Lawyers for non-smoking flight attendants who sued cash-rich foundation are punished for it

By Noreen Marcus, FloridaBulldog.org 

Two Miami lawyers sued a multi-million-dollar foundation to help hundreds of non-smoking flight attendants who’d been exposed to toxic secondhand tobacco smoke.

They didn’t imagine they’d be punished for it seven years later.

The lawyers, Philip Gerson and Steven Hunter, shut down their practices in Miami for a month early this year at the direction of the Florida Supreme Court. Now they have blots on their previously unblemished records after long careers spent building good reputations.

Their suspensions capped lengthy investigations into whether they violated rules of professional conduct by representing hundreds of flight attendants against the wishes of a handful. Two of the objecting flight attendants were salaried board members of the Flight Attendant Medical Research Institute (FAMRI), the Miami-based foundation that Gerson and Hunter sued.

The disciplinary process in the Gerson/Hunter case was highly irregular, lawyers who are familiar with the system say. And the outcome was not what the judge who presided over their ethics hearing had in mind.

Miami-Dade Circuit Judge Michael Hanzman recommended admonishment, the lightest possible punishment, for Gerson and Hunter. He found that they exercised poor judgment by taking steps that might have destroyed FAMRI, to the detriment of all the flight attendants it was set up to help.

Yet he expressed sympathy for their cause: removing the cloak of invisibility that shields FAMRI from oversight and supervision, and finally getting something tangible for the flight attendants.

Since a 1998 class-action settlement that launched the foundation’s $300-million fund, it has been controlled by lawyers Stanley and Susan Rosenblatt and a small board they assembled. Publicly available sources show that some of the money has been used for purposes that do not appear to have anything to do with sick flight attendants, like supporting a hospital in Israel and researching pet wellness.

Hanzman ruling

Hanzman decided that Gerson and Hunter were not guilty of the kind of “egregious misconduct” that merits suspension, he wrote in his January 2017 report.

“While Gerson and Hunter were no doubt motivated, in part, by a desire to receive a fee … their prime motivation was to secure judicial oversight of the Foundation and obtain some monetary relief for clients” who suffered from exposure to secondhand smoke, Hanzman wrote.

Two lawyers who agreed to review Hanzman’s report said it’s thorough and well-reasoned, and wondered why it didn’t persuade the Supreme Court to order a lighter punishment.

“Based on the facts and the rules set out in great detail in the judge’s report, I’m puzzled at how they could reach the discipline that they did,” said Jeffrey Tew, who represents attorneys in Bar disciplinary proceedings.

Veteran criminal defense attorney Joel Hirschhorn said, “It’s hard to disagree with the conclusion that–are you kidding me?–this is just a minor slip for two fellows who probably have had no disciplinary action in over 70 years of careers.”

“The overarching elephant in the room is, how can there be no judicial oversight of a $300-million fund when there was an agreement that there would be oversight?” Hirschhorn asked. “That’s the part that really bothers me.”

So why did the high court give Gerson and Hunter a more severe punishment than the slap on the wrist Hanzman suggested?

It’s hard to say because the justices didn’t offer a rejoinder to Hanzman. Nor has any court addressed the issue of FAMRI’s zero transparency, effectively keeping the cloak of invisibility firmly in place.

FAMRI: We were supervised

John S. Mills, FAMRI’s appellate lawyer, disputed calling his client unsupervised in a statement that responded to a request for comment.

“They were subject to strict judicial oversight until that supervision was released by the court many years ago,” he wrote. “Since that point, they have been subject to the same oversight as any other non-profit research institute.”

Mills was referring to an order dated Oct. 10, 2000 and signed by Miami-Dade Circuit Judge Robert Kaye, who retired the following year. The three-paragraph order recognizes that FAMRI had taken all the steps necessary to begin its work, and therefore releases the $300 million that tobacco companies had placed in three banks. The order says nothing about releasing FAMRI from court supervision.

At an Aug. 9, 2012 hearing before Miami-Dade Circuit Judge Jerald Bagley, who inherited the flight attendants’ case from Kaye, Mills mentioned the Kaye order and said, “There was never any suggestion … that there would be some supervision ad infinitum,” according to a transcript.

Bagley, who left the bench for private practice this year, did not respond to an email seeking comment.

Gerson and Hunter did not comment on their discipline. Case law and Bar ethics rules prevent lawyers from disparaging judicial officers.

The Rosenblatts declined to comment through their spokesman, John Kozyak, who has noted that no one from FAMRI initiated any Bar complaints against Gerson or Hunter.

But Mills provided information about Gerson and Hunter at the request of Florida Bar counsel Thomas Kroeger, the prosecutor in their ethics case. In a May 27, 2014 memo with extensive back-up exhibits, Mills described their effort to obtain client consent to sue FAMRI as faulty, misleading and after-the-fact.

In his statement to Florida Bulldog, Mills declined to respond directly to the Hanzman report.

“Judge Hanzman was merely addressing evidence presented in a disciplinary proceeding to which our clients were not parties and were not called as witnesses,” he wrote. “While we certainly do not admit that anything in his report that may appear critical of FAMRI is correct or stated in context, it is out of respect for Judge Hanzman and his role that we decline to quibble with his findings in the press.”

Hanzman did not respond to a phone message seeking comment.

In addition to Hanzman, Gerson and Hunter had at least partial support from attorney Martin Khoury, the volunteer who investigated their ethics case for the Bar; from two Bar grievance committees–similar to grand juries–and from the Third District Court of Appeal. But at every turn, the Florida Bar Board of Governors and the Florida Supreme Court overruled them.

Not your usual discipline

 The Supreme Court seemed intent on punishing Gerson and Hunter almost as soon as a related case, Young v. Achenbauch, landed in Tallahassee. Young was an appeal of an order disqualifying the two lawyers because of conflict of interest.

FAMRI’s lawyers portrayed Gerson and Hunter as going rogue in their determination to squeeze money out of FAMRI, even if it meant disobeying some of their own clients and sacrificing the foundation.

Representing themselves at the oral argument in the Young case, Gerson and Hunter faced a hostile panel on Oct. 9, 2013. Chief Justice Ricky Polston told Hunter he was getting extra time “because this is perhaps a serious additional Bar disciplinary issue.” The statement was prophetic.

By suing FAMRI, Gerson and Hunter challenged a pair of legal icons. The Rosenblatts rose to national renown in 2000, when they won a $144.8-billion jury award against Big Tobacco in a class action for smokers, Engle v. Liggett Group.

Known for their philanthropy, the Rosenblatts are active in the Florida Supreme Court Historical Society and other prestigious groups. Prominent colleagues, including some who still represent smokers empowered by the Engle case, rallied around the Rosenblatts during the FAMRI litigation.

In 2010 Gerson, Hunter and several other lawyers for the flight attendants negotiated with the Rosenblatts about setting aside up to $50 million from the fund for their clients, according to Hanzman’s report. The flight attendants’ lawyers had filed about 3,000 cases and tried 11 of them, losing all but one.

When the talks reached an impasse, the lawyers filed a petition to force FAMRI to open its books. Signed by Gerson, Hunter and Alex Alvarez, another lawyer for the flight attendants, the petition also asked the court to order FAMRI to distribute the remaining money in the fund to their clients. (Alvarez, who was not disciplined, didn’t respond to several messages seeking comment.)

Judge Bagley disqualified the flight attendants’ lawyers, blocking their petition, because two flight attendants from the FAMRI board, plus a few others, objected to suing the foundation. Those objections created an irreversible conflict of interest for all of their lawyers, Bagley ruled.

Years later Gerson and Hunter, the only lawyers from their group who appealed the disqualification, found themselves disciplined for ethics violations. It was the climax of an unusual procedure.

Here’s how the Bar’s disciplinary system normally works: A complaint is filed against a lawyer and a volunteer investigates the allegations. The investigator’s report goes to a grievance committee, which votes up or down on whether there’s probable cause to proceed against the lawyer.

If the answer is no, the matter generally ends there. If it’s yes, an independent referee holds a hearing and files a report and recommendation to the Florida Supreme Court, the final arbiter. The court either rubber-stamps the referee’s report, or explains in copious detail why it’s departing from the referee’s recommendation.

Ethics classes warn lawyers they will be disciplined if they lie, cheat, steal or neglect clients. They’re coached to zealously represent clients without fear of reprisal for making good-faith arguments.

A quest for punishment

 Here’s how the disciplinary system worked in the Gerson/Hunter case: Bar investigator Martin Khoury suggested that Gerson and Hunter had reason to accuse FAMRI of avoiding “scrutiny.” The grievance committee that considered his report found no probable cause to proceed with ethics charges against Gerson and Hunter.

Later the Supreme Court reviewed Young, the lawyers’ appeal of Judge Bagley’s ruling that disqualified them on the basis of conflict of interest. The Third District Court of Appeal had reversed Bagley, saying his disqualification order “depart[ed] from the essential requirements of law.”

The Supreme Court reversed the Third District and approved the Bagley ruling. The high court’s opinion laid out the proper test for conflicts of interest, and went on to chastise Gerson and Hunter for having failed to follow this approach years earlier. They should have known better, the justices concluded.

The court called for a disciplinary do-over, and a second grievance committee took up the Gerson/Hunter case. The result was another no-probable-cause finding.

Gerson and Hunter would have been in the clear except for what happened next. Hanzman’s report supplied the narrative and the quotation marks:

An unidentified “investigating member” of the grievance committee pushed for probable cause, but the committee demurred. Then, future Florida Bar president Michael Higer stepped in as a “designated reviewer” and sent the matter back to the grievance committee for reconsideration. The committee responded with a third no-probable-cause conclusion.

The persistent Higer referred the matter to the Board of Governors’ “Disciplinary Review Committee,” which decided there was probable cause to proceed against Gerson and Hunter. The full Board of Governors confirmed that decision. Judge Hanzman was appointed to preside over the disciplinary hearing.

Higer responded to a request for comment by asking a Bar spokeswoman to provide Bar rules that show the Board of Governors is authorized to review grievance committee decisions.

In his report, Hanzman strongly implied that Gerson and Hunter had no way of foreseeing the Supreme Court would rule the way it did on the conflict-of-interest question. Back when they sued FAMRI, the question was “fairly debatable” and “presented novel and unsettled legal issues,” he wrote.

The Supreme Court did not respond to Hanzman with an opinion. Instead, the court put a one-paragraph item in the Gerson and Hunter court dockets that announced their one-month suspensions.

Hirschhorn and Tew said the court passed up a teachable moment.

“It is somewhat surprising and certainly disappointing that the Florida Supreme Court did not explain its rationale for the summary suspension, because that could have been of significant guidance to the Bar and the bench for the future,” Hirschhorn said. “Every one of us who gets involved in complex matters at some point faces the potential for conflict.”