RESPONSE TO H ITEM
PART 1
Michael E. Gates, City Attorney
December 20, 2022 H Item by Council Member McKeon:
A lawsuit was brought in 2018 by former attorneys Neal Moore and Scott Field against the City of Huntington Beach and City Attorney, Michael Gates. For years, City Council met with handling attorneys, including outside attorneys from Greenberg Gross in Closed Session about the lawsuit. The 2018 City Council viewed this lawsuit as a frivolous suit, else the City Council would not have met in Closed Session multiple times to direct the handling attorneys for three years to prepare this lawsuit for trial.
RICHARDS WATSON GERSHON REPORT
December 20, 2022 H Item by Council Member McKeon:
Right after the 2020 November election, the new City
Council decided to settle that lawsuit. Then, that City Council retained outside attorney Craig Steele of the law firm of Richards Watson Gershon to “investigate” our City Attorney, Mr. Gates, regarding the handling of the multi- year litigation by outside attorneys from Greenberg Gross.
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December 20, 2022 H Item by Council Member McKeon:
The City Attorney is the City’s attorney designated by the people at election time. The City Charter is clear about this and City Council was not at liberty to hire their own attorney behind closed doors to conduct any
investigations or perform any legal work. This Steele
Investigation, in my view, was nothing more than a
political witch hunt - all done in secret.
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December 20, 2022 H Item by Council Member McKeon:
Mr. Steele never interviewed Mr. Gates, the person at the center of this “investigation,” nor did Mr. Steele interview anyone from Mr. Gates's office, any of the Greenberg Gross attorneys, and he did not interview anyone of the
Councilmembers who were actually present in the 10 Closed Session meetings and who made the decisions and witnessed first hand Mr. Gates's conduct in the handling of the case.
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December 20, 2022 H Item by Council Member McKeon:
4-3 Vote, COUNCIL ACTION:
1. Waive the attorney-client and Closed Session confidentiality privileges for the Closed Session Meetings on the Moore, Field v. City, Gates lawsuit for the sole purposes of
allowing Mr. Gates to give his side of the story - to return to City Council with a public presentation on what was
discussed and decided (by Councilmember votes) in those Closed Sessions
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December 20, 2022 H Item by Council Member McKeon:
4-3 Vote, COUNCIL ACTION:
2. Waive the claimed attorney-client and any other
confidentiality privilege on any and all communications between City, Councilmembers and Craig Steele and his
attorneys regarding this "investigation.” City Manager to preserve all emails/texts/communications between City
and Craig Steele and RWG and between former City
Manager Oliver Chi and RWG
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December 20, 2022 H Item by Council Member McKeon:
4-3 Vote, COUNCIL ACTION:
3. City Attorney, after review of the aforementioned
communications and RWG invoices, return to City Council with recommendations if any further action could be taken against RWG for the spending of taxpayer money on the
"investigation," done behind closed doors and away from the public visibility and accountability.
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Moore, Field v. City, Gates Lawsuit
Filed in 2018 by attorney Neal Moore, who had voluntarily retired from the City Attorney’s Office in 2017, and attorney Scott Field, who even though having filed a lawsuit, continued to work in the City Attorney’s Office for 3 more years. Both alleged age-discrimination and a hostile work environment.
The defense of the case was that those two attorneys, after years of many attempts at correction, refused to meet the expectations of the City Attorney’s Office; and, after many years of demonstrating “very poor” legal judgment, both were disciplined for lack of competence, of which had resulted in substantial monetary exposure to the City.
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Moore, Field v. City, Gates Lawsuit
All of 2019 and 2020, the Moore, Field v. City, Gates Lawsuit had been litigated aggressively, and for those two full years, the 2018 City Council repeatedly voted to take the case to trial and authorize payments for outside counsel, i.e., that there was no merit to the case or to settling. (Peterson, Semeta, Hardy, Carr, Posey, Delgleize, Brenden).
Two years and the previous City Council never expressed concerns over the handling of the case; not once. There was never an indication or a hint of any concern by anyone about ethics or conflicts of interest.
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Moore, Field v. City, Gates Lawsuit
November 3, 2020 – City Election
Kalmick, Moser and Ortiz elected
New City Council sworn in December 2020
Carr, Moser, Kalmick, Posey, Delgleize, Ortiz, Peterson
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Moore, Field v. City, Gates Lawsuit
In an unexpected 180 turn, during a April 19, 2021 Closed Session, the new 2020 City Council voted 5-2 to settle the case for $2.5 million. And, newly elected Council Member Dan Kalmick suddenly called for an “Independent Investigation” into the City Attorney’s “handling” of the Moore, Field v. City, Gates Lawsuit. Council Member Kalmick alleged “ethical” concerns over “conflicts of interest” and “overbilling” by outside law firm, Greenberg Gross. Those allegations were never substantiated.
City Council voted 5-2 to have former City Manager retain an Independent Investigator to investigate/review the City Attorney and the case. (Carr, Moser, Kalmick, Posey, Delgleize – Aye; Ortiz, Peterson, No)
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Moore, Field v. City, Gates Lawsuit
While the new 2020 City Council voted 5-2 to settle this lawsuit, which had been considered “frivolous” by the previous City Council, for $2.5 million, I refused to settle. I was not a part of the Settlement Agreement, I did not consent to settlement, and I did not sign the agreement. Nevertheless, I was dismissed by the Plaintiff attorney because they were pleased with the very favorable settlement and wanted to put case to rest.
(Carr, Moser, Kalmick, Posey, Delgleize – Aye; Ortiz, Peterson, No)
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“Independent Investigation”
Former City Manager Oliver Chi undertook to retain an
“Independent Investigator” to review the City Attorney
(Gates) and the case. Notably, the newly seated City Council after 2020 never voted publicly to waive any attorney-client or Closed Session privileges. This is important. To properly waive any privilege or confidentiality by a Council, it has to be recorded publicly. This never occurred.
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“Independent Investigation”
Hiring an attorney for an “Independent Investigation” is used to achieve an OBJECTIVE review of the facts. “Independent” or “Special” Counsels are “outsiders” who independently gather facts and independently evaluate them. They are disinterested in the outcome and they do not “work with” the party that hired them either for other work, or to conduct the investigation or prepare final reports.
Importantly, Independent or Special Counsels do not establish an attorney- client relationship with the party who retained them to conduct the Independent Investigation. We retain Independent Investigators all the time – there is no attorney-client privilege. This is important.
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“Independent Investigation”
Oliver Chi hires Craig Steele
of Richards Watson Gershon
1. Steele worked with Chi for years in Monrovia
2. Worked for Mayor Joe Kalmick for years as City Attorney of Seal Beach
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“Independent Investigation”
The California League of Cities advises to refrain from selecting lawyers to serve as independent or outside counsel who are friends or colleagues of council members to avoid the
appearance of “cronyism.” Practicing Ethics: A Handbook for Municipal Lawyers, League of Cal Cities.
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“Independent Investigation”
Steele boasts that he worked for partisan:
“political figures such as U.S. Senators Albert Gore, Jr., Alan Simpson, and Lloyd Bentsen, Assembly Speaker
Willie Brown, Los Angeles Mayor Tom Bradley, and
Honolulu Mayor Frank Fasi.” – Craig Steele
https://www.rwglaw.com/people-craig-steele
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“Independent Investigation”
Invoices show that from 2020, the City has paid nearly
$200,000 for legal services to Craig Steele and his firm, RWG, where he is an equity partner. These legal services were quietly requested by the former City Manager Oliver Chi without City Attorney consent or approval.
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“Independent Investigation”
In a recently discovered email, Steele revealed his bias and lack of “Independence.” On December 16, 2021, he wrote to Chi about the upcoming 2022 proposed Charter Amendments:
“ask the voters to improve the system and then he [Gates] can take all his arguments and shove them up his ass”
- December 16, 2021 email from Craig Steele to Oliver Chi
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“Independent Investigation”
Independent?
or Advocate?
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“Independent Investigation”
RWG Report by Craig Steele of July 5, 2022
First Sentence:
“The City Council requested in May of 2021 that Richards, Watson & Gershon (“RWG”) provide an independent review
of the City’s handling of an employment-related lawsuit against City Attorney Michael Gates and the City, brought by two now-former employees in the City Attorney’s office.”
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“Independent Investigation”
RWG Letter of December 23, 2021 to FPPC
First Sentence:
“I have been retained to serve as special counsel to the City Council of the City of Huntington Beach for a review of the City’s handling of a lawsuit...”
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“Independent Investigation”
RWG Report by Craig Steele of July 5, 2022
Was Steele even qualified to review “litigation” matters? Second Paragraph – NO LITIGATION EXPERIENCE:
“I have been a Municipal Law practitioner for my entire career of nearly 30 years, with over 25 years as a sworn contract City Attorney in four cities. I have been the City Attorney in Monrovia since 2002, where former City Manager Oliver Chi served for a period as City Manager prior to coming to Huntington Beach.”
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“Independent Investigation”
RWG Report by Craig Steele of July 5, 2022
Was Steele even qualified to review “litigation” matters? Third Paragraph – Tasked Outside of His Expertise:
“I was engaged to look at the record and evaluate how the litigation was handled, and to advise whether it might
have been handled in a different way…”
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“Independent Investigation”
RWG Report by Craig Steele of July 5, 2022
After the City spent over a year of time on this “Intendent Investigation,” and what appears to be tens of thousands of dollars paid to Craig Steele and RWG, the Steele final
Investigative Report of July 5, 2022 concluded…
“I did not find evidence of any violation of the law by the City Attorney, the current members of his office, or the Greenberg Gross firm.” pg. 27 RWG Report
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Moore, Field v. City, Gates Lawsuit
Brief Case Handling History
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Moore, Field v. City, Gates Lawsuit
January 10, 2019 – Served with Lawsuit
SAME DAY – I Internally Announced my Recusal
Designated Williams to Conduct RFP
Discussed in Closed Session with City Council 10 times
January 22, 2019 – Gates announces recusal verbally
and in writing
Council Votes 7-0 for Williams’ rec’s;
Retain law firm of Greenberg & Gross
(Posey, Peterson, Hardy, Carr, Semeta, Brenden & Delgleize)
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Moore, Field v. City, Gates Lawsuit
What is “Recusal”? – An attorney steps away from
representing a client due to a “conflict of interest,”
which is a legal determination made by a lawyer
Defendants/Clients still “communicate” and participate
in the attorney-client relationship (Rules Professional Conduct, Rule 1.4)
There was no conflict of interest to participate in the litigation as a defendant
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Moore, Field v. City, Gates Lawsuit
Discussed in Closed Session with City Council 9 times
June 3, 2019 – Status of Case by attorneys
No Vote Taken
(Posey, Peterson, Hardy, Carr, Semeta, Brenden & Delgleize) July 1, 2019 – Status of Case by attorneys
Council Votes 6-1 (Peterson absent) to
authorize $200,000 for GG attorneys fees
(Posey, Peterson, Hardy, Carr, Semeta, Brenden & Delgleize)
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Moore, Field v. City, Gates Lawsuit
Discussed in Closed Session with City Council 9 times
March 2, 2020 – Status of Case by attorneys
Council Votes 7-0 to authorize
$750,000 for GG attorneys fees
(Posey, Peterson, Hardy, Carr, Semeta, Brenden & Delgleize) May 18, 2020 – Status of Case by attorneys
Council Votes 7-0 to reject
$5.8 million demand by plaintiffs
(Posey, Peterson, Hardy, Carr, Semeta, Brenden & Delgleize)
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Moore, Field v. City, Gates Lawsuit
Discussed in Closed Session with City Council 9 times
September 8, 2020 – Status of Case by attorneys
Council Votes 7-0 to reject
Renewed $5.8 million demand by plaintiffs
(Posey, Peterson, Hardy, Carr, Semeta, Brenden & Delgleize) November 2, 2020 – Status of Case by attorneys
Council Votes 7-0 to authorize
$500,000 for GG attorneys fees
(Posey, Peterson, Hardy, Carr, Semeta, Brenden & Delgleize)
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Moore, Field v. City, Gates Lawsuit
Discussed in Closed Session with City Council 9 times
November 3, 2020 – ELECTION
(Posey, Peterson, Kalmick, Carr, Moser, Ortiz & Delgleize) December 21, 2020 – Status of Case by attorneys
No Vote Taken
(Posey, Delgleize, Kalmick, Carr, Moser, Ortiz & Peterson)
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Moore, Field v. City, Gates Lawsuit
Discussed in Closed Session with City Council 9 times
April 19, 2021 – Status of Case by attorneys
Council Votes 5-2 to accept
$2.5 million settlement proposal
New Council Majority “orders”
“Independent Investigation”
(Posey, Delgleize, Kalmick, Carr, Moser, Ortiz & Peterson)
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Moore, Field v. City, Gates Lawsuit
Take-aways from Closed Sessions:
• The previous City Council (Peterson, Hardy, Brenden, Semeta, Delgleize, Carr, Posey) voted regularly to approve the $1.5 million spent on Greenberg Gross legal services.
• I recused myself on day one and acted at all times in the lawsuit handling as a defendant – no “conflicts of interest.”
• The case was viewed as “frivolous” until the new 2020 City Council was seated, then it was settled.
• The $2.5 million settlement yielded a $1 million payout to Scott Field who ran against me for City Attorney in 2022 and was endorsed by Kalmick and Bolton.
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Moore, Field v. City, Gates Lawsuit
Again, at the April 19, 2021 Closed Session, newly elected Council Member Dan Kalmick suddenly called for an “Independent Investigation” into the City Attorney’s “handling” of the Moore, Field v. City, Gates Lawsuit.
Council Member Kalmick alleged “ethical” concerns over “conflicts of interest” and “overbilling” by outside law firm, Greenberg Gross.
Yet, neither Kalmick nor Moser and ultimately Bolton were present during any of the City Council Closed Sessions discussing this lawsuit during the preceding two years. They would have not basis to have any “concerns.” (Carr, Moser, Kalmick, Posey, Delgleize, Ortiz, Peterson)
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Review of Records revealed the following Preliminary Findings, which will be reviewed further:
1. On multiple occasions, Oliver Chi forwarded to Craig Steele highly confidential and privileged Closed Session Memos spanning the two years prior that had been prepared by the City’s Attorneys.
2. Oliver Chi and Craig Steele met in Closed Session with the new 2020 City Council on approximately 4 occasions (by Zoom) to discuss the “Independent Investigation,” yet there is no Brown Act authority to do so, and no confidentiality or privilege attaches to such closed-door discussions. Peterson refused to participate on the objection that such meetings are illegal.
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Review of Records revealed the following Preliminary Findings, which will be reviewed further (continued):
3. On multiple occasions, Oliver Chi forwarded to Craig Steele highly confidential and privileged ongoing email communications, attachments that the City Attorney had directed to City Council.
4. For months, Steele helped develop and provide counsel for all the 2022 Charter Amendments
5. Steele helped Delgleize and others with “talking points” to be read at the City Council meetings regarding 2022 Charter
Amendments advocacy and ability to hire own attorneys.
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Review of Records revealed the following Preliminary Findings, which will be reviewed further (continued):
6. Among those Charter Amendments, the initial proposal was to take the “Elected” City Attorney away from the people and convert the City’s form of government to an appointed attorney – one hired by the Council. Steele was involved in helping with this.
7. While I asserted attorney-client privilege between me and the Greenberg Gross attorneys, over my rightfully-placed objections, Chi secretly directed IS staff to access the email server and surreptitiously take my privileged and confidential emails, then Chi forwarded “54” of my private email communications with my attorneys to Craig Steele.
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Review of Records revealed the following Preliminary Findings, which will be reviewed further (continued):
8. Oliver Chi and Craig Steele had circulated drafts of the RWG Craig Steele “Investigative” Report to all City Council, except for Peterson, soliciting a review by the Council Members and feedback, which is in violation of the Brown Act. Council Members did review and provide feedback. Peterson had requested of Oliver Chi to not include him in those communications on the belief that it was illegal.
9. Craig Steele and/or his staff met over the course of months at City Hall and/or Zoom with Council Members to discuss the “Independent Investigation” and proposed 2022 Charter Amendments.
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Review of Records revealed the following Preliminary Findings, which will be reviewed further (continued):
10.Craig Steele met with Oliver Chi, Kim Carr, Mike Posey, Dan Kalmick, Rhonda Bolton, Natalie Moser, and Barbara Delgleize to invade prior attorney-client privileged communications with the City Attorney, and gather information about prior confidential Closed Session discussions with the City’s Attorneys and/or the Greenberg Gross attorneys.
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Notably, I was never interviewed by Craig Steele or his firm as part of his “Independent Investigation” of me. Normally the subject is interviewed.
None of my staff were interviewed. None of the Greenberg Gross Attorneys were interviewed by Steele. None of the following former Council Members who were key witnesses to the subject Closed Sessions were interviewed: Peterson, Hardy, Semeta, or Brenden.
Yet, records show Bolton, Moser, and Kalmick, who were not present during any of the handling of the lawsuit from 2019 through its settlement, were not present for any of the Closed Sessions, and had no information about what had happened, in 2019 and 2020 were interviewed by Steele.
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Even though Steele claimed to have been an “Independent” “Special” counsel, when asked for records, he claimed “attorney-client privilege,” which is not possible if independent.
Even though Steele was commissioned for an “Independent Investigation:” • He worked for Chi in Monrovia, for Kalmick in Seal Beach, and then for Chi again in Huntington Beach earning over $200,000 for his law firm from our City – he is an equity partner and has a financial interest, that is not “independent.” • He met with and communicated with Kalmick, Bolton, Moser and Chi regularly – in person, by email, and during improper Closed Sessions
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Even though Steele was commissioned for an “Independent Investigation:” • He shared early drafts of his report with the City Council Members (not including Peterson over his objections) for months before issuing the Steele final report; • He received highly confidential City Attorney emails and Closed Session attorney work product memos from years past – while having no attorney-client privilege relationship as an “Independent” “Special” counsel to protect those; • In a December 2021 email to Oliver Chi, Steele made a statement against (Gates), which revealed his bias – undermining his independence; • He boasted about working for highly partisan politicians in the past.
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THANK YOU
By Michael E. Gates, City Attorney