(Reuters) - Here’s a weird little civil procedure riddle: What does a one-time Girardi Keese lawyer accused of misappropriating clients’ money have in common with the Ford Motor Company?
Answer: Both tried to beat cases against them by contesting a court’s specific personal jurisdiction – and both failed.
You probably remember Ford’s futile attempt earlier this year to persuade the U.S. Supreme Court to impose a tough test for where plaintiffs can litigate their lawsuits against corporate defendants.
Ford was challenging decisions by state supreme courts in Montana and Minnesota that allowed crash victims to proceed with product liability suits – even though Ford did not manufacture or sell the second-hand vehicles involved in the crashes within state borders – because the company subjected itself to the courts’ jurisdiction by conducting extensive business in their states.
Ford urged the justices to require a causal link between the business a corporation conducts and the plaintiff’s alleged injuries. But in a ruling in March, the Supreme Court declined to adopt Ford's proposed causation test, instead confirming that a court can exercise specific personal jurisdiction over a defendant as long as a plaintiff’s claims are related to the defendant’s in-state conduct.
Last December, while the Ford case was under the justices' consideration, the Chicago firm Edelson launched accusations that have since expanded into an epic law firm scandal. Edelson filed a stemwinder of a complaint, alleging that famed plaintiffs lawyer Tom Girardi and his law firm Girardi Keese had misappropriated money that belonged to clients who had settled claims stemming from the 2018 crash of a Boeing 737 MAX flown by Lion Air.
Edelson, which was Girardi’s co-counsel in Lion Air cases in Chicago, sought to establish a trust for Girardi’s erstwhile Lion Air clients and, after those clients received their settlement proceeds, to recover the co-counsel fees Girardi owed Edelson.
After the Edelson allegations, Girardi and his firm were forced into bankruptcy. Bankruptcy trustees are now probing the alleged transfer of millions of dollars from the firm to Girardi’s estranged wife, reality television star Erika Jayne Girardi.
Edelson’s claims against Girardi and his firm were stayed because of ongoing bankruptcy. But the Edelson complaint also named two other lawyers who had worked at Girardi Keese, David Lira and Keith Griffin, whom Edelson accused of complicity in the alleged scheme to embezzle client funds.
Attorneys for Griffin and Lira vehemently deny that their clients misappropriated client money. Lira counsel Edith Matthai of Robie & Matthai told me the Edelson complaint is riddled with factual errors. Griffin’s lawyer, Ryan Saba of Rosen Saba, said via email that Griffin was a Girardi Keese employee with no control over the firm’s finances. “Mr. Griffin is devastated and is similarly angered that the clients have not been paid their settlement money,” the email said. “Mr. Griffin spent months and months trying to get Mr. Girardi to complete his promises and obligations.”
Lira and Griffin both moved last winter to dismiss Edelson’s claims. Lira primarily argued that because of the Girardi Keese bankruptcy, the case should be stayed or litigated in bankruptcy court. Griffin contended that Illinois courts did not have jurisdiction over him. (You knew that was coming, right?)
Griffin, a California resident, argued that he had no business ties to Illinois. Edelson alleged that Griffin signed one of the contracts laying out the co-counsel agreement between Edelson and Girardi Keese, that Griffin obtained pro hac vice admission to appear in the Lion Air cases and that Griffin communicated with Edelson lawyers in Illinois.
Griffin countered that in all of those capacities, he was acting merely as a Girardi Keese employee, not as an individual availing himself of Illinois’ laws and protections. Moreover, he said, Edelson’s allegations of wrongdoing all arose from actions in California, not Illinois.
The Supreme Court had not issued its decision in Ford when Griffin moved to dismiss the Edelson suit. But Edelson’s April 27 opposition to the defendants’ dismissal motions cited the ruling liberally. The Ford opinion, Edelson said, clarified that plaintiffs are not required to allege that their injuries arose from a defendant’s conduct in a particular forum in order to establish that forum’s jurisdiction. “Accordingly, the specific personal jurisdiction inquiry here cannot be limited to the narrow set of actions that might have caused Edelson’s injury,” the Edelson brief said.
Griffin’s reply brief insisted that the Supreme Court’s Ford ruling doesn’t apply to his case, which involves an individual who had no significant contacts with Illinois rather than a corporation doing significant business in the states where it was sued.
But in an opinion on Monday denying Griffin’s dismissal motion, U.S. District Judge Matthew Kennelly of Chicago said Ford was on point. “Griffin argues that all the claimed wrongdoing that led to this suit took place in California and thus the court may not exercise jurisdiction over him,” Kennelly wrote. “This argument is akin to the one made by the petitioner in Ford Motor. The Supreme Court rejected (it), and so does this court.”
Griffin, the judge said, allegedly came to Illinois and appeared in Illinois courts in connection with the Lion Air litigation, which is at the heart of Edelson’s claims. Under the Supreme Court’s reasoning in Ford, Kennelly said, “Griffin's contacts with Illinois are undoubtedly related to Edelson's claims,” giving him jurisdiction to hear the case.
To be sure, Monday’s ruling wasn’t a complete victory for Edelson, which did not respond to my email query. Kennelly found that Edelson did not have constitutional standing to seek a constructive trust on behalf of onetime Lion Air clients no longer represented by Edelson or Girardi. The judge said Edelson does have standing to pursue a trust to recover its unpaid attorneys’ fees but stayed that claim because it’s enmeshed with the Girardi bankruptcies.
Griffin lawyer Saba said he will “vigorously” defend any attempt by Edelson to hold his client personally responsible for unpaid fees in the Lion case.
Our Standards: The Thomson Reuters Trust Principles.