Judge cites bench shortage in ordering case back to mediation

SANTA ANA -- Citing the seven vacancies on the Central District bench, a federal judge ordered an extensively argued lawsuit that includes a rare crime fraud exception back to mediation, saying he doesn't believe the dispute warrants complex litigation.

U.S. District Judge James V. Selna said Thursday his "substantial doubts" about the worthiness of the litigation, which concerns fraud and civil racketeering claims against a law firm accused of manufacturing personal injury class actions, are exasperated by the increased workload he and his colleagues are experiencing.

The district has 21 judges instead of the allotted 28, which means a 33 percent increase in caseloads.

President Donald J. Trump's announced intention last week to nominate three judges to the Central District judges is "unlikely to have an impact on this court until well into 2019," he said.

"I cannot in good conscience continue to give the level of attention that this case and the parties have thrust upon the court," the judge said, ordering a two-month moratorium on hearings while the attorneys resume discussions with mediator Layn R. Phillips.

Defense attorney Edward Susolik of Callahan & Blaine asked Selna to be prepared to schedule a trial at the next status conference in December. Selna responded: "If this matter needs to be resolved, it needs to be resolved. I'm not shirking from the responsibility or the extent of labor that the case is requiring."

Susolik represents the Newport Trial Group in a lawsuit by Natural-Immunogenics Corp., a health technology company that alleges the firm, which is now Pacific Trial Attorneys in Newport Beach, falsified a consumer fraud lawsuit against it in 2012 as part of an organized fraud ring that paid people to bring false injury claims.

Natural-Immunogenics Corp. is represented by Peter A. Arhangelsky and Joshua S. Furman of Emrod & Associates.

Newport Trial Group also is represented by Callahan & Blaine's Stephanie A. Sperber and David J. Darnell. Tyler E. Sanchez and other attorneys at Ford & Diulio PC represents six defendants who served as plaintiffs in lawsuits that Natural-Immunogenics Corp. alleges were based on false claims.

In June, Selna ordered some material from the law firm that's covered by attorney-client work privilege is discoverable under the crime-fraud exception because it reveals conduct "indicative of a vast scheme or conspiracy to commit fraud on the court ... which threatens to harm the integrity of the judicial process." Natural-Immunogenics Corp. v. Newport Trial Group, 15-CV02034 (C.D. Cal., filed Dec. 7, 2012).

Ongoing disputes include the scope of the exception as well as proposed expert testimony about the tactics of a plaintiff's private investigator. Newport Trial Group also is challenging JAMS Special Master Rosalyn M. Chapman's order that the investigation into whether to pursue a company's unlawful conduct on behalf of a putative class doesn't qualify as "anticipation of litigation."

Selna said at a motion hearing Wednesday he will decide the pending motions but won't hear anything else until after Dec. 15. He referenced the $250,000 in compensatory damages and said that, even including possible punitive and treble damages, he has "substantial doubts as to whether at the end of the day whoever prevails will be in a net-net position."

The case has 752 docket entries, which Selna called "extraordinary," and Chapman has written seven "lengthy, detailed" reports since January.

The judge said he understands the plaintiff may be angry about being sued in the first place, and the defendants could feel their professional reputations are at stake, but given the economic issues, "the parties seriously need to examine their case and examine where they expect to come out at the end of the day."

"The situation is exacerbated by a problem that neither I nor the parties here have any control over," Selna said, referring to the judicial vacancies.

Susolik said the defendants will comply with Selna's order.

Arhangelsky declined to comment.