Galanter left the courthouse confident, but later that afternoon, the Judge issued his written ruling, and he found that LBA was merely a “surrogate” of Simpson for all purposes relating to the book, and that our requested relief extended not just to Simpson, but also to LBA! This was a fantastic result for us. It was the first time that Simpson had suffered any real legal defeat in a long time. It was also the first time, but not the last, that a Court would effectively find that LBA was a sham, and it was the turning point in our pursuit of the book. The press immediately started running stories about the Court’s ruling.
But the battle was far from over. Judging by his lawyer’s reactions, Simpson was not happy about the ruling. His lawyers moved for reconsideration, and Simpson even brought in separate counsel to represent LBA, a lawyer named Tappan Zee. We were in Court one day and everyone, even the Judge, said the same thing: “You mean like the bridge?” We went back to Court a number of times to clarify aspects of the ruling, and to resist challenges by Simpson’s lawyers and the new lawyers hired to represent LBA. In the end, the Court affirmed the prior rulings, and the sheriff’s sale of the book rights was set to go forward on April 17, 2007.
There were a number of problems with the sheriff’s sale, not the least of which was that the demand for the book, after the public outrage, was minimal. David Cook had a backup plan. If nobody wanted to buy the book rights for a significant sum, then we could use our own judgment to credit bid at the auction. Under California law, the unpaid $19 million judgment accrued interest at 10% per year, so in 10 years it had doubled. It is now worth over $40 million. If we did not get a good bid at the auction, then we could buy the book ourselves and reduce our judgment accordingly. We had a huge credit card, and it was unlikely anyone would approach our credit limit. But bless them if they could.
Of course, there was one other huge problem. If we acquired the book, there was little else we could do with it other than shop it and sell it, most likely to a publisher, and use the proceeds to partially satisfy the judgment. Needless to say, Kim and Fred were not entirely pleased with the prospects of selling and publishing the book. Much talk, consideration, and anguish went into the decision to take the book away from Simpson, as the Goldmans knew they would likely be compelled to publish it. I did the only thing I could do as a lawyer. I followed the Law, and I strongly encouraged Kim and Fred to do the same. The Law gave us a judgment, and it imposed on us the duty to enforce it. Either we enforced that judgment, or we let it go. If we were going to enforce it, we would have to enforce it in the manner that the Law allowed. If the Law allowed us to acquire and sell the book, then so be it. I had to believe, and I encouraged my clients to believe, that if the Law supported that result, then that was the result that should be pursued, even if the end was not clear.
Around this time, David Cook and I had a very memorable meeting with a very unlikely guest, Judith Regan. One of David’s attorney friends had represented Judith on another matter, and David and this other lawyer had arranged for a meeting at David’s offices in San Francisco. David was very excited about the meeting, and he hoped that if we acquired the book, Judith might be able to help us with the project. I looked forward to finding out as much about the book as I could from someone who had been instrumental in creating it.
I flew up to David’s old offices in San Francisco (he has since moved to a new location). I loved David’s offices. He occupied a whole floor of an old building, and the work space was really a long, thin corridor, with off-shooting rooms and offices.
There were old creaky wooden floors with books, papers, boxes, notes, artwork, and mementos stacked up and piled everywhere. David’s office staff and attorneys were moving around, and some even seemed to appear out of nowhere from behind the various stacks.
When Judith Regan arrived, we adjourned to one of the tiny back rooms, and David asked the occupant, one of his attorneys, to leave. Then the door closed, and it was just the three of us, David, Judith, and me, in this tiny cluttered room, with the sound of San Francisco trolley cars in the background. David’s attorney friend who had helped arrange the meeting participated on a speaker phone.
Things started pleasantly enough, but there was some tension in the air. Judith agreed to meet with us, but she was not happy and she had a lot she wanted to get off her chest. She talked about how she was in the business of telling stories, and this was a great story, and how the book was a good idea and a good project, and about how everyone had attacked her. When she talked about the book and the interviews, she said that she thought everyone would appreciate that she was going to get Simpson’s confession. She even said that Simpson was taking great risks in penning the book, because he might still be criminally prosecuted for what he said.
For some reason, I remarked that Simpson would simply say that the book was a “hypothetical,” and I had the HarperCollins contract in my lap and I gently tapped on that very language in the contract. I thought Judith was going to jump up out of her seat. “It is not hypothetical!” she screamed. And then she let off a little steam.
But things calmed down, and we actually went on to have a productive discussion. Judith had some good ideas for reviving the book, and she was willing to consider getting involved with it again, but she said that all of the monies had to go to charity. She said she did not want anything for herself.
I enjoyed meeting Judith. She was direct, and she did not hide her strong feelings. We all parted on reasonably good terms. After we walked her out, David turned to me with a big smile on his face and he said, “Well, I thought that went well. It felt like she sucked the oxygen out of the building.”
But after the meeting, it seemed clear that we would not be able to work with her. For one thing, I did not think the Goldmans would agree to bring her on board. It was hard enough just to explain to them that we felt the need to meet with Judith. Moreover, Fred and Kim had already decided to give a portion of any book proceeds to charity, and I told David that Judith did not have the right to control how Fred used the remaining judgment proceeds. The judgment reflected the loss of Fred’s son, not Judith’s. That was my last encounter with Judith.
The sheriff’s sale was scheduled to occur on Tuesday, April 17. Prior to the scheduled sale, I made appearances on Larry King’s show and on Catherine Crier’s show. Yale Galanter also appeared, and he kept saying that the sale would not go forward. On both occasions, he told me on television, “Don’t pop the champagne just yet.” I did not know what he was talking about. The Court had ordered the sale, and all of Simpson’s legal challenges had been denied. I imagined that one day we might be able to send Galanter a box with an empty champagne bottle inside, along with a note, “Is it time yet?” But I never viewed the sale itself as any kind of final victory. I knew we had many other things to do after that sale.
On Friday, April 13, we appeared before Judge Rosenberg to address one final challenge to the court-ordered sheriff’s sale. This time the Browns were trying to stop the sale or take half the proceeds. The chief spokesperson for the Browns is Nicole’s sister, Denise Brown. The Brown judgment, however, is held by her father, Lou Brown, as the representative of Nicole’s estate. It is my understanding that the beneficiaries of Nicole’s estate are Nicole’s and O.J. Simpson’s children—Sydney and Justin. Thus, the Brown judgment is for the benefit of Sydney and Justin.
The Browns essentially argued that the sale should not go forward, but if it did go forward then they were entitled to half the proceeds. Their request could not be granted. Among other things, they had not perfected the renewal of their judgment. Under California law, judgments are valid for 10 years, and then they must be renewed. Our judgment had been renewed, as had the Browns,’ but, ironically, the Browns had not properly served notice of their renewal on Simpson himself. This defect was fatal to their claim. Until they properly served notice of their renewal, they could not take steps to enforce their judgment.
By 11 a.m. on Friday the 13th, our hearing in Sant
a Monica had ended. We discussed plans to travel to Sacramento where the sheriff’s sale would take place. By 11:30 a.m., we were advised that LBA had filed for bankruptcy in Miami. It was our understanding that the federal bankruptcy petition was filed shortly after the denial of the Browns’ last-ditch effort to stop the sale. It certainly seemed to us that Simpson’s people were waiting to see whether the Browns’ petition would stop the sale. And when it did not stop the sale, the bankruptcy petition was immediately filed. In a Newsweek article, the Browns’ chief lawyer, Greg Hafif, said: “One hates to ever say you are on the same side as Simpson, but in this case we’re happy the sale isn’t going forward.”
David had been talking about the possibility of a bankruptcy proceeding, and his instinct certainly was right in that regard. For more than a week, he had been discussing with me how we might react to a bankruptcy filing, but for some reason I just did not think that Simpson’s camp would actually do it. The bankruptcy filing meant that the sheriff’s sale could not go forward. When a debtor files for bankruptcy, there is an immediate stay on enforcement of any debt or claim against the debtor, in this case LBA. The sheriff’s sale was on hold indefinitely. But the book rights were still there, and now they were frozen in bankruptcy.
In retrospect, I suppose the bankruptcy was Galanter’s master plan to prevent us from “popping the champagne.” In the same Newsweek story that quoted Hafif (the article was entitled “Frozen O.J.”), the reporter also quoted Galanter:
Simpson’s lawyer Yale Galanter believes the bankruptcy will prevent the Goldmans from ever participating in the troubled book’s sale. “There’s not a way in the world that Goldman is ever getting a dime,” crows Galanter, who represents Simpson but not his children or LBA and did not file the bankruptcy claim. “Now [the Goldmans] will never ever, ever have anything to do [with this book.”
Even the Newsweek reporter seemed to think that one day Galanter might have to eat some crow. Obviously, the bankruptcy was Galanter’s and Simpson’s last-ditch effort to prevent us from getting the book. But in the end, it completely backfired on them.
We were now faced with a decision. Should we take the fight into the bankruptcy court in Miami, or do we try to get out of that court and pursue the sheriff’s sale in California? We had grounds to try to extricate our claim from the bankruptcy case. LBA’s bankruptcy petition and bankruptcy schedules were a mess, no doubt due to the haste with which they were prepared in an effort to file the bankruptcy just before the sheriff’s sale. Among other things, the bankruptcy papers were not accurate, and they were not signed under oath by an authorized representative of LBA.
Ultimately, we decided to stay in the Miami bankruptcy court, because we hoped that the bankruptcy court would give us better title to the book rights. If we proceeded with the sheriff’s sale in California, we would have acquired similar rights, but we would have faced other potential lawsuits and claims from those contesting the validity and extent of our title. Under broad federal bankruptcy court jurisdiction, those competing claims could be considered and subordinated. To the extent possible, we could try to minimize the prospect of future litigation, although we could not eliminate it.
We also had another good reason to pursue the matter in Miami: excellent local bankruptcy counsel. Jonathan Polak was able to enlist the help of Paul Battista, with the law firm of Genovese Joblove & Battista in Miami. Polak had a great knack for bringing in good attorneys at the right time. He brought in Cook, and he brought in Battista, who was also assisted by one of his partners, Brett Amron, and a number of other personnel at the firm. They were all excellent. We could not have been in better hands.
There were several other elements that helped us in the Miami bankruptcy court. First and foremost, it quickly became clear that LBA was a sham, and the bankruptcy filing was a bad-faith attempt to stop the sheriff’s sale. LBA’s own bankruptcy paperwork was like Swiss cheese, full of holes. There were misstatements and omissions, and they were not trivial. For example, LBA had paid a ton of money to Simpson, but that was not disclosed in the bankruptcy paperwork.
LBA received $663,000 in advance payments for the If I Did It project, and Simpson received $630,000 of that advance, which he allegedly used to pay off a home equity line, back taxes, etc. Most of the remaining $33,000 was used to pay Starke and to purchase a Lincoln Navigator. What little remained of LBA’s money was used to pay for things like Arnelle’s cell phone bills. When LBA finally filed for bankruptcy, it only had about $300. As far as we know, other than a few cell-phone bills and other incidental items for Arnelle, none of the money ever went to Simpson’s children, although each child supposedly was promised a share of the book proceeds.
Simpson and Starke had named Arnelle as the president of LBA because they could control her. At her deposition in the bankruptcy proceeding, Arnelle repeatedly stated that she was just “overwhelmed.” She knew the general business purpose of the LBA corporation—to sell the If I Did It book—but she had no knowledge of the day-to-day operations. She admitted that Starke handled the company, and Starke himself testified that Arnelle was really just a “people person.” It was Starke’s job to run LBA, which effectively meant that Simpson was in control. I actually felt a little sorry for Arnelle. Her father was using her and hiding behind her, and now she was the one getting grilled at her deposition, when it should have been him on the hot seat. It seemed to me that Arnelle did whatever Starke and her father told her to do.
Another reason to stay in Miami was that we were the only “secured” creditor of the estate, because Cook had levied on the book assets. Thus, our judgment was secured or collateralized to the extent of those book assets. All the other creditors were “unsecured.” A secured debt is like a home mortgage. The home is the collateral, and if you default on the loan the bank gets the home. Unsecured debt is like credit card debt. No collateral, no security interest. In bankruptcy, secured creditors have claims to their collateral. Unsecured creditors have claims to whatever is left after administrative expenses, usually only pennies on the dollar, if that.
On top of all of this, we were in front of an extremely good, no-nonsense bankruptcy judge, the Hon. A. Jay Cristol. Judge Cristol did not smile on the kinds of tactics and games that Simpson’s people appeared to be playing.
In short, rather than preventing us from taking the book away, as Simpson and Galanter had hoped, the bankruptcy proceeding aided us. They probably would have done better to let the sheriff’s sale go forward.
We pursued negotiations with the bankruptcy trustee, Drew Dillworth, and his counsel, Brian Rich, both of whom are extremely capable and intelligent lawyers. The trustee is the bankruptcy court’s appointed representative over the bankruptcy estate. His job, among other things, is to supervise the bankruptcy, gather the assets of the debtor, and, if possible, equitably distribute those assets to all the creditors. We eventually reached a proposed settlement with the trustee to acquire the book rights, publish the book, and give the bankruptcy estate 10% of the net proceeds after all publishing costs. This was a good deal for the bankruptcy estate, because if our secured interest was upheld in bankruptcy (which we believed would happen), then we would have taken the book rights completely out of the estate and given the estate nothing. We also agreed that all of the 10% would go to pay administrative claims and the claims of all the other creditors of the LBA estate, primarily the Browns, i.e., Sydney and Justin. Their father had not given them anything from the book, but now we would work to try to generate monies that might flow to them. We also agreed not to share in any of the 10% distributed to the estate, although we had the right to do so.
At the final hour, the Browns again tried to oppose the settlement, and they made their second attempt to try to get money from our efforts to seize the book. The Browns’ counsel strenuously argued, among other things, that the Browns were entitled to 40% of the book proceeds, and they argued that the settlement disproportionately favored the Goldmans. The Browns had no sound legal basi
s to make these claims. At best, they were simply very large unsecured creditors of the bankruptcy estate, like a number of other creditors (including Simpson’s own attorneys, Starke and Tappan Zee, all of whom claimed they were owed money). Judge Cristol and the bankruptcy trustee rejected all of the Browns’ arguments and claims. They concluded, in part, that any benefit to LBA’s creditors could only come from the successful sale of the book, and the Goldmans were best positioned to maximize any such sale proceeds. They also indicated that if our secured claim was upheld after a trial in bankruptcy, then the estate would get nothing.
On July 30, 2007, after an extensive hearing, Judge Cristol approved our proposed settlement. The Court wanted assurances from Fred that he would do his best to market, sell, and “maximize” the value of the book asset for the benefit of the bankruptcy estate and all of its creditors. Holding back tears, Fred (who had not experienced any real sense of victory in some time) thanked the Court for approving the settlement agreement, and he promised to do his best to publish and sell the book.
But as amazing as it sounds, getting the book was only half the battle. In promising to “maximize” the asset, Fred and all of us had taken on another awesome task. Public contempt for the book had not dissipated, and now we were being blamed for it. Although we would not change one word of Simpson’s original text, we had to transform and repackage the book, and we had to find a brave publisher who would share our vision. We were very fortunate to connect with Eric Kampmann of Beaufort Books, Inc., who had the courage and imagination to do what no other publisher would—help us. At that time, no well-known publisher would touch “that book,” which had been publicly scorned and was perceived to have toppled Judith Regan from her perch.
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