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If judges are like umpires in a baseball game, to borrow from an old courthouse cliche, then Ninth Circuit Judge Alex Kozinski might say a Northern District bankruptcy judge blew the call in a dispute between a Silicon Valley tech company and its employees. In a sharply worded, unanimous opinion issued Thursday, Kozinski slammed the Northern District U.S. Bankruptcy Court for rushing to dismiss sex discrimination claims from three female factory workers who manufacture semiconductor products for the San Jose-based company ZiLOG. U.S. Bankruptcy Judge Marilyn Morgan appears to be the main target of Kozinski’s ire, though he also had sharp words for U.S. District Judge Jeremy Fogel, who confirmed the bankruptcy court’s orders, and ZiLOG’s in-house and outside counsel. The factory workers alleged that in June 2001 ZiLOG announced it would close an Idaho plant, but that it would pay retention bonuses to employees who stayed until the December 2001 closing date. The company later reneged on its promise, the women allege, and when they discovered that several male employees had been paid their bonuses, they sued. But by then ZiLOG was in Chapter 11 bankruptcy proceedings, and successfully argued that the women’s claims had been filed too late and were dischargeable under the bankruptcy plan. The women argued their claims should have been accepted as timely under the equitable doctrine of excusable neglect. Kozinski ruled the bankruptcy court had abused its discretion and that Judge Fogel had erred in upholding summary judgment. Once remanded, Kozinski issued an angry-sounding word of caution “to conduct proceedings in close conformity with the views expressed in [the Ninth Circuit] opinion.” The opinion not only canceled an order that the women pay $20,000 to cover ZiLOG’s attorney’s fees, but ordered the bankruptcy court to consider making the company pay for the women’s lawyers. To support his decision, Kozinski pointed to a Feb. 28, 2002, e-mail from ZiLOG General Counsel Daniel Jochnowitz to ZiLOG employees. The e-mail, reprinted in the opinion, reassures employees that the bankruptcy proceedings “will affect only the holders of the company’s public debt securities and the current holders of our common and preferred shares” and “the Chapter 11 case will have no effect on you or our business operations.” The e-mail “was not calculated to inform the women that they needed to file their wage claims with the bankruptcy court,” Kozinski wrote. “More likely, it would have led them to believe exactly the opposite.” In a footnote, he added that “the plainly defective notice” had been cc’d to four of ZiLOG’s outside counsel at Skadden, Arps, Slate, Meagher & Flom, “none of whom sent a corrected notice.” “This case,” he wrote in the first line of the opinion, “shows once again why it’s important for lawyers representing a bankruptcy debtor to turn square corners.” The opinion included the office number for Jochnowitz, who no longer works for ZiLOG. The number now goes to Mark Grant, an outside counsel for ZiLOG, who declined to comment on the ruling. Calls to Jochnowitz’s home were not returned by press time. Skadden’s Richard Levin, who represented ZiLOG before the Ninth Circuit, also declined to comment on the opinion. After thoroughly blasting ZiLOG, Kozinski ripped the bankruptcy court for following the Jochnowitz e-mail with another confusing notice to potential creditors, then failing to give the three women an evidentiary hearing before dismissing their claims. “The written notice of the bankruptcy court muddied the waters further,” Kozinski said. The standard for deciding when neglect is excusable was set by the U.S. Supreme Court in 1993′s Pioneer Investor Services Co. v. Brunswick Associates Limited Partnership 507 U.S. 380, 395 and applied by the Ninth Circuit in 2004 in Pincay v. Andrews, 389 F.3rd 853. “In Pioneer and Pincay, sophisticated attorneys were let off the hook after missing filing deadlines,” Kozinski said. “It would be very strange indeed to find the neglect in our case inexcusable, when the neglect in Pioneer and Pincay was found excusable.” In re: ZiLOG, Inc., 06 C.D.O.S. 5063, was argued Dec. 7 in front of Kozinski, Ninth Circuit Judge Barry Silverman and Southern District Judge Roger Benitez, who was filling in for the day.

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