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Ninth Circuit Publicly Reprimands Former U.S. Attorney
By a MetNews Staff Writer
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GREGORY A. VEGA attorney |
A former U.S. attorney for the Southern District of California has been publicly reprimanded by the Ninth U.S. Circuit Court of Appeals for his role in an effort to seek reconsideration in the District Court of an attorney-fee order based on supposedly newly discovered information that was, in fact, not newly discovered, followed by participation in a frivolous appeal from a denial of the reconsideration motion.
In an order filed Thursday, the lawyer, Gregory A. Vega, was rendered personally liable for up to 20 percent, or $49,396.74, of the $246,983.68 sanction imposed on the client, Tungsten Heavy Powder, Inc. (“THP”). It was indicated that he will be reported to the State Bar of California “for consideration of any further discipline they deem appropriate.”
Vega is a shareholder in the San Diego law firm of Seltzer Caplan McMahon Vitek and is chair of its Litigation Department. Aside from having served as a U.S. attorney from 1999-2001, he was president of the National Association of Former United States Attorneys from 2015-16, a member of the City of San Diego Ethics Commission from 2001-05, president of the Hispanic National Bar Association from 1997-98, and chair of the State Bar Criminal Law Advisory Commission from 1992-93.
Other Lawyers Penalized
Two other lawyers were castigated in the order for participating in the reconsideration effort and were held jointly and severally liable for payment of the sanction, up to a limit. However, only Vega drew discipline.
The sanctions were imposed on the attorneys pursuant to 28 U.S.C. §1927 which provides:
“Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
The sanctions, in favor of THP’s litigation adversaries, were based on fees they incurred in connection with the motion for reconsideration, fees and expenses related to the special master proceedings, and half of the fees paid to lawyers responding to the Ninth Circuit appeal.
Signing the order were Judges Ryan D. Nelson and Bridget S. Bade and Senior Judge Marsha S. Berzon. They adopted, nearly in toto, the 102-page Oct. 31, 2023 report and recommendation by Ninth Circuit Judge Richard C. Tallman, acting as a special master.
Rubber-Stamping
Tallman faulted Vega for blindly accepting the argument concocted by an associate in his firm, Ricardo Arias, that there was a basis for relief from the District Court’s attorney-fee order under Rule 60(b)(2): “newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial.” Arias theorized that anything was “new” that had not already been presented to the judge presiding in the case, Thomas J. Whelan of the Southern District of California.
However, the evidence was, in fact, known to the client and to Vega and Arias, Tallman found, noting that it had been presented by THP earlier in the U.S. District Court for the District of Wyoming in related litigation. Tallman said:
“Had Arias read just one or two cases interpreting the meaning of ‘newly discovered evidence’ or ‘reasonable diligence,’ he would have known that his…argument was frivolous.”
Public Reprimand
In calling for a public reprimand of Vega, the jurist wrote:
“While Vega has had a long and honorable career, and has never before been subject to individual sanctions, in some ways this lengthy litigation experience serves as an aggravating factor.…Simply put, Vega should have known better.”
The judge drew attention to the 2010 Ninth Circuit opinion in In re Girardi, in which the then-prominent plaintiffs’ lawyer Thomas V. Girardi (now disbarred and facing multiple federal felony charges here and in Illinois) was publicly reprimanded and two cohorts—Walter J. Lack and a junior associate in his firm, Paul A. Traina—were suspended from practice in the circuit.
The attorneys had sought to enforce a $489 million Nicaraguan default judgment against a U.S. company that was not a defendant in the case. Girardi—whose use in cases was largely to attempt to dazzle juries with theatrics and displays of personality—was spared a suspension based on the court’s impression that he had not fully realized what was being done.
Girardi Case Differentiated
Tallman said in his report and recommendation:
“Our decision in Girardi, to suspend two attorneys from practice before the circuit for six months following comprehensive special master proceedings is instructive. But unlike the suspended attorneys in Girardi, who were involved in the litigation from start to finish and personally responsible for their own frivolous argument having been filed on appeal and before numerous federal judges, Vega’s role in this litigation was more limited….
“…Vega was honest and contrite during the evidentiary hearing, not seeking to defend his misconduct but instead taking responsibility for it, especially as it concerns reviewing Alias’s work. While the Ninth Circuit determined that the appropriate sanction for the two attorneys in Girardi was a six-month suspension from practice before the Ninth Circuit, the Special Master concludes that a lesser sanction is appropriate for Vega, and formally recommends a public reprimand….”
Nelson, Bade and Berzon agreed.
Sanction Upheld
Addressing the sanction, as applied to Vega, Tallman said:
“When Arias sent him the draft ex parte application for reconsideration, riddled with misstatements of law and fact, he did nothing to correct the errors. He testified on the stand that he simply accepted the argument that Arias set forth in the application, that Fed. R. Civ. P. 60(b)(2) applied because the…information would be ‘new to Judge Whelan.’…As the supervising partner on the THP matter, Vega cannot escape liability or accountability on account of Arias’s exceptionally poor performance in researching and preparing the application for reconsideration. To Vega’s credit, he does not attempt to do so. Indeed, he testified before the Special Master that he accepted full responsibility for the misrepresentations made in the application for reconsideration.”
The judge added:
“In the end, Vega signed his name to the ex parte application for relief, and eventually, to the Notice of Appeal to the Ninth Circuit. His failure to check Arias’s work and independently verify the facts and law included in the application for reconsideration rise to the level of recklessness.”
Marina A. Torres of the downtown Los Angeles law firm of Halpern May Ybarra Gelberg LLP handled the appeal.
Vega’s Lawyer Comments
Vega was represented in connection with the disciplinary proceeding by San Diego attorney Patrick Q. Hall. Zeroing in on Vega’s non-involvement in the appeal from the denial of reconsideration, Hall said Friday:
“Mr. Vega has achieved throughout his lengthy career of more than forty years a reputation of integrity, fairness and high ethical standards. He is gravely disappointed in the conclusion of the Special Master recommending sanctions for misstatements contained within appellate briefs prepared by other counsel.”
He continued:
“It is undisputed that Mr. Vega nor anyone at his firm were consulted by appellate counsel about the arguments raised in those briefs beforehand or even the grounds for appeal. Neither he nor anyone at his firm wrote or reviewed the briefs before they were filed with the Ninth Circuit and he was unaware of how appellate counsel had embellished and added false statements of fact to the arguments first raised in the District Court. He believes that he has been unfairly singled out, when appellate counsel has not been disciplined at all, but also believe that it is time to conclude this regretful chapter of his life.”
Other Lawyers
The order, based on Tallman’s recommendation, provides that Arias “is jointly and severally liable with THP for up to 10%” of the sanction, “not to exceed $24,698.37” and THP’s in-house counsel, Donald Hagans is on the hook for half of the sanction, “not to exceed $123,491.84.”
A copy of Tallman’s report is being sent to the State Bar of California for possible disciplinary action as to Arias, as well as Vega, and to the State Bar of Texas, as it relates to Hagans. The U.S. District Court for the Southern District of California will receive a copy should it wish to take action against either Vegas or Arias or both.
Another copy will go to the U.S. District Court for the District of Wyoming. Tallman’s report alludes to conduct on the part of Megan Overmann Goetz, THP’s lawyer in litigation there, though she was not held responsible for payment of any part of the monetary sanction imposed on Thursday.
Marina Torres Spared
Torres—an unsuccessful candidate for Los Angeles city attorney in 2022—was not exonerated in Thursday’s order, but incurred no penalty for her work in the case in light of evidence that she was not advised that what was purported to be “new” information wasn’t. However, Tallman said in his report that “there were several red flags in the district court record that should have alerted Torres to the frivolousness of the newly discovered evidence argument.”
He found that “although Marina A. Torres personally submitted frivolous arguments to the Ninth Circuit and Special Master, she did not act with the requisite bad faith—i.e., recklessness—necessary to justify monetary sanctions under § 1927.”
Nelson, Bade and Berzon agreed that “[h]er errors were largely—but not only—of omission, not commission” and that “her conduct does not rise to the level of ‘bad faith’ necessary to impose sanctions,” but said:
“As the attorney primarily responsible for researching and drafting the appellate briefs, the petition for rehearing, and the response to the motion for sanctions, Torres had the opportunity to verify the factual basis of THP’s application for reconsideration and failed to do so.”
They remarked that “[h]er efforts to solicit information from Hagans, Vega, and Arias” as to the facts “were cursory,” adding:
“Further, by the time she filed the Opening Brief in this appeal, Torres recognized that the district court’s denial of the application for reconsideration depended on an affidavit filed in the District of Wyoming but failed to thoroughly familiarize herself with that litigation. Even acknowledging that Vega, Arias, and Hagans withheld critical information from Torres…, Torres likely could have uncovered the omission by reviewing the Wyoming pleadings and THP’s district court briefs more thoroughly.”
Underlying Action
The underlying action against THP was brought in 2018 under the False Claims Act by a competitor and a whistleblower claiming that the defendant had certified that materials, used in munitions, that it was supplying to Israel, pursuant to a contract funded by the U.S. Defense Security Cooperation Agreement Agency, were sourced from the United States when they actually came from China. The case was settled for $5,641,114.
Whelan made an award of attorney fees to the whistleblower, former THP employee Gregory Caputo, and Global Tungsten & Powders Corporation, of $505,513.18. The award was upheld by the Ninth Circuit in a Jan. 12, 2023 memorandum opinion.
The case decided Thursday is Caputo v. Tungsten Heavy Powder, Inc., 22-55142.
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