On the day the Dallas City Council settled the Cinemark lawsuit, the mood around the horseshoe was grim. This movie-theater thing was just so out of control.
A simple vote two years ago to reject Cinemark's Tinseltown proposal had led to a major lawsuit against the city and eight individual council members, which had resulted in reams of bad press--bad press that was sure to continue after a bunch of movie moguls made off with $5 million worth of taxpayers' money.
As if that weren't bad enough, the settlement was now spawning mini-scandals.
It seems the city's former planning director, Mike Coker, had been recommending the Tinseltown project to the city council while moonlighting for Cinemark's zoning attorneys. Shortly after the Tinseltown vote, Akin, Gump paid Coker $2,000 to testify as an expert witness in an out-of-town lawsuit unrelated to Cinemark.
During this same period, the public learned that City Councilman Chris Luna had leaked a confidential council document to Cinemark's zoning attorney, Kirk Williams, with whom Luna had once practiced law. Luna's indiscretion opened the floodgate of confidential information that ultimately brought down the city's case. The council had suspected this for over a year, but City Attorney Sam Lindsay made it official, causing a Luna feeding frenzy at City Hall.
Would this nightmare never end?
Sitting in council chambers two Wednesdays ago, even the most casual City Hall observer could see that there was serious business at hand. Things were so bad, in fact, that the entire council was actually present and accounted for, all sitting in their seats like schoolchildren, strangely alert and attentive, for once ignoring their desk phones and personal mail. One by one they took turns at the microphone, moaning like sick hounds, all heartsick and broken up about having to part with the big bucks.
Luna was ashen; the mayor uncharacteristically somber. Even Paul Fielding was without his usual Wednesday smirk. Grim, very grim. But wait. Who were those guys at the far end of the horseshoe--the ones who were standing around congratulating each other as the vote was being tallied? Who were these guys in the subdued suits with the big smiles and the sprightly mannerisms, grabbing the city attorney's hand with their big mitts, leering into his face, so happy, happy, happy?
"Who are you guys?" I asked, walking up to join the little victory party.
They were, of course, the only ones who could be happy about all of this mess: the lawyers. No, not Cinemark's lawyers. These were the city's hired guns from a private law firm who were billing the city $1 million for the privilege of allowing the taxpayers to pay out $5 million. One by one, they introduced themselves: Kent Hofmeister, Robert Brown, Richard Pullman. Big, broad champagne smiles all around. Great manly man sighs of relief. And then a jaunty exit through the side door of the council chambers--Larry, Curly and Moe heading back to their cushy, privileged offices at Vial, Hamilton, Koch & Knox.
Watching them go, it was clear that there must be nothing quite as sweet as the smell of greenbacks on a warm spring day when the bluebonnets are blooming and the taxpayers' heads are getting bashed in.
Make no mistake about it, the taxpayers always get the lousy lawyers.
That's why Ray Hunt has a 100-year choke hold on 25 acres of city-owned property surrounding his Hyatt Hotel--much of which he leases for $100 a year.
That's why former celebrity clergyman Walker Railey is forever free, soaking up the sun in Southern California, while his ex-wife--the victim of an attempted strangulation--lies there, her body twisted up, her mind all but pureed, in a depressing room in an East Texas nursing home.
That's why we've had numerous illegal, closed-door meetings at City Hall about the sports arena. And why Dallas taxpayers got saddled with a $1 million verdict in a pothole case some years back. And why the entertainment sharks who built Starplex walked off with the candy store. And why we just forked over $5 million to a rich movie-theater company that wanted to build a multiplex in a neighborhood that didn't want it.
Because it is clear--after spending a few weeks reviewing courthouse records and talking to more than a dozen lawyers, council members, and courthouse participants in the case--that Vial, Hamilton had no interest in going to trial on this matter for the taxpayers. That it clearly did not have the stomach, the fire, or the nerve to even try to win this case before a jury.
In fact, the lawyers' performances were so lackluster--their faith in their clients so lacking--that Councilman Larry Duncan finally threw his hands up in disgust last summer and brought his own lawyer into the case to defend his, and by extension the city's, position.
"The actions of Vial, Hamilton seemed to say they didn't believe in the case in the first place, and they were in there to cut losses, which isn't the way you negotiate, even if you are one who believes it ought to be settled," says Duncan, one of eight council members who voted against Cinemark building the Tinseltown multiplex and in favor of the neighborhood groups. "The first thing you do is hit the mule between the eyes with a 2-by-4 just to get their attention. Then you start negotiating. They never did that."
Instead, they let lawyer Ernie Figari, the brilliant trial lawyer who took on the case for Cinemark, hit them between the eyes on a daily basis.
"They were always approaching this from a defeatist's point of view," says one of the dozen or so lawyers involved in the case. "There was a lot of focus on, 'Is this a good defense?' and, 'Even if we lose on liability, can we win on qualified immunity for the council members? Maybe they didn't know they were violating anyone's constitutional rights.' It never seemed to dawn on them that they didn't need to hide behind a legal defense. That the council didn't have to be ashamed of what they did. That, in fact, they did the right thing. From what I saw, the Vial, Hamilton lawyers were demoralized early on--from the first minute things didn't go their way. And they never recovered their optimism."
Vial, Hamilton's Robert Brown disagrees. "I don't think it's fair to say we weren't optimistic," Brown says. "Obviously every case has its pros and cons, but I think the media, in general, have portrayed the case a little more darkly than it should be viewed in a legal sense."
Duncan obviously didn't share that opinion, because he brought in Michael Jung, an appellate lawyer and zoning expert with Strasburger & Price, to provide the optimism. In fact, it was only because of Michael Jung's exacting pro bono work on the case that the city's $1 million lawyers stopped cowering last fall and began trying to argue the nuts-and-bolts facts of the case.
According to a number of participants, Jung kept the case on track and was scoring important points with state District Judge Gary Hall until last month when Cinemark--realizing that Vial, Hamilton wanted to settle and Jung wanted to fight--dropped the eight individual council members from the lawsuit, freeing the council to approve a cash settlement and removing the tenacious Jung from the case. (True, at the time Judge Hall was in the middle of ruling against the city in the city's second pretrial attempt to end the lawsuit through a motion for summary judgment--but Vial, Hamilton was so anxious to settle that it was willing to pull the plug before the judge finished ruling on the final point that Jung had brought to the table. Jung's performance was so impressive that Sam Lindsay was considering offering Jung a paid position on the legal team if the case went to trial. "It crossed my mind at the end of the case," Lindsay says.)
"I'll go to my grave believing that this was a winnable case for the city," says Jung. "In my heart of hearts I believe that we were right--that the council members did the right thing, that under the development code it was the only thing they could have done. Sometimes I say that because my client's position needs for me to believe that--but on this one I sincerely believe it."
Bill Blackburn, a Dallas lawyer and former city councilman who also did pro bono work in this case on behalf of the North Dallas homeowners who fought Tinseltown, agrees wholeheartedly. "I spent hours working on this with Jim Harris at Thompson & Knight, which is certainly a top-rated law firm," Blackburn says. "And we believed that if it went to court, to the appeals court, to the Texas Supreme Court, that the courts would ultimately have found that the council had a right to do what it did. I think the city should have gone to the mat with it."
Compare those assessments with the city's paid defenders. "It was a bad deal," says Vial, Hamilton's Richard Pullman, referring to the set of circumstances his firm was forced to defend. "But I think our people--from what I saw--did the best job they could."
It's easy to disagree with that assessment--especially on the issue of Vial, Hamilton's complete inability to protect the attorney-client privilege that existed between City Attorney Sam Lindsay and his clients on the city council. Ineffective lawyering allowed a steady flow of sensitive information--all of which played very nicely into the hands of Cinemark, which ultimately had to prove that the city council "arbitrarily and capriciously" rejected the company's plans to build a movie theater at Forest Lane and Inwood Road.
Cinemark's best evidence on that score was the leaked Luna document--a legal analysis that Sam Lindsay's staff had prepared for the council just before the vote on Tinseltown. According to the analysis, the council had no legal right to keep Cinemark from building the theater; if it did so, individual councilors could be held personally liable for their actions, Lindsay told them.
Even if a jury ultimately sided with Cinemark, that didn't necessarily mean that Cinemark would have collected any money.
"The jury would probably be asked, 'Was the council's decision arbitrary and capricious?'" says Michael Jung. "If they said 'no,' there would be no liability, no damages--even if the wrong thing was done. The judge won't penalize you because you're not liable for every mistake you make--only the mistakes you make arbitrarily and capriciously under the civil-rights act."
Still, the Luna memo made it easier for Cinemark to get the judgment, and Vial, Hamilton certainly knew that. "Is it easier to prove arbitrary and capricious with that memo sitting there?" says Vial, Hamilton's Richard Pullman. "I think so. I think it's a clearly significant memo. Would we have won or lost the case based on that? I don't know."
But one thing is apparent in the record: The taxpayers got little help from Vial, Hamilton to prevent the memo, and the subsequent flood of similarly damaging documents, from getting into Cinemark's hands.
So say other lawyers in the case. And, significantly, so says a leading legal-malpractice lawyer in Dallas, Randy Johnston, who, at the request of the Observer, last week reviewed a 25-page brief that the Cinemark attorneys filed last November, addressing a number of incidents in which Vial, Hamilton failed to protect the privilege for the city. Johnston feels the lawyers didn't move swiftly enough to protect the city's privilege. "And when they did try, they did it poorly," Johnston says. "When a privilege was handled this poorly it would meet my threshold of interest in a case by a wide margin."
To win a malpractice case, Johnston says, a jury must find that a case's outcome would have been different had the lawyers not made mistakes. Johnston says that Vial, Hamilton's mistakes in the Cinemark case are clear; whether the firm fatally crippled the case he can't say. "I would want to know more about the case, but it smells like malpractice," Johnston says. "It doesn't mean that there is--but it sure smells like it."
The mistakes made on the issue of privilege began immediately--from the minute the controversial Luna memo surfaced on March 11, 1994.
On that date--less than two months after the council voted to reject Tinseltown--Vial, Hamilton's Kent Hofmeister deposed Kirk Williams, who was ordered to bring all his Cinemark documents with him to the deposition. He did. One of those documents was the confidential memo Luna had leaked to him on January 5.
The first thing he saw was a fax that Chris Luna sent Williams on January 4--the day before Luna leaked the privileged document. It contained some newspaper clippings and some internal City Hall memoranda from Councilwoman Donna Blumer. He also found a tape of a 1985 council meeting which Luna had also obtained for Williams.
Looking at these materials, Hofmeister asked Williams, "Has he made any other information available to you regarding this litigation or the circumstances giving rise to the litigation?"
Williams replied, referring to the pile of documents he had just surrendered, "You've got copies of all that correspondence, so it's contained in information already in the record."
Hofmeister then dropped the issue. If he came across the January 5 memo that day, he never mentioned it. He never cried foul. It's not like he wouldn't have known the significance of it--after all, Hofmeister is a former assistant city attorney.
Hofmeister did not return calls for this story. But his co-counsel, Robert Brown, says if Hofmeister saw the memo when Kirk Williams gave it to him, he never said so. "The first time I became aware of it was months after [that] when the discovery aspect of the case started," says Brown. "Cinemark's side had attached a copy of the document to the interrogatories in the case...It certainly became obvious to us there was a document in the Figari shop and that he shouldn't have possession of it."
But Figari did, and he made the best of it.
"Neither at the time of Williams' deposition nor during the following four months did any of the [defendants] raise an objection that the Executive Session Memorandum was protected by any privilege," Ernie Figari, the attorney handling Cinemark's lawsuit, wrote in a legal brief to the Texas Supreme Court in November 1995.
That brief, written as a response to one of the city's belated and unsuccessful pleas to stop the release of attorney-client privileged documents--contains a litany of foul-ups:
* On July 19, 1994, Cinemark asked the city to identify the Executive Session Memorandum--who wrote it, who received it. The city's sole response was that it was prepared by Assistant City Attorney Ileana Fernandez, "pursuant to her attorney-client relationship with the city." No privilege was asserted on behalf of the individual council members who had received the memo.
* On October 17, 1994, Cinemark filed a motion to compel the city to give it more information about the memorandum. The city's response to the motion was in the form of an affidavit from Fernandez, explaining that she had been acting in her capacity as a lawyer for the city when the document was given to the city council. Attached to the affidavit was a copy of the executive session memo.
"[Defendants] did not file the response and attached affidavit under seal or make any other effort to reclaim its alleged confidentiality," Figari pointed out to the court.
* At the October 1994 hearing on Cinemark's motion to compel, Cinemark argued that the privilege regarding the memo had been waived because the city was unable to explain how the memo had been disclosed; months had passed during which the city never attempted to rectify the leak; and the city had cavalierly attached the memo to Fernandez's affidavit for purposes of the hearing at hand.
* On April 3, 1995, Judge Hall ordered the city to turn over Ileana Fernandez's entire working file on the Tinseltown matter "based on the insufficiency of the evidence supporting the privileges claimed," Figari's brief stated. The judge gave the city a two-week window in which to file an appeal of his ruling to a higher court. The city didn't bother.
* On August 10, 1995, Hall allowed Fernandez to be deposed. Although the city's attorneys did not allow her to answer questions regarding a November 17, 1993, private meeting between herself, Donna Blumer, Mayor Steve Bartlett, and others, they allowed a former city employee who attended that meeting to testify about it in another deposition.
* Shortly after Fernandez was deposed, the city made the claim for the first time since the lawsuit was filed that the individual council members were entitled to assert individual privileges regarding the memorandum and other documents. (This too-little-too-late argument came only after Duncan recruited Michael Jung, who, free of charge to the taxpayers, began trying to repair some of the damage Vial, Hamilton had done on this issue.)
Robert Brown argues that the deck was stacked against the city at the point Luna leaked the memo. "The public records show that we took the position that it was a privileged document and that we should not be forced to answer questions regarding it," Brown says. "That argument was not successful with the judge. The judge ruled, in essence, the cat's out of the bag, and once it's out of the bag, there is not a way to reclaim it."
Then came Sam Lindsay's deposition on October 19, 1995.
Understand that it is highly unusual for the city attorney to be deposed in a lawsuit. Therefore, when Cinemark insisted on deposing Lindsay--and Vial, Hamilton couldn't come up with a good enough legal argument to prevent it--Judge Hall decided to preside over the deposition in his chambers, a practically unheard-of arrangement.
During the deposition, Vial, Hamilton dutifully raised some privilege objections to certain questions that were asked, but Hall overruled virtually all of them. In fairness to the city, though, the judge ordered Cinemark's attorneys out of the courtroom during some of Lindsay's answers, and he gave the city time to appeal the judge's rulings on the privilege to a higher court.
On November 2, Vial, Hamilton's Robert Brown filed the city's appeal. Attached to it was a complete transcript of Lindsay's deposition--which he filed unsealed.
"Typically, when you file things under seal, you go through a pretty complicated procedure to make sure it gets sealed," says Donald Colleluori, Ernie Figari's partner. "We took a shot that that wasn't done...and sure enough it wasn't...The judge let us check it out, and we brought it back to our office and made a copy."
Faced with nothing to rule on--if there was a privilege, the city's own lawyers had waived it--the appeals court ruled against the city.
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"The failure to seal the deposition when your purpose is to prevent its production to the other side--and the resulting waiver of that--is just indefensible," says Johnston. "That's exactly the kind of mistake that Ernie Figari will kill you on. He's the greatest tactician of rules and procedures I've ever known."
The bottom line is that the city could have hired just about any lawyer for $1 million. Sam Lindsay picked Vial, Hamilton. He did it, he says, partly on the basis of some prior work the firm did for the city, and because a number of firms he contacted, he says, claimed a conflict of interest with Cinemark that precluded them from taking the case.
Although Lindsay says he is pleased "overall" with Vial, Hamilton's work on the Cinemark case, he is obviously extremely displeased with the way in which his deposition was handled.
"The matter was addressed," is all he says, explaining that until two other Cinemark-related suits against the city are disposed of--both of which Vial, Hamilton is handling--he can't comment freely about the firm's performance. "I can't tell you everything that I may do or recommend, if anything. But before it's all over, I'll have something to say about some issues--and on others I won't. And that's probably more than I should say about this.