HomeMy WebLinkAboutAccept Legal Issues Ad Hoc Subcommittee Recommendation to Wa (2) 2000 Main Street,
Huntington Beach,CA
City of Huntington Beach 92648
File #: 22-593 MEETING DATE: 7/5/2022
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
PREPARED BY: Travis K. Hopkins, Assistant City Manager
Subject:
Accept the Legal Issues ad hoc subcommittee recommendation to waive Attorney-Client Privilege
for limited privileged information in the confidential report prepared by Richards Watson Gershon
pertaining to the City Council direction to conduct a review into the City's overall handling of the
case, Neal Moore and Scott Field v. Michael Gates v. the City of Huntington Beach, et al.
Statement of Issue:
On April 19, 2021, the City Council directed former City Manager Oliver Chi to retain Richards Watson
Gershon (RWG) to conduct a review into the City's overall handling of a litigation matter, brought by two
former employees of the City Attorney's office, Neal Moore and Scott Field. A City Council Legal Issues
ad hoc subcommittee reviewed the confidential report with Mr. Craig Steele of RWG under attorney-client
privilege. By agreement with City Attorney Gates, public release of the report was delayed for
discussions between the City Attorney's attorney and the City Council's attorney. As those discussions
have concluded, Mr. Steele will be transmitting a confidential report to all members of the City Council
prior to the July 5, 2022 City Council meeting. Because Mr. Steele interviewed City Councilmembers and
reviewed other privileged information, the ad hoc subcommittee recommends the City Council waive the
Attorney-Client Privilege for the limited confidential report information, and make the report public. The
litigation has been concluded for over a year, there is no appeal, and there would be no harm to the City
by making the limited information public.
Financial Impact:
There is no fiscal impact to this report. RWG's billing for this matter has been $35,577.00 through May of
2022.
Recommended Action:
A) Receive and File this Request for City Council Action; and
B) Waive Attorney-Client Privilege for limited privileged information in the RWG report and subsequently
release it to the public.
Alternative Action(s):
City of Huntington Beach Page 1 of 2 Printed on 6/30/2022
powere42A Legistar-
File #: 22-593 MEETING DATE: 7/5/2022
Do not approve and retain Attorney-Client Privilege and maintain confidentiality of the RWG report.
Environmental Status:
Not Applicable
Strategic Plan Goal:
Non Applicable - Administrative Item
City of Huntington Beach Page 2 of 2 Printed on 6/30/2022
powered LegistarTM
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 5:00MMUNICAT'®N
Sent from my Wad Meeto pets:, L�s Z2
Begin forwarded message: �1
Agende Item w, / �22- 5��`�--
From: "Gates, Michael" <Michael.Gates@surfcity-hb.org>
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" <AI.Zelinka@surfcity-hb.org>, "Vigliotta, Mike"<MVigliotta@surfcity-hb.org>, "Hopkins,
Travis"<thopkins@surfcity-hb.org>
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. 1 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, 1 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 1 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
1
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, 1 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 41h 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
(4),
GUTIERREZ i PRECIADO = HOUSE
ATTORNEYS AT LAW
3020 East Colorado Boulevard, Pasadena, California 91107
Telephone 626.449.2300 1 Facsimile 626.449.2330 1 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:
2 1 P a g e
Moore v. Gates
October 29, 2021
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 1 P a g e
Moore v. Gates
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 1 P a g e
Moore v. Gates
October 29, 2021
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.
5 1 P a g e
Moore v. Gates
October 29, 2021
5. 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.
Moore, Tania
From: Fikes, Cathy
Sent: Friday, July 1, 2022 8:09 PM
To: Agenda Alerts SUPPLEMENTAL
FW: Item#17, Council Agenda for July 5, 2022
COMMUNICATION
Meeft Do*From:Gino J. Bruno<gbruno@socal.rr.com>
Sent: Friday,July 1, 2022 2:22 PM
To: CITY COUNCIL<city.council@surfcity-hb.org>
Cc:Zelinka, Al<AI.Zelinka@surfcity-hb.org>; Hopkins,Travis<thopkins@surfcity-hb.org>; Gates, Michael
<Michael.Gates@surfcity-hb.org>; Estanislau, Robin<Robin.Estanislau@surfcity-hb.org>
Subject: Item#17, Council Agenda for July 5, 2022
City Council members . . .
As you know, here's what Item #17 on the July 51h City Council meeting agenda says, in pertinent part:
On April 19, 2021, the City Council directed former City Manager Oliver Chi to retain Richards Watson Gershon
(RWG)to conduct a review into the City's overall handling of a litigation matter, brought by two former employees
of the City Attorney's office, Neal Moore and Scott Field. A City Council Legal Issues ad hoc subcommittee
reviewed the confidential report with Mr. Craig Steele of RWG under attorney-client privilege. By agreement with
City Attorney Gates, public release of the report was delayed for discussions between the City Attorney's attorney
and the City Council's attorney. As those discussions have concluded, Mr. Steele will be transmitting a
confidential report to all members of the City Council prior to the July 5, 2022 City Council meeting. Because Mr.
Steele interviewed City Councilmembers and reviewed other privileged information, the ad hoc subcommittee
recommends the City Council waive the Attorney-Client Privilege for the limited confidential report information,
and make the report public. The litigation has been concluded for over a year, there is no appeal, and there
would be no harm to the City by making the limited information public.
1. I reviewed the Minutes of the April 19, 2021 City Council meeting to verify (as anyone can), and,
although there is reference to that litigation in the Closed Session portion of the Agenda, the report out
of action taken in Closed Session was, "NONE." (i) How, (ii) when, and (iii) where did 'the City Council
direct[ed] former City Manager Oliver Chi to retain' this outside lawyer? Was there a Brown Act
violation here, where action is taken that is hidden from the public?
2. 1 am not familiar with any "City Council Legal Issues ad hoc subcommittee." Please explain to me how
this subcommittee came about. When was it established? By what authority was it established? For
what purpose was it established? For how long was it to be viable? Who are/were on this ad hoc
subcommittee? Who empowered this subcommittee to review the alleged 'confidential report'? What
are/were the parameters of the subcommittee's authority? Where can I find a copy of its enabling
documents? Was this another Brown Act violation?
3. By what authority did there become a "City Council's attorney" other than our City Charter-provided City
Attorney? Who authorized payment of his billings?
4. How can there be an 'Attorney-Client Privilege' with an attorney who is not the City's attorney, since our
City Charter says we only have ONE city attorney? If just anyone who is a member of the California
State Bar sends an opinion/report to the City Council in non-compliance with the City Charter, is it
subject to the Attorney-Client Privilege?
1
Moore, Tania
From: AnonymousCitizen2030 <AnonymousCitizen2030@proton.me>
Sent: Tuesday,July 5, 2022 9:02 AM
To: supplementalcomm@surfcity-hb.org; CITY COUNCIL
Subject: No on Agenda Items 17 &22
HB City Council,
I oppose your agenda items 17 & 22.
Cease and desist from your globalist efforts in trying to destroy HB.
Sincerely,
Jeremy
P.S. Also, take down those disgusting rainbow flags. Do you not know most people are Christians that live here?
Bigots!
Sent with Proton Mail secure email.
SUPPLEMENTAL
COMMUNICATION
Meeting Date:
Agenda ham No.: ;9�i? (aa-J4-q-3
Lain
City of Huntington Beach
Memorandum
HUNTINGTON BEACH
TO: Laserfiche System ID 5879478; Legistar File ID No. 22-593
FROM: Robin Estanislau, City Clerk 0*
DATE: February 6, 2023
SUBJECT: REMOVAL OF RICHARDS WATSON GERSHON (RWG) REPORT
At their July 5, 2022 meeting, the Huntington Beach City Council approved the release of a
confidential report prepared by Richards Watson Gershon (RWG) pertaining to the Moore
and Field v. the City of Huntington Beach, lawsuit. City Clerk staff placed the report into
Laserfiche, the City's electronic database management system, and Legistar, the City's
agenda management system.
At their December 20, 2022 meeting, the Huntington Beach City Council directed that the
City Clerk remove all copies and/or links to the aforementioned report from the City's
website as soon as possible. Pursuant to Council direction, the report has been removed
from Laserfiche and Legistar.
The RWG report remains a public record, and a copy of it may be obtained by submitting
a public records request through the City's Public Records Request Portal located at:
https.//huntingtonbeachca.qov/government/public-records-requests/
RECEIVED FROM YU444X
AS n KX FOR uHCK I► ErNrc
j ' O LE I HUBER LLP �-
OF
u f Y A R � r' 'r � � t v � OFFICE
RM ESTMN W.CITY
Ual
Derek P.Cole REPLY r0:
dcole@colehuber.com ®RosEV[LLE ❑ONiARIO
January 3, 2022
VIA E-MAIL AND U.S.MAIL
Scan Joyce Craig A. Steele, Esq.
Interim City Manager Richard Watson Gershon
City of Huntington Beach 350 South Grand Avenue
2000 Main Street 37th Floor
Huntington Beach, CA 92648 Los Angeles, CA 90071
E-Mail: sean.ioyce@surfcity-hb.org E-Mail: csteele@rwglaw.com
Re: Demand for Termination of All Work on Purported Audit of City Attorney
Michael Gates
Dear Messrs. Joyce and Steele:
This office represents Michael Gates, the elected Huntington Beach City Attorney. We
write because we understand, based on conversations with former City Manager Oliver Chi, a
written report may be forthcoming documenting an"audit"Mr. Steele is performing concerning
a recent lawsuit against the City Attorney's Office. As to the subjects of this audit, we are
advised that the City Council has been meeting in closed session and engaging in other
communications with Mr. Steele in violation of the Ralph M. Brown Act and the City Charter.
By this letter, we request that all work on the audit immediately cease and that all other
necessary actions be taken to discontinue the Charter and Brown Act violations. Issuance of any
report concerning the audit would only serve to perpetuate the violations that have already
occurred. Overall, we ask that all Charter and legal violations immediately end, so no further
harm is done to the City's interests.
The meetings and communications to which we refer involve an alleged audit of certain
matters Mr. Gates has handled or has been involved in as City Attorney. We understand Mr.
Steele and his law firm may be undertaking, among other things, a review of Mr. Gates' actions
related to a recent age-discrimination lawsuit involving the City Attorney's Office. We also
understand Mr. Steele may have given advice related to the recent"H item" the City Council
considered during its December 21, 2021 meeting, along with communications by Mr. Gates and
this office related to that item(Agenda Item 2021-1088). As we explain,any communications
about these matters between Mr. Steele and the City Council (or any individual councilmembers
or City employee) is unlawful, and must immediately be discontinued.
As a starting point,under the City Charter, Mr. Steele and his law firm cannot enter into
any agreement for legal services that is not subject to City Attorney direction or supervision. I
have thoroughly addressed the City Charter provisions concerning contracting for legal services
ADVANCING YOUR AGENDA 2281 Lava Ric:icle Court,site 300 3401 Centrelake Ur.,Suite 670
Roseville,CA 95661 Ontario,CA 91761
00083063.1 Phone:916.780.9009 Phone:909,230_4209
Fax:916,7 80.90.50 Fax:909.937.2034
Sean Joyce
Craig A. Steele, Esq.
January 3, 2022
Page 2
in a December 21, 2021 letter to the City Council concerning the recent proposed"H item." I
incorporate that discussion by reference here. (See Attachment A.) While audits of actions
taken by the City Attorney's Office may be permissible under limited and appropriate
circumstances,they still must be initiated through the City Attorney's Office, which did not
happen here. The Council may not simply bypass the City Attorney's Office and contract
directly with outside legal counsel,as we understand the Council has done with Mr. Steele and
his firm.
We also understand that Mr. Steele's services may have been retained because of a
perceived conflict of interest Mr. Gates was believed to have with the subjects of the audit. An
alleged conflict of interest, however, furnishes no basis from altogether excluding the City
Attorney's Office from its supervisorial role over City legal services. To the extent Mr. Gates
himself had any actual or potential conflict of interest, an ethical wall could have been created
between him and the other office attorneys. This is a common practice in in-house municipal
legal offices. (See, C.E.B., California Municipal Law Handbook, § 2.187 [2021 ed.].)And, even
when retention of outside counsel is still warranted after an ethical wall is created,at least one
attorney in the City Attorney's Office—such as the Assistant City Attomey—should be
responsible for reviewing outside counsel's agreement and ensuring such counsel's services are
performed timely and competently.
Yet here, with the exception of the age-discrimination litigation—in which Mr. Gates was
a defendant—we are unaware of any actual or potential.conflict of interest that could justify Mr.
Gates' wholesale exclusion. It appears that members of the City Council believe that a conflict
of interest exists whenever they disagree with an opinion of or action Mr. Gates takes. But
conflicts of interest, as legally understood, are defined by the California Rules of Professional
Conduct. In the context of municipal attorney-client relationships, Rules 1.7, 1.9, 1.11,and 1.13
are the provisions that principally govern. We are aware of no basis under these rules by which
Mr. Gates could be excluded from any discussions concerning matters unrelated to the age-
discrimination lawsuit.
We also note that discussions concerning any and all subjects encompassed by the audit
have improperly occurred in violation of the Brown Act. We understand that the audit subjects
have been discussed in closed session at City Council meetings held on July 20,2021,November
2,2021, December 7, 2021, and December 2 t, 2021, under the exception for exposure to
anticipated litigation. A.closed-session discussion is,however, appropriate under this exception
only when:
"A point has been reached where, in the opinion of the legislative
body of the local agency on the advice o{its legal counsel, based
on existing facts and circumstances,there is a significant exposure
to litigation against the local agency." (Gov. Code,
§ 54956.9(d)(2), emphasis added.)
ADVANCING YOUR AGENDA :2281 Lava Rkdge(,Oud,Suite.3!0 340! Cer. ( Wlke ref.,Su11e 610
Roseville,C.A. 95661 Qnlanu,CA 91761
00083063.1 Dhone:916.780.9009 Monti 909.230.4209
Fax:916.;80.'050 Fax:909.937,2034
Sean Joyce
Craig A. Steele, Esq.
January 3, 2022
Page 3
Under this Brown Act provision, a City Council cannot meet in closed session to discuss
anticipated litigation without advice from its City Attorney that"existing facts and
circumstances"' justify the discussion. To this end, Mr. Gates has never advised the Council that
potential litigation could be anticipated for any subjects of the audit. Nor is he aware of any
basis to conclude that any one of the statutorily defined facts or circumstances exist. There
accordingly has never been any basis for the Council to convene in closed session to discuss any
subjects the audit encompasses.
In short, the City Council has no basis to be considering the purported audit, and Mr.
Steele and his office have no.basis to be performing the audit. As we explained in our December
21, 2021 letter, municipal contracting must carefully follow the requirements of a city's charter
and ordinances. Here, legal advice has been given entirely outside the City Attorney's direction
or supervision, by legal counsel who has not properly established an attorney-client relationship
with the City Council, and who is allowing closed-session discussions to occur in plain violation
of the Brown Act. These actions flout basic and well understood municipal-law requirements.
Because the purported audit was never properly initiated under the City Charter, and
because there has never been a lawful basis for the Council and Mr. Steele to be discuss the audit
subjects in any event, Mr. Gates makes the following demands:
1. All work on the audit be immediately stopped, and
no further work on the audit be undertaken, including the
preparation of or finalization of any written report;
2. No further closed session meetings, under the
anticipated litigation exception or otherwise, be placed on any
City Council agenda concerning the subjects of the audit;
3. Mr. Steele and members of his law firm refrain
from having any discussion with any councilmember or group of
councilmembers, in writing or orally, about the subjects related to
the audit; and
4. All records related to the audit be provided to Mr.
Gates as requested in the CPRA request attached as Attachment
B to this letter. We note that,because Mr. Steele and his law firm
did not properly enter into any agreement for this audit under the
City Charter, they cannot lawfully claim attorney-client privilege
over any communications with the City Council or any individual
counci.lmembers concerning the subjects of the audit.
The Brown Act identifies five situations in which such facts and circumstances exist.
(See, Gov. Code, § 54956.9(e)(1)-(5).)
ADVANCING YOUR AGENDA 228' Lavc,Ria9e C: urt,suite 300 34o 1 :.entreloke Dr.,Suite 670
Roseville,CA 95661: Ontario,CA 91/61
00083063.1 Phone:916.780.9009 Phone:909.230.4209
Fax:916.780.90,50 Fax.'909.937.?034
Sean Joyce
Craig A. Steele, Esq,
January 3,2022
Page 4
We will expect a prompt written confirmation that all the requested actions will be taken,
such that further action on Mr. Gates's part will not be necessary. Should you have any
questions in advance of providing that confirmation,please do not hesitate to contact me by
telephone (direct line: 9.16.787.6520)or email (dcole@colehuber.com.)
Sincerely,
Derek P. Cole
COLE I'IUBER LLP
DPC/kgm
Attachments (A&B)
cc: Michael Gates, City Attorney
Mayor and Members of the City Council (via electronic delivery only to
city.council@surfcity-hb.org)
Robin Estanislau, City Clerk
ADVANCING YOUR AGENDA 2281 Lova Ridge Court,suite 300 3401 Centrelake Dr.,suile 670
RosevIll ,CA 95661 Cntcario,CA 91761
000830631 I't'icxoe'.916.780.9009 Phone:909.23G.4209
Fax:916.780.9050 ax:909.937.2034
ATTACHMENT A
COLE . HUBERLLP
A t .
Derek P.Cole REPLY To:
deole@colehuber.com H ROSEVILLE ❑ONTARIO
December 21, 2021
VIA ELECTRONIC DELIVERY
CITV.COtJNCILnu,SIIRFCITY-HB.ORG
Mayor Barbara Delgleize and
Members of the City Council
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Re: Regular Meeting of the Huntington Beach City Council
December.21,2021 Agenda, Item 21-1.008
Comments of City Attorney Michael Gates
Dear Mayor Delgleize and Members of the City Council:
This Office represents Michael Gates, the elected Huntington Beach City Attorney,
regarding Item 21-1008 on the City Council's December 2t, 2021 meeting agenda. For reasons
we explain within, we write to advise the Council that this proposed item would be unlawful if
approved,and we demand that the Council refrain from taking the proposed action.
Agenda Item 21-1008 is a proposal by Mayor Delgleize, Mayor Pro Tern Posey, and
Couneilmember Kalmick. It calls for City staff to"engage in a process to facilitate City Council
selection of an outside legal firm that would directly report to and support the City Council." If
the item is approved,the Council would direct the City.Manager to take t17e actions necessary to
retain a law firm to provide legal advice and representation outside the City Attorney's
supervision. Under both the City Charter and California law,the retention of any outside law
firm for these purposes is beyond the Council's authority,and would be unlawful.
Before outlining the reasons why the Council must refrain from taking the proposed
action, we note we are well positioned to opine on Item 21-1008. Our law frill specializes in
representation of municipal clients. Like other private law firms, we serve as contract city
attorney to a number of cities and as special or litigation counsel to several cities. Because of
our representation of municipal clients,we are very familiar with the unique nature of the
attorney-client relationship in municipal settings. In particular, we understand that any contract
not made in conformance with a city charter or applicable law is void. (Doman Electric, Inc. v.
City of Los Angeles(1994) 9 Cal.4th 1.61, 171.) Like all municipal law firms, we are scrupulous
about respecting a city's contracting requirements and procedures because we know that our
failure to abide by these could render our agreements unenforceable. (Katsura v. City q/San
Buenaventura(2007) 155 Cal.App.4th 104, 109.)
ADVANCING YOUR AGENDA 2281 Lava Ridge Court,suite 300 3401 Centrelake Dr.,Suite 670
Roseville,CA 95661 Ontario,CA 91761
0011328273 Phone:916.780.9009 Phone:909.230.4209
Fox:916.780.9050 Fox:909,937.2034
Mayor Delgleize and Members of the City Council
December 21, 2021
Page 2
Consistent with these limitations on municipal contracting, it is our opinion that no law
firm could lawfully enter into any agreement with the City Council under the teens and
conditions Item 21-1008 proposes. To be sure,there is no dispute the City Attorney may retain
outside legal counsel for a variety of purposes, as the City Attorney has historically done. Cities
of all sizes regularly retain attorneys to perform specialized services in areas such as litigation,
land use, environmental law, public contracting, and employment law. Even in cities with large
in-house city-attorney offices, the complexities and demands of these and other unique areas of
law often require the retention of specialists that can only be found in private law firms.
But while state law affirms the practice of retaining outside legal counsel when.
circumstances dictate (Gov. Code, § 37103), courts have made clear that such counsel may never
be retained to replace or duplicate the work performed by in-house city attorneys. (Rafael v.
Boyle (1916)31 Cal.App. 623, 626;Denman v. Webster(1903) 139 Cal. 452, 456.) California
law makes plain that when a city charter creates and enumerates the powers of city offices, a city
council may not contract with private parties to perform those officers' duties. (Hubbard v. City
of San Diego (1976) 55 Cal.App.3d 380, 388.)
Here,the powers of your City Attorney are clearly enumerated in Section 309 of your
Charter. This section vests the exclusive power in the City Attorney to do the following:
"(a) Represent and advise the City Council and all City officers in
all matters of law pertaining to their offices.
(b) Prosecute on behalf of the people an))or all criminal cases
arising from violation of the provisions of this Charter or of City
ordinances and such state misdemeanors as the City has the power to
prosecute, unless otherwise provided by the City Council.
(c) Represent and appear for the City in any or all actions or
proceedings in which the City is concerned or is a party,and represent and
appear for any City officer or employee, or former City officer or
employee, in any or all civil actions or proceedings in which such officer
or,employee is concerned or is a party for any act arising out of their
employment or by reason of their official capacity.
(d) Attend.all regular meetings of the City Council, unless
excused, and give their advice or opinion orally or in writing whenever
requested to do so by the City Council or by any of the boards or officers
of the City.
(e) Approve in writing the form of all contracts made by and all
bonds and insurance given to the City.
ADVANCING YOUR AGENDA 2281 Lava Ridge Court,suite 300 3401 Cenirelake Dr.,Suite 610
Roseville,CA 95661 Ontario,CA 91761
00082827.3 Phone:916.780.9009 Phone:909.230.4209
Fax:916.780.9050 Fax:909.937.2034
Mayor Delgleize and Members of the City Council
December 21, 2021
Page 3
(0 Prepare tiny and all proposed ordinances and City Council
resolutions and amendments thereto." (Emphasis added.)
Charter Section 309 is unambiguous in assigning the responsibility for all.essential
municipal legal services to your City Attorney.1 Critically,the section uses mandatory
language—"The City Attorney shall"—in describing the duties to "represent and advise"the
Council in"all"matters; prosecute"any and all"code-enforcement cases; "represent and
appear" in all "actions or proceedings;"attend"all"regular Council meetings; approve the form
of"all"contracts; and prepare "any and all" ordinances and resolutions. Also of note, Section
309 takes care to grant the City Attorney all necessary implied powers for carrying out these
responsibilities. Subsection (h) of the section specifies the City Attorney must"[p]erform such
legal functions and duties incident to the execution of the foregoing powers as may be
necessary." In short,the Charter vests authority over all legal services---express and implied—
in your City Attorney.
Because of its comprehensive language, Section 309's command is clear: the City
Attorney must be responsible for all legal services provided to the City. Legal services can, of
course, be performed by subordinates in the City Attorney's office or, when appropriate, by
outside counsel. But to carry out his or her duties under the City Charter, the City Attorney must
be responsible for supervising subordinates or outside counsel in whatever tasks they are
assigned. Necessarily,the City Attorney cannot execute his or her ultimate responsibility over
"all"City legal matters if he or she cannot supervise or direct other attorneys working on City
matters.
We understand that the Councilmembers proposing Item 21-1008 believe Charter Section
3O4(b)provides authority to retain legal counsel independent of City Attorney supervision. But
this is a clear misinterpretation of the subsection, which merely authorizes retention of outside
legal counsel. 1n this regard,the subsection states:
"... The City Council shall have control of all legal business and
proceedings and all property of the legal department, and may employ
other attorneys to take charge of or may contract for any prosecution,
litigation or other legal matter or business."
The language the Councilmembers rely on, the second clause of this sentence, simply authorizes
the City Council to retain outside attorneys for"prosecution,""litigation," or`'other" specialized
legal matters. This language recognizes that, as the ultimate organizational decision-maker for
the City,the City Council may retain attorneys in private practice when necessary or convenient
for City purposes. But this language cannot be read to supplant or usurp the City Attorneys role
in supervising or controlling any counsel the Council retains.
1 Your Charter is consistent with general state law in this regard. As Government Code
section 41801 provides,"[t]he city attorney shall advise the city officials in till legal matters
pertaining to city business." (Emphasis added.)
ADVANCING YOUR AGENDA 2281 Lava Ridge court,Suite 300 3401 Centrelake Dr.,Suite 670
Roseville,CA 95661 Ontario,CA 91761
00082827.3 Phone:916.780.9009 Phone:909.230.4209
Fax:916.780.9050 Fax:909.937.2034
Mayor Delgleize and Members of the City Council
December21, 2021
Page 4
Municipal charters are subject to the same rules that California courts have developed for
interpreting statutes. (Oneto v. City of Fresno (1982) 136 Cal.App.3d 460,465; Caslaneda v.
Holcomb(1981) 114 Ca1.App.3d 939,942.) Charters are to be interpreted according to their
plain meaning. (Squire v. City and County of Sam Francisco(1970) 12 Ca1.App.3d 974,980.)
They must be read as a whole, such that all charter provisions are given effect,and none is
nullified or rendered meaningless. (Don't Cell Our Parks v. City of San Diego (2018) 21
Cal.App.5th 338, 349.)
Under these rules of interpretation, Charter Sections 304 and 309 must be read together
such that they are harmonized. Because Section 309 states that the City Attorney.shall
"represent and advise the City Council and all City officers in all matters,"and is responsible for
all matters related to litigation, contracts, ordinances, resolutions, and the like, Section 309 must
be read in conjunction with the Council's authority under Section 304. Although Section 304
affirms the Council's right to retain counsel, this right must be interpreted to only authorize the
hiring of attorneys,who upon retention become subject to the City Attorney's direction. Section
304 cannot be read to allow the Council to retain legal counsel who act independently of the City
Attorney. Such an interpretation would nullify the plain language of Section 309, which vests in
the City Attorney the power to supervise all City legal matters.
Put more simply, Section 304 does not allow the City Council to hire its own attorney to
act entirely outside City Attorney supervision. The Council cannot create its own"shadow"city
attorney simply because it disagrees with his advice or the acts he has taken. In interpreting
municipal charters, courts ultimately look to the voters' intent. (International Federation of
Professional& Technical Engineers, AFL-CIO v. City of San Francisco(1999) 76 Cal.App.4th
213, 224.) Surely City voters did not intend for their city's legal services to be provided by dual
layers of legal counsel, each serving the same City Council, but each acting separately—and no
doubt in conflict—with each other. It is inconceivable City voters intended to sow the seeds of
such organizational disunity in approving their City Charter.
The Charter has,moreover, already received relevant—and dispositive--court
interpretation. In a 1981 decision,the Fourth District Court of Appeals, in an unpublished
opinion, considered the appeal of a former deputy city attorney whose employment had been
terminated. (O'Connor v. Hutton(4th Dist. Ct. App. 1981)4 Civ.No. 24536.) The then City
Attorney had terminated the appellant's employment for insubordination after the deputy had
met privately with a city council member and refused to disclose his communication. In
upholding the appellant's dismissal,the court explained:
"In exercising client control over the City's legal business, the city council
has power to hire other attorneys, but this power is limited by the city
attorney's power over City I al affairs and the City's legal department
under City Charter section 309 and City personnel rule 4-4. ... Deputy
city attorneys hired by the City work under the city attorneys supervision
and have no independent authority to represent and advise the City; they
may act only through the city attorney." (Op. at p. 5,emphasis added.)
ADVANCING YOUR AGENDA 2281 Lava Ridge Court,Suite 300 3.401 Centrelake Dr.,Suite 670
Roseville,CA 95661 Ontario,CA 91761
00082827.3 Phone:916.780.9009 Phone:909.230.4209
Fox:916.780.9050 Fax:909.937.2034
Mayor Delgleize and Members of the City Council
December 21, 2021
Page 5
This appellate decision confirms that the City Council has no authority to divest or
abridge the City Attorney's authority over City legal services. Under Charter Section 309,the
City Attorney must always take charge of the City"legal department." This requires that all
attorneys who provide legal services to the City—whether as subordinate attorneys in the City
Attorney Office or outside counsel—do so under his or her supervision.
I.n sum, for the reasons described above, we demand that the City Council refrain from
approving or otherwise acting on Item 21-1.008. The retention of an outside law firm not subject
to City Attorney direction would manifestly violate Charter Section 309. We trust that the
Council will recognize the error in proceeding as proposed when it considers the proposed item.
However,should the Council proceed as proposed, City Attorney Gates advises he will be
required to seek immediate judicial relief to protect the integrity of his Office. We hope the
Council will act reasonably and responsibly so that litigation is unnecessary.
Sincerely,
Derek P. Cole
COLE HUBER LLP
ADVANCING YOUR AGENDA 2281 Lava Ridge Court,Suite 300 3401 Centrelake Dr.,Suite 670
Roseville,CA 95661 Ontario,CA 91761
000828273 Phone:916.780.9009 Phone:909.230.4209
Fax:916.780.9050 Fax:909,937.2034
ATTACHMENT B
REQUEST FOR RECORDS
UNDER THE CALIFORNIA PUBLIC RECORDS ACT
Pursuant to the California Public Records Act, Cole Huber LLP, on behalf of City
Attorney Michael Gates, requests to receive copies of all documents in the City of Huntington
Beach's and Craig Steele/Richards Watson Gershon's possession regarding the following
categories of records:
1. A copy of any legal services agreement(or amendment or addendum to
any previous agreement) between the City of Huntington Beach
("City") and the law firm of Richards Watson Gerson("Law Firm")
related to any audit of the legal services perfortned by City Attorney
Michael Gates or the City Attorney's Office ("Audit Services").
2. Copies of all billing records, invoices, and other financial records
associated with any payment to Law Firm for Audit Services.
3. Copies of all correspondence, writings,and memoranda provided by
Law Firm, or any member of Law Firm,to the entire City Council
related to the Audit Services.
4. Copies of all correspondence,writings, and memoranda provided by
Law Firm, or any member of Law Firm,to any employee of the City,
including but not limited to former City Manager Oliver Chi,related to
the Audit Services.
5. Any correspondence—including emails(on city or personal accounts)
and text messages—regarding the Audit Services between Law Firm,
or any member of Law Firm, and the following members of the City
Council:
A. Mayor Delgleize
B. Mayor Pro Tern Posey
C. Councilmember Carr
D. Councilmember Peterson
E. Councilmember Kalmick
F. Councilmember Moser
G. Councilmember Bolton
6. Any correspondence—including emails (on city or personal accounts)
and text messages—regarding the Audit Services between any member
of the City Council and former City Manager Oliver Chi.
Please contact this office promptly to confirm your receipt of this request. Please also
contact this office to make arrangements for inspection or delivery of the above documents in
accordance with any public records policy the City has adopted. Our office is prepared to
promptly make payments for any duplication fees established per City policy.