By Mark Geragos
Could anyone imagine that faced with the potential opportunity of generating about $50 million of new funding for legal services and other needs of our justice system, the California State Bar Board of Trustees, claiming the support of the staff of the Supreme Court of California, would not only kill that opportunity, but do so by defaming the immediate past president and first Latino president of the State Bar and its executive director?
I regret to inform the California legal community this is what happened.
All this was recently brought to light during the high-profile firing without cause of the State Bar executive director Sen. Joseph Dunn (Ret.), whom I represent in litigation against the State Bar.
It all began with the now widely reported events of the Dunn firing: an initial “whistleblower” complaint against Dunn by Chief Trial Counsel Jayne Kim, subsequent “whistleblower” complaints against Kim, and the engagement by the board of the law firm of Munger, Tolles and Olson to evaluate the Kim complaint. Though the Munger Tolles report cost the State Bar over $300,000, it found the financial responsibility for the subject of the complaint was at most less than $10,000 (although even this amount is still in dispute). But notwithstanding the Munger Tolles report, the motion and action at the board meeting on Nov. 7, was to fire Dunn without cause.
It is the nonfinancial portion of the Munger Tolles report that comes to astonishing findings. In the report, Dunn and immediate past president Luis Rodriguez are accused of misleading and blatantly lying to the board about the prospect of selling the San Francisco building which is the headquarters of the State Bar for a substantial profit.
Why didn’t everyone work together instead to clarify any misunderstandings to achieve the goal of selling the San Francisco building to capture its extraordinary value and use the $50 million for the justice system?
During its meetings, Munger Tolles had told the board that its report was of the highest confidentiality and if leaked, could result in the harshest sanctions to anyone who leaked it. But leaked it was, before any person criticized by the report was given any notice of what was found or an opportunity to respond.
What really happened?
Dunn’s accomplishments, during his highly praised previous three years as executive director of the bar, had included selling State Bar property in Los Angeles and using the proceeds of the sale to purchase and relocate the Los Angeles office of the bar to a building in downtown Los Angeles. The new building leases space on the ground floor to a supermarket, which rent is helping to fund important legal services.
Following its profitable relocation of the State Bar’s offices in Los Angeles, Dunn learned important information about the State Bar’s headquarters in San Francisco. The building the bar owned on Howard Street, an area South of Market, had become one of the hottest real estate markets in the nation due to growing high tech facility demand. The current value of the building, which had been bought years ago for $22 million, was about $122 million in 2014 based on an actual offer from an interested buyer. Dunn immediately realized it made no sense from a policy standpoint for the State Bar to just sit on that enormous capital, especially considering all of the current needs of the justice system. He therefore, with the approval of the board’s executive committee, sought potential buyers for the building at its market price and identified a building in Sacramento, among other locations, to serve as the State Bar headquarters. The process which Dunn set in place, if carried to completion, could have produced a potential net excess of funds of about $50 million for the State Bar, after deducting the costs of the new building and moving costs. These funds could have been used for legal services, to lower bar dues, and/or for other general needs of the justice system. The move to Sacramento also made sense in terms of moving the State Bar’s headquarters closer to the Legislature, which governs so much of the State Bar’s fate.
Dunn worked closely on this plan with then State Bar president Luis J. Rodriguez, whoÂ became a supporter of the sale and move. Dunn and Rodriguez kept the board’s executive committee, who was the relevant group at that time,Â fully briefed and involved in the process. Dunn and Rodriguez also briefed the Chief Justice on their plan to sell the San Francisco building and relocate.
So what does this have to do with the Munger Tolles report? In their reports to the State Bar executive committee, Dunn and Rodriguez were asked about their conversations with the Chief Justice. Specifically, a question was raised whether Dunn and Rodriguez had accurately reported their conversations with the Chief Justice. To no surprise, given the multiple conversations among different people, there was confusion about exactly what was said at different times. The Munger Tolles report chose to conclude that Rodriguez lied to, and both Dunn and Rodriguez misled, the executive committee about their conversations with the Chief Justice.
What possible motives would Dunn and Rodriguez have to do so? There is no allegation and never has been that they had any personal interest in the sale of the building or move to Sacramento. Their only interest was in working to maximize State Bar resources to provide an additional $50 million in funds for the many needs of the justice system.
Stunningly, Dunn and Rodriguez did not know of the allegations of the Munger Tolles report until the report was publicly leaked on Wednesday (presumably by the State Bar) and they received calls about the allegations from the reporters to whom it was illegally leaked. To this day, they have not seen the report. The only thing they know about the report is what they have been told by the reporters. Dunn and Rodriguez categorically deny misleading or lying to the executive committee or any part of the board structure about their conversations with the Chief Justice.
All this might be explained by the Rashomon effect. But the broader and more important question for the California justice system is why this became part of a “who said what to whom” internal investigation. Why didn’t everyone work together instead to clarify any misunderstandings to achieve the goal of selling the San Francisco building to capture its extraordinary value and use the $50 million for the justice system?
The reason is that senior executives at the bar claiming support from staff at the Supreme Court do not want the State Bar’s headquarters to move to Sacramento or anywhere else for that matter. These senior executives are comfortable where they are in San Francisco and they would have the justice system pay the potential $50 million price tag in order to make no changes. They decided to block the move by providing questionable information during the Munger Tolles investigation to tar and defameÂ Dunn and Rodriguez, the two people most active in supporting a move. Of course there were other reasons for the outcome of the investigation but this was surely a significant one. Not only did this unfairly harm the highly praised executive director of the bar, but this also caused gratuitous harm to Rodriguez, about whom no known complaint was ever even filed.
After a new State Bar president came into office in September 2014, he refused to act and sat on the documents that would have moved forward the transactions, essentially killing the deal.
So there you have it: the sale of the San Francisco building blocked; potentially $50 million in funds lost for the justice system; and a distinguished executive director and the first Latino president of the State Bar defamed. Not a pretty picture of California’s legal institutions, especially in the midst of a constant cry for extra resources for the judicial branch.
Mark Geragos is a criminal defense lawyer with Geragos & Geragos.