LOS ANGELES, Sept. 4 /PRNewswire/ -- Today, counsel for both sides in four class action lawsuits received a sealed ruling from Los Angeles Superior Court judge Anthony J. Mohr, of the complex litigation panel. According to an unsealed minute order issued by Judge Mohr earlier in the week, the sealed ruling received today grants plaintiffs' motions, brought in all four class actions, to disqualify the international law firm of Sonnenschein, Nath & Rosenthal, and all of the firm's attorneys, from continuing to represent the defendants - First American Title Insurance Company and related entities.
First American Title traces its history to 1889 and is one of the world's largest title insurance companies. Its parent is First American Corporation, a Fortune 500 company, publicly traded on the New York Stock Exchange.
The Sonnenschein law firm, founded more than a century ago, is one of the largest full service law firms in the U.S., with 800 lawyers in 13 offices in the U.S. and Europe, and has a "global reach throughout the Americas, Asia and the Middle East," according to its web site. The firm "serves the needs of many of the world's best known and most admired businesses," according to its web site.
The are four California class actions against First American in which First American's counsel were disqualified:
- Jeffrey Sjobring v. First American Title, et al, LASC Case No. BC329482
- Elizabeth Wilmot , Jason Munro v. First American Title, et al, LASC Case No. BC370141
- Patrick Kirk v. First American Title, et al, LASC Case No. BC372797
- Kaufman v. First American Title, et al, LASC Case No. BC382826
Sonnenschein attorneys who were direct subjects of the disqualification motion include partners Charles Newman and Jason Maschmann of the St. Louis office, partner Joel Siegel of the Los Angeles office, and partner Gary M. Cohen of the San Francisco office. Until 2007, Gary Cohen was Deputy Commissioner and General Counsel at the California Department of Insurance, where he served as chief legal advisor to Commissioners Steve Poizner and John Garamendi, according to his biography on the Sonnenshein web site.
First American Title was represented in the disqualification proceedings by "special counsel" -- attorneys Peter Q. Ezzell and Nancy E. Lucas, of the Haight, Brown & Bonesteel firm, as well as by Sonnenschein partner Ronald D. Kent.
Lead counsel for plaintiffs and class members in all four cases are Los Angeles attorneys Steven Jay "Bernie" Bernheim of The Bernheim Law Firm, and Taras Kick of The Kick Law Firm. Bernheim , an insurance litigator for 20 years, is a past recipient of California Lawyer 's Attorney of the Year ("CLAY") award, and was nominated by Trial Lawyers for Public Justice as a finalist for National Trial Lawyer of the Year. Kick is one of California's leading consumer class action litigators.
The disqualification ruling was the end result of a six month procedure, during which Judge Mohr held six separate hearings, conducted an in- camera examination of confidential documents, and reviewed nearly three feet of briefing, declarations and documentary evidence.
"One thing that both sides can doubtless agree on is that Judge Mohr was extremely thorough and careful in his consideration of these sensitive motions," Bernheim observes.
Immediately after issuing the ruling disqualifying Sonnenschein from all four cases, Judge Mohr began a three month assignment as a temporary justice of the Second Appellate District.
According to the court's records, First American was originally represented in the litigation by the St. Louis and Los Angeles offices of the Bryan, Cave law firm. The First American defense team at Bryan Cave included attorneys Newman, Maschmann and Siegel, who eventually left Bryan Cave to become partners at Sonnenschein in February 2009. They took the First American litigation with them to Sonnenschein. Gary Cohen was already a partner at Sonnenschein at this time.
According to publicly available portions of plaintiffs' disqualification papers, before Mr. Cohen became a partner at Sonnenschein, plaintiffs counsel Bernheim and Kick had on several occasions communicated with Mr. Cohen about retaining/employing Mr. Cohen to work on behalf of plaintiffs in the First American litigation. In so doing, plaintiffs counsel communicated extensive confidential work product information to Mr. Cohen, according to the publicly filed documents.
When Mr. Cohen became a Sonnenschein partner, plaintiffs' counsel again contacted Mr. Cohen, expressing interest in retaining him through the firm, according to plaintiffs' publicly filed papers. According to the publicly filed papers, Mr. Cohen caused a conflict check to be run at Sonnenschein. He reported that there was a conflict, and that he and the firm could not work with plaintiffs against First American in this litigation.
Three weeks after that, Sonnenschein filed a substitution of attorney and became counsel of record against plaintiffs in the very same litigation plaintiffs counsel had discussed with Sonnenshein partner Cohen. Sonnenschein was now adverse to a party in the very litigation where they had nearly been retained only weeks before, and where a conflict check had revealed there was indeed a conflict, according to the publicly available documents filed by plaintiffs in Superior Court.
Plaintiffs filed the motion to disqualify Cohen and the entire Sonnenschein firm in early March 2009. Defendants responded by representing they had built an "ethical wall" around Mr. Cohen at Sonnenschein. In court-filed documents, defendants alleged that the wall prohibited communications pertaining to these cases between Mr. Cohen and the Sonnenschein (formerly Bryan Cave) litigation team.
About six weeks later, according to public records in the court file, the Sonnenschein defense team submitted to Judge Mohr a trial court order from another judge in another First American Title case. The Sonnenschein defense team (Mr. Newman, Mr. Maschmann, Mr. Siegel, et al) urged J. Mohr to dismiss these cases based on that order. They stated that the order in the other case was "directly relevant" to the cases before Judge Mohr.
In court-filed papers, plaintiffs stated that --
- Gary Cohen was in fact one of the lawyers working on this other "directly relevant" case.
- Gary Cohen's work in that "directly relevant" case was adverse to plaintiffs' interests here.
- Gary Cohen did that work despite having received confidential information from plaintiffs, and did that work despite Sonnenschein's representation that Mr. Cohen would abide by their "ethical wall."
In a publicly filed declaration, First American Title's in-house counsel, Mr. Timothy P. Sullivan, Esq., testified that the Sonnenschein lawyers hold "unique and irreplaceable knowledge" pertaining to the litigation. He also testified that these class actions "are the most aggressively litigated and complex proceedings that I have experienced in my 35 years of practice."
Mr. Sullivan testified that First American has incurred more than $5,500,000 in attorney's fees and $1,000,000 in additional expenses in defending them.
Plaintiffs' litigation claims include the following, as set out in public documents in the court file:
- that First American Title charged California consumers higher premiums for title insurance than allowed under the rates First American had filed with the California Department of Insurance.
- that this is unlawful; a title insurance company is only allowed to charge premiums calculated according to the filed rates.
- that First American Title filed a special rate benefiting policyholders who had First American's extended coverage "Eagle Owners" policy. This special filed rate entitled these homeowners to a lower premium when paying for the additional title coverage usually required by mortgage lenders. However, First American Title typically charged this class of consumers more for the lender coverage than the rates allowed.
- that First American clearly stated in an internal memorandum written when the Eagle Owners policy was created that this "was filed with the Department of Insurance in its extended form," not as "standard coverage." As contained in a public court document, a very senior First American Title executive testified that "we were informing the Department of Insurance and everybody else that issued in that form [the Eagle Owners policy] provides extended coverage."
Despite this, in court-filed documents, First American has recently represented to the superior court the exact opposite: "Nothing states that the Eagle Owner's policy is 'extended coverage'; the Eagle Owner's policy is necessarily 'standard coverage'."
"First American Title is apparently talking out of both sides of its mouth," observes class representative Jeffrey Sjobring.
"In this litigation, the consumers also allege that First American's rates, were, at best, ambiguous," states class counsel Kick.
Everyday there home sales transactions in California in which the home seller pays First American Title for a title policy that protects the home buyer. Often, especially in Southern California, a home seller, like class representative Patrick Kirk, will use an independent escrow company to carry out the transaction. One of First American Title's defenses, stated in court-filed documents, is that First American Title has no duty to advise these home sellers about which title policy to buy, or about the appropriate pricing of the policies.
As part of their defense to the litigation, First American states in publicly available court papers that home sellers like Mr. Kirk are simply not "customers" or "consumers" - despite the fact that they pay for the title policies!
As stated in court-filed documents, the First American title officer for two of the class representatives, Mr. Kirk and Mr. Sjobring, testified that First American had, in just five years with the company, paid her $1.5 million in compensation, most of it in commissions. She also testified that "the more premium the buyers, sellers and refinancers of homes pay to First American," the more money she personally makes.
SOURCE The Bernheim Law Firm