Garamendi's 'Best Legal Team' Proved Its Worth

When state Insurance Commissioner John Garamendi hired Michael J. Strumwasser and Fredric D. Woocher to help him implement and defend Proposition 103, he called them "the best legal team in America for full implementation of Proposition 103."

More than 3½ years later, Garamendi's trust in the two lawyers was validated when a unanimous California Supreme Court last month upheld the commissioner's right to issue rebate regulations, the regulations themselves and the formula used to decide how much each insurer owes. 20th Century Insurance Co. v. Garamendi, 94 Daily Journal D.A.R. 11530.

“I don’t think we doubted we were right,” Strumwasser said. “We became increasingly doubtful the courts would get it right.”

“To actually understand the points and rationale behind it, to say in fact it was the most reasonable way to do it was reassuring,” Woocher said.

At a news conference the day of the Supreme Court ruling, Garamendi praised the lawyers, describing them as “very much an inside player in this game.”

Helped in Drafting Details

The insurance commissioner said the two lawyers “have not only carried the major fight in the courts but helped in the drafting of the many details that went into it.”

Garamendi’s comments reflect similar sentiments he expressed when he was inaugurated in January 1991, saying, “I want to make sure Proposition 103 becomes real. Fred and Michael are the best team in America for full implementation of Proposition 103.”

Garamendi was on vacation this week and could not be reached for comment. But Bill Ahern, the deputy commissioner for rate regulation, said the lawyers have “tremendous energy and tremendous legal persuasiveness.”

“They really helped the commissioner very forcefully set the tone, not just the legal path, but the tone and policy direction,” Ahern said.

Steven Miller, Ahern’s predecessor, said the Supreme Court’s decision shows the qualitative difference between the work of two lawyers on one side of an issue and dozens on the other side.

“When you compare resources, it reveals that raw intelligence and tenacity can overcome the quantity of labor on the other side,” Miller said.

And Harvey Rosenfield, the lawyer who wrote Proposition 103, said of Woocher and Strumwasser, “give these two guys a slingshot and they can fell any giant, as they have proven,.”

Since Los Angeles Superior Court Judge Dzintra I. Janavs in February 1993 ruled Garamendi had limited authority and invalidated his rebate regulations, Woocher and Strumwasser were under “intense political and legal pressure,” Rosenfield said.

“So the [Supreme] Court’s decision is not only a vindication of Proposition 103 and of the insurance commissioner, but of Michael Strumwasser and Fred Woocher,” Rosenfield said.

Strumwasser, 48, and Woocher, 43, started their Santa Monica-based firm with only one person in the office to help out: Harumi Shintani, the office manager who did everything from answer phones to establish an accounting system. Strumwasser & Woocher opened its doors in January 1991 just before Garamendi took office as the state’s first elected insurance commissioner. In fact, Garamendi was the firm’s first client.

Woocher, who received his law degree from Stanford University in 1978 after receiving a Ph.D. in cognitive psychology the previous year, worked as special counsel to former Attorney General John Van de Kamp from September 1988 until January 1991.

Woocher’s work at the attorney general’s office included supervising all judicial and administrative proceedings regarding the implementation of Proposition 103. He also wrote Proposition 131, the clean government initiative defeated by voters in November 1990.

Woocher served from February 1988 to June 1988 as the communications director and legal counsel to the campaign involving Proposition 68, the initiative passed by voters in June 1988 involving campaign spending limits.

He worked as a staff attorney at the Center for Law in the Public Interest in Los Angeles from July 1981 to September 1988. Woocher also served as a law clerk from 1979 to 1980 to then-U.S. Supreme Court Justice William J. Brennan Jr.

Strumwasser received his law degree in 1973 from the University of California, Los Angeles, and subsequently joined the attorney general’s office as a deputy attorney general, a position he held until 1983. In that position, he was involved in various areas of law, including environmental protection, antitrust and energy regulation.

Strumwasser became special counsel to Van de Kamp in January 1983, and served in that capacity until January 1991. Aside from working on Proposition 103, he supervised and handled litigation involving antitrust, environment/energy and public utility regulation issues.

The attorneys each worked seven days a week and more than 300 hours a month when the firm started up, they said. Woocher added that although they expected the insurance industry to be litigious, they underestimated the number and diversity of lawsuits that would be filed to block implementation of Proposition 103.

Their efficiency increased over time when they had to respond to issues they had addressed in earlier cases, they said.

And, in July 1992, they had to move into a bigger office suite just to accommodate all of the files they had. The firm has doubled in size since it began. Susan Durbin was hired in December 1991 to handle primarily environmental litigation, and Raleigh H. Levine joined the firm this past year as a public interest fellow. Susan L. Goodkin is of counsel and early on helped write briefs for the Proposition 103 litigation.

Almost every argument Woocher and Strumwasser made about Proposition 103 was endorsed in the Supreme Court’s opinion issued Aug. 18. The court found that Garamendi has the authority to issue rebate regulations and that the 10 percent profit level he established for insurers is valid. Justice Stanley Mosk, in a 139-page opinion, gave detailed reasoning for upholding various aspects of Garamendi’s authority and decisions the commissioner has made.

“I was most gratified ... to see the Supreme Court list facts we listed in cross-examination and draw the conclusions we sought to have the courts draw from our cross-examination,” Strumwasser said.

The two attorneys were the primary drafters of Garamendi’s rebate regulations. Strumwasser said the Garamendi regulations had the same basic structure as ones the two had drafted when they worked as special counsel to Van de Kamp when he was attorney general. The regulations from the attorney general’s office were rejected by then-Insurance Commissioner Roxani Gillespie.

Woocher said one stumbling block they didn’t expect was the department’s problems with the Office of Administrative Law, which reviews and approves regulations drafted by administrative agencies. The OAL twice rejected Garamendi’s regulations, and the commissioner had to turn to Gov. Pete Wilson to overturn the OAL’s decision. When the OAL rejected the regulations a third time, Wilson refused to overturn the ruling, saying a court needed to determine what was proper. In its decision, the Supreme Court agreed with Garamendi that he didn’t need OAL’s approval for his regulations.

Strumwasser and Woocher also said they didn’t expect it would take more than 3½ years to get a Supreme Court ruling on rollbacks, but they did expect insurers to file challenges each step of the way toward implementing the initiative.

“I think the insurers believed they could neuter Proposition 103,” Strumwasser said. “What we did really was to introduce a wholly different approach to rate regulation – explicit general principles adopted by regulation and a firm recognition that not every question is unique to that company and were industry-wide issues. It sounds simple, but in the world of insurance regulations, that’s heresy.”

Despite the barrage of litigation, Woocher said the working relationships with opposing counsel were friendly. “I think on any number of occasions they said ‘We think you’re crazy, you’re wrong, but you are worthy adversaries,’” Woocher said.

The lawyers’ adversaries expressed similar sentiments. “I think they’re both great lawyers,” said Gary Fontana, who represents 20th Century Insurance Co. and is a partner at Thelen, Marrin, Johnson & Bridges in San Francisco.

“I think they’ve done a great job with a tough subject,” he said. “They are head and shoulders above most of the government lawyers we do business with.”

Fontana added that his client probably won’t decide for at least 30 days whether to ask the U.S. Supreme Court to review the 20th Century decision. But he said he does believe there are federal constitutional issues that could be appealed to the nation’s highest court.

Paul Alexander, who represents State Farm, said his opposing counsel are easy to work with.

“I find Michael and Fred to be first-rate advocates,” said Alexander, of Heller, Ehrman, White & McAuliffe in Palo Alto. “I absolutely enjoy working against them because they are always a challenge.”

Alexander’s client is the company Garamendi said is his first target for rebates. When State Farm was called to a hearing before court challenges, it was told it owed more than $250 million in rebates.

Steven H. Weinstein, who represents numerous insurers, including SAFECO, said his opponents “are both excellent and very competent lawyers.”

“They had an objective from the time they came aboard [for Garamendi,]” Weinstein said. “… At least for the moment, they have achieved their goal. It’s uncertain whether the final chapter has been written yet.”

Although Proposition 103 has kept Woocher and Strumwasser busy, they have expanded their practice to handle other kinds of litigation, including election contests, environmental issues and defending the City of Los Angeles’ smoking ban.

“If there is a thread that runs through all of the work that we do, it is complex analytical problems … with difficult technical issues that need to be expressed clearly for lay courts,” Strumwasser said.

Woocher and Strumwasser said they don’t see their firm growing to a total of more than 10 lawyers, but they are glad they aren’t on their own anymore.

“As enjoyable as it was,” Woocher said, “I don’t ever want to be in a position [again] where it is the two of us against the world.”