State contract law may cover Huang's $1 million legal fees.

JOHN Huang, the fundraiser whose activities during former President Bill Clinton's 1996 re-election campaign sparked a series of federal investigations that led him to plead guilty on charges of soliciting illegal campaign contributions, may be reimbursed for nearly $1 million in legal costs by the Democratic National Committee.

A state appellate court earlier this month backed a Los Angeles Superior Court ruling that found Huang's employment agreement with the DNC did not address attorneys' fees, sending the case to trial in the lower court to determine whether Huang was a California resident at the time.

If the court finds that Huang, who signed the employment agreement in Washington, D.C., but paid California income taxes, was a resident, he may be entitled to indemnification under California's contract laws. The DNC, which had agreed to a stipulated judgment giving Huang $975,000, appealed to the 2nd Appellate District, which affirmed the lower court's ruling on April 6.

Stephen Kaufman, a partner at Smith Kaufman LLP representing the DNC, said he plans to appeal to the California Supreme Court and, if necessary, the U.S. Supreme Court.

"It is a bad precedent for out-of-state employers, and District of Columbia employers," Kaufman said. "As you can imagine, with the environment in Washington, inquiries and investigations take place all the time. It's no doubt that's why the laws were written."

Huang was finance vice chairman of the DNC from December 1995 to November 1996. He pleaded guilty to arranging illegal campaign contributions and was sentenced to a year's probation and community service.

Huang's attorney, Brian Sun, a partner at Jones Day, couldn't be reached for comment.

Fat Reversal

An Encino diet supplement maker that paid $10 million to settle a lawsuit filed by the Federal Trade Commission won the fight to put some of its products back on shelves in an April 1 ruling by the 9th Circuit Court of Appeals.

A three-judge panel sent back two preliminary injunctions that had been granted by a lower court federal judge. The FTC argued that Enforma Natural Products Inc. violated a 2000 settlement in which the company agreed to change unsubstantiated claims about its diet products, including Fat Trapper, Fat Trapper Plus and Exercise in a Bottle.

FTC claims that Enforma continues to make false claims that its products absorb or trap fat without diet or exercise. "One of those injunctions required them to re-package their products and remove the claims," said Lawrence DeMille-Wagman, staff attorney in the office of the general counsel at the FTC. "The other injunction basically required them to pull products off the market altogether."

A judge in the U.S. District Court, Central District of California, agreed with the FFC in 2002, but the recent appellate decision lifted the injunctions. The case returns to lower court, DeMille-Wagman said.

Eric Dobberteen, a partner at Arnold & Porter LLP representing Enforma, could not be reached for comment.

Brisbois Boost

Lewis Brisbois Bisgaard & Smith LLP has picked up 13 attorneys from an insurance boutique in Arizona, where it will open new offices. The Los Angeles firm, which also has offices in New York and Nevada, will open new offices in Phoenix and Tucson with the acquisition of two partners and 11 associates from Mariano & Allen PLC, a firm focused on health care and product liability. The bulk of the attorneys will remain in the Phoenix office. Timothy Graves, managing partner of Lewis Brisbois' L.A. office, said adding an Arizona practice will enhance the firm's specialty in elder care and in the medical fields.

Staff reporter Amanda Bronstad can be reached at [phone] ext. 225, or at [e-mail].