Summer 2007 • Issue 25, page 1

A Final View from the Bench: An Interview with Retired Bankruptcy Judge John E. Ryan

By Lobel, William*

(Author’s note: Judge John Ryan, whose judicial career spanned 21 years, is one of the most respected bankruptcy judges in the nation. Those many attorneys, including myself, who appeared before him know that Judge Ryan possesses all of the qualities one could hope to find in a judge. After a brief biographical note, the following is an interview it was my privilege to conduct with Judge Ryan on the occasion of his retirement from the bench.)

The Bankruptcy Bench lost one of its most distinguished members when Judge John E. Ryan left the bench in February, 2007 ending twenty-one years of service.

Judge Ryan sat in the Orange County Division of the United States Bankruptcy Court for the Central District of California for his entire career as a bankruptcy judge, presiding over many high profile bankruptcy cases, the most noteworthy of which was probably the groundbreaking Orange County Chapter 9 proceeding, the largest municipal bankruptcy in history to adjust the debts of that municipality. The case was spawned when the County lost more than $2 billion on high-risk leveraged investments. That 17-month case involved some 3000 court filings and more than 470 judicial orders and nearly 7000 creditors’ claims.

Judge Ryan was also selected to sit on the Ninth Circuit Bankruptcy Appellate Panel from 1996 to 2003, and was unanimously elected Chief Presiding Judge of that appellate group – which hears some 600 cases each year -- in November, 2001. Judge Ryan authored many notable opinions, both as a trial judge and as a member of the BAP.

Judge Ryan graduated from the United States Naval Academy in the class of 1963 and served in the Navy for six years as a combat pilot, flying an F-4 Phantom off the USS Ranger during the Vietnam conflict. He thereafter attended and received his law degree from Georgetown University School of Law in 1972.

Judge Ryan joined the Hale & Dorr law firm in Boston, Massachusetts in 1972, where he practiced corporate and insolvency law through 1975. He thereafter was on in-house legal teams of the New York Stock Exchange and American Stock Exchange from 1976 through 1984. Judge Ryan joined Jennings, Engstrand & Hendrickson in San Diego, California in 1984, where he practiced securities and corporate law until 1986, when he was appointed to the Bankruptcy Bench.

Judge Ryan was instrumental in the founding of the Orange County Bankruptcy Forum and the California Bankruptcy Forum and has given extraordinary amounts of his time and energy over the years in an effort to improve and elevate the practice of bankruptcy law throughout the State. His wry, candid commentary as moderator of the Judges’ Panel and Bankruptcy Squares game at the annual CBF Conferences is always memorable and will be sorely missed.

Judge Ryan's qualities as a bankruptcy judge and as a person have been widely recognized, including (but certainly not limited to) his confirmation as a fellow of the American College of Bankruptcy.

True to his Irish Catholic Boston roots, Judge Ryan is an avid fan of the Boston Red Sox as well as the Fighting Irish of the University of Notre Dame.
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WL: Judge, in your career on the bench, do you have any memorable moments, either good or bad, that occurred in your courtroom, things that happened that stand out in your mind?

Judge Ryan: Well yes, a couple of things. One you are very familiar with and that was the Entertainment Specialties case involving Michael Goodwin and it was interesting that Entertainment Specialties was my first major chapter 11. It was filed right after I took the bench in 1986. You represented Entertainment Specialties, which was a company that put on motor cross events in venues like the Los Angeles Memorial Coliseum and Angels Stadium.
The interesting aspect of that case was the animosity between the two principals of that company, Michael Goodwin and Mickey Thompson. Mickey Thompson had gotten a $500,000 judgment against Michael Goodwin and he was going to collect that judgment come hell or high water, and I guess there had been some problems of fraud that were part of the allegations in the state court leading to this high intensity level of animosity.
I remember it being a very difficult situation to have to handle as a new judge because the emotions were running so high. Ultimately, as you know Micky Thompson and his wife Trudy were murdered and just recently Michael Goodwin was convicted of the murders. That litigation went on and on and on, with numerous appeals. The animosity of the parties in that litigation never ended. It continued and ultimately may have been a factor in the conviction of Michael Goodwin for those murders.

That was a memorable situation. A funnier memorable situation in court involved a Debtor who I think was called Sister Love. When I came into chambers on the day of the first proceeding that I had with Sister Love, Nancy [Nancy Garoutte, Judge Ryan’s long-time assistant, whose retirement coincided with that of Judge Ryan] had this weird smile on her face. I asked “what’s going on here” and she said “well, you got Sister Love’s case today.” I said, “I know, but why is that of interest.” She said, “Well, you’ll see.”

So I went to the Courtroom and called the case and up walked Sister Love. Sister Love was about a 250 lb. man dressed as a woman with red rouge all over his face. In the back of the Courtroom was half the court’s office laughing at my having to keep a straight face as Sister Love approached the lectern. So that’s the spectrum, humor and tragedy.

WL: Do you have memorable moments in your career apart from when you were sitting as a Bankruptcy Judge?

Judge Ryan: While I was working for a company called Oak Industries, as their senior attorney in San Diego, Oak Industries was involved in providing over the air subscription television. It was the first company to do that and it was first to scramble those signals so that they could offer pay per-view. The pay per-view that you see on television today was pioneered by Oak Industries.

As senior attorney, I had to work out the contracts with the various promoters that we were doing business with in terms of putting on pay per-view events. Most of the events were title fights. They involved, for example, boxers like Larry Holmes, Sugar Ray Leonard and Roberto Duran. It was very interesting handling the contract issues with promoters like Don King and Bob Arum. That’s the type of negotiation that really keeps you on your toes and is very entertaining.

I tell you, Don King was an incredible person and had an amazing presence. He invited my wife Terri and I to attend a Bob Hope event that the City of Hope Hospital was putting on. We were sitting at a table with Don King, Larry Holmes and the great running back for the Cleveland Browns, Jim Brown, and, of course, Don King’s bodyguards.

A photographer came up while Terri was sitting close to Don King talking to him. The photographer took a picture and Don King snapped his fingers. Two bodyguards ran up and grabbed the photographer and came back with the film and camera. You didn’t fool around with Don King.

WL: Judge, perhaps the career case of a lifetime was the Orange County Chapter 9 bankruptcy case.

Judge Ryan: I do Bill. When I came back from San Antonio after hearing that I had the case, I walked into chambers and the desk was full of these pink notes for me to call various news outlets and media people. I made an immediate decision that I wasn’t going to talk to anyone about the case?

Everything that I did or said was going to occur in the courtroom. I set the first hearing in the case and we knew that there was going to be a tremendous demand for access to the courtroom and my courtroom only handled about 70 people. So we handed out different colored passes, passes for media, passes for attorneys and the parties to the proceeding and then some for the general public.

For the overflow, we piped the proceedings into Judge Wilson’s courtroom and into a library area.

I entered the courtroom and of course it was packed. I didn’t know what was going to happen and how I was going to control the situation.

I first had to get into the record the identity of everyone who was there. I set up a procedure where the clerk would have a roving microphone in order to pick up the sound so everybody could hear. The problem was that is was not a cordless microphone and as she was moving around to get the various people who were there to identify themselves, she nearly ended up strangling a few people up front with the cord. That added a little humor to the first major hearing of that case. We never went back to the microphone with a cord.

WL: Judge, do you have any advice for lawyers in terms of do’s and don’ts in the courtroom, based on your experiences of being a judge for all these years?

Judge Ryan: A couple of do’s. You were one of my favorite attorneys in the courtroom.

I remember a number of times when a fact or an interpretation was less then clear, you would go back over that and make sure that I understood exactly what the facts were and what you were trying to say in connection with the matter. You never left an issue of law or a factual issue grey in the courtroom.

That caused me to have a high level of confidence in what you were presenting to the court. Credibility is the most important element that an attorney brings to the courtroom. You build that credibility by the way you make your presentation and by the way you clarify issues of fact and law to the court.
The other issue that I would emphasize is try and simplify your facts and the issues. That is very helpful. If there is some area of doubt, you raise it in terms of asking the court if there is any additional factual information or legal argument that the court would like, to assist the court in coming to a decision. It is important for the attorney to not just act as an advocate, but to keep the perspective that the attorneys are officers of the court and are there to help the judge come to a fair and just result.

I always admired the way you handled your cross examination as well. You didn’t spend a lot of time on insignificant issues. You honed in on certain key factual issues and you used your cross examination to assist in clarifying those facts. Those are some of the do’s that I always felt were very helpful to me.

WL: By the way, I don’t know if you recall one of the first times I personally appeared in front of you. It was either on a motion to pay critical vendors or a motion to pay pre-petition payroll. You were brand new on the bench and I remember you saying to me, “Counsel, show me where in the Code you are given the right to do that.”

It caught me totally by surprise because we practitioners had gotten used to getting such motions approved without supporting authority and it kind of brought me back to home base. Judge, I know we have had a recent modification of the Bankruptcy Code. Do you have any suggestions for other changes that might be made with respect to the Code?

Judge Ryan: I do. I’m going to hit this very hard because I believe that the most destructive provisions in the Bankruptcy Code right now deal with venue. I believe that the venue provisions are so inadequate that they distort the whole bankruptcy process and I believe it is very destructive. The forum shopping that is going on in the Bankruptcy Court ought to be an embarrassment for the judiciary as a whole as well as the legislative branch of our government.

The fact that Chapter 11’s for companies located here in California, which have most of their creditors and assets here in California, are not filed here but are filed instead in Delaware or the Southern District of New York is a travesty. Just look at the human aspects of it, rather than from the standpoint of the use of forum shopping to get certain results because of the approaches taken in those two venues.

The movement of major cases from California has had a destructive impact on lawyers, their families, the kinds of cases that come before the Bankruptcy Courts in California and the lifestyles of the attorneys who have to travel across country in order to have a practice equivalent to what they had before. These are things that are very negative about the venue provisions of the Bankruptcy Code today.

I think they have had a very detrimental impact on bankruptcy practice in the Central District of California. I think they have limited the opportunities of young attorneys in the practice of bankruptcy law and, again, I think they have had adverse impacts on those attorneys that have practiced in the area over the years in terms of having to travel to the East Coast in order to have quality cases.

WL: So your specific suggestion would be to eliminate the state of incorporation as a basis for venue?

Judge Ryan: Absolutely. When a case like Enron can leave Texas and be handled in the Southern District of New York, just because certain power groups want it that way and the judge wants to handle the case in the Southern District of New York, that is the worst kind of forum shopping and it should be eliminated.

WL: Now that you have had the opportunity to do what we all dream of, of being able to retire, would you please tell us what you have been doing since leaving the bench.

Judge Ryan: Well first, I have a happy dog. The dog is walked in the morning and gets walked in the evening. My German Sheppard puppy of about seven months is a very happy dog.

Actually, I have been able to spend quite a bit of time as a director of the Armed Services of the YMCA at Camp Pendleton trying to help that organization raise funds to assist young Marines and Navy personnel and their families. Just think for a minute of the impact of the war in Iraq on these young men and women and their families. We are seeing Marines and Navy personnel now being deployed to that war zone for a fourth time. You can just imagine not only the impact on the young Marine and Navy personnel, but the impact on the families of those individuals. The young children of these Marines do not have the presence of their mom or dad for a significant amount of time in terms of their development.

One of the things the Armed Services of the YMCA does is to provide extra schooling and teachers on an eight to one ratio for those young kids who are having problems in school. It also provides a parenting skills type of service to help the spouses deal with some of the ramifications of single parenthood. In terms of the individual Marines, the YMCA helped over two thousand of them on Super Bowl Sunday so that they were able to enjoy the Super Bowl and get well fed on hamburgers, hot dogs and so forth. I do a lot of things at the Armed Services YMCA, and I feel privileged to have an opportunity as a director to participate in those services.

I also got to ski for the first time in over twenty years with my brothers back in Colorado at Winter Park. I think I surprised them. I know I surprised myself in that I didn’t do too badly. As my brother said, “it’s just like getting back riding a bicycle.” Those are some of the things that I’ve been doing in retirement and enjoying.

WL: I think you also had the opportunity to be on one of our nuclear carriers.

Judge Ryan: Thanks for reminding me about that. Terri’s dad was a bomber pilot in World War II and flew off of the Hornet, so she has always wanted to see what it was like to be aboard a carrier. We got the opportunity a couple of weeks ago to fly out to the Nimitz before it deployed to Iraq. It was a great experience and she had a smile on her face from ear to ear as we hit the deck. As a matter of fact, as you probably know, I flew F-4 Phantoms off the Ranger during the Viet Nam period.

On the Nimitz, Terri and I were able to get to within probably twenty feet of the F-18 Hornets as they were taking off during the day. We had a great time and it ended in our getting shot off the carrier by catapult. You are going about 130 knots within a second or two. Now, that is exciting.

It’s amazing that these young men and women are out there moving multi-million dollar aircraft around safely with the lives of these pilots in their hands. It’s quite a testament to the quality of our young people in the armed services. You might be interested to know that 25% of the ship’s personnel are women. Quite a change from when I was flying.

WL: One final question, and the most important question of the interview. A prediction in football, Notre Dame v. USC next year.

Judge Ryan: They are always great games. I’m going to say this year there is going to be an upset. The game is back in Indiana and I have a feeling that this may be Norte Dame’s year for an upset. There have been great upsets in this series, so I’m calling it this year.

WL: That’s great, thank you very much Judge Ryan.

*William N. Lobel, Esq. is a partner with the national firm Irell & Manella LLP in its Newport Beach, California office. Mr. Lobel specializes in representation of borrowers in connection with informal financial restructuring and debtors in possession in Chapter 11 bankruptcy cases (as well as bankruptcy trustees and creditors committees in complex matters). Mr. Lobel practiced before Judge Ryan for many years.