‘On the cover of the Rolling Stooooone…’

… or, at least the Wall Street Journal.

newman-courtesy-of-wsj.gifBay Area-based political consultant Dan Newman — most recently an associate at The Next Generation political consulting firm in Oakland, last year Democratic gubernatorial nomineee Phil Angelides’ communications director — got his mug above the fold of the Journal’s front page Tuesday with an article about the Supreme Court taking up a case (Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc.) on whether defrauded shareholders should be able to sue not just the company in which they owned stock, but also its third-party advisers, lawyers, accountants and vendors.

Read some choice bits from the article regarding Newman’s work, after the jump…

Stoneridge is “a critically important case for all investors, markets, and victims of corporate fraud,” says Dan Newman, a public-relations strategist working for the plaintiffs.


To handle the press on his legal problems — and to help with Enron — Mr. Lerach had recently brought in Mr. Newman as his San Diego-based law firm’s in-house communications and public-affairs director. A veteran Democratic political operative in California, 38-year-old Mr. Newman got to know Mr. Lerach — a big donor to the party — through various campaigns.

Mr. Newman and supportive lawyers headed to Capitol Hill. Pennsylvania Republican Sen. Arlen Specter, a longtime member of the Judiciary Committee, and Connecticut Democrat Sen. Christopher Dodd, chairman of the Banking Committee, wrote letters supporting the plaintiffs’ position. Two House chairmen — Massachusetts Democrat Barney Frank of the Financial Services Committee, and Michigan Democrat John Conyers of the Judiciary Committee — filed a joint amicus brief on behalf of the plaintiffs.

Over the summer, a Web site sponsored by the American Association for Justice, the trial-bar lobby, posted form letters online and urged individuals to write to their local newspapers. Letters ran in at least 17 news outlets from Michigan’s Flint Journal to the Roanoke Times in Virginia.


Lerach’s team knew winning over the White House was hopeless because of the Bush administration’s pro-business, anti-litigation bent. But they took solace in the fact that administration positions are usually shaped by the lead agency on the matter. They felt they could persuade SEC Chairman Christopher Cox, who they believed was sensitive to public opinion and eager to be portrayed as a champion of individual investors.

On May 8, scores of letters from consumer groups — organized by Mr. Newman — began flowing into the SEC’s office. The next morning, Mr. Newman organized a news conference with a group of Enron shareholders at a hotel near SEC headquarters. Mr. Newman knew he’d get far more attention if he tied the Stoneridge case to one of the biggest frauds in American business history.

Mr. Newman had been seeking to get the Enron group a private meeting with Mr. Cox. That morning, he heard his request was denied. Mr. Newman immediately pecked out a hypothetical news release on his BlackBerry: “Although we traveled thousands of miles…to tell our stories as victims of the Enron fraud, Chairman Cox refused our request for a brief meeting.” He sent it to Mr. Cox’s office, noting he planned to issue the statement shortly.

Mr. Newman’s cellphone soon rang. A Cox aide said they should come that afternoon.

During the meeting, Mr. Cox’s aides noted the more than $400 million in fines they had extracted from the Enron fraud. Mr. Cox didn’t commit to a position in the Stoneridge case but told the investors they could be confident the SEC would do its part to see they could recover the maximum amount possible. Three weeks later, on May 30, the SEC commissioners voted to recommend to the solicitor general that the government file in support of the plaintiffs. Mr. Cox has said it was important for the SEC to be consistent in its interpretation of the law and maintain the same position it had taken in an amicus brief filed in an earlier, unrelated case.

That was an important victory for the plaintiffs. But it didn’t guarantee the solicitor general’s support.

Indeed, the SEC vote prompted a flurry of action among pro-business officials inside the administration. Treasury Secretary Henry Paulson directed his staff to caution the government against siding with the plaintiffs’ position because by allowing private suits against third parties it would pose a “risk to our economy, to our competitiveness, to jobs.” The White House counsel’s office reminded the solicitor general of the administration’s longstanding view that “unnecessary lawsuits” were driving business away from the U.S. and harming American financial markets’ global competitiveness.

On Aug. 15, Mr. Clement filed a brief on behalf of the defendants. The solicitor general’s brief said the plaintiffs’ position would constitute a “sweeping expansion” of antifraud laws, “potentially exposing customers, vendors, and other actors far removed from the market to billions of dollars in liability.”

Mr. Grundfest plans to attend the hearing today, voicing confidence his side will prevail.

Mr. Newman insists his six-month-long effort will tip the balance. To drive his campaign home, he’ll also be in the courthouse, along with some of his Enron shareholders.

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.