Can a Small Estate be Handled Without Probate?

Muhammad Ali travels to Vietnam with Albro Lundy

Can a Small Estate be Handled Without Probate?

By Brad N. Baker

Not all estates without a Trust or Will have to be probated even if the decedent did no planning whatsoever; however, the larger the dollar sums in the estate, the less likely that probate can be avoided. California has a statute on the books that allows up to $150,000 to be transferred without probate after a person dies.

How do I know if my estate qualifies to transfer assets without probate?

In computing the dollar amount to see if you qualify for this statute, there are certain assets that are NOT, counted.  California Probate Code Section 13050 sets forth the exhaustive list, but they are basically as follows:

1.  Any assets that are held in joint tenancy with a person who survived the Decedent even if the surviving joint tenant did not contribute to the jointly held asset.

2.  Any vehicles with title in the name of the Decedent.

3.  Any boats held in the name of the Decedent (yes even multi-million-dollar yachts are not counted towards the $150,000 limit!) .

4.  Any mobile home, manufactured home, truck camper, and, drummmm rolllll, any floating home held in the Decedent’s name.

5.  Any payable on death accounts (POD accounts), assets held “as trustee for” (ATF accounts), or assets that have a named beneficiary, such as life insurance, annuities, IRAs, and 401(k)s.

If you are under the $150,000 limit after excluding all of the above items from the computation, then a couple of hurdles must still be cleared to be able to use the affidavit/declaration process that is set forth in Probate Code Section 13101.

What are the steps to transferring assets without probate, if I qualify?

1.  At least 40 days must have elapsed since the Decedent died.

2.  No probate proceeding is open or has been opened for the Decedent.

3.  Oh yeah, you have to be entitled to the asset being transferred by way of the 13101 Affidavit.  (Sometimes this is a little tricky, so check with a lawyer to make sure that the correct people are signing the declaration to get the transferred property.)  California Probate Code Section 13006 (just Google it!) sets forth who are the “Successors” of the Decedent.

4.  You will need a certified copy of the Decedent’s death certificate for each transfer requested. All individual(s) or trustee(s) entitled to the asset must sign the declaration and have the signature(s) notarized.  (Yes, the trustee named in a Pour-Over Will would be the Successor, not the ultimate beneficiaries of the Trust.)

Can I transfer assets by myself?

Many people find that although the above can be accomplished on their own, the 13101 declarations seem to work better in the world of finance when an attorney’s letter attaches the declaration when it is mailed or delivered to the institution holding the Decedent’s asset.  (I believe that the holder of the asset has a better level of comfort that they are turning over the asset to the correct person(s) when an attorney’s letter goes with the declaration.)

Should I get Durable Powers of Attorney even if I don’t have a Will?

So, do we really need to plan if this nifty procedure exists?  If you promise to die quickly once you lose capacity, then you are pretty safe if you are within the statutory limits. However, if no planning whatsoever is done, and you don’t die quickly, then we could be in a conservatorship situation because no one has access to the accounts until 40 days after the Decedent “dies”.  See the gap?  It doesn’t work for incapacitated situations.  So it is recommended that you still get Durable Powers of Attorney in place, one for Asset Management, and another for Medical Decisions, even if you don’t do a Living Trust or a Will.

Please Note: This document does not constitute legal advice. Please consult an attorney for legal advice on what to do in a particular situation.

Albro Lundy III attorney
Brad N. Baker

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Thanksgiving Reflections

Hermosa Beach in Fall

Thanksgiving Reflections

By Brad N. Baker

Although the challenges in our lives seem to be headed our way with increasing speed, the blessings that we are given far exceed the challenges when a moment is taken to reflect.

The amount of information that is available to all of us is truly staggering compared to years past.  We are now able to empathize with people from the four corners of the globe when tragedy strikes. We almost instantly now know of matters that just ten years ago would have gone unreported to us, and thus unnoticed.

How do we survive the onslaught of information and maintain the inner peace that we all strive to attain?  Counting our blessings each and every day, not just on Thanksgiving, is one path that can provide some perspective and help calm the soul.

The ability to turn on the tap and have safe drinking water is something that I just take for granted (even in the midst of drought) until I actually think about it; flipping a switch and getting electricity; walking into a grocery store and having 10,000 choices for food; hopping into our car and driving up to the pump to get gas; having well-trained doctors and nurses and emergency response teams at our disposal; charitable organizations that provide temporary safety nets for us all and reach out to provide help to those less fortunate…

The list is really limitless when blessings are recognized.

The blessing of health is the one that seems to be overlooked the most until we are robbed of the feeling of wellness.  To receive the love of another, and to be able to love someone are more of the blessings that get overlooked.

The challenges are there, to be sure.  However, the tremendous blessings that surround us will hopefully help us gain perspective and help us survive the challenges.

We are all in this together which is actually another blessing that often goes unrecognized.  Despite our differences, there are actually many many more common bonds that we share that will allow us to work together when the going gets tough.

We at the law offices of Baker, Burton & Lundy wish all of you inner peace this Thanksgiving Holiday and thank each and every one of you who add to the blessings that surround us.

News on Portability for Estate Planning

News on Portability for Estate Planning

Learn About New Legal Changes Regarding Portability and How to Maximize Basis Step-up

Recent estate law changes have created new opportunities for people with less than $10 million in assets to reduce future income taxes for their beneficiaries.
Brad N. Baker, senior estate planning attorney at Baker, Burton & Lundy, describes what basis is and how the new opportunities with Portability might affect you. After watching these videos, please call our office to schedule a meeting if you feel your estate can take advantage of considering these new legal developments.

Learn about Establishing Basis for Estate Taxes

Learn About the Changes in Portability Law

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To learn more about how Baker, Burton & Lundy’s experienced attorneys can represent or advise you, please call (310) 376-9893 or fill out the form below.

Baker, Burton & Lundy Law Firm Presents $93,000 Cy Pres Donation

Baker, Burton & Bundy law firm presents $93,000 cy pres donation from major energy cases to the Legal Aid Society of San Diego

Baker, Burton & Lundy Law Firm Presents $93,000 cy pres Donation From Major Energy Cases to the Legal Aid Society of San Diego

On Friday, May 16, 2014 Brad N. Baker, partner at the Law Offices of Baker, Burton & Lundy, presented a donation of $93,940 from the Anti-trust Natural Gas Settlement to the Legal Aid Society of San Diego thus completing a 14 year journey.  Presented on the steps of the San Diego Superior Court at where the case was heard, this donation is the final act in the largest energy case in the history of California, which resulted in settlements and benefits of over $4 billion to California consumers and businesses.

This cy pres donation was the final money left from the class action settlements administered efficiently by Epiq Class Actions & Claims Solutions of Portland, Oregon.  Baker, Burton & Lundy directed the donation of the final settlement dollars to the Legal Aid Society of San Diego since the case was heard in the San Diego Superior Court by the Honorable Ronald S. Prager, who both sides thought did a magnificent job.

Gregory Knoll, director of the Legal Aid Society of San Diego, said “There is nothing better than a law firm that thinks about us at a cy pres award time, which is when the money left from class action suits that cannot be paid out gets designated.  I can’t thank Brad enough. We are thrilled that the entire private bar in San Diego and all California has looked out for us and when there is a remainder that they think of us.  This allows us to do things we could never do otherwise.”

The energy case began in 1999 when attorney Lance Astrella found evidence of a secret 1996 meeting in an Arizona hotel bedroom between high level officers from competing gas pipeline companies planning cessation of competition and the carving up of markets to take advantage of electric deregulation in California. The companies ultimately restricted the flow of natural gas into California and Nevada.  Astrella brought the evidence to Baker, Burton & Lundy and together they recruited and organized a team of top attorneys and experts to investigate.

In September 2000 they filed a lawsuit against El Paso, SoCalGas and SDG&E alleging market allocation and anti-trust violations only to watch the situation become catastrophic as California experienced the energy crisis of 2000 and 2001.  From the legal pressure El Paso settled early for $1.7 billion and in 2006 Sempra Energy settled in the midst of trial which provided billions of dollars of benefits for California businesses and consumers in lower rates as well as a restructuring of the natural gas storage process which eliminated the opportunity for future price manipulation.

Along with the prime mover, Lance Astrella, and Baker, Burton & Lundy, the high-powered consortium of attorneys included Tom Girardi of Girardi  Keese, Walter Lack, Paul Traina and Rahul Ravaputi of Engstrom, Lipscomb & Lack, Pierce O’Donnell and John Shaeffer, of O & S, Brian McMahon, and Ty Kelly with Bill Bernstein and Barry Himmelstein of LCHB, heading up a second team of attorneys on the Price Indexing cases for false reporting of trades.

On a personal note, presenting this donation to the Legal Aid Society has special meaning to Baker since he began his law career by volunteering at the Legal Aid Society in Venice, California.  “This completes a circle” said Baker who suffered a life-threatening illness on a trip to Europe after law school and pledged that if he survived, he would donate six months of his life to a special cause.

Upon his return, he chose the Legal Aid Society where he shared his new legal knowledge with the poor and indigent who normally had no access to legal help. He looks back on that time as not only an opportunity to help others but as an “excellent opportunity to hone my legal skills, very similar to medical students’ residency and internships.”

At the end of Baker’s six months of volunteering, 1,000 feet of office space became available below the Legal Aid Society.  Baker approached fellow UCLA law graduate Kent Burton about forming a partnership and the law firm Baker & Burton was formed in 1976, expanding to Baker, Burton & Lundy in 1997 with the addition of trial lawyer Albro Lundy as partner.  Baker indicates that he was blessed to get to work with such outstanding people in his 14 year energy case journey and knows that the blessings will continue to be paid forward by Gregory Knoll and the Legal Aid Society of San Diego.

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Giant Killers

Giant Killers, The Sequel, Part 1

Easy Reader, January 12, 2006

In December 2000 newspapers reported a 16-fold rise in gas prices at the California border. Energy companies blamed increased demand and a pipeline explosion but a legal team with their leaders in Hermosa didn’t buy the logic. Five years later they have won nearly $4 billion for energy consumers. Attorneys working out of a modest Hermosa Beach storefront have helped California consumers win a second billion dollar-plus settlement from a Fortune 500 energy company.

Three years ago the attorneys from the firm of Baker, Burton & Lundy were instrumental in a $1.7 billion settlement between California residents and El Paso Natural Gas. Last week the same attorneys signed off on a $2 billion settlement with San Diego-based Sempra Energy.

El Paso Gas and two California companies that later merged into Sempra were accused of illegally killing pipeline projects, artificially raising the price of natural gas coming into California, causing electricity prices to soar, and contributing to California’s energy crisis of 2000 and 2001.

Brad Baker of the Hermosa firm served as “head coach” of a team of lawyers from five firms, coordinating massive amounts of court filings and dozens of depositions in the U.S. and Canada, and leading successful courtroom battles against five separate motions for dismissal and 34 motions challenging evidence his attorneys were relying upon.

Partner Albro Lundy worked some of the depositions, prepared other attorneys for their courtroom arguments, and stood ready to question witnesses on the stand had the settlement not been reached. Partner Kent Burton provided consultation services to the team.

Lundy said many of challenges from Sempra lawyers could have sunk the consumers’ case.

“It was one major battle after another,” Lundy said. “Everything was on the edge. If we lost one of them we could have lost everything. But we won every single one of them.”

‘Brutal journey’

¨For four months down the homestretch Baker lived in a hotel next to the San Diego courthouse where the legal proceedings began and the lawsuit was eventually settled.

“When we started this journey we had as a goal that we wanted to change the way that business was conducted so that the Sempra entities could not do it to us again,” Baker said. “We think that we have accomplished this goal.”

Baker, 55, cannot yet fully decompress – the settlement now goes before state entities including the governor’s office, the attorney general’s office and the PUC.

“It’s been a long, brutal journey, and it’s not over yet,” he said.

Baker and the other attorneys on his side plan to request as much as $161 million in fees plus $9 million to cover out-of-pocket expenses. Baker said the fees paid to attorneys would probably be less than 10 percent of the amount they recovered for Californians.

Baker said about 15 attorneys spent most of their time on the case, including six who lived fulltime in San Diego. Their support staffs worked on the case as well.

Baker showered praise on Superior Court Judge Richard Haden, who presided over the case at its beginning, and Judge Ronald Prager, who took over after Haden retired and will maintain jurisdiction during the upcoming negotiations with the government entities.

But Baker saved his most lavish praise for the 12 jurors and eight alternates who spent more than two months in the box, paying close attention to the complicated arguments.

“Not one juror dropped out, not one juror was even five minutes late. They fought sickness – one man battled back spasms, he was practically dying, and he just fought through it. He was determined to see this through,” Baker said. “It really proved that the jury system works,” he said. “The average everyday person can make a difference.”

Bakers also believed the jury’s “attention and dedication” to the proceedings helped convince Sempra to settle. The Sempra attorneys might well have guessed that the jurors weren’t sticking it out through thick and thin “to validate their utility” in the end, Baker said.

Settlement praised

The settlement was hailed by Michael R. Peevey, president of the California Public Utilities Commission, who said it “will provide significant economic benefits to electric and natural gas consumers in California.”

Peevey said consumers will see lower electricity and gas costs as the Sempra companies – SoCalGas and San Diego Gas & Electric – pay $377 million over the next 10 years, provide discounts to Californians and restructure some aspects of their operations to save consumers money.

Sempra denied any wrongdoing as the settlement of the class-action lawsuit was announced.

“This agreement will put the major pieces of energy-crisis litigation behind us,” Sempra Chairman Stephen L. Baum said. “Above and beyond the costs to our company, this settlement will provide substantial benefits to millions of energy consumers in California and Nevada.”

Giant Killers, the sequel, Part II

How it began

The case against Sempra and El Paso began to unfold in 1999 when an attorney named Lance Astrella stumbled upon a hand-written note by a high-level executive telling of a hotel-room meeting in which, it appeared to Astrella, competing energy companies agreed to commit antitrust violations.

Astrella knew that a team of high-powered, specialist attorneys would be needed to pursue the matter. Bypassing armies of sleek-suited warrior in skyscraping Century City and downtown L.A. offices he tapped Baker, who holes up in the ground-scraping Pier Avenue storefront.

In a 2003 interview Astrella said the Hermosa attorneys were known and respected by their colleagues statewide, in part because they fielded sports teams that dominated countywide law firm competitions.

“Many of the top litigation firms knew Baker, Burton through our athletic teams,” agreed the 6-foot-2 Baker, once a hard-working guard on the University of California, Irvine basketball team.

“Litigators are warriors, competitors,” he said.

Baker took the lead role in building a lawyer team that included Tom Girardi and Walter Lack of Erin Brokovich fame. (In the Julia Roberts movie about the corporate whistle blower, Girardi and Lack appear as a composite character played by actor Peter Coyote.)
�The initial $1.7 settlement with El Paso Gas, negotiated by the team in 2003, ranked among the largest in California history. In the settlement El Paso Gas admitted to no wrongdoing.

California Senior Assistant Attorney General Tom Greene, head of the AG’s energy task force, said the antitrust settlement ranked second largest in California history. The largest, he said, came in a nationwide tobacco industry case that was settled in California for $26 billion payable over 20 years.

“Brad did good,” Greene said of Baker in 2003.

How it worked

¨The lawsuit contended that in September 1996 top executives of Southern California Gas Company, San Diego Gas & Electric and El Paso Gas met at the Embassy Suites Hotel near Sky Harbor Airport in Phoenix, Ariz., and illegally agreed to refrain from competing against each other in the natural gas delivery markets of Southern California and Baja California.

A hand-written agenda for the Phoenix meeting called for the 11 executives to discuss “opportunities resulting from electric industry restructuring,” referring to California’s electric industry deregulation that had become law just a month earlier, according to the lawsuit.

The lawsuit claimed that an agreement reached at the “secret Phoenix meeting” went this way:

  • Top officers of El Paso Gas agreed to kill pipeline projects by a company El Paso had purchased three months earlier, called Tenneco Energy. Tenneco had planned to use the pipelines to bring Canadian natural gas into Southern California and Baja, making it cheaper and more plentiful in those markets.
  • In exchange, Southern California Gas and San Diego Gas would agree not to compete with El Paso on a separate pipeline project to bring natural gas from Texas to a plant in Chihuahua, Mexico, even though SoCal Gas enjoyed “a tremendous cost advantage” over El Paso.

Within a month of the Phoenix meeting SoCal Gas announced that it would not compete for the Chihuahua pipeline, and two weeks later El Paso refunded money from companies that had paid to receive Canadian gas delivered through the now-dead Altamont pipeline, the lawsuit contended.

Electricity prices are tied to gas prices largely because gas is used to fire over half of California’s electric plants. In addition, when gas prices rise, the electric companies are allowed to charge more for all their power, including power generated by non-gas fired plants, the lawyers said.

So a spike in gas prices has “a multiplier effect” on the price of electricity, allowing power companies to make profits beyond offsetting their costs of buying more expensive gas, Baker said.

“The agreement eliminated potential price competition and allowed El Paso and SoCal Gas to retain their unchallenged market dominance,” the lawsuit claimed. SoCal and El Paso discussed a long-term plan to “link up supply, transportation, generation and sale of electricity” and to “think/plan position now to be ready when the opportunity comes,” the lawsuit contended, quoting from the alleged agenda.

Following the meeting El Paso Gas launched a “shopping spree” for electricity generating facilities serving California, to exploit its own advantages that had been created in the natural gas market, the lawsuit claimed.

In addition, the lawsuit contended, the companies agreed not to challenge each other’s mergers — El Paso earning regulatory approval to complete its purchase of Tenneco, while SoCal Gas and San Diego Gas merged to become Sempra Energy. In one instance of a possible merger challenge, the lawsuit claimed, San Diego Gas could have fought the El Paso-Tenneco deal, claiming that the killing of Tenneco’s California pipeline plan would prevent cheaper gas from reaching the San Diego area. San Diego Gas could have claimed that the merger would harm potential competitors of SoCal Gas, who would want to sell the cheaper natural gas to San Diego Gas, according to the lawsuit.

“The last thing that any of the coconspirators wanted was legitimate competition,” the lawsuit claimed.

“Soon after the meeting SoCal Gas and El Paso successfully implemented their plan to carve up the California and northern Mexico markets,” the lawsuit claimed. SoCal Gas was the sole bidder on the Baja pipeline, El Paso was the sole bidder on the Chihuahua pipeline, and SoCal Gas was protected from potential competition by El Paso’s ending of the pipeline projects that would have significantly lowered prices in Southern California, the lawsuit claimed.

Energy crisis

The lawsuit also claimed that the alleged collusion exacerbated the energy crisis at the turn of the decade by driving up the price of electricity in California, through an artificial hike in the price of natural gas coming into the state, caused by reducing the number of pipelines to carry the gas. “Southern California’s ‘energy crisis’ is not simply the result of ever-increasing demand for energy by a growing population,” the lawsuit claimed in December 2000. “Rather, it is the direct result of a conspiracy among the natural gas industry’s most powerful Southern California players to preserve and maintain the market dominance that they enjoyed for many years as monopolies subject to regulation.”

“Their unlawful collusion has contributed significantly to the recent astronomical increases in the price of gas and electricity,” the lawyers contended. “As a result Southern California customers have had and will have to pay billions of dollars extra for their natural gas and electric needs.”

In December 2000, newspapers reported a 16-fold rise in gas prices at the California border. Defenders of the rising prices said they were at least partly explained by colder weather, heavy gas use by California power plants and an explosion along an El Paso Gas pipeline that limited its flow.

According to the lawsuit, increases in the price of natural gas at the Arizona-California border well outpaced those throughout the rest of the country, going from $2.40 to $4.40 for a unit called an MMBtu over a one-year period ending in June 2000, then leaping to $25 per MMBtu during 2001.

In 2003 Greene said it was difficult to tell how much of the energy crisis could be blamed upon the alleged conspiracy of the energy companies.

“It affected the price of every kilowatt in California,” he said.

The simple life

Baker the weary warrior figures he can return to his quieter role as an estate-planning attorney about March.

“I’m looking forward to helping one client or one couple at a time instead of helping 14 to 30 million people at time,” he said.

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Baker’s Billions

Baker’s Billions, Part 1

By Robb Fulcher
Easy Reader, August 14, 2003

Attorney Lance Astrella was sitting in a Houston office sifting through about 40 boxes of documents in early 1999 when he stumbled upon conspiracy gold.

Among the piles of paperwork passing under his eyes was a hand-written note by a high-level executive telling of a hotel-room meeting in which, it appeared to Astrella, competing energy companies agreed to commit antitrust violations.

He couldn’t yet know that the note would lead to allegations that the firms illegally agreed to kill pipeline projects, artificially raising the price of natural gas coming into California, deliberately causing electricity prices to soar, and contributing to California’s energy crisis of 2000 and 2001. What Astrella did know right away is that high-powered, specialist attorneys would be needed to pursue the matter, so he rang up a Southern California lawyer with the wherewithal to round up such a team. He didn’t call a sleek-suited warrior in a skyscraping office in Century City or downtown Los Angeles. He called Brad Baker in the ground-scraping storefront of Baker, Burton & Lundy, on Pier Avenue in cozy Hermosa Beach.

From Hermosa, Baker put together a team of Erin Brokovich attorneys and others who would build the case—laughed off at first by many insiders—into a class-action antitrust lawsuit that has been tentatively settled by one of the energy companies for a dizzying $1.7 billion.

Settlement Among Highest

With a San Diego Superior Court judge’s preliminary seal of approval last Wednesday, the antitrust settlement ranks among the largest in California history, although it is expected to be appealed to a higher court. California Senior Assistant Attorney General Tom Greene, the settlement’s chief negotiator and head of the AG’s energy task force, said the antitrust settlement ranks as the second largest in California history. The largest, he said, came in a nationwide tobacco industry case that was settled in California for $26 billion payable over 20 years.

“Brad did good,” Greene said of Baker.

The company that agreed to settle, El Paso Natural Gas Corporation, has admitted no wrongdoing. But if the settlement survives its challenges, El Paso is expected to refund about 90 percent of the $1.7 billion to California’s private electricity and natural gas consumers, numerous city governments, and large industrial users of electricity and gas. A portion of the remainder, up to a maximum of $60 million, would be split among batteries of attorneys at 11 law firms. However, a legal challenge to the settlement could be mounted by any one of California’s 25 million ratepayers. If the settlement fails, the attorneys would get nothing.

“Almost every person in California has standing in this case,” Baker said. “Don’t you think at least one of them will appeal?” The settlement calls for El Paso Gas to pay out the $1.7 billion total over 15 years, Greene said. Part of the money is to be raised by the sale of El Paso stock, Baker said. Diane Pritchard, an attorney for El Paso Gas, declined comment on the lawsuit and its settlement.  “It’s a matter of policy that our firm does not comment on pending litigation,” Pritchard said. Phone calls to a second El Paso attorney were not returned.

Casting The Net

The lawsuit contends that in September 1996 top executives of Southern California Gas Company, San Diego Gas & Electric and the El Paso Gas met at the Embassy Suites Hotel near Sky Harbor Airport in Phoenix, Ariz., and illegally agreed to refrain from competing against each other in the natural gas delivery markets of Southern California and Baja California.

A hand-written agenda for the Phoenix meeting called for the 11 executives to discuss “opportunities resulting from electric industry restructuring,” referring to California’s electric industry deregulation that had become law just a month earlier, according to the lawsuit.

The lawsuit claims that an agreement reached at the “secret Phoenix meeting” went this way:

Top officers of El Paso Gas agreed to kill pipeline projects by a company El Paso had purchased three months earlier, called Tenneco Energy. Tenneco had planned to use the pipelines to bring Canadian natural gas into Southern California and Baja, making it cheaper and more plentiful in those markets.

In exchange, Southern California Gas and San Diego Gas would agree not to compete with El Paso on a separate pipeline project to bring natural gas from Texas to a plant in Chihuahua, Mexico, even though SoCal Gas enjoyed “a tremendous cost advantage” over El Paso.

Within a month of the Phoenix meeting SoCal Gas announced that it would not compete for the Chihuahua pipeline, and two weeks later El Paso refunded money from companies that had paid to receive Canadian gas delivered through the now-dead Altamont pipeline, the lawsuit contends.

Electricity prices are tied to gas prices largely because gas is used to fire over half of California’s electric plants. In addition, when gas prices rise, the electric companies are allowed to charge more for all their power, including power generated by non-gas fired plants, the lawyers said. So a spike in gas prices has “a multiplier effect” on the price of electricity, allowing power companies to make profits beyond offsetting their costs of buying more expensive gas, Baker said.

Baker’s Billion, Part 2

“The agreement eliminated potential price competition and allowed El Paso and SoCal Gas to retain their unchallenged market dominance,” the lawsuit claims. ¨SoCal and El Paso discussed a long-term plan to “link up supply, transportation, generation and sale of electricity” and to “think/plan position now to be ready when the opportunity comes,” the lawsuit contends, quoting from the alleged agenda.

Following the meeting El Paso Gas launched a “shopping spree” for electricity generating facilities serving California, to take exploit its own advantages that had been created in the natural gas market, the lawsuit claims. In addition, the lawsuit contends, the companies agreed not to challenge each other’s mergers—El Paso earning regulatory approval to complete its purchase of Tenneco, while SoCal Gas and San Diego Gas merged to become Sempra Energy.

In one instance of a possible merger challenge, the lawsuit claims, San Diego Gas could have fought the El Paso-Tenneco deal, claiming that the killing of Tenneco’s California pipeline plan would prevent cheaper gas from reaching the San Diego area. San Diego Gas could have claimed that the merger would harm potential competitors of SoCal Gas, who would want to sell the cheaper natural gas to San Diego Gas, according to the lawsuit. “The last thing that any of the coconspirators wanted was legitimate competition,” the lawsuit claims.

“Soon after the meeting SoCal Gas and El Paso successfully implemented their plan to carve up the California and northern Mexico markets,” the lawsuit claims.

SoCal Gas was the sole bidder on the Baja pipeline, El Paso was the sole bidder on the Chihuahua pipeline, and SoCal Gas was protected from potential competition by El Paso’s ending of the pipeline projects that would have significantly lowered prices in Southern California, the lawsuit claims.

Energy Crisis

The lawsuit also claims that the alleged collusion exacerbated the energy crisis at the turn of the decade by driving up the price of electricity in California, through an artificial hike in the price of natural gas coming into the state, caused by reducing the number of pipelines to carry the gas.

“Southern California’s ‘energy crisis’ is not simply the result of ever-increasing demand for energy by a growing population,” the lawsuit claimed in December 2000. “Rather, it is the direct result of a conspiracy among the natural gas industry’s most powerful Southern California players to preserve and maintain the market dominance that they enjoyed for many years as monopolies subject to regulation.”

“Their unlawful collusion has contributed significantly to the recent astronomical increases in the price of gas and electricity,” the lawyers contended. “As a result Southern California customers have had and will have to pay billions of dollars extra for their natural gas and electric needs.”

In December 2000, newspapers reported a 16-fold rise in gas prices at the California border. Defenders of the rising prices said they were at least partly explained by colder weather, heavy gas use by California power plants and an explosion along an El Paso Gas pipeline that limited its flow.

According to the lawsuit, increases in the price of natural gas at the Arizona-California border well outpaced those throughout the rest of the country, going from $2.40 to $4.40 for a unit called an MMBtu over a one-year period ending in June 2000, then leaping to $25 per MMBtu during 2001.

Greene said it is difficult to tell how much of the energy crisis could be blamed upon the alleged conspiracy of the energy companies. “It affected the price of every kilowatt in California,” he said. With the El Paso Gas portion of the lawsuit tentatively settled, the action against SoCal Gas and San Diego Gas & Electric is expected to go to trial soon enough that it can conclude before 2005. Phone calls to attorneys for SoCal Gas and San Diego Gas, now merged into Sempra Energy, were not returned.

Coastal Connection

In Hermosa, the handsome and tidy yet modest storefront occupied by Baker, Burton & Lundy gives no indication why Brad Baker was given the lead role in building a lawyer team that included Tom Girardi and Walter Lack of Erin Brokovich fame. (In the Julia Roberts movie about the corporate whistle blower, Girardi and Lack appear as a composite character played by actor Peter Coyote.

Astrella, who had stumbled upon the hand-written note that started the whole thing, turned to the Hermosa lawyers because he knew they had won the respect of fierce courtroom attorneys across the state, in part with their prowess on the football field and the basketball court.

The 53-year-old Baker, once a hard-working guard on the University of California, Irvine basketball team and his partners, also active athletes, have fielded teams that dominated countywide law firm competitions that are taken almost as seriously as their legal battles. “Many of the top litigation firms knew Baker, Burton through our athletic teams,” said Baker as he stretched out his 6-foot-2 frame in the firm’s conference room, his Hermosa-friendly sneakers crossed atop the table.

He traces the importance of the athletic contests to the competitive nature of lawyers, at least the ones who actually argue in the courtroom. Lawyers who pore over contracts aren’t as keen for the contests, it seems. “Litigators are warriors, competitors,” Baker said. “You don’t get a lot of transactional guys on the football field.”

At Irvine, Baker was a floor-burn player, a “slow white guy” who passed the ball and tightened the screws on defense. He showed up at 6 in the morning to work out with the water polo team, lifting weights, running stairs and performing murderous calisthenics in the “combat room” to stay in especially good shape for basketball. “I was not a physically gifted guy,” he said. “I had to work harder.”

Baker clung tenaciously to his spot on the basketball team as his playing minutes dropped each year. “I think I set the record for minutes sitting on the bench,” he said. Astrella, who used his smaller, wirier frame to earn spots on his college wrestling and gymnastics squads, believes Baker’s pass-the-ball, help-the-team outlook served him well in building his team of antitrust lawyers and helping to manage hour after hour of 30-attorney conference calls as the El Paso settlement progressed.

Baker’s Billion, Part 3

Not that Baker’s skills are all on the athletic fields. In 1985 he reached the peak of courtroom litigation when he argued a case before the U.S. Supreme Court, twice. After lower courts failed to settle the issue, Baker brought a pension case concerning a Los Angeles retiree named Doris Russell to the black-robed justices of the nation’s highest court. With Justice Lewis Powell out sick, Baker argued the case to a 4-4 tie. “I got a postcard saying come back and do it again,” he said.

From the first question he was asked by Powell, Baker said he knew his case was lost. The court wound up issuing a unanimous opinion that the retiree had no standing to press her case, although the justices’ individual analyses showed an unofficial 5-4 split on the merits of the case. “I’m the only person I know of who can say I turned a 4-4 tie into a 9-0 loss,” Baker said with the same easy self-effacement he used to describe his basketball career. Baker said he was excited but not nerve-wracked in anticipation of his Supreme Court appearances.

“It was so well organized, and they asked very intelligent questions,” he said. “For the most part.”

For The Team

When Astrella–the discoverer of the alleged secret Phoenix meeting–sought out Baker, Burton & Lundy, he was turning to the firm as a whole as much as to Baker himself. Baker stressed that the task of heading up the antitrust team fell to him because he had the time for it.

All the while he has concentrated on that effort he has been “subsidized” by his 27-year partner Kent Burton, a contract lawyer who provides “the backbone of the firm,” Albro Lundy, a “tenacious litigator” who joined the partnership nine years ago, and associate attorney Anne McWilliams.

Since Lundy joined the firm Baker has eased away from litigation, spending most of his time in estate planning and probate, when he’s not dealing with massive antitrust cases. Astrella said he’s happy with the El Paso settlement and with the fact that much less than 10 percent of the refund money will be used to pay the lawyers, even though he considers them the good guys.

“You hear about class action lawsuits where the money goes into the attorneys’ pockets,” Astrella said. “This one is neat because it’s the way the system is supposed to work.” As a byproduct, Baker’s work has raised by another notch or two the profile of Baker, Burton & Lundy. “For a sleepy little firm in Hermosa Beach, we’ve had a lot of interesting things happen,” Baker said.

Brad Baker
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