A plaintiffs attorney who was debarred from filing claims with an asbestos trust could get another shot after a federal appeals court found the restriction may have wrongly curtailed his privilege to practice law.
In a 2-1 opinion, the U.S. Court of Appeals for the Ninth Circuit ruled on Thursday that an agreement under which Michael Mandelbrot, an attorney in Novato, California, was barred from making claims against four asbestos trusts might have violated his right to practice law under two California statutes and its own 2015 opinion in Golden v. California Emergency Physicians Medical Group. Mandelbrot, the Ninth Circuit panel said in the majority opinion, agreed to the deal after the trusts accused him of making “unreliable” claims on behalf of asbestos victims but tried to back out a few days later. A district judge in Los Angeles affirmed the agreement. The panel’s majority vacated that order and remanded the case after finding “these calls are best for the district court to make in the first instance.”
“Accordingly, we vacate and remand this case so that the district court can decide whether federal or state law governs (including whether the federal law argument has been waived), and what impact, if any, Golden has on this case,” Judge John Owens wrote for the majority.
In a lengthy dissent, U.S. District Judge Edward Korman of the Eastern District of New York, sitting on the Ninth Circuit panel by designation, said he would affirm because of the “federal interest” involved in administering asbestos trusts. The trusts were set up for companies that were forced to file Chapter 11 bankruptcies amid lawsuits brought on behalf of individuals who contracted mesothelioma after being exposed to asbestos.
“Mandelbrot is not entitled to a second bite at the apple in the district court—a bite that will cause the trusts to expend funds otherwise dedicated to those suffering from asbestos exposure and those who may suffer from it in the future,” Korman wrote. Citing the limited resources of the Ninth Circuit, he wrote that “we do not enjoy the luxury of a game of ping pong with the district court, especially in a case where a party seeks to wriggle out of a settlement agreement made two days into a trial that was not going his way.”
Mandelbrot, of the Mandelbrot Law Firm, said in an interview with The Recorder Thursday that he was “absolutely elated” about the ruling, which could give him “an opportunity to clear both my name and my reputation, and this is one step forward in the process.”
“I have never filed an unreliable claim with any trust,” he said.
Gary Fergus, of Fergus, A Law Office, in San Francisco, who argued for the two trusts in the case, and Thomas Patterson, a partner at Los Angeles-based Klee, Tuchin, Bogdanoff & Stern, who filed briefs on their behalf, did not respond to requests for comment.
Many tort reformers and members of the defense bar have complained about fraud in asbestos claims.
According to Thursday’s opinion, the J.T. Thorpe Settlement Trust and Thorpe Insulation Co. Asbestos Settlement Trust claimed in adversary proceedings in U.S. Bankruptcy Court for the Central District of California that Mandelbrot had a pattern of “unreliable” evidence in asbestos claims.
The case went to trial in 2014.
Under the settlement, reached after two days of trial, Mandelbrot agreed that the trusts had acted reasonably in permanently barring him from submitting claims against them, according to the opinion. The trusts, in return, agreed not to seek damages against Mandelbrot.
After Mandelbrot balked on the deal, U.S. Bankruptcy Court Judge Sheri Bluebond granted a motion to enforce the agreement, and U.S. District Judge Virginia Phillips of the Central District of California affirmed those orders in 2015.
Asked why he agreed to the deal in the first place, Mandelbrot on Thursday told The Recorder he blamed it on “pure stupidity.”
“I basically panicked,” he said, adding that his lawyer at the time insisted—incorrectly—that he might face jail. “My thought at the time was ‘I’ve got to take any deal that’s out there because I don’t want to go to jail.’”
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