School Lawyers Under Increasing Scrutiny
By Eduardo Rueda, Investigative Reporter
A San Diego-based law firm known for representing public entities has come under increased scrutiny for its legal work in various local school districts.
The law firm of Stutz, Artiano, Shinoff & Holtz has represented most of San Diego’s 42 school districts over the past 15 years. Its most visible lawyer, Daniel Shinoff, has played a role in many high profile school district cases throughout the county.
Earlier this year, the firm was sued for malpractice by the San Ysidro School District for allegedly failing to inform that school board of potential settlement offers during a case and for breach of its fiduciary duty to the district. The law firm settled the case for $2 million at the first mediation between the parties, before any depositions were taken or binding arbitration sessions started. The District received a net payout of over $1.8 million after paying outside legal fees. The District also filed
a State Bar complaint against the firm.
“This law firm charged our district more than $1.3 million in legal fees in a case that resulted in a huge judgment against us,” said Marcos Diaz, President of the San Ysidro School District Board. “The law firm settled with us for their entire malpractice insurance limit before we were able to hold a single deposition of the partners,” Mr. Diaz added.
The Stutz Artiano law firm has also faced criticism in San Ysidro for its handling of a payout to Superintendent Manual Paul. Mr. Paul was indicted in January 2013 in a wide-ranging corruption scandal that included San Ysidro School Board Member Yolanda Hernandez and 11 others connected with Sweetwater Union High School District. The San Ysidro district suspended Mr. Paul and later voted to buy out his contract. Daniel Shinoff, the senior partner of the Stutz law firm, handled the buyout negotiations which netted Mr. Paul over $220,000. Earlier this year, the District filed a lawsuit against Mr. Paul to recover the payout claiming it was negotiated in bad faith and was an illegal use of public funds.
Now the law firm is facing pushback in other districts.
Last weekend, in a rare Sunday school board meeting, the Poway Unified School District board voted to hire an outside lawyer to help negotiate a resolution between the District and its embattled Superintendent, John Collins. The district chose not to use its current lawyers from the Stutz Artiano firm. Mr. Collins has also hired his own lawyers. The Superintendent’s contract calls for a buyout payment of 18 months’ salary if he is let go, amounting to an approximately $600,000 severance payment.
The Poway district selected special counsel Maribel Medina, a Los Angeles-based lawyer with previous experience representing the Los Angeles and San Francisco school districts, to handle the negotiations relative to the Superintendent’s contract.
In March of this year, in response to the San Ysidro School District malpractice lawsuit, the San Diego County Office of Education suspended the Stutz Artiano law firm from County cases. For many years, the law firm handled the vast majority of cases administered by the County Office of Education.
During the past three years, the Stutz firm received more than $4.6 million in legal work from the County Office of Education.
At the time of the suspension in March 2015, Ms. Music Watson, a spokesperson for the County Office of Education stated that “staff felt it best to suspend assignment of new lawsuits to the Stutz firm until the malpractice suit and bar complaint are resolved.”
In an email to Daniel Shinoff that same day, Diane Crosier, the executive director for the legal team of the Office of Education, wrote “Due to the severity of the allegations we feel it is in the best interest of our members to suspend any new assignments until the lawsuit and bar complaint are resolved.”
But the suspension didn’t last long. Only a few weeks after the suspension, the Stutz Artiano firm was reassigned to cases from the Office of Education even though the San Ysidro malpractice case and the State Bar complaint were still pending. The County claimed it had investigated the allegations and felt comfortable returning the firm to work, however, no member of the San Ysidro School Board nor the Superintendent was ever contacted by the County in connection with that investigation.
Many critics have long complained about the cozy relationship between Daniel Shinoff and Diane Crosier. In the 1970s, both Mr. Shinoff and Ms. Crosier worked for an outside insurance company that handled school district claims. Mr. Shinoff later became a lawyer and joined what would become the Stutz Artiano firm, and he continued to receive school district cases from Ms. Crosier. A few years later,
Ms. Crosier herself became a lawyer and joined the Stutz firm.
In 1996, when the County Office of Education created the Risk Management Joint Powers Authority (JPA), Mr. Shinoff was instrumental in Diane Crosier’s hiring as the JPA’s Executive Director. Ms. Crosier administers over $42 million per year in insurance claims. Over the past few years, the Stutz firm has received over 70% of the legal work even though the agency claims cases are assigned on a rotating basis.
In the past two years, the Stutz firm has lost several high profile and costly cases for local school districts, yet it continues to receive cases from the JPA.
In February 2014, the San Ysidro School District was hit with a $12 million jury verdict in a breach of contract case. The District paid Stutz law firm over $1.3 million in legal fees, and also incurred $1.6 million in the other party’s legal fees. Board members have claimed the lawyers assured them before trial the case was winnable. Mr. Shinoff made statements to the media before trial that the case was “baseless and meritless”. That case was the basis for the District’s malpractice case against the Stutz firm.
In August 2014, the Solana Beach school district lost a 7-year case involving the special education needs of a 3 year-old girl. The district lost before an administrative law judge, in federal court, at the 9th Circuit Court of Appeals, and was rejected by the Supreme Court before the district finally paid $585,000 to the girl’s family on top of nearly $1,000,000 in the district’s own legal fees. The case started over the district’s refusal to reimburse the family for $6,100 in tuition fees for the student. Critics agree the case was wasteful when facing such a small initial claim amount.
In September 2014, the Sweetwater Union High School District lost a 7-year case involving girls’ sports funding under Title IX. The district fought in federal court, lost on appeal, and sought a hearing before the US Supreme Court. In the end, the district paid nearly $1,000,000 in legal fees and costs. The district has since spent more than $1.5 million to upgrade sports facilities for girls’ sports.
In February 2015, Elaine Allyn won a unanimous jury verdict of $1.2 million against the Fallbrook School District in a wrongful termination case. Ms. Allyn, the district’s former IT director, claimed wrongful termination, retaliation, and a lack of a proper investigation into her claims. Ms. Allyn’s lawyers claim Mr. Shinoff refused to discuss possible settlements during the lead-up to trial then he caused a mistrial by overextending the trial length beyond the jury’s availability.
In the midst of this turmoil, however, the Stutz firm continues looking for new clients.
Last week, the California School Board Association held its Annual Education Conference in San Diego. Over 3,000 school board members from throughout the state participated in the conference to attend workshops on education issues, network with colleagues, and gain insight into upcoming trends. Another aspect of the conference is a trade show where over 200 firms including construction companies, IT providers, and others pay for booth spaces to promote their services to prospective school district clients.
There among the many vendors was a booth for the Stutz Artiano, Shinoff & Holtz law firm. Working the booth were two veteran lawyers for the firm, Gil Abed and Arthur Palkowitz. Mr. Palkowitz is himself a former school board member, having served for 8 years on the Solana Beach School District.
In August 2014, it was revealed Mr. Palkowitz was an employee of the Stutz firm while serving on the school board but failed to report his income on state financial disclosure forms as required by law. The firm was being paid for legal work by that district during the time Mr. Palkowitz was on its board and working for the firm. After the media reported his failure to properly report his income, Mr. Palkowitz chose not to seek re-election to the school board in November 2014. The California Fair Political Practices Commission later fined Mr. Palkowitz $5,000 for his failure to properly report his income.
Other school districts are now reviewing their past cases involving the Stutz firm. School officials from three local districts confirm they are looking at legal cases where they were billed hundred of thousands of dollars and may have received bad legal advice to pursue those cases.
The State Bar complaint filed by the San Ysidro School District is still being investigated.