Two decades ago, the movie “Erin Brockovich” helped make Thomas Girardi something of a folk hero.
Already
an accomplished trial lawyer who pursued personal injury cases against
large corporations, he was part of the legal team when Brockovich went
after Pacific Gas & Electric in 1993. Ultimately, the California
utility was forced to pay hundreds of millions of dollars to people who
said they got cancer and other ailments from drinking contaminated
groundwater.
The movie helped introduce the world to “toxic tort”
litigation — cases arising from exposure to chemicals and pollutants.
And Girardi, who was thanked in the movie’s credits and served as an
adviser on the film, reaped the rewards for clients and himself: He went
on to win billions of dollars for customers of pharmaceutical company
Merck and married a singer who has a spot on the “Real Housewives of
Beverly Hills.”
But now Girardi is starring in his own legal drama
— one that William F. Savino, a lawyer for one of the firms that is
suing him, called an “almost Shakespearean tragedy.”
Lawsuits
playing out simultaneously in state and federal courts in Los Angeles
and Chicago have left Girardi’s personal and professional life in
tatters as he faces accusations of misconduct, including that he
misappropriated money that was supposed to go to families of victims of
the Lion Air crash in 2018 that led to the grounding of Boeing’s 737
Max.
Lawyers for Girardi, 81, have suggested in court that he is
no longer mentally competent — an idea that another attorney for Lion
Air families said was merely an attempt to avoid responsibility for a
Ponzi scheme that finally fell apart.
Girardi owes tens of millions of dollars to finance firms and hedge
funds that lent money to his small Los Angeles law firm, Girardi Keese,
according to court filings. He and the firm were pushed into bankruptcy
in December, and most of his assets have been frozen. Last week, a
federal judge ordered the appointment of an interim trustee “to
immediately take possession of the books and records” to determine how
much money he has and owes to others.
At the same time, a federal
judge in Chicago is holding hearings into fraud accusations against
Girardi over a settlement with Boeing over the Lion Air crash. Lawyers
with another firm who represent victims’ families say Girardi may have
misappropriated at least $2 million in settlement money paid out by
Boeing, which had acknowledged that a software issue had contributed to
the crash that killed 189 people.
And then there is the personal
strife. Girardi’s wife of 21 years — Erika Jayne, a singer and star of
the reality TV show “Real Housewives of Beverly Hills,” filed for
divorce in November just as the mounting debts and allegations of
financial misdeeds began to mount.
It is a stunning fall for
Girardi, who in 2014 was inducted into the Trial Lawyer Hall of Fame.
The group noted that he had secured more than 30 favorable jury verdicts
for clients and praised him for his role in more than 100 settlements,
including the PG&E case and the $4.85 billion settlement arising
from complications associated with Merck’s pain medication Vioxx.
Now
Girardi’s legal practice is effectively shuttered, throwing other
lawsuits into upheaval. His firm had been representing about 8,000
clients in the so-called Porter Ranch environmental litigation — a
far-reaching lawsuit involving 36,000 people who lived near a major gas
leak in 2015. Court filings estimate the litigation could lead to
settlements worth $1 billion just for Girardi’s clients, who now need
new representation.
Girardi’s firm was the lead counsel in the
Lion Air litigation, and Boeing paid it an undisclosed sum that was
supposed to be dispensed to the families of victims. But at least $2
million of that money wasn’t distributed, said Jay Edelson, an attorney
who had represented other clients in the litigation. Lawyers for Girardi
have suggested to the Chicago court that neither he nor his law firm
was in a position to pay the disputed money.
At a hearing last month, Evan Jenness, a criminal defense lawyer
hired by Girardi, told Judge Thomas Durkin that she wanted to get a
“mental evaluation” of Girardi because “he’s unable to effectively
advise me on how to defend him.”
Jenness did not respond to a
request for comment. The lawyer representing Girardi’s firm, Michael
Monico, said in an email that he had no new information to provide.
Edelson
said the suggestion that Girardi’s competency might be at issue was a
ruse to evade liability and accused Girardi and his firm of “running a
Ponzi scheme” for many years. In a recent court filing, Edelson’s firm
said Girardi has a history of postponing payments until money comes in
from other settlements and jury verdicts.
Edelson said his firm became suspicious that something was amiss over
the summer because some of the victims’ families had not been paid by
Girardi’s firm even though Boeing had largely settled with the families
in early 2020.
“We kept getting a lot of excuses but didn’t have
any firm knowledge the money was taken,” Edelson said. “We knew the
money did not go to the clients in the fall.”
In early December,
Edelson filed court papers alerting Durkin to the problems with the
payments. In a Jan. 5 court filing by Edelson’s firm, he included a
transcript of a voice message left by Girardi around Thanksgiving.
“Don’t be mean to me, be nice to me,” Girardi said in the message,
according to the filing. “I’m doing good. It was because of me that we
got this by the way. I’ll be in touch, don’t worry about everything.
We’re friends. Things are going to work out good.”
As the
bankruptcy case proceeds, it’s not clear whether the families of the
victims of the Lion Air crash or Girardi’s creditors will be paid first.
But that may be the least of Girardi’s concerns.
In many states,
misappropriation of client money can be grounds for disbarment and even
criminal prosecution. At a hearing last month, Durkin called Girardi’s
conduct “unconscionable” and said he would refer the matter to federal
prosecutors. Later that day, the U.S. attorney’s office in Chicago filed
a motion with the judge to unseal confidential settlement documents for
law enforcement to review.
Shanin Specter, a trial lawyer in
Philadelphia who has served as a co-counsel with Girardi on the Vioxx
litigation, said Girardi had a well-earned reputation as one of the
nation’s top trial lawyers. But the allegations that he misappropriated
client money, if true, were inexcusable.
“Taking your client’s
funds is the professional equivalent of touching an electrified rail,”
Specter said. “It’s professional suicide.”
