exceeded) has been the subject of
much litigation. Such conduct has been
alleged to include exploiting code-based security flaws,19 launching a denial of service
attack on a Web site,20 “spoofing” IP addresses to avoid access restrictions,21 accessing information stored on an employer’s computer for a competing business,22 allowing an
unauthorized person to use the valid password
of another,23 and violating a Web site’s terms
of service.24
Should the question of authorization be
focused on the means used to obtain the
data (e.g., whether the defendant is alleged
to have broken into the computer system),
or should it further look to whether the
obtained data was used improperly? Under
the latter approach, if a disloyal employee
were to access commercial information on
the employer’s computer for any purpose
other than that authorized by his or her
job, there could be liability under the CFAA.
In recent years, many plaintiffs have used the
CFAA to federalize cases that otherwise
would have been treated as traditional trade
secret cases but for the involvement of a
computer.25 Some recent court decisions,
however, have adopted a narrower interpretation, so whether such a plaintiff would
be successful may depend on which courthouse hears the case.
In International Airport Centers, L.L.C.
v. Citrin, the Seventh Circuit relied on the
agency relationship between an employee
and employer to determine whether access
was authorized.26 The defendant, Citrin,
decided to start his own business in competition with his employer, International Airport
Centers (IAC). Before leaving, Citrin used a
secure-erase program that permanently erased
all the data (presumably including evidence
of his allegedly improper conduct) on a laptop provided to him by IAC.27 Citrin “knew
the company had no duplicates of [the
destroyed data].”28
The court noted that an employee’s authorization to access the employer’s computer
data is based on the agency relationship
between the employer and employee, and
Citrin’s authorization ended when he
breached the duty of loyalty to IAC.29 “[T]he
authority of the agent terminates if, without
knowledge of the principal, he acquires
adverse interests or if he is otherwise guilty
of a serious breach of loyalty to the principal.”30 This interpretation of access under the
CFAA—finding liability for violations of corporate computer use restrictions or violations of a duty of loyalty—was adopted by the
Fifth and Eleventh Circuits as well.31
Some district courts, however, have
observed that the CFAA should be construed
34 Los Angeles Lawyer July/August 2013
narrowly because it is a criminal statute,
while others have adopted the broad analysis of Citrin.32 The Ninth Circuit’s recent
decisions in LVRC Holdings LLC v. Brekka33
and United States v. Nosal,34 however, appear
to be moving toward a narrower interpretation that does not criminalize violations of private use-based restrictions.
In LVRC Holdings LLC v. Brekka, the
defendant was an employee who, as part of
his job, had computer access to information
regarding LVRC’s addiction treatment business, including financial statements, budgets,
and other reports.35 Brekka traveled between
his Florida home and Nevada for work and
e-mailed LVRC business documents to his
and his wife’s personal e-mail accounts. LVRC
and Brekka did not have a written employment agreement, and LVRC had no employee
guidelines that would have prohibited employees from e-mailing LVRC documents to personal computers. After Brekka left the company, LVRC became concerned that Brekka
had e-mailed LVRC documents to himself to
further his own interests rather than those of
LVRC.36
The Ninth Circuit expressly rejected
Citrin’s broad interpretation of the CFAA,
noting that nothing in the plain language of
the statute suggests that liability for accessing
a computer without authorization turns on
whether the defendant breached a duty of
loyalty to an employer.37 Brekka was authorized to use LVRC’s computers while he was
employed at LVRC, so he did not access a
computer “without authorization” under the
CFAA when he e-mailed documents to himself prior to leaving LVRC.38 “Nor did emailing the documents ‘exceed authorized access,’
because Brekka was entitled to obtain the
documents.”39 The court further noted the rule
of lenity, which requires courts to limit the
reach of criminal statutes to their plain meaning and to construe any ambiguity against
the government in order to avoid imposing
unexpected burdens on the defendant.40
Nosal
In United States v. Nosal, Nosal was a highlevel employee at executive search firm Korn
/Ferry International. When Nosal decided to
leave, he signed an agreement to continue
working for Korn/Ferry as an independent
contractor in order to complete several ongoing projects, and he agreed not to compete
against Korn/Ferry for one year.41 During
that time, however, Nosal accessed confidential and proprietary information in the
Korn/Ferry computer system to obtain customer lists and other trade secrets for a competing business that he was starting. Several
employees also helped access the Korn/Ferry
computer system to obtain confidential information and trade secrets for Nosal. Korn
/Ferry had an express computer usage policy
that was reflected in an opening computer
screen warning: “This product is intended
to be used by Korn/Ferry employees for work
on Korn/Ferry business only.”42
Relying on Brekka, the district court dismissed the CFAA claim because Nosal had
permission to access the Korn/Ferry computers.43 The district court also relied on the
rule of lenity to interpret the CFAA narrowly.44 A three-judge panel of the Ninth
Circuit reversed the district court on appeal.45
Distinguishing the earlier Brekka decision in
which the defendant “had unfettered access
to the company computer,” the panel noted
that Korn/Ferry had “clear and conspicuous
restrictions” on an employee’s computer
access.46 The panel held that “as long as the
employee has knowledge of the employer’s
limitations on that authorization, the
employee ‘exceeds authorized access’ when
the employee violates those limitations.”47
The Ninth Circuit reheard Nosal en banc
and reversed the panel decision and affirmed
the district court.48 Writing for the majority,
Chief Judge Alex Kozinski gave a litany of
hypothetical examples of adverse consequences that may arise from giving the force
of criminal law to a private party’s computer
use policies. Numerous dating Web sites, for
instance, have terms of service that “prohibit inaccurate or misleading information.”
Under the government’s proposed interpretation of the CFAA, “describing yourself as
‘tall, dark and handsome,’ when you’re actually short and homely, will earn you a handsome orange jumpsuit.”49
Moreover, because a Web site’s terms of
service or an employer’s policies may change
at any time with little or no prior notice,
what was lawful conduct one day could
become unlawful the next.50 The court suggested that the CFAA would be unconstitutionally vague if violating a Web site’s terms
of service (which typically are written to give
the Web site’s owner a broad right to cancel
accounts without liability) could be construed
to be unauthorized or to have exceeded authorized access under the CFAA.51
The tendency of a mind to “wander” and
people to “procrastinate” by connecting to the
Internet at work for a nonwork purpose
“would make criminals of large groups of
people who would have little reason to suspect they are committing a federal crime.”52
For other improper conduct involving a computer, laws such as wire fraud, trade secret,
or contract law may apply instead.53 The
court concluded that the “exceeds authorized access” language “in the CFAA is limited to violations of restrictions on access to
information, and not restrictions on its use.”54
The Ninth Circuit’s narrow interpretation of the CFAA in Nosal has since been
adopted by the Fourth Circuit and by district
courts in other circuits,55 but a circuit split
remains between Nosal and Citrin.
The Facts of the Swartz Case
Aaron Swartz once wrote, “Stealing is wrong.
But downloading isn’t stealing.”56 In 2008,
Swartz wrote a computer program that
rapidly downloaded millions of pages of
court filings from PACER after a pilot program was started to allow free access to
PACER.57 Swartz’s downloads were then
made freely accessible on the servers at public.resource.org.58 Shortly thereafter, the government ended the pilot project of free access
for PACER.59 The FBI investigated Swartz
but closed its file in 2009.60
About a year later, Swartz allegedly
attempted to access and rapidly download a
large number of academic articles from
JSTOR, a nonprofit that provides a searchable
database of digitized articles archived from
over 1,000 academic journals.61 Libraries
and universities pay a subscription fee for
access to JSTOR’s collection of digitized journals.62 JSTOR’s terms of service prohibit
downloading or exporting documents from
JSTOR using automated computer programs.63 JSTOR also uses technical measures
to prevent automated downloading.64
Swartz allegedly used a laptop connected
to the computer network of the Massachusetts
Institute of Technology (MIT), a JSTOR subscriber, to access JSTOR.65 (MIT has a very
permissive computer culture, and its network
is open and available to anyone on campus.
Anyone on the MIT campus could have
access to JSTOR.66) In response to Swartz’s
rapid downloading of JSTOR articles, JSTOR
blocked the Internet Protocol (IP) address for
MIT that had been assigned to Swartz’s laptop. Swartz then established a new IP address
on the MIT network to sidestep JSTOR’s
block.67 JSTOR complained to MIT about
this, and MIT blocked the Swartz laptop
from its network based on the laptop’s MAC
address, which is a unique identifier assigned
to each computer’s network interface. 68
Swartz avoided MIT’s block by changing
(or spoofing) his laptop’s MAC address.69
The cat-and-mouse game continued
about two weeks until Swartz physically
plugged his laptop directly into MIT’s computer network in an unlocked wiring closet
located in a basement on MIT’s campus.70
There, he allegedly continued to download
articles from JSTOR. MIT traced the location of the laptop in the closet and decided
to treat the downloading as a criminal matter. Local police were called and were joined
by a Secret Service agent, who recommended
installing a surveillance camera.71 In early
January, the camera allegedly recorded
Swartz (with his face obscured by a bicycle
helmet) entering the wiring closet and removing the laptop. 72 Later that day, he was
arrested. JSTOR declined to pursue legal
action against Swartz after he turned over his
hard drives, which contained 4.8 million
JSTOR documents.73 In July 2011, however,
a federal indictment charging Swartz with
violations of the CFAA was unsealed in the
U.S. District Court for the District of
Massachusetts.74 He was accused of violating JSTOR’s use policies and circumventing
JSTOR’s and MIT’s technical restrictions. A
press release by the U.S. Attorney’s Office
Fourth Circuits. The CFAA prohibits more
than just traditional hacking, and Swartz
may have found himself on the wrong side of
the circuit split.
The Swartz case was pending in the District of Massachusetts, and the First Circuit
previously had taken a broad interpretation
of the CFAA in a case in which the plaintiff
had sought to prevent a competitor from
using an automated computer program
(referred to as a scraper) that would download the contents of its public Web site to create a competing travel service.81 Although
stated that Swartz “faces up to 35 years in
prison, to be followed by three years of
supervised release, restitution, forfeiture and
a fine of up to $1 million.”75
Later, Carmen M. Ortiz, the U.S. Attorney
overseeing the case, stated that “stealing is
stealing, whether you use a computer command or a crowbar, and whether you take
documents, data or dollars.”76 It has been
reported that the government asserted the
documents downloaded from JSTOR were
worth $2 million.77 The downloaded documents apparently included publications such
as the 1942 edition of the Journal of Botany.78 As Lessig argued, “[A]nyone who
says that there is money to be made in a
stash of ACADEMIC ARTICLES is either
an idiot or a liar.”79
A computer expert for the defense asserts
that Swartz did not hack JSTOR under any
reasonable definition—Swartz did not use
parameter tampering, break a CAPTCHA, or
do anything more complicated than automate a process that downloads a file in the
same manner as clicking Save As from a
browser.80 It is unclear whether this defense
would have been successful, even with the
recent case law developments in the Ninth and
the First Circuit would not infer a prohibition
under the CFAA against automated access, the
circuit did state in dicta that explicit restrictions set forth on a public Web site’s terms of
service could be enforced under the CFAA.82
Thus, a Massachusetts court may not have
followed Nosal’s narrow interpretation of
the CFAA, which would have excluded termsof-service violations. Swartz was offered a
plea bargain requiring a felony conviction,
under which the government would recommend a prison term (although his defense
counsel could argue to the judge for probation instead).83 Faced with the government's
demand for jail time, Aaron Swartz took his
own life in January.84
Aaron’s Law
In the wake of Swartz’s death, there have
been several proposals to amend the CFAA.
These proposed amendments have been
referred to as Aaron’s Law.
Orin Kerr, a professor at the George Washington University Law School and a former
federal prosecutor, has proposed a number of
changes to the CFAA, including “(1) eliminating liability for exceeding authorized
access, (2) tightening the felony thresholds
Los Angeles Lawyer July/August 2013 35
throughout the statute, and [3] eliminating
several sections of the statute, including…
the civil liability provision which is chiefly
responsible for the overly expansive readings of the statute.”85 Kerr also proposed
that “access without authorization” mean
“to circumvent technological access barriers
to a computer or data without the express
or implied permission of the owner or operator of the computer.”86 Kerr later posted a
series of scenarios in an attempt to help identify what should be the proper line between
authorized and unauthorized access to a
computer.87 The scenarios include examples
of circumventing cookie-based restrictions
and CAPTCHA gates.88
The Electronic Frontier Foundation (EFF)
has proposed defining “without authorization” to mean “to circumvent technological
access barriers to a computer, file, or data
without the express or implied permission
of the owner or operator of the computer to
access the computer, file, or data, but does not
include circumventing a technological measure that does not effectively control access
to a computer, file, or data.”89 The EFF wants
to avoid penalizing “people who have permission to access data but use light technical
workarounds to access that data.”90 Language
in the EFF proposal appears to be borrowed
from the anticircumvention provisions of the
Digital Millennium Copyright Act, which
have been interpreted to mean that a technological measure restricting one form of
access but leaving another route wide open
does not “effectively control access” and
would not be given the force of law.91 This
appears intended to exempt IP and MAC
address spoofing and similar forms of technological circumvention that Swartz was
accused of committing.92 The EFF also has a
link on its Web site encouraging people to take
action to amend the CFAA.93
Representative Zoe Lofgren has posted a
draft bill, christened as “Aaron’s Law,” to
revise the CFAA.94 A revised draft of the bill
eliminates the “exceeds authorized access”
language from the statute and adds a more
detailed definition of “access without authorization.”95 The revised draft states:
“[A]ccess without authorization”—
(A) means (i) to obtain or alter information on a protected computer; (ii)
that the accesser lacks authorization to
obtain or alter; and (iii) by circumventing one or more technological
measures that exclude or prevent unauthorized individuals from obtaining
or altering that information; and (B)
does not include the following, either
in themselves or in combination—(i) a
violation of an agreement, policy, duty,
or contractual obligation regarding
Internet or computer use, such as an
36 Los Angeles Lawyer July/August 2013
acceptable use policy or terms of service agreement with an online service
provider, Internet website, or employer;
or (ii) efforts to prevent personal identification of a computer user, or identification of a user’s hardware device or
software, through a user’s real name,
personally identifiable information, or
software program or hardware device
identifier(s).96
In March, a group of Internet companies
and organizations signed a letter to the House
Subcommittee on Crime, Terrorism, and
Homeland Security in support of the efforts
led by Lofgren to reform the CFAA.97
Even with the bipartisan support of
Representative Darrell Issa and Senator Ron
Wyden, the fate of these proposals is uncertain.98 As Tim Wu, a professor at Columbia
Law School, has observed, “Congress rarely
scales back criminal laws.”99 Moreover, proposals to narrow the scope of a criminal
statute often include provisions for increased
penalties.100 According to Lofgren, the effort
to pass Aaron’s Law “will likely take substantial time and require sustained and intense
support.”101 Time will tell whether Aaron’s
Law will become law.
■
1 Tim Carmody, Memory to Myth: Tracing Aaron
Swartz through the 21st Century, THE VERGE (Jan.
22, 2013), http://www.theverge.com/2013/1/22
/389858/aaron-swartz-profile-memory-to-myth.
2 Lawrence Lessig, Prosecutor as Bully, LESSIG BLOG,
V 2 (Jan. 12, 2013), http://lessig.tumblr.com/post
/40347463044/prosecutor-as-bully [hereinafter Lessig].
3 Larissa MacFarquhar, Requiem for a Dream, THE
NEW YORKER (Mar. 11, 2013), http://nyr.kr/ZUnMMv
[hereinafter MacFarquhar].
4 See D EMAND P ROGRESS , http://www.demandprogress.org/ (Mar. 25, 2013); see also Justin Peters,
The Idealist: Aaron Swartz Wanted to Save the World.
Why Couldn’t He Save Himself?, SLATE (Feb. 7, 2013),
http://slate.me/YevwGC [hereinafter Peters].
5 John Schwartz, Internet Activist, a Creator of RSS, Is
Dead at 26, Apparently a Suicide, N.Y. TIMES (Jan. 12,
2013), http://www.nytimes.com/2013/01/13/technology
/aaron-swartz-internet-activist-dies-at-26.html?_r=0
[hereinafter Schwartz].
6 See, e.g., Orin Kerr, The Criminal Charges against
Aaron Swartz (Part 1: The Law), THE VOLOKH CONSPIRACY (Jan. 14, 2013), http://www.volokh.com/2013
/01/14/aaron-swartz-charges; Jennifer Granick, With the
CFAA, Law and Justice Are Not the Same: A Response
to Orin Kerr, THE CENTER FOR INTERNET AND SOCIETY
(Jan. 14, 2013), https://cyberlaw.stanford.edu/blog
/2013/01/cfaa-law-and-justice-are-not-same-response
0-orin-kerr.
7 Jennifer Granick, Towards Learning from Losing
Aaron Swartz, THE CENTER FOR INTERNET AND SOCIETY
(Jan. 14, 2013), https://cyberlaw.stanford.edu/blog
/2013/01/towards-learning-losing-aaron-swartz [hereinafter Granick, Learning].
8 Paul J. Larkin, Jr., United States v. Nosal: Rebooting
the Computer Fraud and Abuse Act, 8 SETON HALL CIR.
REV. 257, 261 (2012); see also id.
9 18 U.S.C. §1030.
10 See Incorp Servs. Inc. v. Incsmart.Biz Inc., No. 114660, 2012 WL 3685994, at *4 (N.D. Cal. Aug. 24,
2012); American Family Mut. Ins. Co. v. Rickman, 554
F. Supp. 2d 766, 771 (2008).
11 The CFAA was a 1986 amendment to 18 U.S.C.
§1030, but the convention is to refer to §1030 as a
whole as the CFAA. The original 1984 statute was
called the Comprehensive Crime Control Act (CCCA).
Orin S. Kerr, Vagueness Challenges to the Computer
Fraud and Abuse Act, 94 MINN. L. REV. 1561, 1561
n.2, 1563-64 (2012) [hereinafter Kerr].
12 Matthew Kapitanyan, Beyond WarGames: How
the Computer Fraud and Abuse Act Should Be
Interpreted in the Employment Context, 7 I/S: J.L. &
POL’Y FOR THE INFO. SOC’Y 405, 410 (Winter 2012).
13 Kerr, supra note 11, at 1566.
14 Id. (citing 18 U.S.C. §1030(g)).
15 Id. at 1567–68 (citing 18 U.S.C. §1030(e)(2)).
16 Id. at 1571.
17 See 18 U.S.C. §1030(a)(2); see also Jennifer Granick,
Thoughts on Orin Kerr’s CFAA Reform Proposals: A
Great Second Step, The Center for Internet and Society
(Jan. 23, 2013), https://cyberlaw.stanford.edu/blog
/2013/01/thoughts-orin-kerrs-cfaa-reform-proposals
-great-second-step [hereinafter Granick, Thoughts]
(“Historically, the CFAA partitioned the world of computer criminals into two camps, outsiders who ‘access
without authorization’ and wayward insiders who abuse
their position of trust to ‘exceed authorized access’ and
obtain information they were not entitled to.”).
18 Investigating and Prosecuting 21st Century Cyber
Threats: Hearing before United States House of
Representatives Subcommittee on Crime, Terrorism,
Homeland Security and Investigations, 113th Cong. 1
(Mar. 13, 2013) (written statement of Orin S. Kerr),
available at http://www.volokh.com/wp-content
/uploads/2013/03/KerrCFAATestimony2013.pdf.
19 See, e.g., United States v. Morris, 928 F. 2d 504,
505 (1991) (using an Internet “worm” to exploit a security flaw in a computer’s programming code);
YourNetDating, Inc. v. Mitchell, 88 F. Supp. 2d 870,
871 (2000) (hacking a dating service Web site and
diverting its users to a porn site).
20 See, e.g., Pulte Homes, Inc. v. Laborers’ Int’l Union
of N. Am., 648 F. 3d 295, 299-98 (6th Cir. 2011)
(impairing a computer network by directing a large
amount of e-mail at a specific address).
21 See, e.g., Four Seasons Hotels & Resorts B.V. v.
Consorcio Barr, S.A., 267 F. Supp. 2d 1268, 1298
(S.D. Fla. 2003) (“[S]poofing is forging an IP address
so that when a person receives a data packet or communication they believe it is coming from somewhere
else.”), aff’d in part, rev’d in part, 138 F. App’x 297
(11th Cir. 2005); Facebook, Inc. v. Power Ventures,
Inc., 844 F. Supp. 2d 1025, 1037 (N.D. Cal. 2012)
(“[O]ne of the objectives of the [proxy system] design
was to reconfigure the IP connections if an IP address
was blocked.”).
22 See, e.g., Meats by Linz, Inc. v. Dear, No. 10-1511D, 2011 WL 1515028, at *1 (N.D. Tex. Apr. 20, 2011)
(downloading employer’s confidential information after
hours and then e-mailing resignation two hours later).
23 See, e.g., State Analysis, Inc. v. American Fin. Servs.,
621 F. Supp. 2d 309, 316 (E.D. Va. 2009) (“KSE
accessed StateScape’s Web site using usernames and
passwords that did not belong to it.”).
24 See, e.g., America Online, Inc. v. National Health
Care Discount, Inc., 121 F. Supp. 2d 1255, 1260 (N.D.
Iowa 2000) (violating AOL’s terms of service to send
bulk e-mail).
25 See, e.g., Chas. S. Winner, Inc. v. Polistina, 2007 WL
1652292, at *2, (D. N.J. June 4, 2007) (“Absent diversity jurisdiction, a case of this kind sounds in state statutory and common law and is heard in state court.”).
26 International Airport Ctrs., L.L.C. v. Citrin, 440 F.
3d 418 (7th Cir. 2006).
27 Id. at 419-20.
28 Id. at 421.
29 Id.; see also Shurgard Storage Ctrs., Inc. v. Safeguard
Self Storage, Inc., 119 F. Supp. 2d 1121, 1125 (W.E.
Wash. 2000) (cited and relied upon by Citrin).
30 Citrin, 440 F. 3d at 421.
31 United States v. John, 597 F. 3d 263, 273 (5th Cir.
2010) (bank employee accessed customer accounts for
the purpose of incurring fraudulent charges on those
accounts); United States v. Rodriguez, 628 F. 3d 1258,
1263 (11th Cir. 2010) (employee of the Social Security
Administration used an SSA database for personal
reasons).
32 Compare ViChip Corp. v. Lee, 438 F. Supp. 2d
1087, 1100 (N.D. Cal. 2006) (following Citrin’s broad
interpretation of CFAA) with United States v. Drew,
259 F.R.D. 449, 467 (C.D. Cal. 2009) (noting that a
broad interpretation of the CFAA would result in a
“standardless sweep”).
33 LVRC Holdings, LLC v. Brekka, 581 F. 3d 1127 (9th
Cir. 2009).
34 United States v. Nosal, 676 F. 3d 854 (9th Cir.
2012) (en banc).
35 Brekka, 581 F. 3d at 1129-30.
36 Id.
37 Id. at 1134.
38 Id. at 1135.
39 Id. at 1129.
40 Id. at 1134; see also Warren Thomas, Lenity on Me:
LVRC Holdings LLC v. Brekka Points the Way toward
Defining Authorization and Solving the Split over the
Computer Fraud and Abuse Act, 27 GA. ST. U. L.
REV. 379, 400 (2011).
41 United States v. Nosal, 676 F. 3d 854, 856 (9th
Cir. 2012) (en banc).
42 Id. at 856 n.1.
43 United States v. Nosal, No. 08-0237, 2010 WL
934257, at *7 (N.D. Cal. Jan. 6, 2010), rev’d, 642 F.
3d 781 (9th Cir. 2011), rev’d en banc, 676 F. 3d 854
(9th Cir. 2012).
44 Id.
45 United States v. Nosal, 642 F. 3d 781, 789 (2011),
rev’d en banc, 676 F. 3d 854 (2012).
46 Id. at 787. (“Because LVRC had not notified Brekka
of any restrictions on his access to the computer,
Brekka had no way to know whether—or when—his
access would have become unauthorized.”) Id.
47 Id. at 788. But see id. at 790 (Campbell, J., dissenting).
48 United States v. Nosal, 676 F. 3d 854, 863-64 (2012)
(en banc).
49 Id. at 861-62.
50 Id. at 862.
51 Id.; see also United States v. Drew, 259 F.R.D. 449,
466 (C.D. Cal. 2009) (finding the CFAA did not apply
to violations of a Web site’s terms of service).
52 Nosal, 676 F. 3d at 859-60.
53 Id. at 863.
54 Id. at 864. In a jury trial after the remand, Nosal was
found guilty of violating the CFAA because he used a
borrowed password to access Korn/Ferry’s computer
database. See Vanessa Blum, Nosal Found Guilty in
Trade Secret Case, THE RECORDER (Apr. 24, 2013),
http://www.law.com/jsp/ca/PubArticleCA.jsp?id=12025
97433473. Nosal’s attorneys vowed to appeal the verdict. Id.
55 See WEC Carolina Energy Solutions LLC v. Miller,
687 F. 3d 199, 203 (2012); Dana Ltd. v. American
Axle & Mfg. Holdings, Inc., No. 10-450, 2012 WL
2524008, at *4-5 (W.D. Mich. June 29, 2012);
Wentwoth-Douglass Hosp. v. Young & Novus Prof’l
Assoc., No. 10-120, 2012 WL 2522963, at *3-4 (D.
Conn. June 29, 2012); JBCHoldings NY, LLC v.
Pakter, No. 12-7555, 2013 WL 1149061, at *5 (S.D.
N.Y. Mar. 20, 2013).
56 See http://www.aaronsw.com/weblog/001112.
57 John Schwartz, An Effort to Upgrade a Court Archive
System to Free and Easy, N.Y. TIMES, Feb. 12, 2009,
http://www.nytimes.com/2009/02/13/us/13records.html
?_r=0 [hereinafter Schwartz].
Singel, FBI Investigated Coder for Liberating
Paywalled Court Records, WIRED (Oct. 5, 2009),
http://www.wired.com/threatlevel/2009/10/swartz-fbi
[hereinafter Singel].
59 Schwartz, supra note 57. The RECAP add-on for the
Firefox browser now allows users to automatically
save paid-for court filings downloaded from PACER
onto a public server that can later be accessed for free
by other RECAP users. Singel, supra note 58.
60 Id., see also Aaron Swartz, Wanted by the FBI, RAW
T HOUGHT (Oct. 5, 2009), http://www.aaronsw
.com/weblog/fbifile.
61 Superseding Indictment at 1, United States v. Swartz,
No. 11-cr-10260, Dkt. No. 53 (D. Mass. Sept. 12,
2012).
62 Id. at 2. The subscription fees are shared with the
publishers who hold the original copyrights. Id.
63 Id.
64 Id.
65 Id. at 4. (Swartz registered under the name “Gary
Host” and gave his computer the client name “ghost
laptop.”) Id.
66 Id. at 2; see also MacFarquhar, supra note 3.
67 Superseding Indictment, supra note 60, at 5. JSTOR
also temporarily blocked other IP addresses at MIT. Id.
at 6.
68 Id.
69 Id. at 7.
70 Noam Cohen, How M.I.T. Ensnared a Hacker,
Bucking a Freewheeling Culture, N.Y. TIMES (Jan. 20,
2013), http://www.nytimes.com/2013/01/21/technology
/how-mit-ensnared-a-hacker-bucking-a-freewheeling
-culture.html?pagewanted=all.
71 Motion to Suppress No. 1 at 3-5, United States v.
Swartz, No. 11-cr-10260, Dkt. No. 59 (D. Mass. Oct.
5, 2012); see also Two Days Before MIT and
Cambridge Cops Arrested Aaron Swartz, Secret Service
Took Over the Investigation, EMPTYWHEEL (Jan. 13,
2013), http://www.emptywheel.net/2013/01/13/two
-days-before-cambridge-cops-arrested-aaron-swartz
-secret-service-took-over-the-investigation/ (arguing that
under the Secret Service’s Electronic Crimes guidelines, the agency should not have been involved).
72 Peters, supra note 4; see also Superseding Indictment,
supra note 60, at 8.
73 See Lessig, supra note 2.
74 Press Release, United States Attorney’s Office for the
District of Massachusetts, Alleged Hacker Charged
with Stealing over Four Million Documents from MIT
Network (July 19, 2011), http://www.justice.gov
/usao/ma/news/2011/July/SwartzAaronPR.html [hereinafter Press Release].
75 Id. See also Steven Musil, U.S. Attorney Defends
Office’s Conduct in Aaron Swartz Case, CNET (Jan.
16, 2013), http://news.cnet.com/8301-1023_357564414-93/u.s-attorney-defends-offices-conduct-inaaron-swartz-case/.
76 Press Release, supra note 74.
77 MacFarquhar, supra note 3.
78 Id.
79 Lessig, supra note 2 (emphasis in original).
80 Alex Stamos, The Truth About Aaron Swartz’s
“Crime,” UNHANDLED EXCEPTION (Jan. 12, 2013),
http://unhandled.com/2013/01/12/the-truth-about
-aaron-swartzs-crime/.
81 See EF Cultural Travel BV v. Zefer Corp., 318 F. 3d
58 (1st Cir. 2003) (EF Cultural II); EF Cultural Travel
BV v. Explorica, Inc., 274 F. 3d 577 (1st Cir. 2001) (EF
Cultural I).
82 EF Cultural II, 318 F. 3d at 63.
83 MacFarquhar, supra note 3; see also Jennifer Granick,
Towards Learning from Losing Aaron Swartz: Part 2,
The Center for Internet and Society (Jan. 15, 2013),
https://cyberlaw.stanford.edu/blog/2013/01/towards
-learning-losing-aaron-swartz-part-2. (discussing the
58 Ryan
great practical risk in pleading to a felony)
84 Peters, supra note 4; see also Lessig, supra note 2
(“[T]he question this government needs to answer is
why it was so necessary that Aaron Swartz be labeled
a ‘felon.’ For in the 18 months of negotiations, that was
what he was not willing to accept.”).
85 Orin Kerr, Proposed Amendments to 18 U.S.C. 1030,
THE VOLOKH CONSPIRACY (Jan. 20, 2013), http://www
.volokh.com/2013/01/20/proposed-amendments-to
-18-u-s-c-1030/.
86 Orin Kerr, Proposed Amendments to 18 U.S.C.
1030, THE VOLOKH CONSPIRACY (Jan. 20, 2013),
http://www.volokh.com/wp-content/uploads/2013/01
/Amended10302.pdf.
87 Orin Kerr, More Thoughts on the Six CFAA
Scenarios about Authorized Access vs. Unauthorized
Access, THE VOLOKH CONSPIRACY (Jan. 28, 2013),
http://www.volokh.com/2013/01/28/more-thoughts-on
-the-six-cfaa-scenarios-about-authorized-access-vs
-unauthorized-access/.
88 Id.
89 Cindy Cohn & Marcia Hofmann, Part 2: EFF’s
Additional Improvements to Aaron’s Law, DEEPLINKS
BLOG (Jan. 23, 2013), https://www.eff.org/deeplinks
/2013/01/part-2-effs-additional-improvements-aarons
-law [hereinafer Cohn & Hofmann].
90 Id.
91 Granick, Thoughts, supra note 17 (citing Lexmark Int’l,
Inc. v. Static Control Components, Inc., 387 F. 3d 522
(6th Cir. 2004)); but see Stewart Baker, A Dubious
Proposal for Amending the Computer Fraud and Abuse
Act, T HE V OLOKH C ONSPIRACY (Jan. 28, 2013),
http://www.volokh.com/2013/01/28/a-dubious-proposal
-for-amending-the-computer-fraud-and-abuse-act/.
92 Cohn & Hofmann, supra note 89; see also EFF, Explanation of Effects of Aaron’s Law with EFF Proposed
Amendments to “Access Without Authorization” (Jan.
23, 2013), https://www.eff.org/sites/default/files
/Explanation%20of%20Aaron%E2%80%99s%20law
%20with%20EFF%20access%20amendments.pdf
(public discussion draft).
93 EFF.org, The Computer Fraud and Abuse Act Is
Broken. Tell Congress to Fix It, https://action.eff
.org/o/9042/p/dia/action/public/?action_KEY=9005.
94 Adam Clark Estes, The Congressional Backlash over
Aaron Swartz’s Suicide Has Begun, THE ATLANTIC
WIRE (Jan. 15, 2013), http://www.theatlanticwire
.com/politics/2013/01/congressional-backlash-over
-aaron-swartzs-suicide-has-begun/61048/.
95 Discussion Draft, http://lofgren.house.gov/images
/stories/pdf/aarons%20law%20revised%20draft%2001
3013.pdf.
96 Id.; see also Orin Kerr, Drafting Problems with the
Second Version of “Aaron’s Law” from Rep. Lofgren,
THE VOLOKH CONSPIRACY (Feb. 2, 2013), http://www
.volokh.com/2013/02/02/drafting-problems-with-the
-second-version-of-aarons-law-from-rep-lofgren.
97 See Mark M. Jaycox, Startups and Innovators Send
Letter to Congress Demanding CFAA Reform,
D EEPLINKS B LOG (Mar. 12, 2013), https://www
.eff.org/deeplinks/2013/03/startups-and-innovators
-send-letter-congress-demanding-cfaa-reform.
98 Tony Romm, After Activist Aaron Swartz’s Death,
a Tough Slog for Aaron’s Law, POLITICO (Feb. 8,
2013), http://politi.co/XVjnau [hereinafter Romm].
99 Tim Wu, Fixing the Worst Law in Technology, THE
NEW YORKER NEWS DESK (Mar. 18, 2013), http://nyr
.kr/YCubsS.
100 See Orin Kerr, Recent Developments—Both in
the Courts and in Congress—on the Scope of the
Computer Fraud and Abuse Act, T HE V OLOKH
CONSPIRACY (July 30, 2012), http://www.volokh.com
/2012/07/30/recent-developments-both-in-the-courts
-and-in-congress-on-the-scope-of-the-computer-fraud
-and-abuse-act.
101 Romm, supra note 98.
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appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
HAYNIE & COMPANY, CPAS
4910 Campus Drive, Newport Beach, CA 92660, (949)
724-1880, fax (949) 724-1889, e-mail: sgabrielson
@hayniecpa.com. Web site: www.hayniecpa.com.
Contact Steven C. Gabrielson. Consulting and
expert witness testimony in a variety of practice areas:
commercial damages, ownership disputes, economic
analysis, business valuation, lost profits analysis,
fraud/forensic investigations, taxation, personal injury,
wrongful termination, professional liability, and expert
cross examination. Extensive public speaking
background assists in courtroom presentations.
Los Angeles Lawyer July/August 2013 39
HIGGINS, MARCUS & LOVETT, INC.
800 South Figueroa Street, Suite 710, Los Angeles, CA
90017, (213) 617-7775, fax (213) 617-8372, e-mail:
[email protected]. Web site: www.hmlinc.com.
Contact Mark C. Higgins, ASA, president. The firm
has over 30 years of litigation support and expert
testimony experience in matters involving business
valuation, economic damages, intellectual property, loss
of business goodwill, and lost profits. Areas of practice
include business disputes, eminent domain, bankruptcy,
and corporate and marital dissolution. See display ad
on page 43.
KRYCLER, ERVIN, TAUBMAN, &
WALHEIM
15303 Ventura Boulevard, Suite 1040, Sherman Oaks,
CA 91403, (818) 995-1040, fax (818) 995-4124, email:
[email protected]. Web site: www.ketw.com. Contact
Michael J. Krycler. Litigation support, including
forensic accounting, business appraisals, family law
accounting, business and professional valuations,
damages, fraud investigations, and lost earnings.
Krycler, Ervin, Taubman and Walheim is a full-service
accounting firm serving the legal community for more
than 20 years. See display ad on page 44.
MAYER HOFFMAN MCCANN P.C.
10474 Santa Monica Boulevard, Suite 200, Los
Angeles, CA 90025, (310) 268-2000, fax (310) 2682001, e-mail: [email protected] or [email protected].
Web site: www.MHM-PC.com. Contact Coral
Hansen or Len Lyons. Experienced professionals
providing forensic accounting services in fraud
investigations, marital dissolutions, corporate/partnership/
LLC dissolutions, economic damages, loss of earnings,
malpractice defense, expert witness testimony, and
business valuations. Experts include CPA, CFF, CFP,
CFE, ABV, JD.
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
businesses, and wrongful termination. See display ad
on page 41.
ZIVETZ, SCHWARTZ & SALTSMAN, CPAS
11900 West Olympic Boulevard, Suite 650, Los
Angeles, CA 90064-1046, (310) 826-1040, fax (310)
826-1065. Web site: www.zsscpa.com. Contact
Lester J. Schwartz, CPA/CFF, DABFE, DABFA;
Michael D. Saltsman, CPA, MBA; David L. Bass,
CPA; David Dichner, CPA, ABV, CVA; Sandy
Green, CPA; Daljeet Kaur, CPA. Accounting experts
in forensic accounting, tax issues, business valuations,
appraisals, marital dissolutions, eminent domain,
insurance losses, business interruption, goodwill,
economic analysis, investigative auditing, loss of
earning, commercial damages, and lost profits. Expert
witness testimony preparation, settlement negotiations,
and consultations. See display ad on page 47.
40 Los Angeles Lawyer July/August 2013
CELL PHONE FORENSICS
DIGITAL FORENSIC INVESTIGATIONS, INC.
P.O. Box 1288, Costa Mesa, CA 92628, (714) 8677286, e-mail: [email protected]. Web site:
www.dfinvestigations.com. Contact Mark J.
Eskridge, CFCE, DFCP, EnCE, ACE. Digital Forensic
Investigations, Inc. offers your firm extensive expertise
in computer forensics, cellphone forensics, and high
technology investigations. As the owner and primary
forensic investigator, I will utilize my twelve years of
experience as a criminal investigator and computer
forensic examiner with the Orange County District
Attorney’s Office to provide you with the personalized
attention and responsiveness that your case deserves.
Digital Forensic Investigations, Inc., services include
both computer and cellphone forensics in the
corporate, civil, and criminal defense arenas.
INCIDENTRESPONSE.US
710 South Myrtle Avenue, Suite 300, Monrovia,
CA 91016, (888) 330-5550, fax (888) 339-4582,
e-mail: [email protected]. Web site:
www.IncidentResponse.us. Contact Ernest
Koeberlein. Certified Cellebrite mobile phone forensic
investigator, certified information systems security
professional, California private investigator license
#27470, masters: criminal justice and digital forensics,
computer hacking forensic investigator, certified
forensic computer examiner, EnCase certified examiner,
and certified ethical hacker. See display ad on
page 31.
CIVIL INVESTIGATIONS
KEYSTONE INVESTIGATIVE
SERVICES, INC.
530 South Lake Avenue, Suite 706, Pasadena, CA
91101, (626) 676-5170, e-mail: [email protected].
Web site: www.keystoneis.com. Contact Kelly Cory,
president/CEO. Premier investigative firm offering
specialized services for civil litigation, work place
investigations, and entertainment industry matters.
Experts in the field of litigation support and insurance/
malpractice defense. We conduct in-house research
and field investigations, and remain at the top of our
industry by using progressive technology and state-ofthe-art information gathering resources. Let us show
you how we can provide the competitive edge on all of
your case matters! Full-service line at
www.keystoneis.com.
COMPUTER FORENSICS
DIGITAL FORENSIC INVESTIGATIONS, INC.
P.O. Box 1288, Costa Mesa, CA 92628, (714) 8677286, e-mail: [email protected]. Web site:
www.dfinvestigations.com. Contact Mark J.
Eskridge, CFCE, DFCP, EnCE, ACE. Digital Forensic
Investigations, Inc. offers your firm extensive expertise
in computer forensics, cellphone forensics, and high
technology investigations. As the owner and primary
forensic investigator, I will utilize my twelve years of
experience as a criminal investigator and computer
forensic examiner with the Orange County District
Attorney’s Office to provide you with the personalized
attention and responsiveness that your case deserves.
Digital Forensic Investigations, Inc., services include
both computer and cellphone forensics in the
corporate, civil, and criminal defense arenas.
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
INCIDENTRESPONSE.US
710 South Myrtle Avenue, Suite 300, Monrovia, CA
91016, (888) 330-5550, fax (888) 339-4582, e-mail:
[email protected]. Web site: www
.IncidentResponse.us. Contact Ernest Koeberlein.
Certified Cellebrite mobile phone forensic investigator,
certified information systems security professional,
California private investigator license #27470, masters:
criminal justice and digital forensics, computer hacking
forensic investigator, certified forensic computer
examiner, EnCase certified examiner, and certified
ethical hacker. See display ad on page 31.
SETEC INVESTIGATIONS
8391 Beverly Boulevard, Suite 167, Los Angeles, CA
90048, (800) 748-5440, fax (323) 939-5481, e-mail:
[email protected]. Web site:
www.setecinvestigations.com. Contact Todd Stefan.
Setec Investigations offers unparalleled expertise in
computer forensics and enterprise investigations
providing personalized, case-specific forensic analysis
and litigation support services for law firms and
corporations. Setec Investigations possesses the
necessary combination of technical expertise,
understanding of the legal system, and specialized tools
and processes enabling the discovery, collection,
investigation, and production of electronic information
for investigating and handling computer-related crimes
or misuse. Our expertise includes computer forensics,
electronic discovery, litigation support, and expert
witness testimony.
CONSTRUCTION INVESTIGATIONS
DONLEY CONSTRUCTION CONSULTANTS
2524 Micheltorena Street, Los Angeles, CA 90039,
(213) 290 6226. Web site: www.donleycc.com.
Contact John Donley. Objective consulting on
construction disputes. Settle your construction disputes
with the benefit of our technical expertise and objective
eye. Our construction consulting services include:
defect, delay and cost overrun, claims analysis and
management for plaintiff or defense counsel, technical
reports and exhibits, construction document
management, expert witness testimony. We work on
residences, commercial construction multifamily
residences, schools, hospitals, or public facilities.
Donley Construction Consultants offer you flexible
services for investigation, analysis, and preparation for
settlement or court. We build a customized team from
our network of professionals so you can access and
budget for only the resources necessary to your case.
Also, San Francisco office location (415) 456-9242.
FORENSISGROUP
EXPERT WITNESS SERVICES SINCE 1991
301 North Lake Avenue, Suite 420, Pasadena, CA
91101-5119, (800) 555-5422, (626) 795-5000, fax
(626) 795-1950; email: [email protected].
Web site: www.forensisgroup.com. Contact Mercy
Steenwyk. Over 8,000 clients have retained our
experts in over 10,000 cases nationwide. We respond
in one hour or less. ForensisGroup is an expert witness
services and consulting company, providing experts,
expert witnesses, and consultants to law firms,
insurance companies, and other public and private
firms in thousands of disciplines: construction,
engineering, business, accounting, intellectual property,
computers, IT, medical, real estate, insurance, product
liability, premises liability, safety, and others, including
experts in complex and hard-to-find disciplines. Let us
give you the technical advantage and competitive edge
in your cases. Referrals, customized searches and initial
phone consultations are free. See display ad on
page 39.
URS
915 Wilshire Boulevard, Suite 700, Los Angeles, CA
90017, (213) 996-2549, fax (213) 996-2521, e-mail:
[email protected]. Expert witness for
entitlement, causation damages on design, construction,
and geotechnical environmental disputes. Experienced in
all types of construction projects. See display ad on
page 43.
CORPORATE INVESTIGATIONS
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
KEYSTONE INVESTIGATIVE
SERVICES, INC.
530 South Lake Avenue, Suite 706, Pasadena, CA
91101, (626) 676-5170, e-mail: [email protected].
Web site: www.keystoneis.com. Contact Kelly Cory,
president/CEO. Premier investigative firm offering
specialized services for civil litigation, work place
investigations, and entertainment industry matters.
Experts in the field of litigation support and
insurance/malpractice defense. We conduct in-house
research and field investigations, and remain at the top
of our industry by using progressive technology and
state-of-the-art information gathering resources. Let us
show you how we can provide the competitive edge on
all of your case matters! Full-service line at
www.keystoneis.com.
MAYER HOFFMAN MCCANN P.C.
10474 Santa Monica Boulevard, Suite 200, Los
Angeles, CA 90025, (310) 268-2000, fax (310) 2682001, e-mail: [email protected] or [email protected].
Web site: www.MHM-PC.com. Contact Coral
Hansen or Len Lyons. Experienced professionals
providing forensic accounting services in fraud
investigations, marital dissolutions, corporate/
partnership/LLC dissolutions, economic damages, loss
of earnings, malpractice defense, expert witness
testimony, and business valuations. Experts include
CPA, CFF, CFP, CFE, ABV, JD.
SAPIENT INVESTIGATIONS, INC.
1810 14th Street, Suite 212, Santa Monica, CA 90404,
(310) 399-8200, fax (310) 496-2637. Web site:
www.sapientpi.com. Contact David Cogan, CFE,
42 Los Angeles Lawyer July/August 2013
managing director. Sapient Investigations, Inc., the
Westside’s premier intelligence firm, has a long history
of tracking and recovering assets for its clients in the
U.S. and abroad. These challenging cases require a
deep knowledge of how assets are hidden and an
uncanny ability to follow the money trail. We have
pierced corporate veils for Fortune 500 companies and
traced money offshore. For a consultation, please
contact David Cogan, CFE, at (310) 399-8200 or visit
www.sapientpi.com.
THE SPECIAL AGENT GROUP LLC
2901 West Coast Highway, Suite 200, Newport Beach,
CA 92663, (213) 216-3613, fax (714) 998-2699, e-mail:
[email protected]. Web site:
www.TheSpecialAgentGroup.com. Contact Robert
Warren, certified fraud examiner, managing
director. The Special Agent Group is a full-service
licensed and insured Private Investigation firm, CAPI
License #26078. Agents served in the IRS, FBI, and
LAPD for over 25 years. We are experienced in
litigation, fraud, employee misconduct, forensic
accounting, embezzlements, backgrounds, and criminal
defense. Agents can find witnesses and assets
anywhere in the U.S. within 48 hours. We have expert
witnesses in IRS controversies, money laundering,
fraud, and law enforcement matters.
CORROSION
KARS ADVANCED MATERIALS, INC.
Testing and Research Labs, 2528 West Woodland
Drive, Anaheim, CA 92801-2636, (714) 527-7100, fax
(714) 527-7169, e-mail: [email protected]. Web site:
www.karslab.com. Contact Drs. Ramesh J. Kar or
Naresh J. Kar. Southern California’s premier materials/
mechanical/metallurgical/structural/forensics laboratory.
Registered professional engineers with 30-plus years in
metallurgical/forensic/structural failure analysis.
Experienced with automotive, bicycles, tires, fire, paint,
plumbing, corrosion, and structural failures. We work on
both plaintiff and defendant cases. Complete in-house
capabilities for tests. Extensive deposition and
courtroom experience (civil and criminal investigations).
Principals are fellows of American Society for Metals
and board-certified diplomates, American Board of
Forensic Examiners. See display ad on page 49.
DENTISTRY
PARVIZ AZAR-MEHR, DMD
Prosthodontist, Professor of Clinical Dentistry, USC
10291 Wilshire Boulevard, Suite 501, Los Angeles, CA
90024, (310) 443-3030, fax (310) 443-5660. Web site:
www.azarmehr.com. Contact Parviz Azar-Mehr.
Professor of Clinical Dentistry USC; more than 25 years
experience, experienced expert witness; member of
numerous dental organizations including American
College of Prosthodontics. More than 30 publications in
professional journals; 100+ cases: Expert witness and
court appearances. Dental malpractice and disorders of
TMJ. Complimentary preliminary case evaluations.
Degrees/licenses: Advanced prosthodontics, USC,
DMD, NYU and University of Michigan.
DOGS
JILL KESSLER, GRAD. CERT., CPDT
341 North Grenola Street, Pacific Palisades, CA 90272,
(310) 573-9615, fax (310) 573-1304, e-mail: jillkessler
@mac.com. Web site: www.jillkessler.com. Opinion,
consultation, reports, evaluations in dog bites,
aggression, behaviors, training, showing, breed
tendencies, service and rescued dogs. Specializing in
Rottweilers and pit-bull type dogs. See display ad on
page 39.
ECONOMIC DAMAGES
CMM, LLP
5700 Canoga Avenue, Suite 300, Woodland Hills, CA
91367, (818) 986-5070, fax (818) 986-5034, e-mail:
[email protected]. Web site: www.cmmcpas
.com. Contact Scott Mowrey. Specialties:
consultants who provide extensive experience, litigation
support, and expert testimony regarding forensic
accountants, fraud investigations, economic damages,
business valuations, family law, bankruptcy, and
reorganization. Degrees/license: CPAs, CFEs, MBAs.
See display ad on page 39.
ECON ONE RESEARCH, INC.
550 South Hope Street, Suite 800, Los Angeles, CA
90071, (213) 624-9600, e-mail: [email protected].
Web site: www.econone.com. Contact Lisa Skylar.
Econ One provides economic research, consulting, and
expert testimony in many areas, including: antitrust,
intellectual property and patent infringement, contract
disputes, damages analysis/calculations, employment
issues, and unfair competition. We offer in-house
expertise in applied economic theory, econometrics,
statistics, and years of experience successfully dealing
with the specific demands of the litigation process.
Econ One experts have testified in state and federal
courts; administrative, legislative, and regulatory
agencies; and in arbitrations and mediations. We
understand the need for clear, accurate, persuasive
answers to complex problems. See display ad on
page 45.
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
MAYER HOFFMAN MCCANN P.C.
10474 Santa Monica Boulevard, Suite 200, Los
Angeles, CA 90025, (310) 268-2000, fax (310) 2682001, e-mail: [email protected] or [email protected].
Web site: www.MHM-PC.com. Contact Coral
Hansen or Len Lyons. Experienced professionals
providing forensic accounting services in fraud
investigations, marital dissolutions, corporate
/partnership/LLC dissolutions, economic damages,
loss of earnings, malpractice defense, expert witness
testimony, and business valuations. Experts include
CPA, CFF, CFP, CFE, ABV, JD.
WARONZOF ASSOCIATES, INC.
2250 East Imperial Highway, Suite 120, El Segundo,
CA 90245, (310) 322-7744, fax (310) 322-7755. Web
site: www.waronzof.com. Contact Timothy R. Lowe,
MAI, CRE. Waronzof provides real estate and land use
litigation support services including economic damages,
lost profits, financial feasibility, lease dispute, property
value, enterprise value, partnership interest and closelyheld share value, fair compensation, lender liability and
reorganization plan feasibility. Professional staff of five
with advanced degrees and training in real estate,
finance, urban planning, and accounting. See display
ad on page 47.
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
businesses, and wrongful termination. See display ad
on page 41.
Life Care
Planning
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www.linc.biz
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VIDEO SERVICE Day in Life – Mediation/Settlement Documentary
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ZIVETZ, SCHWARTZ & SALTSMAN, CPAS
11900 West Olympic Boulevard, Suite 650, Los
Angeles, CA 90064-1046, (310) 826-1040, fax (310)
826-1065. Web site: www.zsscpa.com. Contact
Lester J. Schwartz, CPA/CFF, DABFE, DABFA;
Michael D. Saltsman, CPA, MBA; David L. Bass,
CPA; David Dichner, CPA, ABV, CVA; Sandy
Green, CPA; Daljeet Kaur, CPA. Accounting experts
in forensic accounting, tax issues, business valuations,
appraisals, marital dissolutions, eminent domain,
insurance losses, business interruption, goodwill,
economic analysis, investigative auditing, loss of
earning, commercial damages, and lost profits. Expert
witness testimony preparation, settlement negotiations,
and consultations. See display ad on page 47.
ECONOMICS
Matthew Lankenau
213-996-2549
[email protected]
URS is the nation’s largest engineering, consulting and construction
services firm. URS specializes in the resolution of construction disputes.
Dispute Resolution & Forensic Analysis
Design/Construction Claims
Environmental Claims
Bid/Cost/Damage Analysis
Construction Defect Analysis
Delay/Acceleration/Disruption Analysis
Expert Witness Testimony
Insurance/Bond Claims
Technical Expertise
Architecture
Engineering
Scheduling
Construction Management
Cost Estimating & Auditing
Environmental
Geotechnical
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
ELECTRONIC EVIDENCE/DATA
RECOVERY
SETEC INVESTIGATIONS
8391 Beverly Boulevard, Suite 167, Los Angeles, CA
90048, (800) 748-5440, fax (323) 939-5481, e-mail:
[email protected]. Web site: www
.setecinvestigations.com. Contact Todd Stefan.
Setec Investigations offers unparalleled expertise in
computer forensics and enterprise investigations
providing personalized, case-specific forensic analysis
and litigation support services for law firms and
corporations. Setec Investigations possesses the
necessary combination of technical expertise,
understanding of the legal system, and specialized tools
and processes enabling the discovery, collection,
investigation, and production of electronic information
for investigating and handling computer-related crimes
or misuse. Our expertise includes computer forensics,
ConfidenceAtThe Courthouse.
Business litigation is increasingly complex. That is why we believe valuation
issues must be addressed with the same meticulous care
as legal issues. Analysis must be clear. Opinions must be
defensible. Expert testimony must be thorough and
articulate. HML has extensive trial experience and can
provide legal counsel with a powerful resource for expert
testimony and litigation support.
For More Information Call 213-617-7775
Or visit us on the web at www.hmlinc.com
BUSINESS VALUATION • LOSS OF GOODWILL • ECONOMIC DAMAGES • LOST PROFITS
Los Angeles Lawyer July/August 2013 43
electronic discovery, litigation support, and expert
witness testimony.
EMPLOYMENT
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
EMPLOYMENT/WAGE & HOUR
DISPUTE
ECON ONE RESEARCH, INC.
550 South Hope Street, Suite 800, Los Angeles, CA
90071, (213) 624-9600, e-mail: [email protected].
Web site: www.econone.com. Contact Lisa Skylar.
Econ One provides economic research, consulting, and
expert testimony in many areas, including: antitrust,
intellectual property and patent infringement, contract
disputes, damages analysis/calculations, employment
issues, and unfair competition. We offer in-house
expertise in applied economic theory, econometrics,
statistics, and years of experience successfully dealing
with the specific demands of the litigation process.
Econ One experts have testified in state and federal
courts; administrative, legislative, and regulatory
agencies; and in arbitrations and mediations. We
understand the need for clear, accurate, persuasive
answers to complex problems. See display ad on
page 45.
ENGINEERING
✒ Litigation support
✒ Expert witness
✒ Forensic accountants
✒ Family law matters
✒ Business valuations
✒ Loss of earnings
✒ Damages
When you need more than just
numbers... you can count on us...
Contact Michael Krycler
PHONE (818) 995-1040
FAX (818) 995-4124
E-MAIL [email protected]
VISIT US @ www.KETW.COM
15303 VENTURA BOULEVARD, SUITE 1040
SHERMAN OAKS, CALIFORNIA 91403
44 Los Angeles Lawyer July/August 2013
EXPONENT
5401 McConnell Avenue, Los Angeles, CA 90066,
(310) 754-2700, fax (310) 754-2799, e-mail: reza
@exponent.com. Web site: www.exponent.com.
Contact Ali Reza. Fires and explosions, metallurgy
and mechanical engineering, structural and
geotechnical, accident reconstruction and analysis,
human factors, visibility analysis, battery failure analysis,
toxicology and human health, biomechanics, electrical
and semiconductors, aviation, materials science,
HVAC, energy consulting, construction defect, and
scheduling.
ENGINEERING/GEOTECHNICAL
COTTON, SHIRES AND ASSOCIATES, INC.
330 Village Lane, Los Gatos, CA 95030-7218, (408)
354-5542, fax (408) 354-1852, 550 St. Charles Drive,
Suite 108, Thousand Oaks, CA 91360-3995, (805)
497-7999, fax (805) 497-7933 e-mail: losgatos
@cottonshires.com. Web site: www.cottonshires.com.
Contact Patrick O. Shires. Full-service geotechnical
engineering consulting firm specializing in investigation,
design, arbitration, and expert witness testimony with
offices in Los Gatos, San Andreas, and Thousand
Oaks, California. Earth movement (settlement, soil
creep, landslides, tunneling, and expansive soil),
foundation distress (movement and cracking of
structures) drainage and grading (seeping slabs and
ponding water in crawlspace), pavement and slabs
(cracking and separating), retaining walls (movement,
cracking, and failures), pipelines, flooding and
hydrology, design and construction deficiencies, expert
testimony at over 80 trials (municipal, superior, and
federal); 125+ depositions; 250+ settlement
conferences in southern and northern California and
Hawaii.
FAILURE ANALYSIS
KARS ADVANCED MATERIALS, INC.
Testing and Research Labs, 2528 West Woodland
Drive, Anaheim, CA 92801-2636, (714) 527-7100, fax
(714) 527-7169, e-mail: [email protected]. Web site:
www.karslab.com. Contact Drs. Ramesh J. Kar or
Naresh J. Kar. Southern California’s premier
materials/mechanical/metallurgical/structural/forensics
laboratory. Registered professional engineers with 30plus years in metallurgical/forensic/structural failure
analysis. Experienced with automotive, bicycles, tires,
fire, paint, plumbing, corrosion, and structural failures.
We work on both plaintiff and defendant cases.
Complete in-house capabilities for tests. Extensive
deposition and courtroom experience (civil and criminal
investigations). Principals are fellows of American
Society for Metals and board-certified diplomates,
American Board of Forensic Examiners. See display
ad on page 49.
FAMILY LAW
BRIAN LEWIS & COMPANY
10900 Wilshire Boulevard, Suite 610, Los Angeles, CA
90024, (310) 475-5676, fax (310) 475-5268, e-mail:
[email protected]. Contact Brian Lewis,
CPA, CVA. Forensic accounting, business valuations,
cash spendable reports, estate, trust, and income tax
services.
KRYCLER, ERVIN, TAUBMAN, & WALHEIM
15303 Ventura Boulevard, Suite 1040, Sherman Oaks,
CA 91403, (818) 995-1040, fax (818) 995-4124, email:
[email protected]. Web site: www.ketw.com. Contact
Michael J. Krycler. Litigation support, including
forensic accounting, business appraisals, family law
accounting, business and professional valuations,
damages, fraud investigations, and lost earnings.
Krycler, Ervin, Taubman and Walheim is a full-service
accounting firm serving the legal community for more
than 20 years. See display ad on this page.
MAYER HOFFMAN MCCANN P.C.
10474 Santa Monica Boulevard, Suite 200, Los
Angeles, CA 90025, (310) 268-2000, fax (310) 2682001, e-mail: [email protected] or [email protected].
Web site: www.MHM-PC.com. Contact Coral
Hansen or Len Lyons. Experienced professionals
providing forensic accounting services in fraud
investigations, marital dissolutions, corporate/
partnership/LLC dissolutions, economic damages,
loss of earnings, malpractice defense, expert witness
testimony, and business valuations. Experts include
CPA, CFF, CFP, CFE, ABV, JD.
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
businesses, and wrongful termination. See display ad
on page 41.
ZIVETZ, SCHWARTZ & SALTSMAN, CPAS
11900 West Olympic Boulevard, Suite 650, Los
Angeles, CA 90064-1046, (310) 826-1040, fax (310)
826-1065. Web site: www.zsscpa.com. Contact
Lester J. Schwartz, CPA/CFF, DABFE, DABFA;
Michael D. Saltsman, CPA, MBA; David L. Bass,
CPA; David Dichner, CPA, ABV, CVA; Sandy
Green, CPA; Daljeet Kaur, CPA. Accounting experts
in forensic accounting, tax issues, business valuations,
appraisals, marital dissolutions, eminent domain,
insurance losses, business interruption, goodwill,
economic analysis, investigative auditing, loss of
earning, commercial damages, and lost profits. Expert
witness testimony preparation, settlement negotiations,
and consultations. See display ad on page 47.
STEVEN BURRES, MD, FAACS | MEDICAL EXPERT
SPECIALIZING IN EAR, NOSE & THROAT: HEARING LOSS, ALLERGY, VOICE, SINUS, ETC.
COSMETIC SURGERY: FACLIFTS, EYELIDS, NOSE, LIPOSUCTION, SCAR, FACIAL INJURY,
• Stanford Trained
• University of
Chicago-Pritzker
Medical School
Faculty
• Board Certified Facial
Plastic Surgery
• Board Certified Ear,
Nose and Throat
• American Academy
of Cosmetic Surgery
Frequent national speaker – Published 30 scientific papers
Won two research awards – Former UCLA faculty
— Over 30 years of experience —
TEL 310.385.0590
/ 877.784.5543
E-MAIL [email protected] FAX 323.937.1673
465 North Roxbury Drive, Suite 1012, Beverly Hills CA 90210
EXPERT WITNESS — Claims Consultant
FINANCIAL
HAYNIE & COMPANY, CPAS
4910 Campus Drive, Newport Beach, CA 92660, (949)
724-1880, fax (949) 724-1889, e-mail: sgabrielson
@hayniecpa.com. Web site: www.hayniecpa.com.
Contact Steven C. Gabrielson. Consulting and
expert witness testimony in a variety of practice areas:
commercial damages, ownership disputes, economic
analysis, business valuation, lost profits analysis,
fraud/forensic investigations, taxation, personal injury,
wrongful termination, professional liability, and expert
cross examination. Extensive public speaking
background assists in courtroom presentations.
• USC-LA County
EXPERIENCE
q
q
INTEGRITY
HONESTY
OVER 45 YEARS EXPERIENCE as a claims adjuster, licensed in three states and
qualified in state and federal courts. Expert in good faith/bad faith,
standards and practices and standard in the industry. Specialties in
property/casualty construction defect, fire/water, uninsured/underinsured
motorist, warehouse and cargo claims. Failure to defend and/or indemnify.
Litigation support, case review and evaluation claim consultation, coverage
review and valuations. Appraisal, Arbitration and Claims Rep. at MSC & MMC.
Contact Gene Evans at E. L. Evans Associates
Phone (310) 559-4005 / Fax (310) 559-4236 / E-mail [email protected]
3 3 1 0 A I R P O R T AVENUE, S U I T E 7 , S A N T A M O N I C A , C A L I F O R N I A 9 0 4 0 5
FINANCIAL STATEMENTS
MAYER HOFFMAN MCCANN P.C.
10474 Santa Monica Boulevard, Suite 200, Los
Angeles, CA 90025, (310) 268-2000, fax (310) 2682001, e-mail: [email protected] or [email protected].
Web site: www.MHM-PC.com. Contact Coral
Hansen or Len Lyons. Experienced professionals
providing forensic accounting services in fraud
investigations, marital dissolutions, corporate/
partnership/LLC dissolutions, economic damages, loss
of earnings, malpractice defense, expert witness
testimony, and business valuations. Experts include
CPA, CFF, CFP, CFE, ABV, JD.
FORENSIC ACCOUNTING
BRIAN LEWIS & COMPANY
10900 Wilshire Boulevard, Suite 610, Los Angeles, CA
90024, (310) 475-5676, fax (310) 475-5268, e-mail:
[email protected]. Contact Brian Lewis,
CPA, CVA. Forensic accounting, business valuations,
cash spendable reports, estate, trust, and income tax
services.
COPAS & COPAS, INC.
631 Del Monte Drive, Hollister, CA 95023, (831) 6349400 or (408) 357-4114. Web site: www.Copas-inc
.com. Contact Sandra Copas [email protected], or Bryan Copas, [email protected].
CCI Financial Investigations (Copas & Copas, Inc.)
provides nationwide individual and business asset
searches specifically for attorneys, individuals, and
businesses throughout California for litigation purposes
at flat rate pricing. Targeted for Dissolution of Marriage
and Embezzlement matters, we locate, interpret, and
simplify complex financial information to offer you an
Enhanced Nationwide Asset Report. Typical results of
We know economic damages analysis. From antitrust to contract breach to oil & gas royalty
payments to wrongful termination, our damages analysis draws directly from our economic
expertise. We posit a world where things would be different--an exercise that draws from
economic principles (what should it look like?) and the actual (what did happen?). We use
state-of-the-art economic, statistical and econometric tools to gather and analyze the data.
And, as always, our findings are clearly communicated. After all, it’s our job to make sure
we’re not the only ones in the room who understand economic damages. econone.com
Antitrust • Intellectual Property • Damages Analysis • Employment Issues
Los Angeles Lawyer July/August 2013 45
nationwide liquid and hard asset searches include
bank, brokerage, retirement and online trade accounts,
safety deposit boxes, credit reports, and real property
with mortgage information when available. To comply
with FCRA and GLBA, our reports will give you the
financial institution name, location, type of accounts,
and bank balances. Comprehensive background
reports are automatically included in our Enhanced
Nationwide Asset Reports to help identify aliases, family
members, and unknown business associations, where
money and other assets may be hidden. CA Private
Investigator License #25429. For more information,
please visit www.copas-inc.com. See display ad on
page 4.
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
MAYER HOFFMAN MCCANN P.C.
10474 Santa Monica Boulevard, Suite 200, Los
Angeles, CA 90025, (310) 268-2000, fax (310) 2682001, e-mail: [email protected] or [email protected].
Web site: www.MHM-PC.com. Contact Coral
Hansen or Len Lyons. Experienced professionals
providing forensic accounting services in fraud
investigations, marital dissolutions, corporate/
partnership/LLC dissolutions, economic damages,
loss of earnings, malpractice defense, expert witness
testimony, and business valuations. Experts include
CPA, CFF, CFP, CFE, ABV, JD.
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
businesses, and wrongful termination. See display ad
on page 41.
ZIVETZ, SCHWARTZ & SALTSMAN, CPAS
11900 West Olympic Boulevard, Suite 650, Los
Angeles, CA 90064-1046, (310) 826-1040, fax (310)
826-1065. Web site: www.zsscpa.com. Contact
Lester J. Schwartz, CPA/CFF, DABFE, DABFA;
Michael D. Saltsman, CPA, MBA; David L. Bass,
CPA; David Dichner, CPA, ABV, CVA; Sandy
Green, CPA; Daljeet Kaur, CPA. Accounting experts
in forensic accounting, tax issues, business valuations,
appraisals, marital dissolutions, eminent domain,
46 Los Angeles Lawyer July/August 2013
insurance losses, business interruption, goodwill,
economic analysis, investigative auditing, loss of
earning, commercial damages, and lost profits. Expert
witness testimony preparation, settlement negotiations,
and consultations. See display ad on page 47.
FRAUD INVESTIGATIONS
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad
back cover.
KROLL ADVISORY SOLUTIONS
555 South Flower Street, Suite 610, Los Angeles, CA
90017, (213) 443-6090, fax (213) 443-6050. Web site:
www.krolladvisory.com. Contact Mary Fulginiti,
[email protected], Kenneth Mate, [email protected].
Kroll Advisory Solutions is internationally recognized as
the premier firm in conducting investigations of fraud
and misconduct, developing facts and intelligence to
support successful litigation strategies, performing due
diligence investigations on prospective deals, evaluating
business opportunities, and assessing the strengths
and weaknesses of competitors. Our services include
corporate internal investigations, litigation support, due
diligence, business intelligence, asset searches, hostile
takeovers and proxy contests, forensic accounting,
anti-money laundering, and compliance and monitoring.
With offices in 29 cities across 17 countries, Kroll
Advisory Solutions serves a global clientele of law firms,
financial institutions, corporations, nonprofit institutions,
government agencies, and individuals.
MARTINO CONSULTING & INVESTIGATIVE
SERVICES, INC.
P.O. Box 950428, Mission Hills, CA 91345, (818) 4720374, fax (818) 920-1367, e-mail: danmartino@verizon
.net. Web site: www.danielmartino.com. Contact
Daniel M. Martino, president. Daniel Martino is a
former FBI supervisory special agent with 34 years of
experience with an emphasis on white collar criminal
and civil investigations. During 1996-2005, Mr. Martino
managed the FBI Health Care Fraud Program in
Southern California. Mr. Martino is nationally recognized
in the healthcare fraud arena. Areas of practice include
due diligence, background healthcare, financial, and
insurance fraud investigations. Additional litigation
support services available.
MAYER HOFFMAN MCCANN P.C.
10474 Santa Monica Boulevard, Suite 200, Los
Angeles, CA 90025, (310) 268-2000, fax (310) 2682001, e-mail: [email protected] or [email protected].
Web site: www.MHM-PC.com. Contact Coral
Hansen or Len Lyons. Experienced professionals
providing forensic accounting services in fraud
investigations, marital dissolutions, corporate/
partnership/LLC dissolutions, economic damages,
loss of earnings, malpractice defense, expert witness
testimony, and business valuations. Experts include
CPA, CFF, CFP, CFE, ABV, JD.
SAPIENT INVESTIGATIONS, INC.
1810 14th Street, Suite 212, Santa Monica, CA 90404,
(310) 399-8200, fax (310) 496-2637. Web site:
www.sapientpi.com. Contact David Cogan, CFE,
managing director. Sapient Investigations, Inc., the
Westside’s premier intelligence firm, specializes in
investigating fraud in companies and nonprofit organizations, whether internal or external. We assist our
clients in uncovering evidence of wrongdoing, unravel
the perpetrator’s financial network, and compile cases
that can be taken directly to law enforcement. Our principals are registered with the national Association of
Certified Fraud Examiners. For a consultation, please
contact David Cogan, CFE, at (310) 399-8200 or visit
www.sapientpi.com.
THE SPECIAL AGENT GROUP LLC
2901 West Coast Highway, Suite 200, Newport Beach,
CA 92663, (213) 216-3613, fax (714) 998-2699, e-mail:
[email protected]. Web site:
www.TheSpecialAgentGroup.com. Contact Robert
Warren, Certified fraud examiner, managing
director. The Special Agent Group is a full service
licensed and insured Private Investigation firm, CAPI
License #26078. Agents served in the IRS, FBI, and
LAPD for over 25 years. We are experienced in
litigation, fraud, employee misconduct, forensic
accounting, embezzlements, backgrounds, and criminal
defense. Agents can find witnesses and assets
anywhere in the U.Ss within 48 hours. We have expert
witnesses in IRS controversies, money laundering,
fraud, and law enforcement matters.
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
businesses, and wrongful termination. See display ad
on page 41.
GENERAL CONTRACTOR
ARCHITECT AND GENERAL CONTRACTOR
RICHARD N RICE, AIA, NCARB,
ARCHITECT & ASSOCIATES, INC.
4973 Leeds Street, Simi Valley, CA 93063, (805) 5779455, fax (805) 577-9457, e-mail: [email protected].
Web site: www.jurispro.com/mem/richardrice. Forensic
Architectural and Construction Technical Services
(F.A.C.T.S.). Forty-plus years of winning reports and
forensic testimony. Diverse experience: commercial/
residential up to $30 million. Expert witness,
construction defects, codes, contracts, water intrusion,
investigations, site inspection, coordination of experts,
destructive testing, repair solutions, bidding, and costs,
and allocation of responsibility and detailed reports.
Certified Mediator and Arbitrator and Dispute Review
Board Panelist. Trial support. Degrees/license: BA
Architecture; Certified Architect/National Council of
Architectural Registration Boards/General Contractor,
insurance appraiser, and mediator/arbitrator/Dispute
Review Board Panelist.
HIGH-PROFILE EXECUTIVES
EXECUTIVE LAW GROUP, INC.
One Newport Place, Suite 1000, Newport Beach, CA
92660, (949) 222-0188, fax (949) 553-8464, e-mail:
[email protected]. Web site: www.execlaw.com.
Contact Clarence Carter. When an investigation
involves a senior executive, the stakes are always high.
For over 30 years, public agencies and private
corporations have turned to R. Craig Scott, the CEO
and managing partner of Executive Law Group, to
conduct their most sensitive investigations of highprofile executives. Need to talk? Call Executive Law
Group at (949) 222-0188. www.execlaw.com.
INSURANCE
[email protected]. Web site: www.fulcrum.com.
Contact David Nolte. Our professionals are
experienced CPAs, MBAs, ASAs, CFAs, affiliated
professors, and industry specialists. Our analysis and
research combined with unique presentation
techniques have resulted in an unequaled record of
successful court cases and client recoveries. Our
expertise encompasses damages analysis, lost profit
studies, business and intangible asset valuations,
appraisals, fraud investigations, troubled company
consultation, statistics, forensic economic analysis,
royalty audits, strategic and market assessments,
computer forensics, electronic discovery, and analysis
of computerized data. Degrees/licenses: CPAs, CFAs,
ASAs, PhDs and MBAs in accounting, finance,
economics, and related subjects. See display ad on
back cover.
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
E.L. EVANS ASSOCIATES
3310 Airport Avenue, Suite 7, Santa Monica, CA
90405, (310) 559-4005, fax (310) 559-4236, e-mail:
[email protected]. Contact Gene Evans. Good
faith/bad faith. Over 45 years’ experience–claims
adjuster. Standards and practices in the industry,
litigation support, claims consultation, case review and
evaluation, property/casualty claims, construction
claims, uninsured/underinsured motorist claims, general
liability, fire/water/mold claims, damage assessment,
professional liability claims, appraisal under policy,
arbitration, duty to defend, advertising claims, coverage
applications, and suspected fraud claims. CV available
on request. See display ad on page 45.
INSURANCE/MALPRACTICE
DEFENSE
KEYSTONE INVESTIGATIVE
SERVICES, INC.
530 South Lake Avenue, Suite 706, Pasadena, CA
91101, (626) 676-5170, e-mail: [email protected].
Web site: www.keystoneis.com. Contact Kelly Cory,
president/CEO. Premier investigative firm offering
specialized services for civil litigation, work place
investigations, and entertainment industry matters.
Experts in the field of litigation support and insurance/
malpractice defense. We conduct in-house research
and field investigations, and remain at the top of our
industry by using progressive technology and state-ofthe-art information gathering resources. Let us show
you how we can provide the competitive edge on all of
your case matters! Full-service line at
www.keystoneis.com.
Zivetz, Schwartz & Saltsman CPA’s
With more than thirty years of experience as expert witnesses
in testimony, pre-trial preparation, settlement negotiations,
consultations and court appointed special master.
Some of our specialties consist of:
INTELLECTUAL PROPERTY/
ACQUISITIONS INVESTIGATIONS
• Forensic Accounting • Marital Dissolutions
ECON ONE RESEARCH, INC.
• Business Valuation and Appraisal • Lost Profits
550 South Hope Street, Suite 800, Los Angeles, CA
90071, (213) 624-9600, e-mail: [email protected].
Web site: www.econone.com. Contact Lisa Skylar.
Econ One provides economic research, consulting, and
expert testimony in many areas, including: antitrust,
intellectual property and patent infringement, contract
disputes, damages analysis/calculations, employment
issues, and unfair competition. We offer in-house
expertise in applied economic theory, econometrics,
statistics, and years of experience successfully dealing
with the specific demands of the litigation process.
Econ One experts have testified in state and federal
courts; administrative, legislative, and regulatory
agencies; and in arbitrations and mediations. We
understand the need for clear, accurate, persuasive
answers to complex problems. See display ad on
page 45.
FULCRUM INQUIRY
888 South Figueroa Street, Suite 2000, Los Angeles,
CA 90017, (213) 787-4100, fax (213) 891-1300, e-mail:
• Economic Damages • Accounting Malpractice
• Employee Benefit Plans • Entertainment Entities
• Financial and Economic Analysis • Shareholder Disputes
• Wrongful Termination
Tel: (310) 826-1040
Lester J. Schwartz, CPA, CFF, DABFA, DABFE
Fax: (310) 826-1065
Michael D. Saltsman, CPA, MBA
E-mail: [email protected]
David L. BASS, CPA
www.zsscpa.com
Dave Dichner, CPA, ABV, CVA
11900 W. Olympic Blvd.
Sandy Green, CPA
Suite 650
Daljeet Kaur, CPA
Los Angeles, CA 90064-1046
Los Angeles Lawyer July/August 2013 47
businesses, and wrongful termination. See display ad
on page 41.
INVESTIGATIONS
APPLIED FACTS
700 Wilshire Boulevard, Suite 520, Los Angeles, CA
90017, (213) 892-8700, fax (213) 683-1938, e-mail:
[email protected]. Web site: www
.appliedfacts.com. Contact Henry Kupperman.
International investigative firm providing services
throughout the world. Areas of expertise include internal
corporate investigations, intellectual property matters,
investigative due diligence (including Patriot Act). FCPA
matters, litigation support and intelligence, forensic
accounting, compliance, surveillance, security
consulting, and computer forensics. Our professional
staff includes top experts from the fields of law, law
enforcement, intelligence services, accounting,
investigative journalism, computer forensics, and
research analysis. Assignments are performed pursuant
to a prearranged budget.
LIFE CARE PLANNERS
AMFS MEDICAL EXPERTS NATIONWIDE
6425 Christie Avenue, Suite 260, Emeryville, CA 94608,
(800) 275-8903. Web site: www.AMFS.com. Medical
experts for malpractice and personal injury cases.
AMFS is America’s premier medical expert witness and
consulting company. We are a trusted partner with the
legal community and provide a superior method of
retaining medical experts. For over 20 years, AMFS has
provided board-certified experts in over 10,000
malpractice and personal injury cases. • Board-Certified
experts in all medical specialties • Practicing physicians
with legal experience • No-cost attorney consultations •
Record review and testimony • Independent Medical
Examinations (IME) and autopsies • Essential affidavits
and reporting. Discuss your case at no charge with one
of our Medical Directors, who will identify and clarify
your case issues to ensure you retain the appropriate
specialists. Cost-effective initial case reviews for merit.
Have your case reviewed for merit by members of our
50+ member multispecialty Physician Advisory Panel.
Review and select expert CVs. Our experience,
resources, and large proprietary database enable us to
quickly identify and interview a large number of potential
medical experts on your behalf and provide you with
the CVs of those who are best suited to your case. See
display ad on page 44.
LITIGATION INVESTIGATIONS
ECON ONE RESEARCH, INC.
550 South Hope Street, Suite 800, Los Angeles, CA
90071, (213) 624-9600, e-mail: [email protected].
Web site: www.econone.com. Contact Lisa Skylar.
Econ One provides economic research, consulting, and
expert testimony in many areas, including: antitrust,
intellectual property and patent infringement, contract
disputes, damages analysis/calculations, employment
issues, and unfair competition. We offer in-house
expertise in applied economic theory, econometrics,
statistics, and years of experience successfully dealing
with the specific demands of the litigation process.
Econ One experts have testified in state and federal
courts; administrative, legislative, and regulatory
agencies; and in arbitrations and mediations. We
understand the need for clear, accurate, persuasive
answers to complex problems. See display ad on
page 45.
HIGGINS, MARCUS & LOVETT, INC.
800 South Figueroa Street, Suite 710, Los Angeles, CA
90017, (213) 617-7775, fax (213) 617-8372, e-mail:
[email protected]. Web site: www.hmlinc.com.
Contact Mark C. Higgins, ASA, president. The firm
48 Los Angeles Lawyer July/August 2013
has over 30 years of litigation support and expert
testimony experience in matters involving business
valuation, economic damages, intellectual property, loss
of business goodwill, and lost profits. Areas of practice
include business disputes, eminent domain, bankruptcy,
and corporate and marital dissolution. See display ad
on page 43.
SAPIENT INVESTIGATIONS, INC.
1810 14th Street, Suite 212, Santa Monica, CA 90404,
(310) 399-8200, fax (310) 496-2637. Web site:
www.sapientpi.com. Contact David Cogan, CFE,
managing director. Sapient Investigations, Inc., the
Westside’s premier intelligence firm, has a long history
of tracking and recovering assets for its clients in the
U.S. and abroad. These challenging cases require a
deep knowledge of how assets are hidden and an
uncanny ability to follow the money trail. We have
pierced corporate veils for Fortune 500 companies and
traced money offshore. For a consultation, please contact David Cogan, CFE, at (310) 399-8200 or visit
www.sapientpi.com.
LITIGATION/LEGAL
INVESTIGATION
KEYSTONE INVESTIGATIVE
SERVICES, INC.
530 South Lake Avenue, Suite 706, Pasadena, CA
91101, (626) 676-5170, e-mail: [email protected].
Web site: www.keystoneis.com. Contact Kelly Cory,
president/CEO. Premier investigative firm offering
specialized services for civil litigation, work place
investigations, and entertainment industry matters.
Experts in the field of litigation support and
insurance/malpractice defense. We conduct in-house
research and field investigations and remain at the top
of our industry by using progressive technology and
state-of-the-art information gathering resources. Let us
show you how we can provide the competitive edge on
all of your case matters! Full-service line at
www.keystoneis.com.
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
businesses, and wrongful termination. See display ad
on page 41.
MECHANICAL ENGINEERING
THOMAS L. LISTON, P.E.
329 South San Antonio Road, Suite 5, Los Altos, CA
94022, (650) 948-1830, fax (650) 948-3030, e-mail:
[email protected]. Web site: www
.tomlistoninc.com. Contact Tom Liston, PE. Air
conditioning system giving you problems? Your
servicemen not giving you satisfactory answers? You
strongly suspect that your system is not as it should be
and could be? I’ll take careful look at original design
plans and specs for flaws, original installation for
defects, current maintenance, and operation for errors. I
will record temperatures, power use, and control
responses. Concepts for corrections will follow. Tom
Liston, P.E. Mechanical Engineer.
MEDICAL COSMETIC SURGERY
STEVEN BURRES, M.D.
465 North Roxbury Drive, Suite 1012, Beverly Hills, CA
90210, (310) 385-0590, fax (310) 937-1673, e-mail:
[email protected]. Cosmetic surgery, audiology, earnose-throat, rhinoplasty, facelift, hearing loss, sinus
surgery, tinnitus, hoarseness, scars, trauma, dizziness,
vertigo, hair loss, liposuction, eyelids, nerve injury, and
facial nerve. See display ad on page 45.
MEDICAL EAR/NOSE/THROAT
STEVEN BURRES, M.D.
LITIGATION SUPPORT
INVESTIGATIONS
KROLL ADVISORY SOLUTIONS
555 South Flower Street, Suite 610, Los Angeles, CA
90017, (213) 443-6090, fax (213) 443-6050. Web site:
www.krolladvisory.com. Contact Mary Fulginiti,
[email protected], Kenneth Mate, [email protected].
Kroll Advisory Solutions is internationally recognized as
the premier firm in conducting investigations of fraud
and misconduct, developing facts and intelligence to
support successful litigation strategies, performing due
diligence investigations on prospective deals, evaluating
business opportunities, and assessing the strengths
and weaknesses of competitors. Our services include
corporate internal investigations, litigation support, due
diligence, business intelligence, asset searches, hostile
takeovers and proxy contests, forensic accounting,
anti-money laundering, and compliance and monitoring.
With offices in 29 cities across 17 countries, Kroll
Advisory Solutions serves a global clientele of law firms,
financial institutions, corporations, nonprofit institutions,
government agencies, and individuals.
LOST PROFITS AND EARNINGS
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
465 North Roxbury Drive, Suite 1012, Beverly Hills, CA
90210, (310) 385-0590, fax (310) 937-1673, e-mail:
[email protected]. Cosmetic surgery, audiology, ear
nose throat, rhinoplasty, facelift, hearing loss, sinus
surgery, tinnitus, hoarseness, scars, trauma, dizziness,
vertigo, hair loss, liposuction, eyelids, nerve injury, and
facial nerve. See display ad on page 45.
MEDICAL EXPERT WITNESSES
(ALL SPECIALTIES)
AMFS MEDICAL EXPERTS NATIONWIDE
6425 Christie Avenue, Suite 260, Emeryville, CA 94608,
(800) 275-8903. Web site: www.AMFS.com. Medical
experts for malpractice and personal injury cases.
AMFS is America’s premier medical expert witness and
consulting company. We are a trusted partner with the
legal community and provide a superior method of
retaining medical experts. For over 20 years, AMFS has
provided board-certified experts in over 10,000
malpractice and personal injury cases. • Board-Certified
experts in all medical specialties • Practicing physicians
with legal experience • No-cost attorney consultations •
Record review and testimony • Independent Medical
Examinations (IME) and autopsies • Essential affidavits
and reporting. Discuss your case at no charge with one
of our Medical Directors, who will identify and clarify
your case issues to ensure you retain the appropriate
specialists. Cost-effective initial case reviews for merit.
Have your case reviewed for merit by members of our
50+ member multispecialty Physician Advisory Panel.
Review and select expert CVs. Our experience,
resources, and large proprietary database enable us to
quickly identify and interview a large number of potential
medical experts on your behalf and provide you with
the CVs of those who are best suited to your case. See
display ad on page 44.
MEDICAL FACIAL PLASTIC
SURGERY
STEVEN BURRES, M.D.
465 North Roxbury Drive, Suite 1012, Beverly Hills, CA
90210, (310) 385-0590, fax (310) 937-1673, e-mail:
[email protected]. Contact Steven Burres, M.D.
Cosmetic surgery, audiology, ear-nose-throat,
rhinoplasty, facelift, hearing loss, sinus surgery, tinnitus,
hoarseness, scars, trauma, dizziness, vertigo, hair loss,
liposuction, eyelids, nerve injury, and facial nerve. See
display ad on page 45.
Contact Barbara Luna. Expert witness testimony for
complex litigation-damage analyses of lost profits,
unjust enrichment, reasonable royalties, lost earnings,
lost business value, forensic accounting, fraud
investigation, and investigative analysis of liability.
Excellent communications with extensive testimony
experience. PhD’s, MBA’s CPA’s, CFF’s, CFE’s, ASA’s,
and ABV’s. Specialties include accounting, breach of
contract, business interruption, business dissolution,
construction. fraud, insurance bad faith, intellectual
property, malpractice, personal injury, product liability,
real estate, securities, unfair competition, valuation of
businesses, and wrongful termination. See display ad
on page 41.
MEDICAL LEGAL
PLASTIC AND COSMETIC
RECONSTRUCTIVE SURGERY
ROUGHAN & ASSOCIATES AT LINC, INC.
STANLEY P. FRILECK, MD, F.A.C.S.
114 West Colorado Boulevard, Monrovia, CA 91016,
(626) 303-6333, fax (626) 303-8080, e-mail: janr@linc
.biz. Contact Jan Roughan at ext. 16. Specialties:
Roughan and Associates at LINC is a case management and medical/legal consulting firm. Services/
products offered include: 1) expert testimony, 2) life
care plan (LCP) construction/LCP critique, 3) medical
record organization/Summarization/analysis, 4) medical
bill auditing, 5) expert witness identification, 6) IME
attendance, 7) video services (e.g., day in life,
settlement brief, IME evaluation, NDT/PT evaluation,
etc.), 8) questions for: deposition/cross examination ,
9) medical/psychiatric case management. See display
ad on page 43.
METALLURGY
KARS ADVANCED MATERIALS, INC.
Testing and Research Labs, 2528 West Woodland
Drive, Anaheim, CA 92801-2636, (714) 527-7100, fax
(714) 527-7169, e-mail: [email protected]. Web site:
www.karslab.com. Contact Drs. Ramesh J. Kar or
Naresh J. Kar. Southern California’s premier
materials/mechanical/metallurgical/structural/forensics
laboratory. Registered professional engineers with 30plus years in metallurgical/forensic/structural failure
analysis. Experienced with automotive, bicycles, tires,
fire, paint, plumbing, corrosion, and structural failures.
We work on both plaintiff and defendant cases.
Complete in-house capabilities for tests. Extensive
deposition and courtroom experience (civil and criminal
investigations). Principals are fellows of American
Society for Metals and board-certified diplomates,
American Board of Forensic Examiners. See display
ad on this page.
PERSONAL INJURY
KEYSTONE INVESTIGATIVE SERVICES,
INC.
530 S. Lake Avenue, Suite 706, Pasadena, CA 91101,
(626) 676-5170, e-mail: [email protected]. Web
site: www.keystoneis.com. Contact Kelly Cory,
president/CEO. Premier investigative firm offering
specialized services for civil litigation, work place
investigations and entertainment industry matters.
Experts in the field of litigation support and insurance/
malpractice defense. We conduct in-house research &
field investigations and remain at the top of our industry
by using progressive technology and state of the art
information gathering resources. Let us show you how
we can provide the competitive edge on all of your case
matters! Full-service line at www.keystoneis.com.
WHITE, ZUCKERMAN, WARSAVSKY,
LUNA & HUNT
15490 Ventura Boulevard, Suite 300, Sherman Oaks,
CA 91403, (818) 981-4226, fax (818) 981-4278, e-mail:
[email protected]. Web site: www.wzwlh.com.
11980 San Vicente Boulevard, Suite 110, Los Angeles,
CA 90049, (310) 820-1491, fax (310) 826-1977, e-mail:
[email protected]. Web site: www.drfrileck.com.
Contact Amanda Campbell. Diplomate, American
Board of Plastic Surgery; Assistant Clinical Professor at
UCLA and Veterans Administration Hospital—
Wadsworth; President Emeritus, UCLA Plastic Surgery
Society. Over 25 years of experience in private and
medical/legal practice specializing in plastic and
reconstructive surgery, cosmetic and burn
reconstruction. Expert witness and consultation in
medical malpractice, product liability, and personal
injury. Technical advisory for film and television.
JEFFREY L. ROSENBERG, MD
1245 Wilshire Boulevard, Suite 601, Los Angeles, CA
90017, (213) 977-0257, fax (213) 977-0501. Plastic
and reconstructive surgery, burn specialist. Diplomate,
American Board of Plastic Surgery. Member, American
Burn Association, and American Society of Plastic
Surgeons.
POLYGRAPH
JACK TRIMARCO & ASSOCIATES
POLYGRAPH INC.
9454 Wilshire Boulevard, 6th Floor, Beverly Hills, CA
90212, (310) 247-2637, e-mail: [email protected].
Web site: www.jacktrimarco.com. Contact Jack
Trimarco. Former manager of the Federal Bureau of
Investigation’s polygraph program in Los Angeles.
Former Inspector, General Polygraph Program—
Department of Energy. Nationally known and respected
polygraph expert. I have the credentials you would want
when you have a client polygraphed, a case reviewed,
or a motion made regarding polygraph. My unique
background allows me to bring the highest levels of
service and expertise to any polygraph situation.
Current member of the Ethics Committee, California
Association of Polygraph Examiners (CAPE). Hundreds
of appearances on national TV, including Dr. Phil,
Oprah, Greta, Nancy Grace, O’Reilly Factor, and
Hannity and Colmes. Degrees/licenses: BS Psychology;
Certified APA, AAPP, CAPE, AAFE. See display ad on
page 2.
PRIVATE INVESTIGATIONS
PARRENT SMITH INVESTIGATIONS &
RESEARCH
10158 Hollow Glen Circle, Los Angeles, CA 90077,
(310) 275-8619, (800) 516-2448, fax (310) 274-0503,
or (707) 540-6047, e-mail: [email protected]
or [email protected]. Web site: www
.psinvestigates.com. Contact Joanne Parrent or Nic
Smith. PSI is a full-service investigative firm. Nic Smith
has 40 years in the field conducting investigations for
THE BEST LEGAL MINDS
IN THE COUNTRY
TALK TO US
• Metallurgical Failures
• Corrosion & Welding Failures
• Glass & Ceramic Failures
• Chairs / Ladders / Tires
• Automobile/Aerospace/
Accidents
Contact:
• Bio-Medical/Orthopedic Implants
• Plumbing/Piping/ABS Failures
• Complete In-House Laboratory
Testing & Analysis Facilities
• Expert Witnesses/Jury Verdicts
• Licensed Professional Engineers
Dr. Naresh Kar, Fellow ASM, Fellow ACFE
Dr. Ramesh Kar, Fellow ASM, Fellow ACFE
ADVANCED MATERIALS, INC.
Testing & Research Labs
2528 W. Woodland Drive
Anaheim, CA 92801
■ TEL: (714)527-7100
■ FAX: (714)527-7169
■ www.karslab.com
■ email: [email protected]
Los Angeles Lawyer July/August 2013 49
attorneys in thousands of civil and criminal cases. We
specialize in all types of litigation support including
asset searches; witness interviews; complex litigation
investigations; corporate, family, and environmental
cases. Nic Smith is a court-qualified expert in security
and investigative standards. Joanne Parrent, formerly
an author and journalist, brings her investigative
research background to all matters. Offices in Los
Angeles and San Francisco. Services throughout
California.
THE SPECIAL AGENT GROUP LLC
2901 West Coast Highway, Suite 200, Newport Beach,
CA 92663, (213) 216-3613, fax (714) 998-2699,
e-mail: [email protected]. Web
site: www.TheSpecialAgentGroup.com. Contact
Robert Warren, certified fraud examiner,
managing director. The Special Agent Group is a full
service licensed and insured Private Investigation firm,
CAPI License #26078. Agents served in the IRS, FBI,
and LAPD for over 25 years. We are experienced in
litigation, fraud, employee misconduct, forensic
accounting, embezzlements, backgrounds, and
criminal defense. Agents can find witnesses and assets
anywhere in the U.S. within 48 hours. We have expert
witnesses in IRS controversies, money laundering,
fraud, and law enforcement matters.
PUBLIC SECTOR
SCOTT & WHITEHEAD
1301 Dove Street, Suite 1000, Newport Beach, CA
92660, (949) 222-0166, fax (949) 222-0113, e-mail:
[email protected]. Web site: www.employerlaw
.com. Contact Clarence Carter. With 20 years
experience as a mayor and city council member, cities
and other public agencies have turned to R. Craig
Scott, managing partner of the employment law firm of
Scott & Whitehead, to conduct their most sensitive
workplace investigations. Mr. Scott understands the
workings of government and does not need to be
“brought up to speed.” Need to talk? Call Scott &
Whitehead at (949) 222-0166. www.employerlaw.com.
investigations; corporate, family, and environmental
cases. Nic Smith is a court-qualified expert in security
and investigative standards. Joanne Parrent, formerly
an author and journalist, brings her investigative
research background to all matters. Offices in Los
Angeles and San Francisco. Services throughout
California.
REAL PROPERTY
TITLE CONSULTING
LAW OFFICE OF LORE HILBURG
1943 Buckingham Road, Los Angeles, CA 90016,
(323) 934-4443, fax (323) 934-4034, e-mail: lore
@hilburglaw.com. Contact Lore Hilburg. Lore Hilburg
Esq. is a seasoned professional who has served as an
expert witness on escrow and real property title dispute
over matters such as but not limited to easements, lien
priority, constructive notice and grantor/grantee index
searches. Ms. Hilburg also serves as a consultant on
real property title and/or escrow issues whether they
arise in litigation such as tort claims, legal malpractice,
breach of contract, or other real property disputes or
transactional setting.
PETRU CORPORATION
SURVEILLANCE
SCOTT & WHITEHEAD
PARRENT SMITH INVESTIGATIONS &
RESEARCH
10158 Hollow Glen Circle, Los Angeles, CA 90077,
(310) 275-8619, (800) 516-2448, fax (310) 274-0503,
or (707) 540-6047, e-mail: [email protected]
or [email protected]. Web site: www
.psinvestigates.com. Contact Joanne Parrent or Nic
Smith. PSI is a full-service investigative firm. Nic Smith
has 40 years in the field conducting investigations for
attorneys in thousands of civil and criminal cases. We
specialize in all types of litigation support including
asset searches; witness interviews; complex litigation
250 Hallock Drive, Suite 100, Santa Paula, CA
93060, (805) 933-1389, fax (805) 933-1380, e-mail:
[email protected]. Web site: www
.PetruCorporation,com. Contact Tim Truwe. Title
searching, title engineering, title claims and research,
rights of way, water rights, oil, gas, mineral,
geothermal, mining rights consulting, regulatory
compliance, subdivision map, act consulting, and
expert witness.
WORKPLACE INVESTIGATIONS
1301 Dove Street, Suite 1000, Newport Beach, CA
92660, (949) 222-0166, fax (949) 222-0113, e-mail:
[email protected]. Web site: www.employerlaw
.com. Contact Clarence Carter. The Law Firm of
Scott & Whitehead offers a variety of specialized
workplace investigation services, including, but not
limited to: discrimination, harassment, and retaliation
complaints; employee misconduct, including fraud and
embezzlement; workplace violence; and workplace
accident and injury claims. Let us help you maintain a
safe and profitable workplace. Call Scott & Whitehead
at (949) 222-0166. www.employerlaw.com.
NORIEGA CHIROPRACTIC CLINICS, INC.
JESS T. NORIEGA, D.C.
Is proud to announce the opening of our Lynwood location
SERVICING: SOUTHGATE • BELLFLOWER • CUDAHY • NORTH LONG BEACH • WATTS
LYNWOOD HEALTH CENTER
11123 LONG BEACH BLVD.
LYNWOOD, CA 90262
HUNTINGTON PARK
HEALTH CENTER
ONTARIO HEALTH
SERVICES
(310) 604-6940
3033 E. Florence Ave.
Huntington Park, CA 90255
(323) 582-8401
602B N. Euclid Ave.
Ontario, CA 91764
(909) 395-5598
WHITTIER HEALTH
SERVICES
MONTEBELLO HEALTH
CENTER
SOUTH CENTRAL
HEALTH CENTER
13019 Bailey Ave. Suite F
Whittier, CA 90601
(562) 698-2411
HIGHLAND PARK
HEALTH CENTER
604 North Monetebllo Blvd.,
Montebello, CA 90640
(323) 726-8818
4721 S. Broadway Blvd.
Los Angeles, CA 90037
(323) 234-3100
5421 N. Figueroa St.
Highland Park, CA 90042
(323) 478-9771
1 • 800 • NORIEGA
50 Los Angeles Lawyer July/August 2013
Personal Injury cases accepted on lien basis.
1•800•667•4342
Affiniscape Merchant Solutions, p. 5
The Holmes Law Firm, p. 8
Ross Mediation Services, p. 15
Tel. 866-376-0950 www.lawpay.com
Tel. 626-432-7222 www.theholmeslawfirm.com
Tel. 818-840-0950 www.rossmediation.com
AMFS, Inc. (American Medical Forensic Specialists, Inc.), p. 44
Huron Law Group, p. 10
Roughan & Associates at LINC, p. 43
Tel. 800-275-8903 www.amfs.com
Tel. 310-284-3400 www.huronlaw.com
Tel. 626-303-6333 x16 e-mail: [email protected]
The California Academy of Distinguished Neutrals, p. 26, 27
IncidentResponse.us, p. 31
Anita Rae Shapiro, p. 15
Tel. 310-341-3879 www.CaliforniaNeutrals.org
Tel. 888-330-5550 http://www.incidentResponse.us
Tel. 714-529-0415 www.adr-shapiro.com
California Western School of Law, p. 24
Jack Trimarco & Associates Polygraph, Inc., p. 2
St. Thomas More Society, Inside back cover
Tel. 800-255-4252 www.californiawestern.edu
Tel. 310-247-2637 www.jacktrimarco.com
Tel. 626-914-8942
CMM, LLP, p. 39
James R. DiFrank, PLC, p. 19
Stephen Danz & Associates, p. 10
Tel. 818-986-5070 e-mail: [email protected]
Tel. 562-789-7734 www.bardefense.net e-mail: [email protected]
Tel. 877-789-9707 www.employmentattorneyca.com
Commerce Escrow Company, p. 16
JAMS, The Resolution Experts, p. 11
The Esquire Network (“TEN”), Inside front cover
Tel. 213-484-0855 www.comescrow.com
Tel. 800-352-JAMS (800-352-5267) www.jamsadr.com
Tel. 818-268-5929 e-mail: [email protected]
Copas & Copas, Inc. p. 4
Kantor & Kantor, LLP, p. 19
URS, p. 43
Tel. 831-634-9400 or 408-357-4114 www.copas-inc.com
Tel. 877-783-8686 www.kantorlaw.net
Tel. 213-996-2555 www.urscorp.com
Twin Cities Mediation, p. 19
KARS Advanced Materials, Inc., p. 49
Walzer & Melcher, p. 1
Tel. 651-699-5000 www.twincitiesmediation.com
Tel. 714-892-8987 www.karslab.com
Tel. 818-591-3700 e-mail: [email protected]
E. L. Evans & Associates, p. 45
Krycler, Ervin, Taubman & Walheim, p. 44
Waronzof Associates, p. 47
Tel. 310-559-4005
Tel. 818-995-1040 www.ketw.com
Tel. 310-954-8060 www.waronzof.com
Econ One Research, Inc., p. 45
LawBiz Management, p. 15
White, Zuckerman, Warsavsky, Luna, & Hunt, p. 41
Tel. 213-624-9600 e-mail: [email protected]
Tel. 800-837-5880 www.lawbiz.com e-mail: [email protected]
Tel. 818-981-4226 www.wzwlw.com
ForensisGroup Inc., p. 39
Lawyer Referral and Information Service, p. 18
Witkin & Eisinger, LLC, p. 4
Tel. 626-795-5000 www.forensisgroup.com
Tel. 213-243-1525 www.smartlaw.com
Tel. 818-845-4000
FULCRUM Financial Inquiry LLP, back cover
Lawyers’ Mutual Insurance Co., p. 7
Woodard Mediation, p. 10
Tel. 213-787-4100 www.fulcruminquiry.com
Tel. 800-252-2045 www.lawyersmutual.com
Tel. 626-584-8000 www.woodardmediation.com
Gerber & Co., p. 15
MCLE4LAWYERS.COM, p. 31
World Wide Mediators, p. 15
Tel. 310-552-1600 http://gerberco.com
Tel. 310-552-5382 www.MCLEforlawyers.com
Tel. 818-500-7500 www.wwmediators.org
Greg David Derin, p. 18
Michael Marcus, p. 4
Zivetz, Schwartz & Saltsman, p. 47
Tel. 310-552-1062 www.derin.com
Tel. 310-201-0010 www.marcusmediation.com
Tel. 310-826-1040 www.zsscpa.com
Higgins, Marcus & Lovett, Inc., p. 43
Noriega Clinics, p. 50
Tel. 213-617-7775 www.hmlinc.com
Tel. 213-716-3744
Los Angeles Lawyer July/August 2013 51
closing argument
BY EDWARD S. RENWICK
Can Task Billing Be a Cure for the Unhappiest Job in America?
ACCORDING TO A SURVEY RECENTLY REPORTED in the electronic edi- quotas for billable hours. Instead, any productivity quotas they have
tion of the American Bar Association Journal, an associate attorney are based on completing prepriced tasks. If a lawyer is falling short,
has the unhappiest job in America.1 The reason given is “a structured the solution is to complete more tasks. Each completed task will move
environment that is heavily centered on billable hours.” Earlier, the the case closer to its conclusion. There will be no incentive to record
same journal reported a fee dispute between a large national law firm billable time on unnecessary tasks.
Clients should be receptive to prepriced task billing since it is a
and a client. The client’s discovery found an indiscreet internal e-mail
means to control litigation costs. However, it should be equally
referring to the firm’s billing process as “Churn that bill, baby.”2
Is there a connection between unhappy associates and churning attractive to law firms. First, law firms can make their clients happy
that bill? Most certainly, yes. Focusing on billable hours unavoidably by helping them control costs. As the case proceeds, the law firm will
invites associates and partners to record their time with a heavy receive regular agreed-to payments as tasks are completed. When the
hand or spend time on unnecessary projects.
Small wonder that idealistic young associates
are unhappy. The same undoubtedly goes for
No longer will clients feel they have to obsessively review
many partners. Would lawyers be happier if
they could avoid living or dying by the billable
hour? I think so. Is it possible to abandon the
invoices and micromanage their trial counsel.
billable hour and still make an adequate living?
The answer is yes. The solution is to stop
focusing on time and start focusing on results.
I am not suggesting lawyers stop keeping time. I am suggesting that case is completed, if the results are good, the firm will receive an agreedto bonus. Second, it should be attractive to law firms because it protime is a good measure of cost but not value.
How do we arrange to be paid for results rather than hours with- motes trust between lawyer and client. That should improve firm
out restricting our practices to contingency work? One answer is to morale and help cement good relations with valued clients.
Third, task-based billing benefits not only the client but also the
switch to a prepriced, task-based billing system. Under such a system
each task would be prepriced and the firm paid as discrete tasks are firm because the case will practically manage itself. Both client and
completed. In addition, the firm should be paid a negotiated bonus for firm are able to easily monitor the progress and cost of the case by
good results. This system will work in any litigation in which legal fees consulting the case budget and noting which tasks have been completed and which have not. No longer will clients feel they have to
are significant enough to justify the time spent preparing a budget.
Some clients and firms may resist task billing in the belief that bud- obsessively review invoices and micromanage their trial counsel in an
geting cases and prepricing tasks accurately are too difficult. They are effort to control litigation costs. If the firm wants trial counsel to take
wrong. An experienced trial lawyer who takes the time to understand an extra lawyer to a deposition, it is the firm’s decision and will not
his or her case well in advance of filing a complaint or answer, who matter to the client because it does not change the budgeted and
understands the budgeting process, who has the necessary tools, and prepriced cost of the task.
Fourth, the financial interests of counsel and client will be aligned.
who has the skills to use those tools can budget a case. The first tool
is a detailed trial task list arranged in chronological order. The sec- No longer will every monthly invoice present a chance for a dispute.
ond tool is a simple electronic spreadsheet upon which the parties Instead, lawyer and client can concentrate on what is important: workrecord the estimated cost of each task and subtask. When completed ing together to achieve the best possible result. If law firms can find
and totaled, the spreadsheet becomes the case budget, which describes ways not to live and die by the billable hour, it will be a giant step
toward ending rampant associate and partner dissatisfaction.
■
in detail which tasks will be performed and which not.
What if, as the case moves forward, client and counsel find that
some budgeted tasks are unnecessary while other unbudgeted tasks 1 Debra Cassens Weiss, Associate Attorney Is the Unhappiest Job in America,
are necessary? The answer is to amend the budget. What if client and Survey Says, ABA J. (Apr. 1, 2013), available at http://www.abajournal.com
counsel fail to budget every task accurately? There will be multiple /news/article/why_a_career_website_deems_associate_attorney_the_unhappiest_job_in
_america.
budgeted tasks. Some will come in under budget and others will come 2
Martha Neil, “Churn that bill, baby!” Email Surfaces in Fee Dispute with DLA
in over budget. Over the course of an entire case one would expect Piper, ABA J. (Mar. 25, 2013), http://www.abajournal.com/news/article/sued_by
these out-of-budget items to cancel out.
_dla_piper_for_675k_ex-client_discovers_lighthearted_churn_that_bill.
The system takes advantage of human nature. We know that
most law firms give their attorneys quotas for billable hours. Each Edward S. Renwick, a partner with the law firm of Hanna and Morton LLP in
month lawyers check their hours and, if they are short, find ways to Los Angeles, specializes in trial and appellate work, particularly in the areas
record more hours. Under a task-based system, lawyers do not have of oil and gas and natural resources law.
52 Los Angeles Lawyer July/August 2013
THE ST. THOMAS MORE SOCIETY OF LOS ANGELES
invites the entire legal community to the
31st Annual Red Mass
THE CATHEDRAL OF OUR LADY OF THE ANGELS
555 W. Temple St., Los Angeles, California
Thursday, October 3, 2013 - 5:30 p.m. Mass
Celebrant: Archbishop Jose Gomez
RECEPTION FOLLOWING IN THE CATHEDRAL CONFERENCE CENTER
History of the Red Mass
The Red Mass was first celebrated in Paris in 1245 and began in England about 1310
during the reign of Edward I. The entire Bench and Bar would attend the Red Mass
together at the opening of each term of Court. The priest and the judges of the High
Court wore red robes, thus the Eucharistic celebration became popularly known as the
Red Mass.
Portrait of St. Thomas More used with
permission of the Frick Collection, New York
The tradition of the Red Mass has continued in the United States. Each year in
Washington, D.C. the members of the United States Supreme Court join the President,
and members of Congress in the celebration of the Red Mass at the National Shrine of
the Immaculate Conception. The Mass is attended by government officials, judges,
members of the legal profession and their supporters and is open to all faiths.
Benefactors
Latham & Watkins LLP – Roger M. Sullivan, Esq. – Panish Shea & Boyle LLP
Patrons
Oscar A. Acosta, Esq. – Cole Pedroza LLP – Hon. Lawrence W. Crispo (Ret.) - Daniel V. DuRoss, Esq.
Mancini And Associates – Phillip R. Marrone, Esq. – William M. Wardlaw, Esq. – Paul Hastings
Anderson Kill Wood & Bender, P.C.
Sponsors and Friends
Suzanne L. Austin, Esq. – Stuart Alan Chapman – Rosa M.C. Cumare, Esq. – Christopher A. Duenas, Esq.
Rolando Hidalgo, Esq. – Nancy L. Iredale, Esq. – Hon. Lawrence Waddington (Ret.) – Paul C. Workman, Esq.
Enrique Arevalo, Esq. – Thomas Patrick Beck, Esq. – Martin Boles, Esq. – Thomas P. Cacciatore, Esq. – Steve Cooley, Esq.
George D. Crook, Esq. – Lawrence W. Dailey, Jr., Esq. – William J. Emanuel, Esq. – Vincent Farhat, Esq.
Michael Scott Feeley, Esq. – Thomas L. Flattery, Esq. – George Hawley, Esq. – Manuel Hidalgo, Esq. – Philip F. Lanzafame, Esq.
Stephen G. Larson, Esq. – Thomas J. Loftus, Esq. – Lopez Law Group, APC
- Michael J. Maloney, Esq. – Michael Norris, Esq.
Michael O’Connor, Esq. – Odion L. Okojie, Esq. – Dean Francis Pace, Esq. – Armando Paz, Esq. – Thomas H. Reilly, Esq.
Patrick G. Rogan, Esq. – Rickard Santwier, Esq. – Robert F. Scoular, Esq. – Prof. Daniel P. Selmi, Esq. – Margherita Underhill, Esq.
Thomas J. Viola, Esq. – Molly M. White, Esq. – Robert M. Keane, Jr., Esq. – James J. Farrell, Esq. – Ursula Hyman, Esq.
Maria Hoye, Esq. – Paul D. Tosetti, Esq. – John D. Cahill, Esq. – Hratch J. Karakachian, CPA, Esq. – Patrick McLaughlin, Esq.
Frances L. Martin, Esq. – Eugene F. McMenamin, Esq. - Chad T-W Pratt Associates, Inc. – Younger & Associates
Metropolitan News – Loyola Law School – La Salle High School of Pasadena –
St. Thomas More Society of Los Angeles website: www.stmsla.org