Summer 2013 • Issue 48, page 1

Life's Lessons: An Interview with the Honorable Hannah L. Blumenstiel Judge of the United States Bankruptcy Court for the Northern District of California

By McFarland, Beverly*

I not only have the privilege of having Judge Blumenstiel as a friend, but have great respect for her ambition as a person with one of the most important goals of her life fulfilled. Judge Blumenstiel’s spirit and dedication is best described in this quote from her, “I worked hard, never gave up on my judicial aspirations and here I am – exactly where I want to be.”

The Honorable Hannah L. Blumenstiel is currently one of three judges presiding in the San Francisco Division of the United States Bankruptcy Court for the Northern District of California. The Ninth Circuit Court of Appeals appointed Judge Blumenstiel to the bench on February 11, 2013.

A Long Way from Home
Judge Blumenstiel was born in Sebring, Ohio – a rural, rust belt town with four traffic lights. As a child and teenager, she participated actively in local 4-H clubs, showing one or more of her three horses nearly every weekend between April and October. “My horses kept me fully occupied and likely out of trouble, given that there wasn’t much to do where I grew up. And traveling every weekend helped me realize that I wanted to expand my world beyond Northeastern Ohio.”

After graduating from high school, Judge Blumenstiel enrolled at the Ohio State University in Columbus, Ohio. She did not immediately excel. “I did reasonably well in high school but didn’t have to work very hard. Once I got to college and didn’t have anyone insisting that I go to class and do the work, I quickly became more interested in sowing my wild oats than in my courses. I also realized that I was wasting time and money by staying and not doing well, so I decided to leave college and travel.”

Judge Blumenstiel moved to San Diego, California, where she took advantage of her equestrian experience and worked as a horse and carriage driver. “It was a great job. The horses were well cared for, I was well-paid, and no one who takes a carriage ride is in a bad mood – they’re on vacation, getting engaged, going to prom – always happy to be there.” Judge Blumenstiel soon realized, however, that as much fun as it was, she couldn’t drive a horse and carriage for the rest of her life. If she wanted true stability and accomplishment, she would have to return to college and get an education.

After a year in sunny San Diego, she returned to Ohio State and graduated a few years later. The question then became, what next? “I majored in Sociology, a subject I found interesting but which didn’t leave me all that employable as a professional.” Continuing her habit of making her hobbies into jobs, she became a bicycle messenger. “Some of my colleagues and friends were competitive cyclists and soon I was racing road and mountain bikes all over the country. I rode a lot, but didn’t know a thing about proper training, so I was average, at best. But I had a really, really good time.”

The messenger service for which she worked maintained its offices at the Columbus Bar Association, and Judge Blumenstiel came to know many CBA staff. This led to her first “real” job as Director of “Lawyers for Justice,” the Columbus Bar Association’s brand new pro bono initiative. LFJ’s mission was to serve that segment of the population that other local pro bono service providers turned away, either because the client’s income was slightly too high or because their legal problem was a type not handled by other pro bono agencies. “I designed the program from the ground up and it was a one woman show. I interviewed every client, did factual research concerning their cases, recruited the law firms, matched eligible clients with volunteer attorneys and monitored the cases until their conclusion. One year into the job, I knew I wanted to go to law school.”

Judge Blumenstiel needed to work full time to support herself, so she applied to the only law school in the area with an evening program – Capital University Law School. “The moment I received my acceptance letter, I knew my life had changed and I never again needed to worry about winding up back in Sebring, Ohio.”

An Early Desire to Take the Bench
The first day of law school, one of Judge Blumenstiel’s professors polled the class about what they hoped to achieve after graduation. Judge Blumenstiel responded “perhaps naively,” that she had “judicial aspirations.” In the meantime, however, there was work to be done. Judge Blumenstiel struggled academically during her first year of law school. “I didn’t know how to be a good student. Even after returning to college, I never felt challenged and could do well with a modest effort. In law school, especially the first year, everyone is motivated and the competition is tough.”

The turning point occurred in her second year, when she tried out for the moot court team at the invitation of two professors who served as the faculty mentors/coaches for Capital’s well-regarded national moot court team. I’d done extremely well in the oral advocacy component of my first year legal research and writing class, but my overall grades weren’t strong enough to permit me to join the team.” The next year, as moot court tryouts were approaching, the coaches insisted she throw her hat in the ring again. She’d improved her grades substantially, and after turning in another strong performance during her tryout, she made the team, which went on to great success.

“My experience as a member of what became Capital’s most successful moot court team in years was transformative. I made friendships that have stood the test of time and I learned to think like a lawyer.” It also set the stage for the rest of her career.

Introduction to Bankruptcy
One of the volunteer judges for the team’s practice rounds was Nora Jones, who served as Director of Litigation in the bankruptcy section of the Ohio Attorney General’s Office. Nora was impressed by Judge Blumenstiel’s performance and hired her as an Intern. “Nora was a phenomenal mentor and introduced me to the Bankruptcy Code and Rules. The bankruptcy process made intuitive sense and I enjoyed learning why businesses fail. In addition, I enjoyed that a bankruptcy practice exposes lawyers to other areas of law, too, because once a debtor comes under the protection of the bankruptcy court, all of its other problems –labor, environmental, tax, etc. – must be addressed there, too, at least at first.”

After graduation and after she passed the Ohio bar exam, Judge Blumenstiel became an Assistant Attorney General, representing the State of Ohio’s interests in bankruptcy cases around the state. She believes she was the first in her class to have an appellate argument, two weeks after she was sworn in as a member of the Ohio bar. “The case was a total stinker. That’s why they let me argue it.”

About six months later, Judge Blumenstiel learned that one of the local bankruptcy judges, Charles Caldwell, was looking for a new law clerk. She applied immediately and got the job. “I loved working for Judge Caldwell. He set an excellent example of judicial temperament and class, and taught me lessons I’ll never forget.” She stayed for three years and during that time, established appointment to the bankruptcy bench as her ultimate goal. “I didn’t know if I’d get there, but knew I had to try and that meant private practice.”

She wound up back in California, this time in San Francisco, having landed a job at Murphy Sheneman Julian & Rogers, a premier bankruptcy boutique. “It was such a terrific firm. Wonderful people, brilliant lawyers, and great friends. I am so proud to have worked there.” Two years later, however, the Murphy firm was acquired by Chicago-based Winston & Strawn LLP. “I never saw myself as a big firm lawyer, but Winston extended offers to all of the Murphy Associates, and all of us accepted.”

Over the next five years, Judge Blumenstiel focused her practice on creditor-side litigation, in and out of bankruptcy court. Judge Blumenstiel also represented receivers. She made partner in 2008, shortly after she and senior partner Kip Maly made new law in the Ninth Circuit in In re Future Media, Inc. “We succeeded in convincing the Ninth Circuit that an oversecured creditor is entitled to default rate interest where its collateral is sold pursuant to section 363 of the Bankruptcy Code, rather than through a sale conducted pursuant to a plan. The concept of cure isn’t mentioned in the context of a 363 sale, so we argued – and the Ninth Circuit agreed – that caselaw such as Entz-White did not apply. Rather, parties can enforce their rights under their otherwise valid contracts, including their right to default rate interest.”

In 2009, her most significant client, GE Capital, invited her to Connecticut as a secondee to its Restructuring and Bankruptcy Center of Excellence. “The Bankruptcy COE is involved in all of GE’s most important bankruptcy and restructuring matters. It was a terrific opportunity and a great experience.”

Appointment to the Bench
After her second appointment ended, Judge Blumenstiel returned to her practice in Winston’s San Francisco office. Shortly thereafter, she began applying for bankruptcy judgeships. On October 31, 2012, she learned that the Ninth Circuit had selected her for appointment to the bankruptcy bench in San Francisco. “To say that I was thrilled is the understatement of the century. Appointment to this bench is all I have ever wanted as a lawyer. I couldn’t be more humbled and grateful.” Now, approximately five months after her appointment, Judge Blumenstiel is settling in well. “I have two fantastic law clerks – Brent Meyer and John Cannizzaro – both of whom were well-regarded consumer bankruptcy practitioners before joining chambers. Their experience on the consumer side makes my learning curve a little less steep.” In fact, the enjoyment Judge Blumenstiel gains from her consumer caseload is one of her most pleasant surprises so far. “Because I spent my career in private practice representing large financial institutions, I worried that I’d really struggle with the consumer cases. But the quality of the consumer bar and the amount of patience they’ve shown me has been a very happy surprise. Those lawyers are some of the most diligent, well-prepared, professional and tenacious advocates I’ve ever seen. It’s a pleasure and an honor to work with them.”

Life Lessons
Judge Blumenstiel also enjoys the degree of control she can now assert over her personal schedule – a striking difference between her new position and private practice. This has enabled her to continue her extra-judicial interests, which include running, a sport she took up when law school cut into her cycling time. “Soon after I started law school, it became clear that I didn’t have time to ride my bike 2-5 hours a day, which is what it takes to be a competitive cyclist. It takes about half that time to be a fit, competitive runner. So I switched sports, although I still ride my mountain or road bike on occasion.”

Judge Blumenstiel considers her qualification for the Boston Marathon her finest athletic accomplishment, although she now competes for personal satisfaction alone. “I’m in my 40’s, so my PR’s (personal records) are behind me, but I enjoy the workouts and the discipline. Running has taught me a great deal about patience, paying attention to the details and never, ever giving up. Those lessons translate well to the rest of my life. I worked hard, never gave up on my judicial aspirations and here I am – exactly where I want to be.”

*Beverly N. McFarland is a an RN Associate Publisher, a chapter 11 trustee and receiver and CEO of The Beverly Group, Inc., an asset management company that has successfully resolved in excess of $8 billion dollars of estimated assets since 1983. Ms. McFarland is a former chair and current member of the California Receivers Forum BOD, the Turnaround Managers Association BOD and has enjoyed presenting at the Loyola Law School seminars through the years as well as many other associations on receiverships and chapter 11 bankruptcy matters.