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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: Thomas Girardi now sits at the defendant's table in an

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Speaker 1: LA courtroom, a far cry from his days as a

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Speaker 1: famous lawyer getting gigantic verdicts for his clients and portrayed

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Speaker 1: in the Aaron Rokovich movie in two thousand and then

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Speaker 1: as the husband of one of the Real housewives of

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Speaker 1: Beverly Hills. The eighty five year old is being tried

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Speaker 1: for embezzling fifteen million dollars from his vulnerable clients to

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Speaker 1: fund his lavish lifestyle. Joining me his trial attorney, David

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Speaker 1: Ring of the LA firm of Taylor Ring. For people

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Speaker 1: who might not know, tell us about Tom Girardi. You know,

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Speaker 1: the star lawyer and his reputation.

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Speaker 2: Tom Girardi was a legend in Los Angeles legal circles.

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Speaker 2: He's a plaintiff's trial lawyer. He represented victims of horrific

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Speaker 2: accidents like plane crashes and horrible automobile accents and things

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Speaker 2: like that. And he'd been a legendary trio loor in

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Speaker 2: Los Angeles since the nineteen eighties. He was as big

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Speaker 2: as it gets in Los Angeles. He was politically connected.

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Speaker 2: He was well known to be connected with the courts

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Speaker 2: and the judges, and he was a very powerful man,

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Speaker 2: and so you know, he was untouchable. He was untouchable

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Speaker 2: in Los Angeles for many, many, many years until this

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Speaker 2: scandal imploded in twenty twenty.

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Speaker 1: Tell us about the scandal that sort of opened this

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Speaker 1: Pandora's box.

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Speaker 2: What caused the downfall of Tom Girardi in his law

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Speaker 2: firm was it all started with a particular lawsuit, the

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Speaker 2: Lion air plane crash, which happened in Jakarta, and Tom

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Speaker 2: Girardi in his firm, they would represent victims in big

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Speaker 2: airplane crashes like that, even if the crash happened halfway

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Speaker 2: across the world. And that litigation was centered in Chicago

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Speaker 2: in federal court, and ultimately it was settled. You know,

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Speaker 2: Boeing and some other defendants paid a lot of money,

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Speaker 2: and Tom Girardi represented families who had lost loved ones

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Speaker 2: in that plane crash. Now he represented them. He had

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Speaker 2: a co council in Chicago, Chicago firm, And when the

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Speaker 2: settlement was reached and the money was paid by the defendants,

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Speaker 2: Tom Girardi's firm didn't pay his clients, and one excuse

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Speaker 2: after another, this firm in Chicago started to get very

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Speaker 2: very upset because clients are supposed to be paid out

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Speaker 2: right away. And so this firm in Chicago went to

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Speaker 2: federal court and said, there is some suspicious going on here.

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Speaker 2: Tom Girardi's firm is not paying out money that they

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Speaker 2: have received to the clients. And the federal court judge

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Speaker 2: got very involved, went ballistic, and basically some ined Tom

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Speaker 2: Girardi and others to court and it all unfolded there

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Speaker 2: because it was a house of cards and it all

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Speaker 2: fell apart at that point, and it became clear that

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Speaker 2: Tom Girardi had been stealing money from clients and from

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Speaker 2: his firm.

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Speaker 1: Will you explain the basics of the prosecution's case against

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Speaker 1: him in the LA trial.

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Speaker 2: So right now in Los Angeles Federal Court, Tom Girardi

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Speaker 2: is being prosecuted for wire fraud. And the wire fraud involves,

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Speaker 2: you know, four or five clients. Look, he defraud a

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Speaker 2: whole lot more than four or five clients over the years,

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Speaker 2: but the prosecutors, the US Attorney's Office in Los Angeles

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Speaker 2: has narrowed it down to about four or five families

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Speaker 2: who basically had their funds, their settlements stolen by Tom Girardi,

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Speaker 2: you know. So he's accused of misappropriation of client funds

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Speaker 2: and wire fraud. And the amounting question this trial is

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Speaker 2: about fifteen million dollars. Again, you look at the long

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Speaker 2: term wrongdoings by mister Girardi and he absconded with a

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Speaker 2: whole lot more than fifteen million. But that's the part

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Speaker 2: of this case that's going on. So he's there in

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Speaker 2: court every day and prosecution is close to resting their case,

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Speaker 2: and they've put on these victims who have explained how

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Speaker 2: they weren't given their settlement funds and all the excuses

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Speaker 2: they were given over time. And they've also had witnesses

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Speaker 2: who are the lawyers for these victims after the fact,

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Speaker 2: who tried to help them get the money from Girardi,

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Speaker 2: you know, when they weren't being paid, and these lawyers

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Speaker 2: come and say the excuses we got were absurd. And

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Speaker 2: so that's what's taking place right now in Los Angeles.

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Speaker 2: Last thing is is Tom Girardi will then face another

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Speaker 2: criminal trial in Chicago arising out of what we talked

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Speaker 2: about earlier, the Lion airplane crash.

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Speaker 1: Is it basically like a Ponzi scheme that he allegedly operated.

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Speaker 2: I equate Tom Girardi to Bernie Mainoff, the same type

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Speaker 2: of personality, the same type of long running fraud, just

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Speaker 2: the absolute despicable conduct of stealing from your own clients

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Speaker 2: who you have a duty of loyalty to. And so yeah,

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Speaker 2: it basically was a Ponzi scheme. What Tom Girardi apparently

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Speaker 2: was doing was he spent extravagantly. We all know he

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Speaker 2: is married to Erica Jane from the Real Housewives, and

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Speaker 2: the amount of money that was flowing from Tom for

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Speaker 2: his lifestyle and for Erica Jane's lifestyle, and so he

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Speaker 2: would basically a settlement would come in, it would go

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Speaker 2: into the Girardi and Keys client trust fund, and Tom

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Speaker 2: Girardi would take some or all of it for his

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Speaker 2: own personal, improper purposes, and then would lie to the

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Speaker 2: client the money didn't come in yet, Oh there's a

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Speaker 2: hold up, Oh it's being taxed. All sorts of stories

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Speaker 2: not to pay them out. Then when another big settlement

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Speaker 2: came in, okay, he might pay out the person who'd

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Speaker 2: been complaining for a year or two, but now he'd

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Speaker 2: stiff that client from their settlement funds, So yeah, basically

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Speaker 2: a Ponzi scheme.

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Speaker 1: The prosecution is painting him as a celebrity attorney turned villain.

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Speaker 1: But the defendant sitting there in the courtroom is this

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Speaker 1: eighty five year old in mental decline. He's been diagnosed

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Speaker 1: with dementia, lives in a nursing home. So might the

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Speaker 1: jury feel sympathy for him or say why are they

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Speaker 1: going after him? At this point?

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Speaker 2: Here's how that plays out is because in this particular

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Speaker 2: Los Angeles trial, the crimes that Tom Dry's being accused

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Speaker 2: of committing date back to twenty ten, all right, and

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Speaker 2: there's no evidence that he had any real mental decline

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Speaker 2: until about twenty twenty. So he was perfectly fit twenty

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Speaker 2: ten through twenty twenty. He was in courts, he was

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Speaker 2: given speeches, he was politicians, fundraisers. Believe me, he was

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Speaker 2: in perfect mental health between twenty ten and twenty twenty

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Speaker 2: when some of these crimes were committed. And it really

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Speaker 2: was only until twenty twenty when, yeah, he absolutely did

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Speaker 2: have some sort of mental decline. And now they say

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Speaker 2: he has early on Alzheimer's or dementia, and he does

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Speaker 2: not look well at all in court. But what the

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Speaker 2: prosecution will do and has done, is say, you can't

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Speaker 2: look at this man for what he is right now

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Speaker 2: here today, look at what he's done over the past

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Speaker 2: fifteen years, back to twenty ten, when he was absolutely

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Speaker 2: positively competent.

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Speaker 1: The defense is blaming the XCFO, Christopher Caman, who's charged

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Speaker 1: with fraud for allegedly stealing from both client accounts and

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Speaker 1: the firm's operating fund. A judge has split Girardi's trial

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Speaker 1: from Cayman's, so that's quite advantageous to Girardi's defense. His

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Speaker 1: lawyer can point at Cayman as the real villain here.

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Speaker 2: Yes, so Tom Girardi really has two main points in

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Speaker 2: his defense in the trial. One is that, oh, you know,

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Speaker 2: he was unfit, he was mentally declining, he had dementia,

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Speaker 2: He didn't know what he was doing. He couldn't have

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Speaker 2: controlled these accounts or this money because he really couldn't

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Speaker 2: even handle his own day to day activities. That's a

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Speaker 2: big part of their defense. And the other part is

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Speaker 2: what you mentioned that the law firm Girardi and Keith

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Speaker 2: had a chief financial officer named Chris Cayman, and mister

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Speaker 2: Cayman is separately charged from mister Girardi for crimes that

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Speaker 2: mister Cayman committed, and so absolutely in this case, Tom

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Speaker 2: Girardi's defense is to point the finger at Chris Cayman,

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Speaker 2: the CFO, and say, you know what, he's the guy

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Speaker 2: who is stealing the money. He's the guy who you know,

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Speaker 2: wreaked havoc on the law firm's financial resources and the

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Speaker 2: client trust accounts. The problem with that is that it's

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Speaker 2: going to become pretty clear that the CFO, Chris Cayman,

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Speaker 2: he was conducting what they've called is a side fraud.

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Speaker 2: He knew that Girardi was playing Shenanigans with all the money.

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Speaker 2: I mean, he was a CFO, He knew what was

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Speaker 2: going on, and he knew he could get away with

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Speaker 2: from pezzling money. And so what he did He saw

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Speaker 2: this firm in disarray, knew what Girardi was doing, so

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Speaker 2: he started to steal money on his own. And that's

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Speaker 2: going to be a separate trial down the road against

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Speaker 2: mister Kaman, who had fled the country and they brought

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Speaker 2: him back here. But it certainly gives Tom Girardi's lawyers

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Speaker 2: some arguments in this particular trial. My personal opinion, I

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Speaker 2: don't think it's going to carry the day for Tom Girardi.

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Speaker 1: Apparently there is some evidence coming in. On the fifth

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Speaker 1: day of the trial, there was testimony about a secret

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Speaker 1: bank account that was hidden from Girardi. So the defense

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Speaker 1: is looking at that as evidence showing that Girardi wasn't

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Speaker 1: aware of all that was going on at the firm.

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Speaker 2: I'll tell you what, this very very very interesting development

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Speaker 2: in the case, this secret bank account, and we don't

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Speaker 2: know a lot about it yet. It really just surfaced

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Speaker 2: for the first time in the media, at least in

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Speaker 2: this lawsuit. No one had really heard about this secret

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Speaker 2: bank account before. But what it appears to have been

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Speaker 2: is part of perhaps Chris came in side fraud where

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Speaker 2: someone set up another bank account and a different bank

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Speaker 2: than the law firm routinely used and was siphoning money

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Speaker 2: over to this other bank account, and we don't really

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Speaker 2: know why. We do know that checks were written out

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Speaker 2: of it, we know clients were paid money out of it,

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Speaker 2: but we also know that didn't really start until close

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Speaker 2: to twenty nineteen or twenty twenty, and so again you

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Speaker 2: got to go back and look at the crimes that

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Speaker 2: are ledged against Girardi. And those days all the way

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Speaker 2: back to twenty ten in this case. So again, the

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Speaker 2: secret bank account very interesting, raises eyebrows for sure, but

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Speaker 2: I don't think it's enough to get Tom Girardi off.

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Speaker 1: The defense said during opening statements that the trial was

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Speaker 1: going to be technical and boring, and inundated the jury

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Speaker 1: with financial documents during one of the cross examinations. I mean,

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Speaker 1: juries see lots of financial documents and cases all the time,

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Speaker 1: and they also get bored all the time. Is that

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Speaker 1: a really effective strategy.

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Speaker 2: Well, I think you've seen two wildly different approaches from

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Speaker 2: the prosecution and the defense. The prosecution has put on

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Speaker 2: victims who've been very emotional on the stand because of

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Speaker 2: what they were put through, not only because either they

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Speaker 2: or their loved one was seriously hurt or injured, but

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Speaker 2: then they had to suffer through years of trying to

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Speaker 2: get their settlements from this law firm. So you saw

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Speaker 2: some really human emotions and some really compelling witnesses. And

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Speaker 2: then you have Tom Girardi's defense that is doing exactly that.

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Speaker 2: They're trying to put up a lot of financial figures

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Speaker 2: and documents and trying to confuse the jury, and you know,

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Speaker 2: maybe get them to think someone else did it, or

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Speaker 2: trying to put all sorts of charts and financial data

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Speaker 2: up there, perhaps an attempt to confuse. I don't know

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Speaker 2: if their goal is to bore them the death, that

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Speaker 2: would be a very good strategy, but it certainly is

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Speaker 2: to try to get them confused and to maybe not

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Speaker 2: fully understand where all this money is flowing from. But again,

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Speaker 2: as you said, hey, juries get it. I mean, this

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Speaker 2: is not an incredibly complicated financial case by any means.

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Speaker 2: It's easily understood, and the prosecution will make it easily understood.

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Speaker 1: But the defense only needs one juror to be confused

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Speaker 1: or not to see the scheme that was evolving, or

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Speaker 1: to feel sympathy for him.

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Speaker 2: Very true, I mean, the defense is all they need

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Speaker 2: for a quote unquote victory is one juror to say

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Speaker 2: I don't think he did it or I'm not convinced

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Speaker 2: beyond a reasonable doubt. And so that's likely their goal.

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Speaker 2: They likely don't think they have a shot at a

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Speaker 2: full acquittal, but they would certainly be happy with a mistrial.

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Speaker 2: But again, having followed the trial to this point in time,

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Speaker 2: I think the prosecution has really done a very good

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Speaker 2: job of putting on compelling evidence and testimony that kind

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Speaker 2: of shows how long these crimes were going on and

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Speaker 2: that Tom Girardi was directly involved in that, even when

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Speaker 2: he was absolutely competent.

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Speaker 1: What penalty might he face if convicted.

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Speaker 2: Well, his age plays a huge role in that, as

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Speaker 2: does his mental decline. So again that's something that is

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Speaker 2: handled by the federal judge federal sentencing guidelines. Tom Girardi's

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Speaker 2: in his early eighties. He clearly does have some form

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Speaker 2: of dementia at this point in time. It certainly appears

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Speaker 2: like it. So we don't know is a judge going

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Speaker 2: to put him on some sort of house arrest, Is

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Speaker 2: he going to send him to prison, Is he going

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Speaker 2: to send him to some other sort of facility that

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Speaker 2: takes care of him. Unknown at this time, but he's

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Speaker 2: going to get punished for sure.

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Speaker 1: Girardi had apparently over two hundred misconduct complaints before the

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Speaker 1: State Bar of California over four decades and managed to

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Speaker 1: avoid disciplinary action until the end. And the parents of

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Speaker 1: a son who died of cancer who was represented by Girardi,

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Speaker 1: filed a class action lawsuit against the State Bar of

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Speaker 1: California alleging gross negligence and reckless misconduct. What do you

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Speaker 1: think about that lawsuit?

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Speaker 2: I think it's definitely got legs. There has been a

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Speaker 2: lot that has come out against the California State Bar

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Speaker 2: since this Girarti scandal erupted four years ago, and it's

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Speaker 2: absolutely mind numbing and despicable what has been shown and

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Speaker 2: what's been shown this shows you how powerful Tom Girardi was.

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Speaker 2: Tom Girardi had the state Bar wrapped around his finger.

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Speaker 2: Tom Girardi had so many complaints made against him over

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Speaker 2: the course of twenty or thirty years, and yet maybe

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Speaker 2: none of them were uphell as being legitimate, when clearly

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Speaker 2: many were, and how did he get away with that?

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Speaker 2: He was the ultimate mastermind. This guy had so many connections.

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Speaker 2: He actually placed an investigator in the State Bar office

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Speaker 2: who was there handling complaints against Girbarti, and the investigator

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Speaker 2: was one of Tom Girardi's guys. He was loyal to

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Speaker 2: Tom Girardi and he was taking kickbacks and all sorts

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Speaker 2: of things. Tom Girardi was very close with some of

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Speaker 2: these state bar judges. And so the system, now that

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Speaker 2: we've seen it exposed for what it was. It was

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Speaker 2: a sham and tom Girardi manipulated the state bar system

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Speaker 2: and he got away with it for thirty plus years,

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Speaker 2: despite having hundreds of complaints made against him. You know,

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Speaker 2: most lawyers in their career that do the type of

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Speaker 2: work that Tom Girardi did, they might have one or

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Speaker 2: two complaints and they might not be legitimate complaints, or

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Speaker 2: maybe one or two of them are right, and the

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Speaker 2: state are supposed to investigate that and discipline the lawyer.

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Speaker 2: Tom Girardi had hundreds of complaints, one hundreds, and not

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Speaker 2: one thing was ever done to him. Shameful and a.

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Speaker 1: Lot more evidence to come in this trial. Thanks so

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Speaker 1: much for being on the show, David. That's trial attorney

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Speaker 1: David Ring of Taylor Ring in Los Angeles. A federal

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Speaker 1: appeals court has rejected Chipotle Mexican Grill's attempt to force

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Speaker 1: a former worker's sexual harassment and assault claims into arbitration

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Speaker 1: under a landmark twenty twenty two law because of timing,

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Speaker 1: setting the stage for more showdowns as judges further assess

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Speaker 1: the law's reach. The Eighth Circuit ruled last week that

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Speaker 1: the EFAA covers the former workers workplace assault claim against

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Speaker 1: the restaurant chain, even though the allegedmist conduct occurred before

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Speaker 1: the law took effect. Joining me is employment law attorney

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Speaker 1: Anthony Oncidi, a partner at Prosscauer Rose. Tony start by

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Speaker 1: telling us about the Federal Arbitration Act and how it

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Speaker 1: works in employment cases.

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Speaker 3: Okay, so there is a federal law that's been on

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Speaker 3: the books for many, many years, over a century, actually

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Speaker 3: called the Federal Arbitration Act, and what that does is

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Speaker 3: essentially permit or indeed compel arbitration, both in federal courts

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Speaker 3: and state courts around the country with respect to situations

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Speaker 3: in which, in this instance we're talking about an employer

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Speaker 3: and an employee have entered into what's called a pre

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Speaker 3: dispute arbitration agreement. But what does that mean. That means

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Speaker 3: that nobody's yet fighting with one another about the employee

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Speaker 3: and the employer perhaps have started out their relationship, the

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Speaker 3: employee may have just been hired, and among the other

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Speaker 3: documents that are circulated at the beginning of the relationship,

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Speaker 3: there is what's referred to as an arbitration agreement, which

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Speaker 3: says that if in fact, we ever have a dispute

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Speaker 3: about anything today or sometime thereafter, you agree and we

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Speaker 3: agree that rather than taking the dispute to court, we

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Speaker 3: will have a private arbitrator or panel of arbitrators. Sometimes

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Speaker 3: they're up to three arbitrators decide the dispute that we

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Speaker 3: might have with one another. So that's what an arbitration

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Speaker 3: agreement is. In the Federal Arbitration Act permits that kind

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Speaker 3: of arrangement. What has happened in recent years is that

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Speaker 3: there's been a significant disconnect between the kinds of results

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Speaker 3: that employees who file lawsuits in court get versus the

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Speaker 3: kinds of results they get when they appear in front

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Speaker 3: of an arbitrator. Who are arbitrators. They are typically retired

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Speaker 3: judges or retired practitioners lawyers who decide these cases, and

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Speaker 3: they tend on average to be less susceptible to passion

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Speaker 3: and prejudice, which sometimes occurs certainly in employment cases. And

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Speaker 3: they also tend to although side with the employee or

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Speaker 3: the employer on about the same regularity that would occur

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Speaker 3: in court. War Wards tend to be much lower with

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Speaker 3: arbitrators as compared to juries. This has not gone unnoticed

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Speaker 3: by plaintiff lawyers, who always take these cases on a

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Speaker 3: contingency fee basis, or almost always which means they get

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Speaker 3: up to thirty forty in California, sometimes fifty percent of

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Speaker 3: what their clients recover. And plaintiff lawyers are not interested

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Speaker 3: in going in front of an arbitrator who might give

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Speaker 3: a quote unquote reasonable result. What they want to do

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Speaker 3: is they want to hit it out of the park

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Speaker 3: if possible, and get a multimillion dollar verdict, which increasingly

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Speaker 3: is becoming the case at least in California and some

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Speaker 3: of the other big jurisdictions around the country. And so

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Speaker 3: plaintiff lawyers in the organized consumer trial lawyers bar in

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Speaker 3: California and elsewhere are very very opposed now to arbitration

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Speaker 3: agreements because they would much prefer to be in front

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Speaker 3: of a jury because they think that a jury is

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Speaker 3: likely to give them a better result or they can

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Speaker 3: extract a better settlement amount if the case is not

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Speaker 3: going to go to an arbitrator and instead is going

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Speaker 3: to go to a jury.

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Speaker 1: Okay, So that's the FAA tell us about this amendment

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Speaker 1: to the FAA. The EFAA standing for ending Forced Arbitration

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Speaker 1: of Sexual Assault and Sexual Harassment Act.

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Speaker 3: Up to this point, the Federal Arbitration Act has protected

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Speaker 3: arbitration agreements so long as they don't have elements of overreaching,

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Speaker 3: and there are instances where employers have overreached, meaning that,

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Speaker 3: for example, they say that the employee has a limited

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Speaker 3: period of time to file the claim less than they

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Speaker 3: would otherwise have under the law, or it otherwise limits

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Speaker 3: the awards that the employee can recover. They try to

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Speaker 3: put a ceiling on it. Anything like that, quite predictably

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Speaker 3: is going to be struck down by the courts. But otherwise,

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Speaker 3: if it's a straight down the middle arbitration agreement that says,

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Speaker 3: as I said at the beginning, if we have a

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Speaker 3: dispute will go to arbitration, we won't go to court.

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Speaker 3: Most courts have upheld that, and they've used the Federal

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Speaker 3: Arbitration Act to fend off attacks which have occurred at

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Speaker 3: the legislator level and at the judicial level in states

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Speaker 3: like California against arbitration. That was what the FAA was

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Speaker 3: doing until twenty twenty one when this new act, this

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Speaker 3: amendment to the statue, was passed, and this was in

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Speaker 3: direct response to the me too movement, which we'll all

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Speaker 3: recall began in the fall in Occober I believe of

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Speaker 3: twenty seventeen with the Harvey Weinstein revelations. It seems like

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Speaker 3: a long period of time from twenty seventeen to twenty

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Speaker 3: twenty one, but sometimes the gears of the legislative machine

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Speaker 3: turns slowly, and so this law gets to Congress in

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Speaker 3: twenty twenty one, and essentially what they say is okay,

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Speaker 3: the FAA will remain in place. It will continue to

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Speaker 3: protect arbitration everywhere in the country except in cases in

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Speaker 3: which there is a lawsuit involving sexual harassment or sexual assault.

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Speaker 3: And that law became effective on March third, twenty twenty two.

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Speaker 3: So since that effective date, any dispute that has arisen

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Speaker 3: anywhere in the country that involves sexual harassment or sexual

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Speaker 3: assault may no longer be compelled to arbitration. Based upon

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Speaker 3: a pre dispute arbitration agreement the parties, they can themselves,

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Speaker 3: after the dispute arises, agree to arbitrary a case. But again,

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Speaker 3: once a lawyer gets involved on the part of the employee,

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Speaker 3: that rarely happens because they're going to want to be

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Speaker 3: in front of a jury, they're not going to want

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Speaker 3: to be in.

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Speaker 2: Front of an arbitrator.

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Speaker 1: So this Eighth Circuit case is sort of about timing,

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Speaker 1: tell us about it.

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Speaker 3: Sure, So there's now this Eighth Circuit decision you're referring to.

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Speaker 3: There's also an appellate court opinion in California from January

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Speaker 3: twenty twenty four holding the same and we're seeing these

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Speaker 3: cases begin to populate among the courts. This is a

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Speaker 3: short term issue, as you might expect based upon the

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Speaker 3: statute that we've been talking about. The question that is

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Speaker 3: before the courts and that has so far been decided

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Speaker 3: in favor of employees is exactly what is meant by

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Speaker 3: a dispute when it arises, because what this statute says,

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Speaker 3: and I think this is an example of, by the way,

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Speaker 3: legislative malpractice. I can't believe that a statute like this

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Speaker 3: would get passed and nobody would have stopped for twenty

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Speaker 3: five seconds to think, Gee, what do we mean when

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Speaker 3: we say dispute? Maybe we should define that.

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Speaker 1: You really are surprised about that? Nothing surprised. Nothing surprises

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Speaker 1: me about the way laws are written.

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Speaker 3: I think you're absolutely right. Well, you know, I was

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Speaker 3: lucky enough to have the late antonin Scalia as a

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Speaker 3: law professor at the University of Chicago, and he used

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Speaker 3: to always say when we encountered things like this, well

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Speaker 3: close enough for government work. And I think what he

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Speaker 3: meant by that was that the government can make things

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Speaker 3: worse even when they're trying to make things better, and

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Speaker 3: I think this is a good example of that. So anyway,

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Speaker 3: there is this ambiguity, and the question is whether or

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Speaker 3: not a dispute arises when, for example, an employee first

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Speaker 3: suffers an incident of sexual harassment or sexual assault in

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Speaker 3: the workplace, or maybe when the employee first complains about

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Speaker 3: sexual harassment or sexual assault in the workplace. What the

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Speaker 3: Eighth Circuit has said in this recent case, and they

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Speaker 3: got this from a definition of dispute that they found

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Speaker 3: in a law dictionary, which is always a little bit

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Speaker 3: I think, although not wrong, it's also just a little

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Speaker 3: bit maybe too fast, a little bit too easy to

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Speaker 3: try to decide something like this on They said, well, gee,

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Speaker 3: a dispute means a lawsuit. And so what they said

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Speaker 3: is if the employee complains about the sexual harassment beforehand,

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Speaker 3: or even lodges an internal complaint, that is not a

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Speaker 3: quote unquote dispute. A dispute occurs when the employee actually

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Speaker 3: files something basically files a lawsuit or administrative complaint with

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Speaker 3: an agency or with the courts, And as you think

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Speaker 3: about it, that's probably the latest that a quote unquote

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Speaker 3: dispute might arise. So the result of that is that

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Speaker 3: it sweeps more and more cases into the realm of

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Speaker 3: this anti arbitration statue. This situation will all very quickly

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Speaker 3: June go away, because soon all disputes that are being

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Speaker 3: decided I did one way or the other will have

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Speaker 3: occurred on or after March third, twenty twenty two. So

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Speaker 3: this is a short term issue. I don't think it's

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Speaker 3: going to ever get before, for example, the US Supreme Court.

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Speaker 3: It has a very limited shelf life.

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Speaker 1: Coming up next on the Bloomberg Law Show, I'll continue

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Speaker 1: this conversation with employment law expert Anthony on CD some

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Speaker 1: recent eye popping verdicts. I've been talking to employment law

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Speaker 1: attorney Anthony on CD of prosskau or Rose about a

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Speaker 1: federal appeals court ruling that the EFAA covers a former

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Speaker 1: worker's workplace assault claim even though the allegimist conduct occurred

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Speaker 1: before the law took effect. The Eighth Circuit is conservative.

436
00:25:40,040 --> 00:25:45,600
Speaker 1: I think ten Republican appointed judges and one Democratic appointed judge.

437
00:25:45,960 --> 00:25:49,160
Speaker 1: Are you surprised that this decision came from the Eighth Circuit?

438
00:25:49,560 --> 00:25:52,240
Speaker 3: Not really. I mean, I don't subscribe to the theory

439
00:25:52,280 --> 00:25:56,200
Speaker 3: that appointees of one party or the other with regularity

440
00:25:56,280 --> 00:25:58,159
Speaker 3: always vote one way or the other. I mean, I

441
00:25:58,160 --> 00:26:00,560
Speaker 3: think you might be able to say perhaps maybe more

442
00:26:00,600 --> 00:26:02,520
Speaker 3: than fifty percent of the time you can find that.

443
00:26:03,040 --> 00:26:06,440
Speaker 3: But even our own US Supreme Court, there have been

444
00:26:06,600 --> 00:26:10,359
Speaker 3: somewhat surprising results from the so called conservative majority that

445
00:26:10,400 --> 00:26:14,159
Speaker 3: have been pro employee, for example, or pro consumer. In

446
00:26:14,200 --> 00:26:17,720
Speaker 3: some of these cases. There obviously is an absolute predictability

447
00:26:17,720 --> 00:26:20,560
Speaker 3: with respect to the party that appointed the judge, and

448
00:26:20,560 --> 00:26:22,679
Speaker 3: of course that's how it should be. There shouldn't be

449
00:26:22,680 --> 00:26:25,600
Speaker 3: really any predictability, but unfortunately there is. I don't think

450
00:26:25,600 --> 00:26:27,280
Speaker 3: what they did in this case, which is to go

451
00:26:27,320 --> 00:26:30,240
Speaker 3: to a dictionary definition, is as I said, wrong. I

452
00:26:30,240 --> 00:26:30,879
Speaker 3: don't think there's.

453
00:26:31,720 --> 00:26:33,639
Speaker 1: Went to the dictionary every once in a while.

454
00:26:33,920 --> 00:26:37,040
Speaker 3: It truly did, so, Tony.

455
00:26:36,840 --> 00:26:40,879
Speaker 1: Are there any implications beyond this statute that we've been

456
00:26:40,920 --> 00:26:43,000
Speaker 1: talking about the EFAA.

457
00:26:43,600 --> 00:26:46,680
Speaker 3: Yeah, so I think it's the narrow end of the

458
00:26:46,680 --> 00:26:50,639
Speaker 3: wedge here, and that is that essentially what that statute

459
00:26:50,680 --> 00:26:54,080
Speaker 3: says without saying it is there's something quote unquote wrong

460
00:26:54,160 --> 00:26:57,120
Speaker 3: with arbitration. Essentially, what it's saying is, if you've been

461
00:26:57,119 --> 00:27:00,239
Speaker 3: the victim of sexual harassment or sexual assault, you are

462
00:27:00,240 --> 00:27:05,440
Speaker 3: not required to go to arbitration. You can go to court.

463
00:27:05,560 --> 00:27:07,919
Speaker 3: What it doesn't say is, well, what happens if you

464
00:27:08,000 --> 00:27:11,639
Speaker 3: are the victim of racial harassment, or what if you

465
00:27:11,680 --> 00:27:15,480
Speaker 3: are the victim of disability harassment in the workplace, or

466
00:27:15,800 --> 00:27:19,600
Speaker 3: age harassment or discrimination. There's a whole panoply of other

467
00:27:19,840 --> 00:27:23,480
Speaker 3: categories that we protect under the law, both state and federal,

468
00:27:23,760 --> 00:27:27,479
Speaker 3: And if we've said that sexual harassment victims don't have

469
00:27:27,600 --> 00:27:31,240
Speaker 3: to go to arbitration, we are suggesting there's something wrong

470
00:27:31,280 --> 00:27:34,320
Speaker 3: with arbitration. I disagree with that proposition. I think that

471
00:27:34,920 --> 00:27:38,640
Speaker 3: arbitration actually can be a very effective means of resolving disputes,

472
00:27:38,680 --> 00:27:40,399
Speaker 3: and I think it can be fair and usually is

473
00:27:40,440 --> 00:27:43,240
Speaker 3: fair for both sides. But if you essentially say there's

474
00:27:43,280 --> 00:27:47,080
Speaker 3: something lesser than about arbitration, then everyone else is going

475
00:27:47,160 --> 00:27:51,880
Speaker 3: to start lining up, as has already happened, to say, well, gosh,

476
00:27:52,080 --> 00:27:55,360
Speaker 3: if sexual harassment victims don't have to go to arbitration,

477
00:27:55,560 --> 00:28:00,280
Speaker 3: neither should racial or age discrimination or harassment victims have

478
00:28:00,320 --> 00:28:02,480
Speaker 3: to go to arbitration, they too should be able to

479
00:28:02,480 --> 00:28:05,600
Speaker 3: go to a jury, and it really opens up a

480
00:28:05,720 --> 00:28:11,280
Speaker 3: huge door by which litigants can avoid arbitration entirely and

481
00:28:11,720 --> 00:28:14,960
Speaker 3: find their way to a jury, which is simply going

482
00:28:15,000 --> 00:28:19,040
Speaker 3: to increase enormously the cost of litigating these cases, the

483
00:28:19,119 --> 00:28:22,040
Speaker 3: time it takes to resolve them, and the burdens that

484
00:28:22,080 --> 00:28:25,360
Speaker 3: will be placed upon employers nationwide, the.

485
00:28:25,320 --> 00:28:30,160
Speaker 1: Difference of opinion on arbitration between plaintiff's lawyers and defense lawyers,

486
00:28:30,720 --> 00:28:33,879
Speaker 1: and never the twinshaill meet. And you've written about some

487
00:28:34,000 --> 00:28:39,160
Speaker 1: of the eye popping verdicts in sexual assault and harassment cases.

488
00:28:39,160 --> 00:28:42,200
Speaker 1: There was a nine hundred million dollar verdict recently.

489
00:28:42,600 --> 00:28:45,560
Speaker 3: It was one single plaintiff, The facts were horrendous, and

490
00:28:45,680 --> 00:28:49,560
Speaker 3: the defendant in the case has been sued multiple times.

491
00:28:49,600 --> 00:28:53,280
Speaker 3: There are multiple multi million dollar judgments against him in

492
00:28:53,320 --> 00:28:56,520
Speaker 3: the state of California. And my understanding, and I don't

493
00:28:56,560 --> 00:28:58,160
Speaker 3: have a huge amount of information about this that my

494
00:28:58,240 --> 00:29:00,960
Speaker 3: understanding is that their defense was not even mounted in

495
00:29:01,000 --> 00:29:03,200
Speaker 3: this case. But in any event, it was a case

496
00:29:03,760 --> 00:29:08,520
Speaker 3: again very serious allegations and obviously ultimately proof about alleged

497
00:29:08,720 --> 00:29:11,920
Speaker 3: rape and sexual assault in the workplace, and a jury

498
00:29:12,000 --> 00:29:14,800
Speaker 3: in June of this year awarded the plaintiff one hundred

499
00:29:14,840 --> 00:29:17,640
Speaker 3: million dollars in competed story damages, which basically is emotional

500
00:29:17,720 --> 00:29:22,320
Speaker 3: distress damages, and eight hundred million dollars in punitive damages.

501
00:29:21,920 --> 00:29:25,640
Speaker 1: And of course most of it punitive to punish the defendant.

502
00:29:26,040 --> 00:29:30,360
Speaker 1: But you see ie popping verdicts nowadays in other areas

503
00:29:30,360 --> 00:29:33,920
Speaker 1: as well, not just employment, personal injury and torque cases.

504
00:29:34,360 --> 00:29:37,120
Speaker 1: And what makes them ie popping a lot of the

505
00:29:37,200 --> 00:29:39,000
Speaker 1: times is the punitive damages.

506
00:29:39,520 --> 00:29:42,200
Speaker 3: One of the things that I have said in a

507
00:29:42,200 --> 00:29:44,640
Speaker 3: couple of the articles I've recently written, in some of

508
00:29:44,640 --> 00:29:47,280
Speaker 3: the speaking engagements I've had on this to various groups

509
00:29:47,280 --> 00:29:50,120
Speaker 3: of lawyers, is that it's a very peculiar process, at

510
00:29:50,200 --> 00:29:52,960
Speaker 3: least in California, where I'm most familiar. You get to

511
00:29:53,000 --> 00:29:57,000
Speaker 3: the point in the trial where the plaintiff is going

512
00:29:57,040 --> 00:30:00,440
Speaker 3: to ask for punitive damages, and under California law, for example,

513
00:30:00,440 --> 00:30:03,640
Speaker 3: they have to show malice, oppression, or fraud. But you

514
00:30:03,680 --> 00:30:06,400
Speaker 3: have to show one of those things Jusuet's malice most particularly,

515
00:30:06,680 --> 00:30:10,880
Speaker 3: and everyone in the courtroom, the judge, the lawyers, if

516
00:30:10,920 --> 00:30:13,640
Speaker 3: there are legal reporters in the courtroom, maybe even some

517
00:30:13,720 --> 00:30:15,720
Speaker 3: of the observers are aware of the fact that there

518
00:30:15,720 --> 00:30:19,720
Speaker 3: are constitutional limits on the amount of punitive damages that

519
00:30:19,840 --> 00:30:22,160
Speaker 3: can be awarded in a case. This is something that

520
00:30:22,560 --> 00:30:25,840
Speaker 3: people off the street i e. Jurors for example, don't

521
00:30:25,960 --> 00:30:29,440
Speaker 3: usually know. And so the most important people in that courtroom,

522
00:30:29,480 --> 00:30:32,040
Speaker 3: who are about now to make a decision about how

523
00:30:32,120 --> 00:30:35,920
Speaker 3: much punitive damage dollars should be awarded, if any, are

524
00:30:35,960 --> 00:30:39,120
Speaker 3: not told. No one tells them that there is this limitation,

525
00:30:39,240 --> 00:30:42,160
Speaker 3: this constitutional limitation, both of the state and federal level,

526
00:30:42,360 --> 00:30:46,680
Speaker 3: that prohibits an award of punitive damages that exceeds more

527
00:30:46,800 --> 00:30:50,960
Speaker 3: than a so called one digit, single digit multiplier. What

528
00:30:51,000 --> 00:30:54,760
Speaker 3: does that mean. That means it shouldn't be more than two, three, four, five,

529
00:30:55,040 --> 00:30:59,200
Speaker 3: maybe nine. In the most ridiculously terrible cases times the

530
00:30:59,440 --> 00:31:01,920
Speaker 3: compensate damages. So if you've got emotional to the stress

531
00:31:02,000 --> 00:31:05,360
Speaker 3: damages of two hundred thousand dollars, say, or three hundred

532
00:31:05,400 --> 00:31:08,120
Speaker 3: thousand dollars, the punitive damage award, if there is going

533
00:31:08,200 --> 00:31:09,720
Speaker 3: to be one, and it doesn't have to be one,

534
00:31:09,760 --> 00:31:12,000
Speaker 3: but if the jury wants to award, that should not

535
00:31:12,200 --> 00:31:16,440
Speaker 3: be more than a single multiplier of that compensatory damage amount,

536
00:31:16,920 --> 00:31:18,760
Speaker 3: but no one tells the jury that, And so what

537
00:31:18,920 --> 00:31:22,720
Speaker 3: happens is you end up with punitive damages awards sometimes

538
00:31:22,720 --> 00:31:26,480
Speaker 3: that are twenty thirty times the compensatory damages. And there's

539
00:31:26,520 --> 00:31:29,080
Speaker 3: this conspiracy of silence in the court room that no

540
00:31:29,120 --> 00:31:31,320
Speaker 3: one tells the jury in advance. And I think there's

541
00:31:31,360 --> 00:31:33,920
Speaker 3: a peculiar reason for that, and that is that neither

542
00:31:34,480 --> 00:31:38,000
Speaker 3: the plaintiff's lawyer nor the defense lawyer wants to talk

543
00:31:38,040 --> 00:31:41,520
Speaker 3: about this limitation. Why Because the plaintiff lawyer doesn't want

544
00:31:41,560 --> 00:31:44,400
Speaker 3: to put a ceiling on the amount of punitive damages

545
00:31:44,560 --> 00:31:46,600
Speaker 3: even if they know they're not going to ultimately collect

546
00:31:46,680 --> 00:31:49,400
Speaker 3: twenty times the compensitory damages. They're more than happy to

547
00:31:49,520 --> 00:31:52,400
Speaker 3: use that as a leverage point in settlement, for example,

548
00:31:52,800 --> 00:31:54,840
Speaker 3: after the trial. And the defense lawyer is not going

549
00:31:54,880 --> 00:31:56,600
Speaker 3: to want to say it either, because it can become

550
00:31:56,640 --> 00:31:58,920
Speaker 3: a floor and the jury can say, oh, so we

551
00:31:59,040 --> 00:32:03,560
Speaker 3: can constitution only award five times punitive damages. Maybe they

552
00:32:03,560 --> 00:32:05,560
Speaker 3: otherwise would have been inclined only to do two or

553
00:32:05,560 --> 00:32:07,959
Speaker 3: three times, but now they figure, oh, well, I can

554
00:32:08,000 --> 00:32:10,800
Speaker 3: go to five times and that'll be protected under a

555
00:32:10,880 --> 00:32:14,160
Speaker 3: constitutional challenge. The other problem that I think defense lawyers

556
00:32:14,480 --> 00:32:17,959
Speaker 3: have with this that is talking about these limits, is

557
00:32:17,960 --> 00:32:21,160
Speaker 3: that there's nothing to stop the jury from inflating the

558
00:32:21,160 --> 00:32:24,880
Speaker 3: amount of compensatory damages, because, for example, an emotional distress

559
00:32:25,000 --> 00:32:30,200
Speaker 3: damages award the standards for how you translate the pain

560
00:32:30,280 --> 00:32:33,880
Speaker 3: and suffering or the emotional distress the employee has suffered

561
00:32:34,000 --> 00:32:37,440
Speaker 3: into dollars, there's no real reliable way of doing that

562
00:32:37,840 --> 00:32:40,320
Speaker 3: or even guiding the jury, and so they may end

563
00:32:40,400 --> 00:32:44,320
Speaker 3: up inflating that compensatory damages amount so that the punitive

564
00:32:44,400 --> 00:32:47,400
Speaker 3: damages will still be a lower multiple, but the overall

565
00:32:47,520 --> 00:32:49,959
Speaker 3: judgment could still be very, very high. And I think

566
00:32:50,040 --> 00:32:54,000
Speaker 3: employer's counsel and defense counsel are reluctant therefore for that reason,

567
00:32:54,200 --> 00:32:56,880
Speaker 3: to talk about those kinds of limits. So I think

568
00:32:56,920 --> 00:33:00,360
Speaker 3: the judge really should be talking about these issues, or

569
00:33:00,400 --> 00:33:04,480
Speaker 3: the legislature or whoever's writing jury instructions, because most jurisdictions,

570
00:33:04,520 --> 00:33:07,640
Speaker 3: of course have patterned jury instructions which are pre made

571
00:33:07,760 --> 00:33:10,680
Speaker 3: for a trial, and in California at least, there's no limitations.

572
00:33:10,840 --> 00:33:13,920
Speaker 1: I know the Supreme Court has spoken about this. What

573
00:33:14,160 --> 00:33:20,400
Speaker 1: is the highest allowable ratio between compensatory and punitive.

574
00:33:20,120 --> 00:33:23,280
Speaker 3: It should not ever be more than nine times, and

575
00:33:23,680 --> 00:33:27,640
Speaker 3: only the most extraordinary cases should be even close to

576
00:33:27,720 --> 00:33:29,680
Speaker 3: nine times. What most of the courts that have looked

577
00:33:29,680 --> 00:33:33,280
Speaker 3: at this have said is look at statutes, because a

578
00:33:33,280 --> 00:33:36,040
Speaker 3: lot of statutes, for example, in the old days before

579
00:33:36,120 --> 00:33:38,440
Speaker 3: everybody's looking for a huge punity of damage to awards,

580
00:33:38,600 --> 00:33:42,120
Speaker 3: would have what would be, for example, a treble damages award.

581
00:33:42,160 --> 00:33:44,280
Speaker 3: And we see that under some of the federal statutes

582
00:33:44,360 --> 00:33:46,880
Speaker 3: in the labor area and the employment area, and a

583
00:33:46,960 --> 00:33:50,000
Speaker 3: trust in other places. You may remember recently there were

584
00:33:50,000 --> 00:33:51,920
Speaker 3: other big verdicts that were talked about where there was

585
00:33:51,960 --> 00:33:58,200
Speaker 3: a tripling of the underlying damages. So statutory formulations usually

586
00:33:58,240 --> 00:34:02,400
Speaker 3: have a three x the plier for you know, intentional

587
00:34:02,640 --> 00:34:05,880
Speaker 3: or deliberate misconduct of some sort that might be prohibited

588
00:34:05,960 --> 00:34:07,840
Speaker 3: under the law. And so a lot of courts have

589
00:34:07,880 --> 00:34:10,120
Speaker 3: looked at that and said, well, that's probably about right.

590
00:34:10,239 --> 00:34:12,440
Speaker 3: Maybe if there's you know, one hundred thousand dollars in

591
00:34:12,600 --> 00:34:15,839
Speaker 3: emotional distress damages, maybe the punitive damages shouldn't be more

592
00:34:15,880 --> 00:34:18,920
Speaker 3: than three times that. But the US Supreme Court didn't

593
00:34:18,920 --> 00:34:21,760
Speaker 3: say that, and essentially what they said was it shouldn't

594
00:34:21,760 --> 00:34:23,839
Speaker 3: be more than nine times, and it should very very

595
00:34:23,920 --> 00:34:26,720
Speaker 3: rarely be more than three four or five something along

596
00:34:26,719 --> 00:34:29,839
Speaker 3: those lines. Footnote. We did mention Justice Scalaire. I brought

597
00:34:29,880 --> 00:34:33,080
Speaker 3: him up. He actually dissented, as did Clarence Thomas, to

598
00:34:33,440 --> 00:34:36,360
Speaker 3: the Supreme Court's decision that there's a constitutional limit on

599
00:34:36,440 --> 00:34:40,879
Speaker 3: punitive damages. They both said, as good strict constructionists might.

600
00:34:41,440 --> 00:34:43,799
Speaker 3: They said, I've got to copy the Constitution in my

601
00:34:43,840 --> 00:34:46,400
Speaker 3: breast pocket. I just looked. There's nothing in there about

602
00:34:46,440 --> 00:34:49,800
Speaker 3: punitive damages. And so they actually dissented, even though you

603
00:34:49,880 --> 00:34:51,480
Speaker 3: might think they might have been on the other side

604
00:34:51,520 --> 00:34:54,799
Speaker 3: of this question. They dissented from the Supreme Court's decisions

605
00:34:54,800 --> 00:34:57,080
Speaker 3: on this saying that there's nothing in the in the

606
00:34:57,120 --> 00:34:59,560
Speaker 3: Constitution at all that limits punitive damages.

607
00:34:59,560 --> 00:35:04,799
Speaker 1: Maybe there's thanks so much, Tony. That's employment Attorney Anthony Acidi,

608
00:35:04,960 --> 00:35:07,799
Speaker 1: a partner at Prosscauer Rose. And that's it for this

609
00:35:07,920 --> 00:35:11,040
Speaker 1: edition of the Bloomberg Law Podcast. Remember you can always

610
00:35:11,080 --> 00:35:13,799
Speaker 1: get the latest legal news by subscribing and listening to

611
00:35:13,840 --> 00:35:18,000
Speaker 1: the show on Apple Podcasts, Spotify, and at Bloomberg dot com,

612
00:35:18,040 --> 00:35:22,279
Speaker 1: slash podcast Slash Law. I'm June Grosso, and this is

613
00:35:22,320 --> 00:35:22,920
Speaker 1: Bloomberg