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Federal Court to Ease Backlog by Delaying Trials

Federal Court to Ease Backlog by Delaying Trials

By AMANDA BRONSTAD

Staff Reporter

Federal judges in Southern California, straining under an increasing caseload but faced with more civil and criminal trials given the spate of recent corporate scandals, are recommending that all complex business cases be shelved, in some cases for nearly two years.

While the delays, whose length will be established by individual judges on a case-by-case basis, are deemed necessary in a district where 24 judges handle as many as 15,000 cases annually, they have plaintiff’s attorneys seeing red.



“There’s an old adage: Justice delayed is justice denied,” said Allan Browne, a trial attorney at Browne & Woods LLP. “There is no greater truth than that. A plaintiff is someone who is owed a lot of money. The person may be hovering toward bankruptcy. Their business may be teetering on the edge of extinction. And the defendant is using the money to make more money. Is that fair?”

But U.S. District Judge Dickran Tevrizian (right) of the Central District of California said the moves could alleviate the huge backlog of cases that has arisen as a result of a perfect storm of trial work.

Already shorthanded, district judges face

an increasing number of cases brought by aggrieved shareholders as a result of falling share prices and corporate accounting scandals. They have been swamped by cases as defendants’ attorneys seek a venue they feel yields more favorable jury verdicts.

“The problem is that these major pieces of litigation corporate securities, patent, intellectual property and copyright involve long trial times,” Tevrizian said. “Those cases in which trial estimates are four days or less will get priority. The longer cases will get on the back of the bus.”

Shareholder suits, which typically take 16 to 18 months to litigate, could run twice as long under the proposal, Tevrizian said.

Randall Lee, regional director of the Securities and Exchange Commission’s Pacific Regional office, which files most of its cases in federal courts, said he has already noticed delays in getting to trial.

“As a government agency, we represent the interests of an investing public,” Lee said. “So when there are delays of our cases, it’s the American public that suffers. Many of our most significant cases involve extremely complex allegations of accounting and financial reporting fraud, which are often simply not susceptible to being tried in a manner of several days.”

Complex criminal cases, including those against the Mexican Mafia and the Aryan Brotherhood, as well as hundreds of immigration status cases, have added to the white collar delays. Under the federal government’s Speedy Trial Act of 1974, criminal cases take precedence over civil cases because defendants must be brought to trial within 70 days after their arrest.

Seeking consensus

A committee of seven senior judges, including Tevrizian, held an emergency meeting in early December to address workload options, and will present the idea of delaying civil trials of more than four days to the district’s judges at a monthly meeting in January. In theory, they can reject the proposal but that’s considered unlikely.

“My experience in the L.A. district is it’s rapidly becoming one of the most congested districts in which we practice,” said Marshall Grossman, a partner at Alschuler Grossman Stein & Kahan LLP who handles large-scale business litigation.

The greatest impact will be felt in shareholder derivative cases, intellectual property litigation, breach of contract and wrongful termination cases.

Intellectual property cases, including copyright and patent litigation, are among the most time-consuming cases and therefore most likely to be affected by a four-day trial cut-off. Bob Weiss, a partner at Jones Day Reavis & Pogue, said such cases have trials of one to six months in length.

Delaying a trial could significantly impact the outcome of the case, he said. If a company that had been sued for infringing on another company’s patent continues to manufacture and sell the product while the case sits in court for 10 years, it could accrue a substantial amount of back profits owed the patent-holder in a case it eventually loses, Weiss said.

Squeezing complex business litigation, in which trials can last from two weeks to six months, into four days is almost impossible, Browne said.

What’s more, he said, defendants might have an advantage in having cases delayed because plaintiffs could opt to settle or even drop the case. Also, key witnesses may die or drop out.

“Most of my cases involve millions and millions of dollars,” Browne said. “They tend to be more complicated and have more witnesses. If you are a plaintiff, it can be a disaster. If you’re a defendant, you can enjoy the sunlight.”

To date, judges have dealt with the workload issues on an individual basis. A few months ago, Tevrizian announced he would only hear cases with trial times of four days or fewer.

Other judges have reduced deposition times to one day, limited time on jury selection and opening statements or eliminated testimony by having witnesses submit a shortened declaration, said Browne.

Another key component to the backlog has been a shortage of six judges in the Central District, although in the past six months three judges were appointed and two are likely to be appointed next year.

While there is agreement that delays will add to the price of litigation, not all attorneys agree that plaintiffs will bear the full burden. Grossman said depositions or motions to be filed in the course of the delays could mean added costs for all clients.

“When trials are delayed, lawyers always seem to find the work to fill their time,” Grossman said. “The longer it takes for a case to go to trial, the more likely it is the lawyers will spin their wheels filing motions, taking depositions or writing letters back and forth with no real benefit to anybody other than themselves.”

Among short-term options for clients is to pay private judges to hear their cases or try to remove their case to another jurisdiction, Weiss said.

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