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Jewish Journal

Shangri-La lawyers ready for another day in court

by Jonah Lowenfeld

September 3, 2014 | 2:28 pm

<em>The Santa Monica Hotel Shangri-La was the venue for a party at the center of the dispute.</em><br />

The Santa Monica Hotel Shangri-La was the venue for a party at the center of the dispute.

Four years after a group of Jewish partygoers accused a hotel owner of anti-Semitic discrimination — and two years after a jury found in favor of the group — the case is about to return to court. 

Did Hotel Shangri-La owner Tehmina Adaya, on July 11, 2010, instruct her staff to “systematically — and successfully — shut down” a party organized by a group of young supporters of the Friends of the Israel Defense Forces (FIDF), despite the event’s having been prearranged to take place on the hotel’s pool deck? Or was she simply enforcing the hotel’s “policies and procedures … that members of the FIDF violated”?

The poolside, where the party took place.

Were the hotel staff’s actions that day — removing the banners, tables and towels that had been arranged for the partygoers’ use and instructing the FIDF supporters to stop collecting donations, to remove their commemorative T-shirts and to stay out of the pool — intended to cause “severe emotional distress” to the partygoers? Or was Adaya acting within her rights in shutting down a party that had been organized by a promoter and authorized by an onsite vendor — but apparently had never been approved by the hotel’s staff?

And did she actually say — as one former employee testified — “I don’t want any f---ing Jews in the pool,” or didn’t she?

These questions were at the heart of the 2012 case, the outcome of which was a jury ordering Adaya and the Santa Monica boutique hotel owned by her family to pay approximately $3.7 million to the plaintiffs and their lawyers— the only court-confirmed case in recent memory of discrimination against Jews in the United States.

But this fall, likely in September or October, when oral arguments take place in the California Courts of Appeal, those same questions are not expected to be the focus of the arguments presented by Adaya’s new legal team, from the highly esteemed firm of Gibson, Dunn & Crutcher. 

“The court’s limited in an appeal as to what they can actually review,” said Jason C. Dineros, an attorney at Gilbert, Kelly, Crowley & Jennett, and an adjunct faculty member to the Collins College of Hospitality Management at Cal Poly Pomona in hospitality law and labor law in the hospitality industry. “The court can’t review the facts again. If the jury determined — as a matter of fact — that the racial slurs or racial remarks were directed at the plaintiffs, the appellate court cannot overrule that.” 

Based on the verdict, it would seem that the jury did not believe Adaya when, testifying at trial, she denied having made the remarks. Instead, it appears the jury relied upon the testimony of the one person who claimed to have heard Adaya’s comment directly — despite his not having appeared in court in 2012. That lone witness, Nathan Codrey, was a food and beverage manager at the hotel that day, and was fired shortly after the incident, in 2010. Codrey’s earlier sworn deposition was read into the record for the jury. (See sidebar) 

Rather than rehash the ground covered in the first trial, Marcellus McRae and his colleagues from Gibson Dunn — the fourth set of lawyers to represent Adaya and the hotel since the plaintiffs filed their complaint in 2010 — are challenging what they call errors in law made by the court and internal inconsistencies in the jury’s verdict. Among the key assertions made by the appellants: 

Nobody other than Codrey claimed to have heard Adaya herself make the “f---ing Jews” remark; therefore, it is impossible for Adaya and the hotel to have intentionally inflicted emotional distress upon the plaintiffs with her words. 

Moreover, by allowing other witnesses to testify to having heard Adaya’s words relayed to them by Codrey — or by a person who had heard the secondhand report from Codrey — the trial court “manifestly abused its discretion” by “allowing into evidence double and triple hearsay statements.” 

Adaya and the Shangri-La cannot be held accountable under the Unruh Civil Rights Act for their actions because they acted in the service of legitimate business purpose, and nothing that the plaintiffs presented to the trial court demonstrated that they acted with discriminatory intent.

The jury found that Adaya and the hotel inflicted emotional distress on the plaintiffs both intentionally and negligently, through the same set of actions — which is legally impossible. 

Dineros said this last argument is particularly interesting. 

“What the appellants creatively did was look at the inconsistency of the verdicts,” he said, “and the fact that the jury found both an intentional and a negligent element appears contradictory in itself.”

Despite numerous inquiries, the lawyers from Gibson Dunn declined to respond to questions for this article. In a statement sent to the Journal, McRae said that Adaya and Indus Investments, the parent company that owns the Shangri-La, are appealing the judgments and awards of the trial court based on “an array of legal and evidentiary challenges” set out in the brief. 

Jim Turken and his colleagues from Dickstein Shapiro, the law firm that has represented the plaintiffs — who are now called respondents — since the start of this case, rejected the appellants’ arguments. In their response brief, they write that almost every issue raised by the appellants — from their questions about what Adaya did or did not say to arguments about whether the hotel actually had policies and practices and whether it enforced them in a nondiscriminatory fashion in July 2010 — are “questions of fact for the jury,” and should not be subjected again to a court’s scrutiny. 

“As the evidence established, and the jury found, there were no such policies and practices,” the lawyers wrote in their brief filed in March 2014, “and, in any event, the purported policies were never enforced until after Adaya found out there were Jews attending a Jewish event.”

It’s hard to overstate just how atypical the path through the legal system has been for this controversial and closely watched case. For one, most cases like this never make it to trial, let alone get heard by a jury. And according to attorneys, pretrial settlements are particularly common in discrimination cases, as they typically pit cash-poor individuals against a business that would rather pay a lump sum than risk damage to its reputation. 

Yet this case, officially known as Paletz et al. v. Adaya et al., went all the way to trial, and it ended with Adaya and the Shangri-La being ordered by the jury to pay $1.6 million in damages to the plaintiffs and $2.1 million in fees to the plaintiffs’ lawyers. Now Adaya and the Shangri-La are about to go to a higher court, something that only 3 percent of the losing parties in big-ticket civil cases (involving damages of $25,000 or more) attempted during the 2011-12 year, which is the most recent one for which data is available. And they’re doing so in the hopes that theirs won’t be among the vast majority of those cases upheld on appeal. (In the 2011-12 fiscal year, the higher court upheld 87 percent of lower court rulings.) 

The length and litigious intensity of this fight has to be chalked up, at least in part, to the inherent ambiguities involved in what happened on July 11, 2010, which were subjected to significant scrutiny during the initial trial. 

It’s also worth noting that this fight almost certainly would never have gone this far without the two sides being able to marshal remarkable legal firepower. 

For Adaya and the Shangri-La, bringing in McRae, an accomplished litigator (who is Jewish and black), hints at the significant funds she and her family have at their disposal. (Adaya and the hotel reportedly used attorneys provided by the hotel’s insurer for the initial trial, a decision that Adaya came to regret. If the brief from the respondents is any indication, there are at least half a dozen different points on which the strategy pursued by the trial lawyers was defective in ways that may make their appeal more difficult.) 

And for the respondents, their ability to pursue this case (and to defend it on appeal) is entirely due to Turken’s willingness to invest more than 4,500 hours of staff time on a case and a cause in which he wholeheartedly believes. A member of Sinai Temple in Westwood, Turken is a managing partner of Dickstein Shapiro, runs the firm’s California offices and has spent more than 450 hours of his own time on this case. Had the firm lost, it would not have received compensation for that time. But for attorneys who successfully prove that their clients were discriminated against, the Unruh Civil Rights Act provides for the payment of fees. The trial court awarded Turken and his firm a whopping $2.1 million — an award that, like the award to the plaintiffs, is currently being held in escrow, pending the decision on this appeal. 

To McRae and his associates, that bill looks inflated. According to their brief, Turken and his associates ran up the tab unnecessarily by assigning multiple attorneys to conduct certain trial-related tasks. What’s more, they also structured their sizable bill in a way that made it impossible for the trial court judge to determine which tasks the defendants should be on the hook for (i.e. the ones related to the Unruh Act claims) and which they should not have to pay for (everything else). 

Consider one day in the working life of Amy Rubinfeld, a partner at Dickstein Shapiro who clocked 1,435 hours on the case, more than any other member of the legal team. According to the firm’s billing, Rubinfeld spent most of Aug. 3, 2011, working on the case — making a phone call to one of the plaintiffs, exchanging emails with others, paying “further attention” to scheduling mediation, and attending a “meeting with N. Codrey in connection with upcoming deposition[.]” Rubinfeld billed 5.10 hours that day — total cost $3,111.00. Some sizable chunk of that time must have been spent with Codrey, as Turken also billed for that time — itemizing it as 2.50 hours to “meet with Nathan Codrey and A. Rubinfeld in downtown Los Angeles concerning his deposition.” 

If the judge’s award of fees to Dickstein Shapiro is allowed to stand, that meeting — a lengthy lunch that took place at The Palm restaurant — will cost Adaya and the hotel $3,200. 

And McRae, in his appeal brief, positively bristled at his clients being forced to pay for the time Turken spent speaking about the case with reporters. In the weeks before the start of the jury trial, multiple members of Turken’s team worked with the Los Angeles Times on a story that appeared in the paper before the trial. Because Dickstein Shapiro used a “block billing” method on its invoice that only subdivides tasks on a daily basis, it’s impossible to say how much time Turken spent on July 18, 2012, on “telephone calls with the L.A. Times,” nor can it be determined from the bill how many minutes or hours Rubinfeld spent the next day sitting in on an interview with the same reporter. On July 21, Rubinfeld billed for “review[ing] e-mails with L.A. Times reporter,” and when the article came out on July 22, Fawn Schanz, an associate in the business litigation department, billed for what she described as “review L.A. Times article regarding case and forward to team.” 

“Media relations work is not ‘reasonably necessary to the conduct of the litigation,’ nor is $15,525 (at least 23 hours of fees at the average rate of $675 per hour) for non-legal work reasonable,” the appellants’ lawyers write in their appeal brief. 

But in spending his time speaking to the media, Turken appears to have been following a playbook well-known to many attorneys who bring discrimination lawsuits: Show the defendants the kind of bad press they’ll face if they lose and thereby persuade them to agree to a favorable settlement. 

For Turken, the opinions of Adaya’s attorneys about his fees are not significant. 

“Their problem is that a judge looked at everything and determined that the defendants should pay for the time,” Turken told the Journal earlier this year. 

In the lead-up to and the aftermath of the first trial, the reaction of local and national Jewish defense groups to the case has been notably muted. The groups that are most vocal on issues of anti-Semitism all but avoided involving themselves in the situation. 

When asked about their hands-off approach, leaders from the Simon Wiesenthal Center and the Los Angeles chapter of the Anti-Defamation League (ADL) simply said they hadn’t been asked to do anything — not by the plaintiffs, nor by anyone else. 

And ADL Regional Director Amanda Susskind said in a recent interview that once a case goes into litigation, the ADL typically leaves it to the lawyers. 

“We don’t comment on cases; we don’t get involved,” Susskind said. “But we’re interested. We’re following it.”

Even the hardline Zionist Organization of America (ZOA) — which planned a public protest outside the hotel in the wake of the verdict — quickly backed off after Adaya made donations to two pro-Israel charities and offered the group the chance to hold a party at the hotel, free of charge. At that party, a Purim-themed festival at which prominent anti-Islam activist Pamela Geller received an award, one ZOA national board member told a reporter he had come to doubt the accuracy of the jury’s verdict against the Shangri-La. 

Whether the appellate court judges share that doubt will soon become clear. During the as-yet-unscheduled oral arguments, which are expected to last between just 20 and 30 minutes, the questions the three judges ask may offer insight as to which direction they’re leaning. The final decision will be rendered within a few months of the oral arguments. 

Further, the appellate judges will have just three choices for their ruling: to uphold or strike down the lower court’s verdict (either wholly or in part), or to send the case back for a retrial. No matter which they choose, Paletz et al. v. Adaya et al. will still stand out as one of the most unusual discrimination cases brought in recent years. After all, it’s very rare to hear allegations in court of anti-Semitic discrimination against Jews in a place of public accommodation in 21st-century America. 

“I can’t even remember a case that I’ve heard of in the last decades, really,” David Bernstein, a law professor at George Mason University, said. “It’s certainly uncommon to have an actual public accommodation — not a private club or a country club or something like that — an actual hotel or restaurant that says, ‘We don’t want Jews here.’ I’m not saying it never, ever happens. It’s very, very unusual.” 

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