Winnick Suffers Setback In Suit by Former Partner

By Amanda Bronstad
(Los Angeles Business Journal)

Gary Winnick, who has so far successfully averted claims made by shareholders of the bankrupt Global Crossing Ltd., suffered a legal setback last month in a $1.1 billion case brought by a former partner.

An Aug. 28 ruling by a three-judge panel in the 2nd Appellate District paves the way for Douglas Shooker’s fraud case against Winnick to head to trial on Sept. 19 in Los Angeles Superior Court. An expected appeal by Winnick of the decision to the California Supreme Court could delay the trial.

Shooker was managing director of Winnick’s Pacific Capital Group Inc. in 1993. Under a partnership agreement, he was to receive a 15 percent interest in various ventures, including Telecommunications Development Corp., a precursor to Global Crossing, according to the ruling.

Shooker left Pacific Capital in 1994. But in August 2000, after reading about Winnick’s plans for Global Crossing, he sued in L.A. Superior Court for breach of fiduciary duty, fraud and other claims, seeking the 15 percent owed him from the partnership agreement, the ruling says.

Shooker planned to, designate himself an expert witness but withdrew in March after the lower court judge forced him to disclose communications with his lawyer that are typically considered confidential, the ruling says. Shooker petitioned the appellate court to retain his attorney-client privilege in the case, and the panel ruled in his favor.

Winnick’s lawyer, Marshall Grossman, a partner at Alshuler Grossman Stein & Kahan LLP, said he would seek a review of the ruling by the state Supreme Court.

"Once you waive the privilege, you don’t get a mulligan," he said. The waiver is complete. "He has played games with the rules, and we intend to hold his feet to the fire and deal with the consequences of designating himself as an expert."

Don Howarth, a partner at Howarth & Smith representing Shooker, called the attorney-client privilege issue a "sideshow" Winnick used to divert the case before trial.

He said Shooker intends to take the stand as a fact witness but offering no expert opinion in the case.

Global Crossing shareholders, along with former employees and bondholders of the company, are expected to reach a wide ranging settlement with the company and Winnick this fall covering a number of suits.

9/11 families sue Saudis, Sudan for $3 trillion - Defendants accused of funding al Qaeda

By Bob Egelko
(San Francisco Chronicle)

Family members of victims of the Sept. 11 terrorist attacks look on during a Washignton news conference Thursday, Aug. 15, 2002 where it was announced that legal action would be taken against Saudi officials and institutions, charging they financed Osama bin Laden's terrorist network. From left are, Ellen Saracini, whose husband Victor was the captain of United Airlines Flight 175; Tara Bane, whose husband died at the World Trade Center; Fiona Havlish, whose husband, Don, worked on the 101st floor of the south tower; and Sara Mulligan, wife of a New York firefighter. (AP Photo/Lawrence Jackson)

Families of more than 600 Sept. 11 victims filed a $3 trillion lawsuit Thursday, accusing Saudi princes, foreign banks, charities and the government of Sudan of funding the terrorist network that launched the attacks.

The lead plaintiffs are the widow, sister and parents of Thomas Burnett Jr., the San Ramon executive believed to have helped fight the hijackers of San Francisco-bound United Airlines Flight 93 and forced the jetliner down in rural Pennsylvania, short of its presumed target in Washington, D.C. All 44 people aboard were killed.

"It's up to us to bankrupt the terrorists and those who finance them so they will never again have the resources to commit such atrocities," Burnett's widow, Deena, said at a news conference in Washington, where the federal lawsuit was filed.

"As my son, Tom, told his wife, Deena, from the cabin of Flight 93, 'We're going to do something,' " said Thomas E. Burnett.

The suit alleges that Osama bin Laden's al Qaeda network was heavily financed by seven international banks and eight charitable foundations, with the active promotion and support of three members of the Saudi royal family. Bin Laden is a Saudi native, and 15 of the 19 hijackers were Saudi citizens.

The suit does not accuse any of the defendants of having a direct role in the Sept. 11 attacks, or knowing about them in advance, but says they knowingly funded terrorists and must be held responsible for the consequences.

"The charitable, financial, religious and political networks that front terror -- the defendant banks, charities, financial and business institutions - - are responsible for the deaths and injuries" of last September, the suit says.

Lawsuit Looks to Lockerbie

The lawsuit is partly modeled on the action filed against Libya in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. One lawyer in Thursday's case, Allen Gerson, helped negotiate a recent $2.7 billion settlement with the Libyan government on behalf of the families of the 270 victims.

Another precedent has resulted from a pending suit by the parents of an American-born teenager killed in a terrorist attack in Israel. The U.S. Court of Appeals in Chicago ruled recently the parents could sue Islamic charitable organizations that allegedly acted as fronts for the group blamed in the attack, Hamas.

Plaintiffs' attorneys in Thursday's suit said many of the defendants had considerable property in the United States from which damages could be collected. Some of the assets remain frozen, however, after the U.S. government declared several charities to be terrorist fronts.

The suit comes at a delicate time in U.S.-Saudi relations. In a briefing last month to a defense advisory board, a Rand analyst called Saudi Arabia an enemy of the United States. That assessment was quickly disavowed by the Saudi government and the Bush administration, both of which insisted that the two nations' ties were as strong as ever.

"We understand (the Bush administration's) concerns about the Saudis," said plaintiffs' lawyer Anne Kearse. "Our action is on behalf of our clients, to help with the war on terrorism."

The suit quoted the Rand briefing, belittled Saudi leaders' denials of connections to al Qaeda and stopped just short of accusing the Saudi government of complicity in the Sept. 11 attacks.

"Royal denials notwithstanding, Saudi money has for years been funneled to encourage radical anti-Americanism as well as to fund the al Qaeda terrorists, " the suit said. "Saudi Arabian money has financed terror while its citizens have promoted and executed it."

Royal Defendants

One Saudi prince named as a defendant, Sultan Bin Abdulaziz al Saud, has been the kingdom's defense minister since 1963. The suit quoted his denunciation of America's "Zionist and Jewish lobby" after Sept. 11 and said he had donated $6 million since 1994 to Islamic charities that finance al Qaeda, while also serving as the government's chief overseer of charitable fund raising.

Another royal defendant, Turki al-Faisal al Saud, was until a year ago the chief of the Saudi intelligence agency, which the suit described as "Osama bin Laden's nexus to the network of charities, foundations and other funding sources." The role of the third prince named in the suit, Mohammed al-Faisal al Saud, was not specified.

The suit did not name the Saudi government as a defendant but did target the government of Sudan, where two of the banks are based and where bin Laden had his headquarters from 1991 until he was expelled in 1996. Attorney Don Howarth explained that Sudan is on the U.S. State Department's list of sponsors of terrorism -- removing its immunity from terror-related damage suits -- but Saudi Arabia is not.

Attempts to reach the Saudi and Sudanese embassies in Washington for comment were unsuccessful.

The suit seeks $1 trillion on a variety of grounds for supporting or knowingly permitting terrorist activities. One claim seeks $3 trillion under a law providing triple damages for U.S. victims of international terrorism. In addition to compensation, the suit also seeks $100 trillion in punitive damages against Sudan.

Top 30 Women Litigators

(Los Angeles Daily Journal)

Six years ago, Suzelle Smith won an automobile rollover case against an undefeated attorney, paving her way to the national ranks of litigators.

In 1985, Suzelle Smith and Don Howarth struck out on their own to form Howarth & Smith, a litigation boutique. Even though Smith was only a second-year associate, she was confident that she could handle her own practice.

"I had shown that I could stand up in the courtroom," Smith says.

At that point in her career, Smith worked on "bet the company" defense litigation. Suzuki was having some problems, and it hired Smith to change its strategy.

"What they needed was a woman first-chair trial lawyer," Smith said.

Smith, 48, also handles plaintiffs’ work. She’s working as lead counsel on the first class action against terrorists and terrorist groups for the Sept. 11 attacks. The case was filed May 9 on behalf of the victims and the decedents’ families. Havlish v. Bin Laden, CV 0035 (D. D.C., filed May 9, 2002). "It’s about war on terrorism and seeing that it never happens again," Smith says.

Women at the Top

(The National Law Journal)

Fifty litigators who succeed in and out of the courthouse

Suzelle M. Smith is a plaintiffs’ attorney who has won substantial settlements and verdicts against the National Football League, Southern California Edison, the city of Irvine, Calif., General Electric Co. and Sears Roebuck & Co. This summer, Smith won a $16.3 million verdict against Cotter Corp. on behalf of 25 plaintiffs who were contending that Cotter’s uranium mill poisoned their community; that judgment was increased to $43.3 million in November, through the addition of prejudgment interest and the cost of medical monitoring. For several years, Smith also represented defendants in high-profile litigations. She has returned to a plaintiffs’-only practice and is currently representing the government of the Marshall Islands in a major lawsuit filed against the tobacco industry that will likely be the first international tobacco case to be tried.

$2.9 Million Awarded in Cotter Corp. Lawsuit

By Mike McPhee
(The Denver Post)

A federal jury Wednesday awarded $2.9 million to 14 residents of Canon City who were contaminated by the Cotter Corp. uranium-processing mill during the 1970s and '80s.

The jury took only six hours to reach a decision after listening to nearly 25 days of testimony, presided over by U.S. District Court Judge Zita Weinshienk. Included in the verdict was a provision to provide the 14 residents with lifetime monitoring for cancer and other illnesses.

Nearly 30 witnesses testified during the trial, some telling how pollution, mostly dusty powder, from the mill contaminated the residents' groundwater, vegetable gardens, lawns and homes. Much of the pollution was radioactive. Other pollutants included heavy metals such as molybdenum and arsenic.

The mill, which opened in 1958 and closed in 1987, produced a dust form of uranium called "yellowcake" for nuclear power plants. The mill and the surrounding area, located in Lincoln Park just south of Canon City, was declared a Superfund Site in 1984, making it eligible for federal funds for clean up as one of the nation's most polluted sites.

The 14 residents have suffered a variety of illnesses, cancer and arthritis. One woman, a non-smoker, died of lung cancer. Handicapped rodeo rider Jack Hadley has a condition known as multiple exostosis, or abnormal bony growths throughout the body. One expert testified that Hadley's multiple exostosis was caused by his mother's exposure to molybdenum while pregnant.

Weinshienk, in her instructions to the jury, said that Cotter already had been ruled to be negligent, that the jury merely needed to decide whether the pollution caused the injuries and death.

"This verdict reflects the obvious facts, which Cotter has denied for decades, that the properties of these people were contaminated, that these people were hurt and confirms by a unanimous jury beyond a reasonable doubt that Cotter ignored the rights and safety of the public for its own financial benefit," said Suzelle Smith, a Los Angeles lawyer who led a team of lawyers for the plaintiff.

Attorneys for Cotter did not return phone calls Thursday.

The 14 residents were the first of four groups of plaintiffs, totaling 67 residents of Lincoln Park, who are suing the Cotter Corp. The 14 were picked as a cross-section of the injuries and maladies. The next trial is expected to start early next year.

Meanwhile, Cotter has filed an application to reopen the mill as early as this year.

Nuclear Reaction

By Gail Diane Cox
(The Recorder)

Suzelle Smith and Don Howarth

It's one thing to lose a case. It's another to lose after a six-week federal trial that took just three hours for a jury to decide -- unanimously.

Worse yet, this debacle in March 1998 was the third straight trial failure in a campaign by Los Angeles' Howarth & Smith to hold the San Onofre Nuclear Generating Station responsible for leukemia that had stricken a handful of people who had been in or around the plant in the mid-1980s.

"The jurors we interviewed afterward from all three juries told us exactly the same thing," litigator Don Howarth recalls. They could not -- as required by a jury instruction -- conclude that in a universe full of radiation, a particular ray from leaking fuel rods at San Onofre had actually caused the frequently fatal form of leukemia.

"We'd spent years of trying to prove the impossible," Howarth says. "Medical science can't prove exactly which of many potential causes triggers a cancer, and that's another way of saying that given those jury instructions, the plaintiff can't win."

After that third trial on behalf of cancer victims and their survivors, Howarth and his partner, Suzelle Smith, convened the plaintiffs, including those in four similar pending suits. They then laid out a double-or-nothing strategy: Unless they could convince the 9th U.S. Circuit Court of Appeals to change the jury instruction regarding causation, they would have to give up.

A MATTER OF EXPOSURE: The San Onofre Nuclear Generating Station, about 40 miles north of San Diego, is the alleged origin of leukemia that struck a handful of former plant workers and their families.

On July 20, climaxing Howarth's seven-year crusade, a 9th Circuit panel changed the instruction. The third case can be retried, and all future cases can go to trial, under a drastically lowered standard for tort liability.

"This is the first appellate ruling in a nuclear power plant case in 25 years -- that is, the first since Silkwood -- that does not further insulate the industry from liability," Smith says.

"I remember opening the envelope from the court," Howarth adds, "and, when I quit going 'wow,' yelling out to her that justice delayed is still justice achieved."

The new instruction requires a plaintiff to show only that exposure to radiation "in reasonable medical probability was a substantial factor" contributing to the risk of developing cancer. At its broadest, it substitutes "risk" for "actual cause." And the court noted in Kennedy v. Southern California Edison Co., 98-56157, that the chance of increased risk theoretically could be as small as one in 100,000 for a jury to find liability.

Industrial concerns were quick to oppose the ruling. The California Chamber of Commerce, the American Chemistry Council and the National Association of Manufacturers are among those urging reconsideration.

"If unmodified, liability for alleged injury associated with exposure to chemical products will be virtually unlimited," reads an amicus brief that Los Angeles' Gibson, Dunn & Crutcher submitted on their behalf. Citing the risk to the California economy, the brief, also representing Lockheed Martin Corp., Phillips Petroleum and Pfizer Inc., concludes that Kennedy is a "fundamental reordering of ... a plaintiff's burden of proof."

If the unanimous panel headed by Judge Michael Hawkins holds its ground, and the 9th Circuit doesn't intervene en banc, both sides agree the U.S. Supreme Court comes next.

Howarth insists he isn't worried about facing the combined forces of Los Angeles-based firms Paul, Hastings, Janofsky & Walker and Munger, Tolles & Olson, representing Southern California Edison Co. in addition to Gibson, Dunn. Ironically, years ago it might have been him, rather than Gibson, Dunn partner Robert Loewen, who wrote the amicus brief challenging the Kennedy ruling.

Loewen, from Gibson Dunn's Irvine, Calif., office, notes that Howarth built a career at Gibson Dunn defending asbestos cases. "You can bet Don wouldn't have thought much of this jury instruction then," he says.

But in 1985, Howarth earned himself a footnote in the annals of law firm heresy when he became the first partner to leave Gibson Dunn to strike out on his own, taking three promising associates, one of whom was Smith. At the time, he didn't express a burning desire to represent plaintiffs but rather to escape big-firm bureaucracy, which he complained was "risk averse."

By 1993, the date of the first San Onofre filing, Howarth & Smith had a statewide reputation for beguiling juries. But with fewer than 20 lawyers, the decision to take on the nuclear power industry -- on contingency -- was a sizable risk. Each trial has cost about $500,000, Smith notes, and that doesn't include several million dollars worth of lawyer hours expended over the years.

No one disputes that San Onofre's operators identified some 100 defective fuel rods in 1983 and chose to wait 18 months until the next scheduled overhaul to replace them. The Nuclear Regulatory Commission levied a $100,000 fine for safety violations. Located 40 miles north of San Diego, the Southern California Edison plant generates 20 percent of Southern California's electricity.

The first plaintiff was R.C. Tang, who worked for the Nuclear Regulatory Commission at San Onofre for two years. In her case, and the subsequent cases that Howarth & Smith filed, the cancer was chronic myelogenous leukemia. It is a blood disease seen in survivors of the atomic attacks on Hiroshima and Nagasaki. Although the only known cause is radiation exposure, the latency period can be so long that many victims have no record of contamination.

The Tang jury hung in February 1994. The case settled confidentially.

The second plaintiff was Glen "Jimmy" James, an electrical engineer at the plant. The defense argued in both cases that the plaintiffs' exposure was less than has been designated acceptable in industrywide standards. Howarth and Smith failed to score with their counterargument that the exposure was underestimated because it didn't include "fuel fleas" -- microscopic but dense fragments that are a byproduct of leaking rods and that arguably can lodge in hair and clothing, and even meandering cats, to follow workers home and irradiate their families and neighborhoods.

In the Kennedy case, the victim was married to a man who worked at San Onofre. She died of chronic myelogenous leukemia in 1996. The widower and their four children sued, and if this summer's 9th Circuit opinion holds, they qualify for a second chance to show that Southern California Edison as well as the manufacturer of the rods are to blame for her death. The four remaining lawsuits on file are a mix of claims by former workers with cancer and their widows.

Next time, Howarth and Smith won't have to rely so heavily on fuel fleas. As the amicus brief notes, "acceptable" risk levels established in 1986 by regulators for operating nuclear power plants -- formerly a slam-dunk defense -- exceed the one-in-100,000 range the court articulated in Kennedy.

Led by John Reding at the San Francisco office of Los Angeles-based Paul Hastings, the defendants are focusing on the Price-Anderson Act, in which Congress said nuclear power plant cases are to be tried in federal courts under the substantive law of the state where the alleged tort took place. Congress intended uniformity. The defense argues that other federal courts have required actual causation for radiation tort liability.

The amicus brief opposing the 9th Circuit ruling focuses on the court's reliance on Rutherford v. Owens-Illinois Inc., 16 Cal. 4th 953, an asbestos case that sets a strict liability standard. Rutherford was different from Kennedy, they maintain, because in Rutherford, causation was already established, and the jury used risk merely to allocate blame among multiple manufacturers.

And what if, as Don Howarth maintains, medical science can't be definitive enough to prove causation for radiation-linked cancers?

"Sounds like a reason not to assign liability," Loewen replies.

Tobacco Giants Want Marshalls Suit Dismissed

By Giff Johnson
(Pacific Magazine, July/August 2000)

Charging that Marshall Islands High Court Judge H. Dee Johnson is helping the Marshall Islands government in its efforts to "extort huge sums of money" from the U.S. tobacco industry, four American tobacco firms have filed an appeal seeking Supreme Court intervention to call a halt to the high-stakes court battle.

"The High Court's plainly erroneous orders refusing to put a stop to this legally meritless lawsuit have the clear and unmistakable effect of assisting the government in its efforts to abuse the judicial process so as to extort a settlement of claims in what the government now alleges to be a $20-billion case," stated the motion filed for Philip Morris Inc., Philip Morris Products Inc., Brown and Williamson Tobacco Corp. and R.J. Reynolds Tobacco Co.

The firms are seeking a writ of mandamus (or order) from the Supreme Court instructing the High Court to:

• Dismiss all common law claims by the government against the tobacco companies;
• prohibit the government from continuing to use 1997 and 1998 amendments to the Consumer Protection Law and Health Fund Law, respectively, on a retroactive basis regarding the conduct of the tobacco companies prior to the amendments coming into effect;
• strike from the government's complaint a paragraph in which the government is seeking about $100-million for the construction of hospitals throughout the country.

The companies said that "immediate intervention also is required to preserve the appearance of impartiality of this nation's judiciary in a closely watched case in which the government is seeking a massive monetary recovery to itself in its own court and which tests the independence of the Marshall Islands judiciary."

But, attorneys for the Marshall Islands said the tobacco industry "is acting like a bully" in trying to get the Supreme Court to throw out the lawsuit.

"Tobacco companies took profits out of the Marshalls and left costs here," said Don Howarth, a Los Angeles-base attorney for the Marshalls. "It is time for them to pay the costs."

Howarth's partner, attorney Suzelle Smith, said "the tobacco industry's strategy is to drown us (with motions) before we get to the trial so we can't get to the merits of the case." Smith described the tobacco industry's action as "a desperation motion" that is trying to "short-circuit the legal process and deny the government its day in court."

Howarth noted that the U.S. states got a $200-billion settlement from the industry. "They can get a fair trial here, but they don't want it," he said.

The companies complained about Judge Johnson for dismissing several of their motions without providing any legal basis or reasoning, and a schedule leading up to a planned Jan. 15, 2001, trial that provides for all motions to be dealt with during a November status conference.

They said Johnson is preventing them from getting "a full and fair hearing" and that by setting a pretrial schedule, it "sets the government's claims on for trial while virtually ensuring that petitioners' legal arguments will get no serious consideration, particularly those arguments that would dispose of the government's claims in their entirety."

The companies' motion called the $20-billion the government is seeking "astonishing." (It translates to $400,000 for each resident [and juror] in the country.)

The Marshall Islands has asked for a jury trial, which the companies say is the first time there would be a civil jury trial in the nation's history.

The case "should, and must, be brought to a halt," the companies said.

Lawsuit by Family of Marlboro Man Clears Legal Hurdle

(The News & Observer a.k.a. Nando Times)

Marlboro pitchman David McLean

A lawsuit filed by family members of the Marlboro Man, who died of lung cancer after years of smoking, has cleared a legal hurdle and moved one step closer to trial, attorneys said Friday.

U.S. District Judge David Folsom, in a ruling in Texarkana dated Aug. 14 but disclosed publicly this week, declined to throw out a lawsuit filed by the widow and son of Marlboro pitchman David McLean.

The suit names several companies, including tobacco giant Philip Morris, maker of the popular Marlboro brand.

The suit, which Folsom sent to the U.S. Fifth Circuit Court of Appeals for review, claims the companies conspired to conceal the addictive nature of nicotine.

If McLean's family is successful at the appeals court, a trial could begin next year, attorneys said.

Michael York, a lawyer for Philip Morris, dismissed claims that smokers were unaware of the dangers of tobacco prior to government warnings and predicted the case would be dismissed before trial based on Texas law.

"There have been cases against cigarette manufacturers literally nonstop every day for 45 years," said York. "People have been aware of the risks for many, many years."

McLean was sometimes required to smoke up to five packs of Marlboros for a single commercial, his family claims. A Texas native, McLean played a rugged cowboy in Marlboro ads beginning in the 1960s. McLean developed emphysema in the 1980s and died of lung cancer in 1995 at age 73, according to widow Lilo McLean.

He began smoking in the late 1930s, well before the U.S. surgeon general warned of the dangers of cigarette smoking, according to the plaintiffs' attorneys.

McLean "tried to quit a number of times. He thought he was just weak, but it turns out he was really hooked," said Don Howarth, one of the attorneys representing McLean's family.

"We now know they have documents that say nicotine is the vehicle that hooks them. If it hooks them, we've got a customer for life."

If Folsom's ruling is ultimately upheld, it will be of particular importance to people who began smoking before the warnings came out, Howarth said.

"We took the position that they knew about addiction and weren't telling the public way back then . . . and therefore it wasn't fair to preclude older people who started smoking before," Howarth said. "Judge Folsom agreed with that."

Tobacco Wars

(Los Angeles Daily Journal)

A Los Angeles firm that has been involved in a series of lawsuits challenging the tobacco industry now finds itself as lead counsel in what is probably the most visible case yet filed.

Howarth & Smith filed a complaint three weeks ago in federal court in Texas on behalf of the widow and son of David McLean, a.k.a. the Marlboro Man. The lawsuit alleges that McLean, a Beverly Hills resident who died of lung cancer after smoking as much as five packs a day, died because he was addicted to nicotine.

Suzelle M. Smith, a name partner in Howarth & Smith, said the Marlboro Man case will have repercussions in other tobacco litigation around the country. McLean's widow "feels David was really part of the effort to sell addictive and deadly products," Smith said. "And she feels she wants to pay back part of the debt."

Howarth & Smith is also part of a lawsuit filed in July in Orange County Superior Court that alleges the industry sold an addictive drug. This case is the California version of a federal class action filed on behalf of every addicted smoker in the country, an action that was tossed out by appeals panel in new Orleans that determined it was too large to manage.

Working with Howarth & Smith in the Orange County litigation are attorneys with Dougherty & Hildre of San Diego; Robinson, Phillips & Calcagnie of Laguna Niguel; and Casey, Gerry, Reed & Schenk of San Diego.

Howarth & Smith: Place of Possibilities

(Heritage Media Corporation)

Founding Partners Don Howarth and Suzelle Smith.

Since its founding in 1985, Howarth & Smith has gained a national reputation for its extraordinary success in a variety of high profile trials and appeals. This boutique law firm, which represents plaintiffs and defendants, is the only firm in the country ever to have been selected by the National Law Journal for both "Top 10" plaintiff's and defense verdicts in a single year.

Howarth & Smith represented the plaintiff in a 1996 fraud and breach-of-contract action against General Dynamics, winning $107.4 million judgment – the largest verdict in California that year. The firm also was responsible for one of the year's most notable defense verdicts in a product liability action defending Suzuki Motor Corp. Opposing the same counsel who had obtained a $90 million verdict against Suzuki in a prior suit, Howarth & Smith's bold trial strategy led to a defense verdict after the jury deliberated for three hours. Howarth & Smith represented 14 "bellwether" plaintiffs (out of a total group of 58), residents of Lincoln Park, Colorado in a contamination case against Cotter uranium mill. In the federal court trial in Denver, a unanimous jury found in favor of all plaintiffs and awarded punitive damages against Cotter. Additionally, the jury awarded lifetime medical monitoring to all plaintiffs, an unprecedented result in a contamination case. Judgment has been entered for $2.9 million, and the remaining cases are pending.

Howarth & Smith, Annual Black Tie Dinner, Blenheim Palace, Oxfordshire, England May 9, 1998
Partners (Left to Right) David K. Ringwood, Brian D. Bubb, Suzelle M. Smith and Don Howarth

Howarth & Smith specializes in complex civil actions, including business and commercial matters, antitrust cases, class actions, toxic torts and catastrophic personal injury cases. The firm's practice is focused on high-stakes trials and appeals, including "bet the company" cases. Howarth & Smith is selective in its client representation, undertaking matters involving intellectual challenges, serious social concerns and the opportunity to address groundbreaking legal issues.

The firm typically refers routine litigation to other capable attorneys and firms, many of which it has worked with over the years.

Howarth & Smith encourages close relationships with attorneys and law firms throughout the country, and many of its clients, which include individuals, corporations and nonprofit organizations, are referred by other lawyers. The firm also serves as designated trial Counsel in significant cases, where the pretrial preparation is handled by other firms in co-counsel capacity. A brief list of some prominent cases demonstrates Howarth & Smith's remarkable achievements:

The firm represented the late Doris Duke and played a leading role in the battle over the billion-dollar estate of the tobacco heiress, resulting in the removal of the opposing trustees, preliminary executor and a major banking institution and the appointment of the firm's client as a trustee of the Estate.

Howarth & Smith represents the wife and son of the original "Marlboro Man" in their suit against Philip Morris and is heavily involved in the landmark class action cases against the tobacco industry.

Howarth & Smith Partners, Oxford University, Trinity Term Law Lectures, 1998

Another high profile case involved an antitrust challenge to the National Football League by the firm's clients - about 20 top professional NFL football players.

The firm has handled a number of consumer class actions, including a price fixing class action on behalf of all purchasers of eggs in Southern California. The firm is lead trial counsel for the Government of the Republic of the Marshall Islands in its action against the tobacco industry to recover healthcare costs incurred because of tobacco use in the islands. The firm represented a manufacturer in connection with its suit against the company that was to implement its Enterprise Resource Planning System..

The firm filed suit against a Pasadena shopping mall, successfully arguing that the mall's deficient security allowed two criminals to rape and murder the wife of its client. The jury returned a $3.6 million verdict in favor of the husband and against the mall.

In a product liability case, the firm won a $7 million jury verdict for a man left paralyzed in connection with the use of a Sears extension ladder sold without adequate safety warnings.

In a breach of oral contract to transfer an equity interest to a corporate executive, Howarth & Smith obtained a $9 million jury verdict for the corporate executive.

The firm has represented 12 California cities and municipalities in an action against other municipalities for recovery of $30 million lost in a fraudulent investment scheme.

On the defense side, the firm has represented many corporations in multimillion dollar suits, including anti-trust cases against vitamin, catfish, cement and glass container manufacturers, NBA and NFL stars, high net worth individuals, the Vatican Library (as custodian of Vatican artwork) and several prominent law firms.

Howarth & Smith's unique legal accomplishments stem from its partners' recognized ability to combine strategic thinking, high quality legal analysis and persuasive courtroom presence. What further distinguishes these lawyers is their ability to distill complex legal issues, technicalities and jargon into understandable and compelling arguments, enabling juries to grasp relevant issues and understand the client's position. Howarth & Smith's flair for crisp, concise communication– coupled with its analytical skills and mastery of trial strategy - are a potent combination that makes the firm a powerful force in the nation's courtrooms.

(Left to right) Kenneth Tune (of counsel) and partners, Don Howarth, Suzelle Smith, Brian D. Bubb and David K. Ringwood

Howarth & Smith is led by five partners, Don Howarth, Suzelle Smith, David Ringwood, Brian Bubb and Robert Brain. The partners are supported by associates, of counsel attorneys and a group of experienced paralegal assistants.

Mr. Howarth specializes in trials and appellate arguments. He holds three degrees from Harvard University, including a B.A. from Harvard College, a Master's from the Kennedy School of Government and a JD from the Harvard Law School. He is an elected Fellow of the American College of Trial Lawyers and of the International Academy of Trial Lawyers, and the American Bar Foundation. He is a Visiting Fellow at Oxford University (England), and a Visiting Scholar at Cambridge University (England). He is a frequently invited speaker at high-level conferences throughout the U.S. and abroad.

Ms. Smith, recognized by The National Law Journal as one the nation's 10 best litigators in 1996, graduated summa cum laude from Boston University and obtained a Master's degree in Philosophy from Oxford University in England. She earned her Law degree from the University of Virginia, where she was Order of the Coif. She is now a member of the University of Virginia School of Law Board of Trustee, a member of the Pepperdine Law School Board of Visitors, a Visiting Fellow Oxford University (England), a Visiting Scholar at Cambridge University (England) and an elected Fellow of the International Academy of Trial Lawyers and American Bar Foundation.

Howarth & Smith has demonstrated that creative attorneys with the right approach and the right set of skills can provide what is necessary to succeed in today's legal arena: individualized trial and appellate advocacy so difficult to find in large firms with generic programs.

Suit Accuses Supermarkets Of Cooking Egg Prices

By Jess Bravin
(The Wall Street Journal)

SANTA MONICA -- Walk into an independently owned 7-Eleven store in and around this sunny beach town and you'll find that the price of a dozen large white eggs ranges from $1.59 to $1.99. But at local outlets of Southern California's three major supermarket chains -- Lucky, Ralphs and Vons--the price is markedly higher: a uniform $2.09.

A similar discrepancy prevails throughout much of Southern California, with independent grocers and convenience stores charging less for eggs than the big chains that dominate the market. Why the difference?

The chains say the answer is simple: Given the basic law of supply and demand, they can command these higher prices. It is, they maintain, the free market at work.

But according to the plaintiffs in a class-action lawsuit in San Diego Superior Court, the reason is much more sinister: In their view, there's an illegal price-fixing agreement among the major supermarkets. Over the past five years, they contend, consumers have paid $250 million more for eggs than they would have in a truly competitive market.

The case, originally filed in 1996 with little fanfare, was recently set for trial; jury selection is scheduled to begin Nov. 2. The plaintiffs say they will not only prove that egg prices in Southern California are higher than those in other parts of the country, but that Lucky, Ralphs and Vons share pricing information through trade associations and other intermediaries and have at least a tacit agreement to keep prices high.

"There is a mechanism...where the majors turn in their egg prices. It's 'You show me yours and I'll show you mine,'" contends plaintiffs' attorney Don Howarth of Los Angeles. "If everyone stays with the program, there's a benefit to all the participants. If not...the prices will spiral down."

Perfectly orchestrated, Mr. Howarth says, the "conspiracy" manages to prop prices at the highest level, while keeping "the purchasing public sullen but not mutinous." The plaintiffs are seeking an injunction that would prevent the price of eggs from being fixed and unspecified monetary damages.

Suit Alleges Grocers Fixed Egg Prices.

The supermarkets flatly deny the charge, and in court papers have challenged everything from the suit's factual premise to the qualifications of the named plaintiffs -- a sister and a friend of the young attorney who first filed the case--to represent the class of all egg consumers in Imperial, Los Angeles, Orange, Riverside, San Bernardino and San Diego Counties.

Vons Co. "has never entered into any agreement with any competitor to fix the price of any product it sells, including eggs," the Los Angeles-based supermarket chain said in a statement released by its attorney. Gregory Stone of Munger, Tolles & Olson, "Vons' frequent promotions and discounting of eggs results in an average sales price that is well below the egg prices of Vons' major Southern California competitors."

The attorney for Dublin-based Lucky Stores Inc., Mark Spooner of the Los Angeles firm Arnold & Porter, also calls the case "really, totally baseless." The prices on any given item, he says, "are going to vary from market to market, and what really matters is the mix of prices. There are literally thousands of items sold in grocery stores, and you can't judge competition based on any one item." (Ralphs Grocery Co. of Compton didn't respond to request for comment.)

Even with all the wrangling, two things seem beyond dispute. First, despite controversies over their health implications, eggs remain a popular food. Consumption is down from its peak in the 1940s-- when the average American ate 400 eggs a year-- but Californians still consume about 240 eggs annually, some 30% of them as recipe ingredients.

Second, although California is the nation's largest egg producer, with roughly one laying hen for each of the state's 33 million residents, its supermarket egg prices are generally the highest in the U.S.

This has been so since 1983, when an epidemic of avian influenza wiped out much of the nation's chicken population and "prices went through the roof," says Donald Bell, a poultry specialist at the University of California-Riverside. But after the industry recovered, "the rest of the country took their retail prices back down--and California did not."

According to Mr. Bell, the wholesale price of a dozen large eggs in California is now around 64 cents--meaning the supermarkets are marking up their eggs by about $1.45 per carton.

Still, he says, "it's going to be very difficult to prove a willful agreement between those parties to do whatever they're doing. You can always look at any price in a store and say, 'Boy that's high.' But that's part of capitalism."

Howard Shelanski, a law professor and antitrust expert at the University of California-Berkeley, agrees. "High margins can be the result of ...rational behavior" on the part of each supermarket acting independently, rather than through collusion, Prof. Shelanski says.

Antitrust law, he adds, "has always wrestled with the problem of how to handle "high prices in a sector in which there is just a handful of particularly large players--an oligopoly. "Generally, the position has been to watch those industries carefully," the professor explains, "but you don't punish the firms" simply for charging as much as they can.

'Cash and Carrie'

The assault on supermarket egg prices was initiated by a San Diego attorney named Cash J. Bonas. Mr. Bonas specializes in antitrust matters; as he puts it, "Price-fixing is what I do."

Shortly after his 1995 graduation from the University of Idaho law school, Mr. Bonas began comparing egg prices with his sister, Carrie O'Husky, an Oceanside schoolteacher. "It really kind of hit us that there was definitely something wrong, economically speaking."

Mr. Bonas persuaded his sister and a college friend, Sheri McCampbell of Hermosa Beach, to serve as the named plaintiffs in the class-action suit against Lucky, Ralphs and Vons. Three other firms signed on as plaintiff's attorneys, including L.A.'s Howarth & Smith, which has participated in high-profile litigation against tobacco companies and an antitrust claim against the National Football League.

The supermarkets have been vigorously fighting the case--and at times, things have gotten personal. Mr. Spooner, the Lucky attorney, not only questioned Ms. McCampbell during her deposition about economic models of egg pricing, but also whether she had ever been "romantically involved" with Mr. Bonas. (The answer: No.)

In an effort to show that the named plaintiffs hadn't suffered sufficient injury, Vons went so far as to note that both "are Vons Club members and use their cards regularly" and that "Carrie O'Husky received a free turkey this past Thanksgiving" thanks to a store promotion.

And in a case egg-ceptionally vulnerable to puns, there have been moments of levity. Pausing during the deposition of Ms. O'Husky, Ralphs attorney Eliot Disner marveled at the first names of Mr. Bonas and his client/sister. "Cash and Carrie. I don't believe it," he said. "Are there any other siblings?" (One: Michael.)

Despite the joking, consumer advocates say the litigation underscores a serious matter. "The major supermarket chains are gouging consumers on the basic necessities of life," charges Harry Snyder, senior advocate at Consumers Union's West Coast regional office in San Francisco, which has released studies showing that supermarket milk prices in Los Angeles and San Francisco are far higher than those of independent grocers.

'Tacit or Explicit'

"They have some sort of agreement, either tacit or explicit, to maintain higher-than-competitive pricing," Mr. Snyder says, because "traditionally it's thought that consumption" won't fall on basic commodities like milk and eggs, even if prices rise.

Trying to prove such an "agreement" exists, however, is bound to be an extremely complex matter.

Mr. Howarth claims that the majors share information by reporting their prices to intermediaries, such as the Chicago based market-data firm Information Resources Inc., which then tell the supermarkets what the others are charging.

But Information Resources denies that. While it does report "average" prices in the region, "we would not tell Ralphs what's going on with Lucky or Vons," says Bob Bregenzer, a senior vice president at Information Resources.

Other claims by the plaintiffs as to how the alleged cartel operates are vague. For instance, the plaintiffs say in court papers that they will "present evidence of close professional and personal relationships among the officers and directors of Vons, Ralphs and Lucky" and of those executives "many opportunities to collude through, for example, their participation in professional organizations." Citing confidentiality orders imposed by the court, plaintiff attorneys wouldn't elaborate.

Some Inconsistencies

What's more, it remains unclear whether there really is price uniformity among the chain supermarkets. It's true that in the Santa Monica area, the majors last weekend where charging $2.09 for a dozen large white eggs, while prices were lower at the local 7-Elevens, the discount gourmet grocery Trader Joe's ($1.19) and the upscale natural foods market Wild Oats ($1.69).

But at the same time, Vons supermarket in Riverside were charging only $1.49--exactly the same price as Vons outlets in Las Vegas, a city that the plaintiffs cite for its low egg prices and assert is not part of the alleged Southern California egg cartel. Meanwhile, at an El Cerrito Lucky--in the Bay Area's Contra Costa County, outside the region covered by the suit--the price was, again, $2.09.

Mr. Bonas insists that despite these pricing anomalies, he will prove his egg conspiracy at trial.

And win or lose, one thing is certain, "I used to like omelets with bacon and onions," Mr. Bonas says, "But now I never want to see another egg again."

Lawyer Suzelle M. Smith Acts as Samurai Warrior

By Margaret Cronin Fisk
(The National Law Journal)

Suzelle M. Smith

She recognized the tragedy but proved that Suzuki's product had not caused it.

ATTORNEY: Suzelle M. Smith, 43
FIRM: Los Angeles' Howarth & Smith
CASE: Heath v. Suzuki Motor Corp., CV 295-164 (S.D. Ga.)

Consumers Union ran an article in 1988 contending that its tests of the Suzuki Samurai showed that the Samurai was prone to roll over during simple maneuvers. The article, says Suzuki defense counsel Suzelle M. Smith, caused a massive decline in the Samurai's public reputation; in some quarters, she notes, the vehicle is known as "the Flipmobile.” The Samurai was also the object of a number of products liability actions brought by plaintiffs claiming injuries caused by the Samurai's alleged propensity to roll over.

When defendants are faced with bad publicity, the standard approach is to suppress any mention of it in trials. In products liability trials involving the Samurai, Suzuki followed this approach, trying to keep out any references to the Consumers Union charges, Ms. Smith notes. But the company realized this was an impossibility, she says. "Everyone had heard about it. It had permeated the culture." During trials, she adds, "everybody's experts talked about it."

Consequently, when Ms. Smith was called in to defend a products liability action in Georgia against Suzuki brought by a young paraplegic, "we decided to hit it straight on.” Suzuki decided to confront Consumers Unions as well as the plaintiff. "What I did was to tell the Consumers Union story, that Consumers Union went after the Suzuki Samurai, that the tests were rigged and that Suzuki was suing Consumers Union."

Trial Tips:

• Confront bad publicity and rumors.
• Study opposing counsel's earlier courtroom victories.
• Avoid a highly technical defense in this kind of case.
• Keep examination short and simple.

It is essential, she believes, to confront such attacks or well-known rumors: "If you don't confront them head on, you may lose the jury to innuendo." At the end of this trial, the Georgia jury found no defects in the Samurai. The verdict was one of the biggest defense wins of 1996.

Ms. Smith was brought in by Suzuki General Counsel George Ball as a national trial counsel for Suzuki after the company was hit with a $90 million verdict in St. Louis in 1995. Rodriguez v. Suzuki Motor Co., 902-0869 I (Cir. Ct., St. Louis). That verdict was ultimately reversed and will be retried. "Mr. Ball was looking for a new approach," Ms. Smith notes, specifically a female attorney to soften the corporate image, but also a high-profile litigator who had experience in representing plaintiffs as well as defendants.

Ms. Smith fit the criteria perfectly. She is a name partner at Los Angeles’ Howarth & Smith, a small but highly regarded litigation boutique that handles both plaintiffs’ and defense work in civil cases. Despite its size, the firm is a primary outside counsel for Georgia-Pacific Corp. As plaintiffs’ counsel, Ms. Smith has won settlements and verdicts against the National Football League; Southern California Edison Co.; the city of Irvine, Calif.; General Electric Co.; and Sears, Roebuck and Co. As defense counsel she has won jury trials and summary dismissals for such companies as Owens-Illinois Inc. and Marriott, as well as Georgia-Pacific. In 1996, she represented one of the contestants to the will of the late heiress Doris Duke and was a primary force in having the original executor removed; her client became one of the trustees of the Duke charitable estate. Ms. Smith often handles cases with her partner, Don Howarth, who won one of 1996's largest plaintiffs' verdicts.

Formidable Adversary

In the Georgia case, the plaintiff, James Heath, had been injured in September 1991 when the 1987 Samurai he was driving went out of control and rolled over after being clipped by a Jeep Wrangler. Mr. Heath was ejected from the vehicle; his passenger, who was also ejected, died of her injuries.

Mr. Heath's attorney was James E. Butler Jr., of Columbus, Ga.'s Butler, Wooten, Overby, Pearson, Fryhofer & Daughtery, who had won the $90 million verdict against the company and has made a long career of persuading jurors to hit automobile companies with massive verdicts.

When Ms. Smith was hired as one of Suzuki's trial counsel, she says, she began to research Mr. Butler “because I knew I would eventually face him. I asked for the transcripts for Rodriguez. I also got the transcripts and the Court TV clips of the Moseley trial to see him in practice." Moseley was a products case against General Motors Corp. in which Mr. Butler won a $150 million verdict. Ms. Smith is a firm believer in getting to know one’s opposing counsel and suggests that attorneys get transcripts of openings and closings of prospective opposing counsel, "to get a feel for them."

She learned that "generally Jim Butler tries to personalize the trials. He attacks the corporate defendant, the opposing counsel and the witnesses personally. To some extent, you might think, the judge will not allow this," she adds. "But Butler is relentless, and there is only so much a judge can do." To counter this assault on the defense's credibility she did not respond loudly or emotionally, she says. "I tried to calmly defend the integrity of Suzuki, myself and the witnesses and let the jury decide which approach rang more true."

Ms. Smith established a defense for Mr. Heath that was aggressive but succinct. Each portion of the trial was much shorter than the defense Suzuki had used in Rodriguez. Her first major challenge came in jury selection. "I began by asking the jurors if they were aware of the Consumers Union test." This could be dangerous, she says. "[It] may reinforce what you don't want to reinforce. But you have to take it on." The judge dismissed any jurors who were readers of Consumer Reports.

Plumbing Possible Prejudice

She also tried to detect any prejudice against foreign corporations and her planned Japanese witnesses. “I had to be careful. I couldn't let them believe that I thought they were prejudiced, but I have to raise the issue and get it out front." To avoid implying that she thought they harbored a prejudice, she was indirect, noting to the jurors that "the Japanese witnesses would be using an interpreter, which would make the examination slower and more cumbersome. I asked if that would be a problem."

She addressed the issue of sympathy, too. “This was a young, local plaintiff in a wheelchair. I asked them if they could really turn him away. There were some people who said they couldn't do it." The jurors who didn't say they would be unable to reject a suffering plaintiff, she says, implicitly promised to be fair to the defendant

In her opening, Ms. Smith developed her countertheme. "This was a tragedy but it was not Suzuki's fault. The two drivers caused this accident. This company had built a good vehicle."

In cases of this type, she avoids putting on a highly technical defense. "You have to keep it very simple and commonsensical. It has to be packaged in a way that the jury can understand,” she adds. Being too technical can play into the hands of the plaintiffs' attorney.

Most accidents involving sports utility vehicles can be directly linked to driver error or the actions of another vehicle, she says. Mr. Butler and other plaintiffs' attorneys, she contends, "try to focus the trial on what they claim is an unstable vehicle to minimize that." To counter this in Heath, she says, "I brought the case down to the basics."

Her cross-examination of the plaintiff's principal design experts, Wade Allen, which lasted a few hours, was very different from his cross in Rodriguez, in which he testified for several days. The longer cross revealed some points for the defense, she says, "but the nuggets were lost in the volume and weight of it."

After the Consumers Union article appeared, Mr. Allen was hired by the National Highway Traffic Safety Administration to do a study on sports utility vehicles, including the Samurai. In Heath and Rodriguez, he testified that the Samurai was unsafe but, Ms. Smith says, "he never told anyone at the National Highway Traffic Safety Administration about his opinion of the Samurai. He didn't say it was a deathtrap until he was testifying for plaintiffs' lawyers." With plaintiffs’ experts, she notes, she is not afraid of being tough. Juries don't really mind attacks on experts, she believes.

During cross-examination, she says, "I'm not hostile, but I am firm. I do not shout or scream or call anybody names. I won't beat it to death, but I'II ask it four or five times so the jury knows the witness is being evasive. I will deliberately hold onto the point until I think the jury has got it. Then I move on. I’m very polite and respectful, but I've had jurors tell me I was mean. I won't back off if the witness is sweating and uncomfortable."

While Mr. Allen was on the stand, Ms. Smith continually confronted him about his lack of written or other formal reports to anyone at NHTSA concerning his opinion of the Samurai. During his testimony, she would also read to him portions of a NHTSA report denying petitions to recall the Samurni, using Mr. Allen to inform the jury about it and getting him seemingly to affirm the NHTSA conclusions.

Her own case in chief was very brief. She started with race car driver Cale Yarborough, who had also testified in Rodriguez. In that case, he had been brought on after several technical witnesses, thus losing much of his impact. "I put him up so he could talk in layperson's terms," Ms. Smith says.

Mr. Yarborough had tested the Samurai offroad and through maneuvers. "He testified that the vehicle is stable and handles better than any sports utility vehicle on the road," she says. "His testimony went very, very well." Particularly effective was his testimony that he felt the Samurai saved his life one night when he encountered a concrete block in the road; the Samurai kept him from hitting the block or going into a ditch.

She presented only three more witnesses – a Suzuki executive who had designed the Samurai, an engineer and a police officer.

"There were others planned, but I cut the case way back,” she says.

The jury was out for three hours. It returned a finding of no liability June 11, 1996. The plaintiff's post-trial motions to set aside the verdict were denied two months later. An appeal is pending.

Tobacco Pact Sets Record, Raises Issues

By Daniel Shaw, Don J. DeBenedictis, and Marty Graham
(Los Angeles Daily Journal)

After Friday's landmark $360 billion settlement between tobacco companies and anti-smoking forces, several questions remain. The most pressing for lawyers, however, may be whether the pact is constitutional.

Under the agreement - which must be approved by Congress and the president - smokers would see dire new warnings on cigarette packs, get free medical help to kick the habit and be inundated with nationwide anti-smoking advertising.

In return, tobacco companies and investors would get relief from the uncertainty posed by hundreds of pending lawsuits. The deal is to settle 40 state lawsuits that seek to recover Medicaid money spent treating sick smokers and 17 class actions against the industry. Individual smokers' lawsuits that are already pending in court are not expected to be affected, unless those people choose to join the settlement

Of concern to lawyers, the pact would take away the ability of individual smokers to sue for punitive damages for any past misconduct by tobacco companies. Instead, as punishment for all past wrongdoing, the tobacco industry would pay $50 billion into a fund. In addition all class-action lawsuits against the industry would be banned.

Several legal scholars said the settlement terms could raise constitutional issues, depending on what is in the fine print and what if any, changes Congress, makes to the agreement. The major potential issue, said one constitutional expert, is whether the settlement will limit due process.

Erwin Chemerinsky, constitutional law professor at the University of Southern California, said, "Until we see exactly how due process is limited, it's hard to evaluate the due process question."

Los Angeles attorney Suzelle Smith, a partner with Howarth & Smith, which represents a group of plaintiffs – as well as the widow of a man who portrayed the Marlboro man in ads and died of lung cancer – in a suit against the cigarette makers, said she was particularly pleased that the tobacco companies agreed to pay $60 billion in punitive damages.

"We negotiated long and hard to get the best deal for the public and the punitive damages were a breaking point for a long time," she said. "Much of that money will be used to fight the terrible problem of teen smoking and to educate people to the dangers of smoking."

Smith is among the attorneys involved in the class-action group that arose out a class action filed in New Orleans in 1994. Smith credited the New Orleans suit, known as the Castano Plaintiff Group after the lead plaintiff, Diane Castano, as the single largest force in driving the tobacco companies to the negotiation table.

"It's fair to say that without Castano, the discovery we've done and the momentum we've created, none of this would have occurred," she said. "If it hadn't been for the plaintiffs' lawyers getting out there and suing, the end of smoking addiction would not be in sight"

One unsettled question as of Friday afternoon is which attorneys will be paid – and how. Lawyers' fees and cost are not included in the settlement and will be negotiated after the settlement is approved, said Smith.

"It would be a tragedy if the lawyers who initiated this suit and got the public aboard, and brought the tobacco companies to the table, got sold down the river," she said.

The agreement allows for the industry to pay out $360 billion over 25 years, most of it for anti-smoking campaigns and public health efforts. Of that sum, the agreement would allocate $4 billion a year in compensatory damages into a fund that would pay any smoker who won a suit

The settlement is also significant because it is thought to be the largest verdict or settlement ever reached. The amount dwarfs such well-known previous settlements for asbestos, silicone breast implants ($4.23 billion from 60 manufacturers payable over 30 years), the Dalkon Shield, and the Bhopal, India, chemical spill ($470 million). It is also larger than such record verdicts as the $22 billion against the estate of Philippine President Ferdinand Marcos, the $10.5 billion awarded to Pennzoil against Texaco, and the $5 billion won by Alaskans for the Exxon Valdez oil spill.

The Dollar Total For 1996's Top Verdict Awards Continues On A Downward Trend

By Alex Chun
(Los Angeles Daily Journal)

Continuing its downward trend, the dollar total for California Law Business' annual list of the state's top 10 verdicts dipped to $284.6 million in 1996-a 5.5 percent decrease from the 1995 total.

And while the case heading the 1996 list Forti v. General Dynamics Corp., tops last year's big winner, American Samoa Government v. Affiliated FM Insurance, by $18 million, five of this year's verdicts would not have made last year's list.

"These figures seem to be consistent with what we're seeing in cases overall, not just in the top 10," said Deborah A. David, president of the Consumer Attorneys of Los Angeles. "Filings are down and punitive damage awards are just as rare as they have always been." In fact, according to the Judicial Council of California, the number of annual Superior Court filings in California has dropped from 1.26 million to 1.19 million over the last two years. "The bottom line as I look at these figures is that the notion of a tort crisis or a personal injury crisis is a figment of someone's imagination," David added.

Echoing David's sentiments is Marie Reubi, a managing editor for Jury Verdict Research. She noted that the average award for personal injury cases in California was 1 percent below the national norm last year, whereas in 1991, California was 6 percent above the national norm. In contrast to the rest of the state, however, "Los Angeles tends to be about 10 percent above the national norm," she said.

All 10 of the cases on this year's top-10 list originated in Southern California, and six of the 10 were tried in Los Angeles Superior Court. This year's list is also marked by two cases-including the case that topped the list-that arose in an employment arena, an area that was neglected in 1994 and 1995. As a result of a breach of fiduciary duty between an employer and employee, plaintiff's attorney Don Howarth won an eye-popping $107 million jury verdict in Forti v. General Dynamics, Los Angeles Superior Court, No. KC 016871. "There are so many opportunities for abuse in the workplace," said Howarth, a name partner with Los Angeles' Howarth & Smith. "Employees are beginning to understand that they do have a recourse when they've been wronged."

Life is Good: $107.4 M Verdict

By Anthony Aarons
(Los Angeles Daily Journal)

A California Attorney reached major-player status when he backed General Dynamics into a corner.

Twelve years ago Don Howarth left Gibson, Dunn & Crutcher with the hopes of leaving corporate defense work behind.

Today his own firm, Los Angeles' Howarth & Smith, still handles a fair amount of corporate defense work. Though his partner Suzelle Smith is currently defending Suzuki in a products liability case, the 20 lawyer firm has developed an eclectic list of clients including: the wife of the original Marlboro man in her suit against Phillip Morris and the estate of tobacco heiress Doris Duke. The firm also weighs in on a number of consumer-oriented class-action suits.

"These are the kinds of cases where you can feel like you are making a difference, where you are helping people," says Howarth, who handled his first plaintiff's case - a personal injury suit in which a boy fell off a ladder and became a paraplegic - the first year in his new firm.

Last summer, however, Howarth won a verdict that places him among the biggest names in California laintiffs lawyers when a Norwalk jury awarded two of his clients William Forti and Dolores Blanton, $107.4 million in a breach of contract suit against their former employer Falls Church, Va. --based General Dynamics. The suit was the largest verdict in California state courts in 1996, although it was reduced to $37.4 million by the trial judge. Although it was not a tragic personal injury suit or a tear-jerking insurance bad faith case, it was the kind of loyal employee vs. greedy corporate monster suit that wins over Jurors as well as headlines.

Don Howarth topped the list of lawyers securing the 10 biggest verdicts in California last year, netting their clients $285 million.

In 1990, Forti and Blanton, longtime General Dynamics' employees, were asked to leave their jobs at the company to start a new subsidiary for the company. The new company, to be called E-Metrics, was to develop a technology that would enable computers to recognize faces and that could be used as a security tool to identify criminals in a crowd. "It has many applications in airport security and other police work." Howarth says.

In exchange for starting the new company, Forti, Blanton and four other engineers, were promised equal shares of a 20 percent equity stake in the company. The plaintiffs did not receive a written contract, although Howarth says they received numerous verbal assurances of the agreement by General Dynamics Vice President Sterling Starr. In addition, they were told that it was too early to issue formal stock shares for the company.

Two years later E-Metrics was sold to Hughes as part of a $500 million package. When Forti and Blanton approached General Dynamics for their share of the proceeds from the sale of E-Metrics, they were told there was no such agreement.

General Dynamics essentially argued that when E-Metrics was sold to Hughes, the company had developed no products and recorded no sales.

Howarth contended that in addition to breach of contract, General Dynamics was guilty of fraud because it never intended to pay the "founders" of E-Metrics.

"In the sale to Hughes they never broke down the value of E-Metrics. I argued they did it on purpose to avoid paying any claims on the company," Howarth says.

Howarth says he was always comfortable with his clients' case. If Howarth was confident, General Dynamics was playing hardball on the eve of trial.

Howarth made a settlement demand of $1 million for each of the plaintiffs, while General Dynamics stood by an earlier offer of $100,000 each for Forti and Blanton. "That offer never changed during trial, even when I knew the jury was going with us," Howarth says.

The key moment of the trial came when General Dynamics' defense attorneys called Forti and Blanton's old boss, Starr, to the stand. Starr was under no legal duty to appear at the trial, he had retired and moved out of state, but the defense brought him to California as a major witness to rebut the plaintiffs' claims of an oral contract.

On cross, Starr's story fell apart as he contradicted his earlier deposition testimony. "He admitted he had adjusted his testimony to help the company," Howarth says. Howarth says that Starr's testimony could not be discounted in the jury's decision after only two days of deliberations - to award the plaintiffs combined compensatory damages of $7.4 million, their share of the value of 20 percent of E-Metrics. But, he says, Starr's testimony was even more important in the punitive damages phase of the trial. At this point, Howarth says, defense attorneys changed their strategy and accused Starr of wrongdoing.

"It was an incredible closing argument to cut the umbilical cord and blame it all on him. They didn't care who the jury blamed as long as it wasn't [General Dynamics]," Howarth says. Howarth's closing in the punitive damages phase of the trial took only 15 minutes, first to point out the hypocrisy of blaming Starr and then to explain the economic shortcomings of the $7.4 million compensatory award.

"All they had given them was what they were owed. At that point not paying [the plaintiffs] was a good business decision for General Dynamics. They had to punish them for refusing to honor the contract and trying to hide the value of the company," Howarth says.

The jury only took a few hours to return a punitive damages award of $100 million.

A 15-minute close might seem short, but Howarth purposely tried to keep everything brief during the three-week trial.

"We had enough material to make it last two months, but that just would have confused the jury," says Howarth who has three degrees from Harvard University, including his J.D., a B.A. and a masters in public policy. Although General Dynamics' defense attorneys did not return calls for comment, a press release issued after the trial asserted that E-Metrics had no value.

"In fact, General Dynamics told E-Metrics employees, in writing, that the E-Metrics board would decide upon equity interest once outside investors were obtained. When E-Metrics failed to attract outside investors, General Dynamics discontinued the business," the July press release stated. "General Dynamics can hardly be expected to have shared with employees the fruits of a business that never made a dime."

Judge Chris Conway reduced the punitive damages award to $30 million. While it might seem the judge reduced the punitive damages because of the excessive ratio to the compensatory damages, Howarth says that was not the case. In the first place, he says, the $100 million punitive is fair when compared to the value of both General Dynamics and E-Metrics. More importantly, in the judge's opinion, the punitives were cut to allow some damages to remain in the event the four engineers-the other "founders" along with Forti and Blanton-file suit against General Dynamics.

"It was a very reasoned opinion," Howarth says. Howarth now represents the engineers and is considering what action, if any, is still available for them. General Dynamics is appealing the verdict on numerous grounds, including the statute of frauds and the statute of limitations. The statute of frauds dictates when an oral contract is valid-and Howarth admits this could be the defense's strongest argument, but the trial judge ruled against two motions on that claim during trial. Although Howarth says that settlement negotiations have not been promising, General Dynamics General Counsel, says that a settlement could be near.

"We've had substantial discussions" to try and settle the case, said Ned Bruntrager, general counsel of General Dynamics: "The true nature of those discussions is confidential, but the fact is they were being held at the direction of the Court of Appeals. We've not inked a final agreement. It's technically correct that there is no final agreement." But, he added, "I would be surprised if that case is not settled shortly."

As the lead attorney in the biggest verdict of 1996, Don Howarth of Howarth & Smith took on and beat General Dynamics. A jury's $107 million award in the breach of contract lawsuit tops our annual list of the 10 largest verdicts, which netted their clients a total of $285 million. Today's issue of California Law Business also examines the downward trend in dollar totals.

CHECKMATE!

The Big Numbers of 1996

The National Law Journal
Vol. 19, No. 24 (February 10, 1997)

PLAINTIFFS' ATTORNEYS: Don Howarth and Brian D. Bubb, of Los Angeles' Howarth & Smith

CASE: Forti v. General Dynamics Corp., KC 016 871 (Super Ct., Los Angeles)

DEFENSE ATTORNEYS: Linda L. Listrom and Gregory S. Gallopoulos. of Chicago's Jenner & Block; Michael W. Mugg, of San Bernardino, Calif.'s Mac Lachlan, Burford& Arias

JURY VERDICT: $107.4 million, reduced to $37.45 million

In 1990, William B. Forti was working in business development and Delores Blanton was working as an administrator at General Dynamics Corp., when their employer asked them to leave their positions to help develop a new subsidiary called E-Metrics," said plaintiffs' attorney Don Howarth. E-Metrics would attempt to develop commercial products based on General Dynamics' patents in neural network technology.

"As founders, Mr. Forti and Ms. Blanton were to receive an equity share in the subsidiary, Mr. Howarth said. Five other General Dynamics employees were offered the same deal," he added.

In 1992, General Dynamics sold E-Metrics, along with other divisions of its Air Research Defense Systems, to Hughes Aircraft Corp. for about $500 million, Mr. Howarth said. The E-Metrics employees received nothing from the sale, so Mr. Forti and Ms. Blanton sued General Dynamics, charging breach of oral contract, breach of fiduciary duty and fraud. The other employees did not sue, Mr. Howarth said.

Company executives denied at trial that any promises of ownership had been given. General Dynamics also denied that E-Metrics was worth anything. "E-Metrics was never able to find customers or outside investors for its technology," the company said in a public statement.

But on July 26, 1996, a Los Angeles jury awarded each plaintiff $3.7 million in compensatory damages and $50 million in punitive, for a total of $107.4 million.

In October, Superior Court Judge Chris R. Conway sliced the punitive from $100 million to $30 million, then added $50,000 to the judgment for costs. The case is on appeal.

Money Doris Duke Meant for Charity Is Making a Lot of Other People Rich

This was Doris Duke's predicament. She was worth $1.2 billion, but had no relatives or friends she particularly cared to enrich so massively when she died. Instead, she decided with immodesty befitting one of the world's richest women that her estate would go toward "the improvement of humanity," as her will said. Her money would allow dancers to dance, artists to paint, doctors to cure diseases, animals to escape the cruelty of people.

It was a wonderful vision. But it overlooked what turned out to be the first effect of Miss Duke's largess: It allowed lawyers to eat.

The 30-month fight over Miss Duke's estate was as full of mystery and intrigue as was the life of the reclusive, mistrustful tobacco heiress who died in October 1993 at 80. There was her alcoholic, barely literate butler who was named in her will as the executor of the estate, and one of her many former doctors who believed he deserved the job -- and the fees. The situation was resolved last year when a surrogate judge in Manhattan approved the creation of the Doris Duke Charitable Foundation, one of the nation's best-endowed charitable funds.

The dispute played out in Surrogate's Court was, in the words of one lawyer, "the World Series of litigation," with big-name law firms playing for big stakes. Now the contest over Miss Duke's estate has gone into extra innings. The prizes this time are legal and estate administration fees that already amount to $10 million and probably will more than double when all of the requests are filed with the court.

Lawyers flew across the country charging their hourly rate as they went, sometimes as high as $450 an hour. They stayed in New York City's finest hotels. And In court appearances and meetings, clients often were represented by multiple lawyers, causing a gridlock of expensive suits and large briefcases.

Consider the lawyers' bonanza of January 1996. When the State Court of Appeals issued a decision in the case, 14 lawyers from two firms spent a total of more than 40 hours reviewing it, and all submitted bills for their work, according to court papers.

The case involved dozens of lawyers in some of the nation's most prominent firms. One of the more noteworthy lawyers, Alexander D. Forger, the president of the Legal Services Corporation, has applied for $450,000 in fees. He was appointed a temporary administrator of the estate, but the appointment was stayed nine days later, according to legal papers filed by the New York State Attorney General, Dennis C. Vacco.

Mr. Forger, who did not return telephone calls, said in court papers that his responsibilities lasted for months, not days, and that "in any event, I have not been motivated by notions of compensation."

Since the fees will be paid out of the charitable money, the requests for payment are facing stiff opposition from two other sets of lawyers -- the State Attorney General, who represents beneficiaries of the charity, and lawyers representing the trustees of the charitable fund.

"This is a feeding frenzy," said a lawyer associated with the case, speaking on condition of anonymity.

On the record, the critism is only slightly more restrained.

"If one needs cause to question the legal profession, these excessive claims provide ample issue," Laura Werner, an assistant New York State Attorney General wrote in a Dec. 11 court filing.

But the lawyers seeking the fees insist they are justified.

"This litigation undoubtedly was one of the most complicated probate matters in the history of the state of New York," said Rodney N. Houghton, one of the many lawyers representing Miss Duke's former doctor. "Its complexity was matched only by the intensity of the litigation, requiring us to work on many occasions on an around-the-clock basis to meet competing deadlines."

Even so, there were instances where it appears lawyers were stacked up like planes over La Guardia. When the charitable foundation questioned why lawyers from three different firms had to appear at court hearings on behalf of Miss Duke's former doctor, one of the lawyers answered in court papers that it was important for them to discuss matters in person after the court session and "to observe the reaction of the Court and co-counsel to various factual and legal issues."

Lawyers for the charitable foundation, who are trying to protect the estate's assets, were incredulous.

"It would plainly be wrong to require the Estate to foot the bill for multiple attorneys to 'observe the reaction of the Court,'" the foundation lawyers wrote in an Oct. 21 filing. "Presumably, one representative of the three firms could have attended proceedings to observe reactions and passed his or her observations on to other attorneys as necessary."

When several law firm partners charged the estate for attending depositionse, the charitable foundation lawyers wrote to the court that "the Estate should not be compelled to pay $465/hr. for one partner to watch other partners work."

In many respects, Miss Duke's will was straightforward, especially given the size of her fortune.

Miss Duke was twice married and twice divorced, and her closest relative when she died was a daughter, Charlene Gail Heffner, known as Chandi, whom Miss Duke adopted in 1988 when Ms. Heffner was 35. Their relationship fell apart a few years later and Ms. Heffner sued, seeking to become the beneficiary of Miss Duke's estate. The estate settled with her for $65 million last year.

In her final years, Miss Duke was unwavering in her decision to give her fortune to charity, but her estate became complicated because she repeatedly re-wrote her will, changing the executor of the estate -- a designation that would carry millions of dollars in fees. The rewriting of her will, those who knew her said, reflected her isolation from friends and relatives and her suspicion that those who were close to her were merely trying to get her money.

"We're here because of Miss Duke's personalities and eccentricities," said Don Howarth, a Los Angeles lawyer, explaining why the disposition of the estate had turned contentious. "This is a reflection of Miss Duke's vulnerability at not having close friends."

In the final years of her life, she signed a succession of wills, transferring control of her estate from her daughter to her diet doctor, Harry Demopoulos, then to her accountant, then to Bernard Lafferty, the butler whom many of Miss Duke's associates accused of isolating the heiress. (Mr. Lafferty died in November.)

The course of the estate through the court was complicated by two factors.

First, Dr. Demopoulos, and others, contended that Miss Duke, weak and disoriented, was coerced to sign her final will and suggested that her death may have been hastened to keep her from changing the will. An investigation ordered by the court found that Miss Duke's death was hastened by doses of morphine.

Dr. Demopoulos hired three law firms to press his case, and although no conspiracy to induce Miss Duke to change her will or to murder her were ever found, the lawyers say their request for more than $4 million in fees is justified. They say their work benefited the charitable fund by insuring that Mr. Lafferty would not be in control of the estate.

The other complicating factor was a May 1995 decision by Surrogate Eve Preminger to remove Mr. Lafferty and the United States Trust Company as co-executors of the estate. She said Mr. Lafferty used Miss Duke's fortune to finance his own "profligate life style" and she criticized the bank for giving him an unsecured $825,000 loan.

Surrogate Preminger installed as temporary administrators the Morgan Guaranty Trust Company and Mr. Forger. In addition to his job with the Legal Services Corporation, Mr. Forger is a veteran estates lawyer in New York and was a co-chairman of a lawyers' committee that ran advertisements backing Surrogate Preminger in the 1990 race for her court seat.

Although Surrogate Preminger's decision was stayed nine days later and ultimately reversed by the Court of Appeals, which criticized her for not giving the administrators a hearing before removing them, lawyers for Mr. Forger and Morgan Trust argue in court papers that their responsibilities lasted longer than nine days. The bills for their legal and administrative work, including fighting to defend their appointments, comes to more than $5.3 million.

While Mr. Forger's bill is relatively small, the tussle over it is particularly nasty.

In a December court filing, lawyers for Attorney General Vacco said it was worth considering "how it looks to the public when the president of the L.S.C. seeks $450,000 for 'outside work' while claiming to be working full-time to protect a federally funded program designed to assist the poor."

In a series of responses, Mr. Forger said that the Attorney General's statements were "flawed beyond carelessness," and that his contract allows him to do outside work. He also said that if the court agrees his reponsibility lasted just nine days, his fees should be substantially reduced.

"Whatever the compensation, however limited or modest, I shall not feel aggrieved," Mr. Forger wrote. "This mission was a worthy one and one -- in the long and unfortunate saga, not yet completed -- which I was privileged to undertake."

Why Philip Morris Hates Trial Lawyers

By John Stauber and Sheldon Rampton
(PR Watch)

On September 19, 1996, the widow of the original Marlboro Man filed a lawsuit in Texas charging that her husband died from using the product that made him a household word.

David McLean was hired in the early 1960s to portray the "Marlboro Man" in television and print ads. He was obligated to smoke Marlboros as he posed for television and print ads, smoking up to five packs per take in order to get the right look. Afterwards, Philip Morris continued to send him gift boxes of cigarettes.

In 1985, McLean developed emphysema, followed by lung cancer in 1993. Following unsuccessful attempts at chemotherapy and other treatments, he died on October 12, 1995. McLean's death actually made him the second Marlboro Man to die of lung cancer. Another actor, Wayne McLaren, died in 1992 at the age of 51.

"Even the 'Marlboro Man' was not immune from the effects of cigarette smoking," said Don Howarth of the Howarth & Smith law firm, which is representing McLean's widow in the lawsuit against Philip Morris. "Mr. McLean's widow and son hope by this action to strike a blow for the countless others whose lives have been ravaged through the tobacco industry's aggressive campaign of fraud and deceit."

Many people have sued the tobacco industry before, of course, and to date they have not collected a dollar in damages. During the second quarter of 1996, in fact, company profits were up 18% over the same quarter in 1995, making the first half of the year a "blockbuster" according to PM CEO Geoffrey Bible.

In order to maintain its profitability in a hostile environment, Philip Morris spends staggering sums on lobbying and public relations. According to an internal State Affairs Company (SAC) report from 1995, PM "contributed $50 million to tax-exempt organizations through the nation during 1992 and is the largest contributor to the arts.... PM also sponsored the 54th annual Convention of the National Newspapers Publishers Association" and "helps fund The American Civil Liberties Union--they gave $100,000 in 1991 and 1992."

Among groups that reported political lobbying in the first half of 1996, Philip Morris led the pack at $11.3 million, almost six times the amount reported by its arch-nemesis, the Association of Trial Lawyers of America. Consumers organizations and membership-funded citizen groups spent almost nothing by comparison. With the exception of the Christian Coalition, which spent $5.9 million, virtually every big-spending lobbyist represented a corporation or wealthy financial interest--the AMA, the U.S. Chamber of Commerce, General Motors, General Electric, the Chemical Manufacturers' Association and AT&T. By comparison, the nation's largest membership organization, the American Association of Retired Persons, spent only $3 million.

The "California Thing"

"An interesting insight into Philip Morris's efforts comes from Victor Crawford, a former . . . lobbyist for the Tobacco Institute," observes an internal report by the State Affairs Company.

Crawford became an outspoken enemy of the tobacco lobby after developing lung cancer which led to his death earlier this year. The SAC report quotes him as saying, "If you ever want to see a bunch of cowboys work, watch Philip Morris. They are tough. I mean they shoot from the hip. It was Philip Morris who did the California thing [Proposition 188] after they were advised not to. That California thing was dumb, because they had their name attached to it. They should have never done that ... and they're getting bolder. It's a take-no-prisoners fight. You're talking about $100 billion a year in gross profits ... And man, anything goes. And anything will go."

The "California thing" was PM's outrageous attempt, organized through two PR firms, the Dolphin Group and Burson-Marsteller, to sucker California voters into passing a pro-tobacco initiative disguised as a smoking restrictions law. "Specifically, Proposition 188 would have overturned about 300 local smoking ordinances," observed the SAC report. "Besides spending about $15 million dollars in lobbying and expenditures in a failed effort to pass 188, PM "was responsible for the $968,710 in independent expenditures contributed by the National Smokers Alliance."

The National Smokers Alliance is PM's version of "grassroots lobbying"--the rapidly growing practice of using advertising, fax machines, mail and telephone banks to create phony "grassroots" front groups in order to stir up public support for its corporate objectives.

SAC operates much of the National Smokers Alliance account, which PM founded with an initial contribution of $7 million dollars to Burson-Marsteller. NAS's current budget exceeds $10 million annually, primarily from Philip Morris.

In July, SAC led a PM-funded effort by the National Smokers Alliance in Virginia attacking the Motorola corporation's smoking policy, which they depicted as "the most mean-spirited and punitive ... of any we have yet encountered in this country." Thomas Humber, a Burson-Marsteller executive who is the nominal head of the National Smokers Alliance, wrote to SAC's David McCloud: "Enclosed is a check for $5,000 for the Motorola effort.... You are great Americans, and you understand raising hell and having fun."

Pair Awarded $107M Over Business Deal Company Defrauded Ex-Employees Out of Share in Start-Up Sold to Rival Concern

By Rebecca Lisa
(Los Angeles Daily Journal)

Offering more of a kick in the ribs than a slap on the wrist, a jury in Norwalk Friday directed General Dynamics Corp. to pay two former employees $107.4 million in damages for not honoring a lucrative business agreement. After deliberating for 21/2 days, the jury found by "clear and convincing evidence" that General Dynamics had committed fraud and should pay William B. Forti and Dolores Blanton – former employees of the company – $3.7 million each in compensatory damages.

"This was a very deliberate, rational verdict," said plaintiffs' attorney Don Howarth, of the Los Angeles firm Howarth & Smith. "This was a business deal and General Dynamics made this money ... They did not have a right to defraud my clients of that."

The plaintiffs were also represented by Brian Bubb, a partner with Howarth & Smith.

The Los Angeles Superior Court cases, filed in June and July 1994, arose out of the development of a subsidiary company of General Dynamics called E-Metrics. After working 15 years for General Dynamics, Forti and Blanton agreed to leave their positions and help build the new Pomona-based computer technology company. In exchange, General Dynamics, in an oral contract, agreed to give the two equity ownership in the company, the complaint alleged.

Howarth described E-Metrics as having developed "absolutely astounding technology" that was going to "change the world" had it been give commercial application. The computer they developed at E-Metrics could "think like the human brain," according to Howarth, who said it is now being used in the defense industry. "It was so good, it had to sleep for a while after you fed it information," he said.

Following two weeks of testimony, the jury found that General Dynamics not only breached the oral contract but defrauded the plaintiffs because it had never intended to honor the agreement, according to Howarth. "It was like the carrot in front of the mule," Howarth said. "They held [the equity agreement] out in front of them when they never intended to give it to them."