A legal reform organization has written to The State Bar of California, calling for investigation of potential ethics violations in mass arbitrations, including possible use of fictitious, deceased, or otherwise ineligible claimants in order to leverage higher settlements from businesses.
The Civil Justice Association of California (CJAC) sent the July 6 letter on behalf of its members to highlight the abuses of mass arbitration and encourage the State Bar to investigate underlying ethical violations, Jaime Huff, CJAC vice president and counsel, public policy, said in an email response to the Northern California Record.
“Mass arbitration is a strategy employed by the plaintiffs’ bar to pressure a defendant business into settling under a large volume of arbitration claims,” Huff said. “The cost to defend against these versus the amount of settlement creates a Hobson’s choice for businesses. This type of abusive practice costs California employers and businesses tens or hundreds of millions of dollars annually and undermines arbitration, which is a process that has proven benefits for consumers and workers and helps to alleviate the burden on our courts.”
The letter is addressed to Enrique Zuniga, the first Public Trust Liaison for the California State Bar, which licenses attorneys and oversees their conduct. The position was created following questionable practices during the decades-long investigation of plaintiff’s attorney Thomas Girardi.
California State Auditor reports have found the State Bar lacking efficiency in its attorney discipline system.
“Abusive mass arbitrations focus on enriching lawyers and ultimately harm consumers,” Huff said. “Our governing body charged with overseeing such violations of ethical standards should be proactive in stopping the practice altogether. We are encouraged to see the State Bar establish a Public Trust Liaison, and we look forward to working with Mr. Zuniga’s office.”
A State Bar spokesperson said the letter also has been forwarded to the Office of Professional Competence to determine how the allegations outlined in the letter are, or are not, addressed by existing Rules of Professional Conduct and the State Bar Act.
“Though no specific allegations against a licensed attorney were mentioned, the letter was also forwarded to the Chief Trial Counsel (OCTC), which is responsible for investigating allegations of attorney violations of the Rules of Professional Conduct and the State Bar Act,” the spokesperson told the Record by email. “If it were a complaint letter about the actions of a specific California-licensed attorney, some follow up from OCTC could occur and an investigation, if warranted, could begin. By law, OCTC’s disciplinary investigations, including whether or not OCTC has opened a disciplinary investigation, are confidential.”
The spokesperson noted that as a general matter, attorneys engaged in arbitrations remain obligated to comply with the California Rules of Professional Conduct and the State Bar Act (Business and Professions Code sections 6001 et seq.).
“Among other things, these rules preclude lawyers from pursuing frivolous litigation (section 6068(c) and Rule 3.1(a)), prohibit material misrepresentations to the tribunal (section 6068(d) and Rule 3.3), and impose a variety of obligations regarding communications with clients, including a specific rule regarding required individual client consent to any aggregate settlement (Rule 1.8.7),” the spokesperson said.
State Bar statistics show that in 2022, there were approximately 195,000 active, licensed attorneys in California.
“Individuals who believe that an attorney is violating any of these provisions, whether in connection with an arbitration or otherwise, may submit a complaint to OCTC,” the spokesperson said. “Any such complaint should identify the individual attorney and provide as much specific information as possible regarding that attorney’s alleged misconduct so that OCTC has the information necessary to make a meaningful assessment as to whether there is a basis for initiating an investigation of misconduct by a specific attorney.”