Switzer, Donna
From: Estanislau, Robin
Sent: Friday, July 1, 2022 4:43 PM
To: Switzer, Donna
Subject: Fwd: Supplemental Communication for Item #17 on July 5, 2022 Agenda Attachments: Final Report 2021-10-30.pdf
SUPPLEMENTAL
Is it possible to upload this information (email and attachment) into Item #17 before 5:002WMUNICATION Sent from my iPad Meeting Date: 7/5/22
Begin forwarded message:
Agenda lam No: / 7(22-593).
From: "Gates, Michael" <[email protected]>
Date: July 1, 2022 at 2:25:12 PM PDT
To: "Estanislau, Robin" < Robin.Estanislau@ surfcity-hb.org>, "Esparza, Patty" < PEsparza@surfcity- hb.org>
Cc: "Zelinka, Al" < [email protected]>, "Vigliotta, Mike" <[email protected]>, "Hopkins, Travis" <[email protected]>
Subject: Supplemental Communication for Item #17 on July 5, 2022 Agenda Ms. Estanislau,
I am requesting that this email and the attached report be added to the communications and as part of the administrative record for the July 5, 2022 regular City Council Meeting in response to Item #17. I am requesting all 5 pages of the attached report appear in the record as well, as opposed to simply a reference of the attachment.
This attached report, as City Council knows, came as a result of the City Council's open meeting request in 2021 that a review of the handling of the Moore, et al., v. City of Huntington Beach, et al., case be conducted because of concerns, expressed then, of overbilling. Later, there were additional Council Member expressions of concern about possible conflict of interest on my part in the handling of that case. As I take all concerns about my office seriously and to heart, I commissioned my own review of the matter by contacting for the first time an attorney by the name of Calvin House. I sought a purely objective, neutral review of the same concerns Council Members had voiced because I wanted to make sure the outcome of any such review was reliable as objective. So, I contacted Mr. House, who I had never spoken to before, never met, and had never worked with.
To be clear, on day one back in May of 2018, when the Moore, et al., v. City of Huntington Beach, et al., lawsuit was received by the City, I recused myself entirely from the handling of that case. I neither conducted the RFP for law firms to handle this lawsuit in light of my recusal, nor selected the law firm that was ultimately chosen (Greenberg Gross, LLP) and was approved by City Council to handle the case. Since that first day, back in 2018, I only participated in the matter as a defendant, not as legal counsel nor a representative of the City in the case. There are a number of witnesses to these facts. Notwithstanding, some Council Members have been critical of my participation in the lawsuit at all even though / was named defendant in the case. The criticism even included my being present in Closed Session while the handling attorneys, including those from Greenberg Gross, were updating City Council on the matter. To be clear, my participation as a defendant in a lawsuit is required as part of attorney-client relationship. Any such question or concern about my involvement in the litigation as a defendant fall completely flat and are without merit. Not participating in a lawsuit as a defendant usually does, which I did as a defendant in this case, would have been dilatory, improper, and not contemplated by law.
Moreover, as the public record shows from 2018 to end of 2020, the attorneys handling the case gave City Council 10 updates in 10 Closed Sessions. Publicly available financial records also show City Council approved the steps in the litigation and approved the moneys spent on the attorney's fees in the amount of $1.5MM. Indeed, it was City Council that steered the litigation by its decisions in the critical time between early 2018 and end of 2020. All decisions in this lawsuit were made on the matter before 3 new Council Members were sworn in as a result of the 2020 election. It may go without saying, but to be clear, I would have never advocated to settle for $2.5MM what the City had long-perceived as a frivolous lawsuit. If there is anything that is untoward about this case, it is that it was settled at the very last minute before trial, after years of decisions by City Council to take it to trial and over a million dollars spent on preparing it for trial. Finally, it seems particularly odd and disturbing that the handling of this case is under scrutiny when everyone who was present on Council from 2018 to end of 2020 knew everything that was going on with the case, made all the decisions, and now a new Council after 2020, seemingly not happy with the way the case went, has drawn me in as the subject of scrutiny, when clearly I had no control over the matter or a vote on its outcome.
Finally, although I have not seen the report referenced in Item #17, I presume it represents evidence of an improper relationship between Council and this outside attorney. For these reasons, and others not stated here, I object to the report referred to in Item #17 of the Agenda. Instead, I offer the attached report, which was properly commissioned, was done objectively, and provides results responsive to the voiced City Council concerns of 2021 about the Moore, et al., v. City of Huntington Beach, et al., lawsuit.
Thank you and I hope Huntington Beach enjoys a Happy 4* of July.
Michael E. Gates, City Attorney
OFFICE OF THE CITY ATTORNEY
CITY OF HUNTINGTON BEACH
2000 Main St., Fourth Floor
Huntington Beach, CA 92648
Ph: (714) 536-5538 Fx: (714) 374-1590
2 ФІ
GUTIERREZ | PRECIADO | HOUSE
ATTORNEYS AT LAW
3020 East Colorado Boulevard, Pasadena, California 91107 Telephone 626.449.2300 | Facsimile 626.449.2330 | gphlawyers.com October 29, 2021
To: Michael Gates, City Attorney
From: Calvin House, Partner
Re: Neal Moore and Scott Field v. Michael Gates and the City of Huntington Beach This report addresses the questions you posed to me concerning the handling of the above-captioned matter in an email dated August 3, 2021. As I understand it these questions were raised by the Huntington Beach City Council, which, upon the advice of City Manager Oliver Chi, has retained Craig Steele from the Richards Watson Gershon firm to investigate these questions.
You have asked for my independent analysis because of concerns about the independence and objectivity of Mr. Steele's investigation. I understand from you that Mr. Steele was previously retained by Mr. Chi as the City Attorney for the City of Monrovia while Mr. Chi was the City Manager there. Shortly after becoming the City Manager for the City of Huntington Beach, Mr. Chi arranged for Mr. Steele to manage legal matters for the City. Usually, when a public body seeks an independent evaluation of the propriety of certain actions, it retains someone with no existing ties to any party with an interest in the matter to avoid the appearance of bias. I have never provided legal services to you or to the City of Huntington Beach, and have no ties either to you or to anyone else involved in the lawsuit. Because Mr. Steele's ability to continue earning legal fees from the City is dependent upon Mr. Chi and the City Council, his conduct of the investigation may create an appearance of bias.
I address the questions in the order you provided them to me:
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1. Are the Greenberg Gross legal fees for the handling of the Neal Moore, Scott Field v. HB City, Gates matter improper, unreasonable, and excessive? If the answer is yes, who at the City is responsible for authorizing payment on improper, unreasonable, and excessive fees? The blended hourly rate of $495 per hour and the total amount paid of $1,338,541.91 are not improper or unreasonable for a high stakes employment lawsuit. However, public employers like the City of Huntington Beach typically do not pay prevailing market rates. For example, all the other responses to the request for proposals that led to selection of the Greenberg Gross firm show lower rates for attorneys with comparable experience to the Greenberg Gross attorneys who worked on the lawsuit.
The other proposals offered rates for senior attorneys that ranged from $210 per hour to $375 per hour.
The fee difference may be in part attributable to the fact that Greenberg Gross does not appear to have any substantial experience in representing governmental entities. Its response to the request for proposals did not identify any such experience. Its website (ggtriallaw.com) bills the firm as "Trial Lawyers for High-Stakes Business Cases." The other firms that responded to the request for proposals all highlighted their representation of government clients, and are well known for that type of work.
That said, it is not unheard of for government agencies to pay firms like Greenberg Gross comparable rates. For example, the Miller Barondess firm (millerbarondess.com) is another well-regarded litigation firm, which has done public entity work. The County of Los Angeles has been paying the firm a blended rate of $495 per hour for litigation involving the Los Angeles County Sheriff. The City of Inglewood entered into an agreement with the firm in January 2020 to pay a blended rate of $650 per hour.
A cursory review of the invoices submitted by the Greenberg Gross raises some questions about the billing. For example, there are multiple instances of more than one attorney from the firm participating in events, such as conference calls, meetings among themselves, interviews with City witnesses, and depositions. Many hours were billed to routine tasks. Preparing an outline for Field's deposition consumed 31.2 hours.
Preparing an outline for Moore's deposition consumed 20.6 hours. Those hours do not include the many hours devoted to compiling and reviewing documents to be used at the depositions. A legal fee audit might turn up additional questionable billing.
The City Council approved the hourly rate when it approved the agreement to retain Greenberg Gross. Only the Council has authority to appropriate City money to pay legal 3 | Page
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October 29, 2021
fees. It continually appropriated the funds to pay the bills submitted by Greenberg Gross during the pendency of the lawsuit.
2. From the work arrangement in the handling of the case, do you see any conflicts of interest or conflicts violations by the City Attorney or anyone else?
No. You, as the City Attorney recused yourself from defense and management of the case, and arranged a process that led to the City Council's engagement of Greenberg Gross as outside counsel to defend the lawsuit. When the lawsuit was discussed with the City Council, you left it to Brian Williams and Greenberg Gross to do the briefing.
Since you were not representing either the City or yourself in the lawsuit, you could not have been engaged in a conflict of interest as an attorney. Further, since the allegations of the lawsuit concern actions that you took in the performance of your duties as the City Attorney, your interests and the City's are aligned. If your actions had been found to be unlawful, the City would have been liable. If they were not found to be unlawful, the City would not have been liable. See Beyda v. City of Los Angeles (1998) 65 Cal.App.4th 511; Gov. Code, § 815.3.
3. Since Mr. Williams left the City's employ, and before the conclusion of the lawsuit, do you see any conflicts of interest for the City of Huntington Beach or any wrongdoing on the part of the City Attorney's Office with regard to Mr. Williams continuing to work on the Matter? There was no wrongdoing or conflict of interest in the continuing involvement of Brian Williams in the lawsuit after he left his job with the City to join Greenberg Gross.
Rule 1.11 of the California Rules of Professional Conduct provides that a lawyer who has been a government employee "shall not otherwise represent a client in connection with a matter in which the lawyer participated personally and substantially as a public official or employee, unless the appropriate government agency gives its informed written consent to the representation." Comments to the rule make clear that the "client" who may not be represented is a private client. It is not intended to bar the government lawyer from continuing his representation of the agency where he formerly worked.
Because Mr. Williams was representing the City in the lawsuit after he joined the Greenberg Gross firm, and not a private client, he did not violate Rule 1.11.
The California Political Reform Act prohibits any public employee from using his official position "to influence, any governmental decision directly relating to any person with 4 | Page
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whom he or she is negotiating, or has any arrangement concerning, prospective employment." (Gov. Code, § 87407) The ban applies if the official "either personally or through an agent, is negotiating or has an arrangement concerning prospective employment" with the person to whom the governmental decision relates. (Cal. Admin.
Code, tit. 2, § 18747.) The decision to retain the Greenberg Gross firm to defend the lawsuit was made in February 2019. Mr. Williams told me that did not have any communications with the Greenberg Gross firm about his employment until the fall of 2000. He did not initiate the contact. Therefore, he did not violate the ban on influencing a decision relating to a person which whom he was negotiating or had an arrangement concerning prospective employment.
4. From the time of the initial RFP for outside legal services, through the time of settlement in May of 2021, do you have any criticisms about the handling of the Neal Moore, Scott Field v. HB City, Gates lawsuit? No. I have reviewed the court dockets for both the federal court and the state court actions and the invoices presented by the Greenberg Gross firm. I have also discussed some of the litigation strategy with Mr. Williams. All the steps taken to defend the lawsuit were reasonable for a high stakes employment lawsuit. They were also made necessary by the high settlement demands from Moore and Field. In May 2020 (after the lawsuit had been in litigation for well over a year), the plaintiffs demanded a combined $5.8 million. They repeated that demand in August 2020. The lawsuit settled for $2.5 million in May 2021, less than half the amount of the 2020 demands.
Further, the public record of City Council agendas, and my interview with Mr. Williams confirm that the lawsuit was frequently discussed with City Council. The lawsuit was on the closed session agenda nine times between January 14, 2019, and December 21, 2020. Those discussions provided the City Council with multiple opportunities to ask questions about the billing and provide input into the course of the litigation. With the input from those closed session proceedings, the Council approved the major strategic decisions, the funding for the legal fees incurred to conduct those decisions, and the settlement that resolved the case.
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October 29, 2021
From the time of the initial RFP for outside legal services, through the time of settlement in May of 2021, do you have any criticisms of Mr.
Gates's conduct in the handling of the Neal Moore, Scott Field v. HB City, Gates matter?
No. Because you were a named defendant in the lawsuit, you arranged a process that led to the City Council's engagement of Greenberg Gross as outside counsel to defend the lawsuit. You recused yourself from the management and defense of the lawsuit. You did not give any advice to the City Council on how the litigation should be managed, leaving such communications to Mr. Williams and the Greenberg Gross firm.
Further, as a City official, you were entitled to a defense provided by the City under Government Code section 995. Therefore, it was appropriate for the Greenberg Gross firm to defend you and the City against the allegations of the lawsuit.
Waiver of Any Claim of Privilege
I waive any privilege I may have personally to prevent disclosure of this report. You are free to assert or waive any privilege you may have in this communication.
Cine lakel