Saturday, August 4, 2012

Mongolian Barbecue

Pity the poor Mongols Nation Motorcycle Club, Inc., getting "shanked" that way by a California appeals court wielding corporate law.

You've heard of the Mongols. They've been called "domestic terrorists" in court records. It's a moniker the club rejects, noting that past criminal activity is "behind us."

In 2010, the Mongols sued the Southern California city of Lancaster, an hour north of Los Angeles, after the city learned that the Mongol horde planned to hold its "convention" in the city of 157,000. Citing zoning violations, the city shut the hotel where the club had rented 100 rooms for its weekend bash.

The city's mayor didn't mince words at the time, telling a TV station: "The Mongols are domestic terrorists, and we will treat them accordingly," adding, "anybody wearing Mongol colors will serve as a beacon for law enforcement."

The motorcycle gang sued, saying the city interfered with its contract with the hotel, for which it paid $14,000. More interestingly, however, the Mongols also contended the city violated their civil rights.

In defending the city, officials asked a judge to kill the suit. While the judge dismissed parts of it, he allowed the suit to go forward to trial on the civil rights issue. The city appealed the judge's decision.

That's when the case got interesting -- if you're a legal junkie like me.

A three-judge panel of the Second Appellate District in Los Angeles County took it upon itself to do some investigating, and in April, "notified the parties it had taken judicial notice of the records of the California Secretary of State, which records indicated Mongols Inc. is a dissolved corporation."

In an opinion released August 2, 2012, the justices argued that because the Mongols had stated in their incorporation dissolution papers that they had no assets, the club was barred from claiming the lawsuit was part of the corporate "winding up" process, which is allowed for corporations being dissolved.

The appellate justices knew their "post-judgment" evidence-gathering was unusual, and tried to explain it in an opinion footnote: "While post-judgment evidence is generally not admissible on appeal, it may be considered to determine whether it renders an issue moot on appeal." Then they called their own rules of procedure "somewhat flexible," and hung their collective legal hat on a case in which the "Supreme Court deemed it appropriate to take judicial notice of an insurer's post-judgment insolvency."

The footnote should be required reading for all trial court judges in California, especially those who decry judicial activism.

Sorry, boys: appellate decisions should be based on the case presented at trial, the same evidence the trial judge considered when making his decision, and absolutely not on post-judgment evidence discovered afterwards.

In the end, the appellate court ordered the judge to dismiss the "Mongols Inc.'s action in its entirety," basing it on its own "post-judgment" evidence-gathering.

I am not defending these Mongol miscreants. But, the ruling raises a troubling question: Would the justices have used "post-judgment evidence" to dismiss this case if it had been filed by the Acme Baby Diaper Co. Inc. against Lancaster?

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