Huge Legal Fee Voided in Smog Case

SACRAMENTO — A judge reversed the fortunes of five law firms Friday, issuing a final order eliminating the entire $88.5-million award they won earlier this year for their role in overturning a smog fee imposed on people who registered out-of-state cars in California.

Gov. Gray Davis hailed the decision by Superior Court Judge Joe Gray, saying the award was “a total rip-off, a gift of public funds.”

“I’m thrilled,” the governor said. “Right now, the attorneys have nothing.”

William Dato, a partner with Milberg, Weiss, Bershad, Hynes & Lerach, which stood to get 40% of the award, declined to comment.

Davis signed legislation last year turning the issue of attorneys’ fees over to a panel of private arbiters, who met in secret and issued a confidential decision. After the size of the award was revealed, Davis condemned it and pushed for an appeal.

The lawyers sued over a fee charged to register out-of-state vehicles in the 1990s. After an appellate court struck down the fee in 1999, Davis dropped the appeal. He later signed a bill offering full refunds.

The fund amounted to $665 million. The legislation signed by Davis included a provision that the attorneys fee would be decided in arbitration behind closed doors, rather than in a traditional open court proceeding.