Girardi dangled ‘connections with judges’ Edelson founder testified

After a Chicago law firm filed a motion for a rule to show cause in December 2020 alleging Girardi Keese misappropriated client funds to be paid to families of victims of a Boeing Co. plane crash, Thomas V. Girardi made a striking offer, the founder of the Illinois firm testified Tuesday.

Girardi, a prominent Los Angeles plaintiffs' lawyer with decades of major legal victories and a lot of political influence, told Edelson PC founder Jay Edelson that he wanted him to drop the motion, Edelson testified Tuesday in federal court in Chicago.

"After we filed the rule to show cause, Tom started calling me," Edelson said under questioning from another attorney at his firm, J. Eli Wade-Scott.

"He was trying to explain to me that if we simply dropped it, he would make a ton of money for me because of his connections with the judges of California," Edelson told U.S. District Judge Thomas M. Durkin.

Edelson, whose firm was acting as local counsel in the Lion Air plane crash case, said he replied that Girardi Keese's failure to pay clients the full settlement from a plane crash in Indonesia "is going to be very bad for you."

Girardi said he should get off the phone, Edelson said.

Durkin asked if Girardi, whose affairs are now being handled by his brother under a court order and is now in bankruptcy, sounded lucid.

"He sounded very lucid," Edelson replied. "He was smart enough to get off the phone quickly because he knew I wasn't interested."

The evidentiary hearing was called by Durkin to determine whether two former Girardi Keese attorneys, David R. Lira and Keith D. Griffin, should be held in contempt. In re: Lion Air Flight JT 610 Crash, 18-CV-07686 (N.D. Ill., filed Nov. 19, 2018).

Girardi invoked his Fifth Amendment right not to testify.

Lawyers for Lira and Griffin have tried to turn the tables, arguing that Edelson lawyers knew Boeing had paid settlement money for several plaintiffs months before the firm reported it to the court.

"You're really pointing fingers at each other at this stage," Durkin said at the end of the three-day hearing on Tuesday afternoon.

The judge asked attorneys for Lira and Griffin as well as Edelson to submit briefs arguing whether he had the inherent authority to order some or all of them to pay plaintiffs settlement money they should have received.

Edith R. Matthai, a partner with Robie & Matthai who represents Lira, said her client informed Edelson lawyers that the settlements at issue in this hearing were funded as of June 16, three days after he quit the firm during an argument with Girardi.

Ryan D. Saba, a partner with Rosen Saba LLP who represents Griffin, asked Edelson attorney Ari Scharg if he didn't know the settlements had been funded by July at the latest.

Scharg said Griffin told him earlier in the year Boeing refused to fund the settlements until all the agreements were signed, including other Lion Air cases not involved in this contempt hearing.

Durkin said everyone who has testified said they did not think anything "nefarious" was happening even though the judge said there were plenty of "red flags." One, he said, was that the settlement was to be funded within 30 days early in 2020.

"You're hearing from Mr. Griffin that it isn't happening," Durkin said to Scharg.

Scharg downplayed the significance and said he didn't feel the need to call Boeing or its attorneys at Perkins Coie LLP because Edelson was local counsel and wanted to present a united front.

"It's not uncommon for a defendant to not pay a settlement on time," Scharg said.

"A week or two, fine," the judge replied. "But months and months?"

Scharg said he was told Girardi was suffering from cancer and was dealing with tax issues regarding the settlements and administrative problems at his firm. Pressed by Saba, Scharg said, "Only one person was lying. [Griffin] knew he received the money."

Edelson said he only realized for certain that the first group of clients hadn't been paid all of the money in late November when he spoke with Griffin, who suggested he contact former Girardi Keese attorney Robert W. Finnerty, who is now at Abir Cohen Treyzon Salo LLP. Edelson said Finnerty discouraged him from reporting the case because it would shine a negative spotlight on the plaintiffs' bar.

Edelson said Finnerty told him, "Everyone has known Tom has been stealing money from clients for years."

The Chicago lawyer said he looked up Finnerty's background after the call and realized he used to work at Girardi Keese. "I had to take about 15 showers after that," he testified. "It was all so disgusting to me."

Edelson said he filed the motion, "creating publicity on the California bar to finally wake up and do something even though it's not totally in our interest because we've become a target."

Lira, who is married to Girardi's daughter, and Griffin and their lawyers have consistently argued that they were only salaried employees at Girardi Keese and had no control over whether their former boss made the payments. Both men said they urged him to do so, only to be rebuffed by Girardi. Lira quit in June. Griffin departed at the end of November.

Daily Journal Staff Writer Gina Kim contributed to this report.