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HomeMy WebLinkAbout08-City Attorney ORIGINAL CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Diane C. Roth Subject: RESOLUTION OF THE MAYOR AND Senior Assistant City Attorney COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION Dept: CITY ATTORNEY OF A RETAINER AGREEMENT BETWEEN COLANTUONO & LEVIN, PC AND THE CITY OF Date: August 5, 2011 SAN BERNARDINO FOR LEGAL SERVICES IN THE CASE SIPPLE ET AL. v. CITY OF ALAMEDA ET AL. LOS ANGELES COUNTY SUPERIOR COURT CASE NUMBER BC462270. Meeting Date: August 15, 2011 Synopsis of Previous Council Action: July 18,2011: The Mayor and Common Council approved inclosed session retaining Coantuono&Levin, PC in Sipple et al. v. City of Alameda et al. August 1, 2011: The Mayor and Common Council approved a budget amendment increasing the City Attorney's FY 2011/2012 budget to pay for outside counsel in Sipple, et al. v. City of Alameda, et al. Recommended motion: That said Resolution be adopted. ignature Contact person: Shauna M. Britton Phone: 5355 Supporting data attached: Staff Report Ward: All FUNDING REQUIREMENTS: Amount: Source: Finance: Council Notes: Agenda Item No. t STAFF REPORT Council Meeting Date: August 15, 2011 TO: Mayor and Common Council FROM: City Attorney's Office DATE: July 28, 2011 AGENDA: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A RETAINER AGREEMENT BETWEEN COLANTUONO&LEVIN,PC AND THE CITY OF SAN BERNARDINO FOR LEGAL SERVICES IN THE CASE SIPPLE ET AL.v. CITY OF ALAMEDA ET AL. LOS ANGELES COUNTY SUPERIOR COURT CASE NUMBER BC462270. The City of San Bernardino is currently one of approximately 135 Defendants in a statewide lawsuit brought by AT&T for refund of utility user taxes AT&T alleges were incorrectly paid by its customers. On July 18,2011 in closed session,the Mayor and Common Council approved retention of the law firm of Colantuono & Levin,PC regarding the case Sipple et al. v. City of Alameda et al. The agreement has been finalized and is attached hereto. On August 1, 2011, the Mayor and Common Council approved a budget amendment increasing the City Attorney's FY 2011/2012 budget $6,000 to pay the anticipated fiscal year attorneys' fees in this case. The City Attorney requests the following motion be adopted authorizing the Mayor to execute the Professional Services Agreement on behalf of the City of San Bernardino: "That the Mayor and Common Council of the City of San Bernardino authorize and direct the Mayor of the City of San Bernardino to execute on behalf of the City of San Bernardino the Retainer Agreement with Colantuono&Levin,PC to represent the City of San Bernardino regarding the case entitled Sipple et al v. City of Alameda,Los Angeles County Superior Court Case Number BC462270." SMB/cj[BlankStaf£Report] 0 I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A RETAINER AGREEMENT 2 BETWEEN COLANTUONO & LEVIN, PC AND THE CITY OF SAN BERNARDINO FOR LEGAL SERVICES IN THE CASE SIPPLE ET AL. v CITY OF ALAMEDA ET AL. LOS 3 ANGELES COUNTY SUPERIOR COURT CASE NUMBER BC462270. 4 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN 5 BERNARDINO AS FOLLOWS: 6 SECTION 1: That the Mayor and Common Council of the City of San Bernardino authorize 7 and direct the Mayor of the City of San Bernardino to execute on behalf of the City of San Bernardino 8 the Retainer Agreement, including a side letter, with Colantuono &Levin, PC to represent the City 9 of San Bernardino in the case entitled Sipple et al v. City of Alameda, Los Angeles County Superior 10 Court Case Number BC462270, copies of which are attached hereto and incorporated herein as 11 Exhibits "A" and `B." 12 SECTION 2: The authorization granted by this Resolution shall expire and be void and of no 13 further effect if the Agreement is not executed by both parties and returned to the Office of the City 14 Clerk within sixty(60) days following the effective date of this Resolution. 15 16 17 18 19 20 21 22 23 24 25 26 27 74 I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A RETAINER AGREEMENT 2 BETWEEN COLANTUONO & LEVIN,PC AND THE CITY OF SAN BERNARDINO FOR LEGAL SERVICES IN THE CASE SIPPLE ET AL. v. CITY OF ALAMEDA ET AL. LOS 3 ANGELES COUNTY SUPERIOR COURT CASE NUMBER BC462270 4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 5 meeting thereof,held Common Council of the City of San Bernardino at a g 6 on the day of , 2011,by the following vote, to wit: 7 Council Members: AYES NAYS ABSTAIN ABSENT 8 9 MARQUEZ 10 JENKINS 11 BRINKER 12 SHORETT 13 KELLEY 14 JOHNSON 15 MCCAMMACK 16 17 18 Rachel G. Clark, CMC, City Clerk 19 20 The foregoing resolution is hereby approved this day of , 2011. 21 22 Patrick J. Morris, Mayor City of San Bernardino 23 Approved as to form: 24 JAMES F. PENMAN, 25 City Attorney 26 By: ' 27 4'it;f4 'i Colantuono & Levin, PC 300 S. Grand Avenue, Suite 2700 Sandra J. Levin LOS Angeles, CA 90071-3137 SLevin @CLLAW.US Main: (213) 542-5700 (213)542-5707 FAX: (213) 542-5710 WWW.CLLAW.US July 14, 2011 VIA E-MAIL AND U.S. MAIL Shauna M. Britton, Deputy City Attorney City of San Bernardino 300 North "D" Street, 61h Floor San Bernardino, CA 92418 Re: Sipple et al. v. City of Alameda, et al., Los Angeles County Superior Court Case No. BC 462270 Dear Shauna: Introduction. As promised, I write to propose a form of letter retainer agreement for our firm to represent the City of San Bernardino ("you" or "the City"), with respect to the lawsuit identified above. More than 30 of the 135 defendants in this case have contacted us regarding representation and we anticipate that we may be asked to represent others as well. Subject to the decision-making of the Client Relations Committee referenced below, we will agree to represent you and any other defendant in this case on the terms provided herein. Colantuono & Levin, P.C. ("the firm") and all of its professionals are very pleased to have the opportunity to assist the City in this way. This letter sets forth the basis upon which we will provide you legal services and bill you for services and costs. If it is acceptable, please have it executed on behalf of the City and return it to me by fax and mail. Instructions for completing this agreement appear on page 7 of this letter. If you have questions or concerns about this form of agreement, please call me at the direct-dial number listed above. Conflicts of Interest. The firm maintains a conflict of interest index which lists all clients of our firm and matters in which we represent them. We will not represent any party with an interest that may be adverse to an indexed person without first determining if a professional conflict of interest would arise. We propose to index the following names with respect to this matter: Client-affiliated parties: The agencies listed in the attached spreadsheet Client-aligned parties: All other agencies named as defendants in the suit Shauna M. B ritton Deputy City Attorney July 14, 2011 Page 2 Adverse parties: Donald Sipple John Simon Karl Simonsen Christopher Jacobs New Cingular Wireless PCS LLC, a Delaware limited liability company. Please let me know if any of these names are incorrect or misspelled, or if there are other parties with an interest in this issue that we should list. Unless we hear from you to the contrary, we will assume that the above listing is accurate and complete. Given the nature of this representation, which involves defending a large number of cities in a dispute involving all cities and counties in California that impose utility users taxes, careful thought must be given to conflicts of interest. First, we have multiple clients for purposes of this engagement. It is possible, perhaps likely, that differences of opinion and different interests may exist or develo p among them. This could occur if a settlement proposal were made, for example, that offered different terms to taxing agencies based on the language of their tax and claiming ordinances. As different agencies have different ordinances representing several generations of model ordinances and competing approaches to modernizing older ordinances, such a settlement proposal would affect agencies differently. Different clients could also have different views on strategy, settlement, whether to answer, demur or cross-complain, whether to appeal, and other issues. In addition, our firm serves as City Attorney for the Cities of Auburn, Barstow, Calabasas, La Habra Heights, Los Alamitos and Sierra Madre and we have current, general- and special-counsel relationships with other local governments throughout California. We are representing the San Diego County Water Authority in San Diego County Water Authority v. Metropolitan Water District of Southern California, et al., San Francisco Superior Court Case No. CPF-10-510830. This is a challenge to Metropolitan's rates which affects agencies which provide water service throughout the six-county southern California region that Metropolitan serves. We also represent 47 Los Angeles County cities in a case pending in the California Supreme Court entitled Alhambra v, County of Los Angeles, et al., Case No. S185457, which challenges the manner in which Los Angeles County calculates and withholds property tax administrative fees from those cities. However, none of our clients in those other matters, or the public agencies which have interests adverse to our clients, has an interest in this case that is not comparable to the interest of the agencies retaining us to defend the suit. All cities and counties in California that tax telephony have a common interest in defeating or minimizing the refund claims at issue in this case. Nevertheless, an attorney cannot represent clients in unrelated matters if those two clients have a legal conflict or other adversity between them, even if that Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 3 conflict is unrelated to the work the attorney is handling without their informed, written consent. Nor can we undertake this representation if it would impair our ability to continue to represent our existing clients. Accordingly, your retention of our firm to represent you along with other defendant cities and counties in this case represents your agreement to waive any conflict of interest that does or may hereafter exist among the defendant agencies, accepting that any limitation on our ability to represent individual cities' and counties' interests made necessary by our service to the group as directed by the Client Relations Committee referenced below is acceptable to you in light of the efficiency, cost savings and other benefits to you of joint representation. You agree not to share with us any confidential information of the City which you do not wish us to share with the Client Relations Committee and the other agencies which retain us in this case and to look to your own City Attorney or other independent counsel for any advice you may desire as to issues in which your interests do not align with those of other agencies we are to represent. Further, you agree that we may represent you in this case and represent our existing general and special counsel clients, and new clients, on matters unrelated to this case even if you have a legal conflict or other adversity with that other client, such as a different position on a claim against an insurance risk pool, a boundary dispute, a commercial dispute, any other inter- agency dispute, or other disagreement. You agree not to share with us any confidential information unrelated to this case which might impair our ability to represent our existing general and special counsel clients and other clients in unrelated matters notwithstanding any legal conflict or other adversity between you and those other clients. You should consider these conflict waivers carefully and consult with your own City Attorney or other independent counsel before signing this letter agreement. Agreement Among Agencies. By signing this agreement and retaining our firm to defend you in this case, you agree that our firm may take direction regarding the case, including action on a settlement proposal (although no agency can be bound to a settlement or to filing a cross-complaint without its independent consent), from a Client Relations Committee made up of five or fewer members selected by the participating agencies, with each agency having one vote in the election of Client Relations Committee Members and each member of the Client Relations Committee having one vote on that committee, with a majority of the committee required to establish a quorum and to take action. The initial Client Relations Committee is comprised of Berkeley City Attorney Zach Cowan, Burbank Assistant City Attorney Juli Scott, and Torrance Finance Director Eric Tsao, who will serve until a meeting of all participating cities' representatives confirms their appointments or select others to serve in their place. In the event of a vacancy on the Committee, the remaining Committee members may appoint a successor to serve until a meeting of all participating cities representatives confirms or replaces that appointee. There has been discussion of a Steering Committee to represent all defendants in the Shauna M. Britton, Deputy City Attorney July 14,2011 Page 4 case, whether or not represented by Colantuono & Levin, in certain factual investigations and review in connection with a potential settlement of the case. That Steering Committee is distinct from the Client Relations Committee created by this agreement and if created will have only the role reflected in the joint defense and confidentiality agreement creating it and as the defendants may subsequently agree. You agree that our fees and charges for services in this case will be divided among our clients in proportion to the amounts they have at stake. Unless and until the Client Relations Committee approves a better estimate of the amount at stake for each City or County, their relative stakes shall be determined according to the dollar amount of the refunds sought by the plaintiffs in this case in written claims under local claiming ordinances and / or the Government Claims Act. Our current understanding of the amounts in issue for the clients who have contacted us to date is reflected in the attached spreadsheet. Please confirm that the figure shown there for your City is correct. Your share of fees and costs is presently estimated at 2.59% but the percentage will change if any listed agency determines not to participate and, as may be likely, if other defendants join our group. When the list of agencies who retain us is } complete and the amount of the refund claimed from each is confirmed, we will submit a further version of the attached spreadsheet to the Client Relations Committee for approval and, once approved, that spreadsheet will control unless and until the Committee approves revisions to it. The decisions of the Client Relations Committee will be governed by the amount in issue against each defendant as measured by a written claim or by other evidence which reasonably supports the Committee's determination. Unless the Client Relations Committee otherwise directs, you will be responsible for your percentage share of the cost of all of our services and all of the costs incurred in defending the case up to the date of your termination of our representation. However, if particular issues arise in the case that affect only some agencies — such as decisions to cross-complain — the Client Relations Committee may direct us to bill work on those issues separately. In that case, those charges will be borne by the benefited agencies in proportion to the amounts they have at stake, as determined by the Clients Relations Committee in the manner described above. An initial estimate of the potential range of our total fees is reflected in the enclosed spreadsheet. Further, the City of Torrance (or any agency later appointed in Torrance's place by the Client Relations Committee, in which case references in this letter to Torrance shall refer to that successor agency) will serve as Treasurer of the Client Relations Committee, will receive funds from the participating agencies and disburse those funds to us and to any vendors retained in defense of the case after the Client Relations Committee authorizes it to do so. You should forward a check payable to the City of Torrance, with a memorandum that the funds are for the defense of"Sipple et al. v. City of Alameda et al.," in the amount of$6,473 at the same time that you provide a signed copy of this letter to me. The Client Relations Committee will request Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 5 additional deposits be paid to Torrance if our initial budget estimates prove unattainable and we obtain Client Relations Committee approval of an increased budget. This initial deposit reflects the attached fee-sharing spreadsheet. Further deposits and any refunds to participating agencies will reflect the final fee-sharing spreadsheet approved by the Client Relations Committee and credit (or debit) any agency which has contributed more (or less) than its then-current share when the additional deposit or refund is made. The Client Relations Committee will direct return of your proportionate share of any unexpended funds when the case is resolved. These five paragraphs labeled "Agreement Among Agencies" represent a contract among the defendant agencies which retain us to defend them in this matter. We cannot be involved in negotiating or interpreting that contract or resolving any disputes regarding it, as doing so would necessarily involve us in a matter as to which our clients have conflicting interests. Accordingly, you agree that you will seek independent legal advice whether to enter into this Agreement and that any dispute among our client cities in this case that cannot be resolved by the Client Relations Committee or in mediation will be resolved by binding arbitration in Los Angeles to be conducted by JAMS according to its commercial arbitration rules and that our firm and its professionals will represent no party in such a dispute. Other Terms of Representation. The $250,000 to $600,000 estimate of total fees in this case reflected in the attached spreadsheet is an estimate of the fees we expect to charge through a trial court judgment; it is not a guarantee. It does not cover the cost of an appeal, which may be likely. It assumes that the plaintiffs will not engage in tactics (such as pursuing numerous pre-trial motions against all defendants) designed to raise the cost to prosecute the case, that unexpectedly intensive discovery will not be required, and that we can resolve this case without jury trial. We believe these are all reasonable assumptions based on what we presently know about the case but, of course, cannot guarantee them. If these assumptions are not realized or we believe the budget bears review for other reasons, we will present a revised budget to the Client Relations Committee for its review and approval. We will, of course, make every effort to represent you as efficiently as possible. Torrance will receive monthly statements stating our fees and costs incurred during the prior month and circulate those invoices as directed by the Client Relations Committee. Michael Colantuono, Holly Whatley and I will have primary responsibility for your representation, and the firm will use other attorneys and legal assistants in the best exercise of our professional judgment. If at any time you have questions, concerns or criticisms, please let Michael, Holly or me know. Naturally, we expect you to keep us reasonably informed of significant developments in matters relating to this representation. We review all statements before they are issued to ensure that the amount charged is appropriate. The statement for fees is simply the product of the hours worked multiplied by the hourly rates for the attorneys and legal assistants who did the work. Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 6 Our hourly rates are based upon the experience, reputation and ability of the professional performing the services and for 2011 range between $175 and $425 per hour for attorneys' time, and between$110 and $145 for the time of paralegals and legal assistants. However, we agree to cap our fees on this project at $350 per hour as a professional courtesy to you. Our rate structure in general and the rates of particular lawyers may be increased from time to time, and are usually adjusted as of the beginning of each calendar year, but we will not alter the $350 per hour cap without agreement of the Client Relations Committee. It may be necessary to bill you for items such as, but not limited to, authorized travel, long-distance telephone calls, mileage at the IRS rate, filing fees, photocopying, word processing, secretarial overtime, computerized legal research and the like. These items are separately itemized on our statement as "disbursements." These amounts will be billed in addition to our professional fees. We will send the Client Relations Committee monthly statements, and expect payment within 45 days of the billing date. If payment is not received within 60 days of the billing date, we reserve the right to charge interest on the unpaid balance at the rate of one percent per month and to terminate our representation. We rarely have disputes with clients over our fees. Nevertheless, you should be aware that you are entitled to require that any fee dispute be resolved by binding arbitration in Los Angeles or Nevada Counties pursuant to the arbitration rules for legal fee disputes of the respective County Bar Associations. Whether or not you choose to utilize the County Bar Association procedures, you agree that all disputes between us regarding services rendered or fees charged not resolved by the County fee arbitration process will be submitted to binding arbitration in the Los Angeles, to be conducted by JAMS in accordance with its commercial arbitration rules. You have the right to terminate our representation at any time but agree that we may continue to represent any other defendants in this case. We also have the right to terminate our representation of the City, subject to an obligation to give you reasonable notice to arrange alternative representation. In either circumstance, you agree to secure new counsel to represent you as quickly as possible and to cooperate fully in the substitution of the new counsel as counsel of record in this case. Notwithstanding the termination of our representation, you will remain obligated to pay us your proportionate share of all fees and costs incurred prior to termination. I apologize for the formality of this letter, but we are required by California law to provide this information to you in writing. We are also required to inform you that we currently carry professional liability insurance. 1 r»c»1 Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 7 Conclusion. Please review the foregoing and, if it meets with your approval, have a copy of this letter executed on behalf of the City and returned to me by fax and mail. If you have any questions, please feel free to call me at the direct-dial number above, Michael at (530) 432-7359 or Holly at (213) 542-5704. We look forward to representing you. Thank you for the opportunity to do so! Veg truly yours, f ra Vev' m t i d SJL:sjl Enclosure: Fee-sharing spreadsheet Directions for completing agreement: 1. Have this letter agreement executed on behalf of your City where indicated below. 2. Provide a name and contact data on this page below for your City's representative empowered to vote for Client Relations Committee Members. 3. Confirm the amount of the claim filed against your agency by the Sipple plaintiffs on the attached spreadsheet and if is not correct, provide the correct amount here: $ and fax a copy of the claim to us along with this letter to the fax number shown in point 4. below. If the amount shown is correct, we will not need a further copy of the claim. 4. Return a signed copy of this letter by mail to Brian R. Guth, Colantuono & Levin, P.C., 300 So. Grand Avenue, Ste. 2700, Los Angeles, CA 90071- 3137 and by fax to (213) 542-5710. 5. Send a check for $6,473, made payable to the City of Torrance and bearing a memorandum "Sipple et al. v. City of Alameda et al.,"to: Eric E. Tsao, Finance Director City of Torrance 3031 Torrance Boulevard Torrance, CA 90503 Shauna M. Britton, Deputy City Attorney 1 July 14, 2011 Page 8 1 1 On behalf of the City of San Bernardino, I hereby agree to retain Colantuono & Levin, P.C. to provide legal services as described above and to waive conflicts of interest as stated above. By: Printed Name: Title: The City's designated representative for this case and his/her contact information are: name: _Shauna_M Rr;r nn title: Deputy City Attorney phone: (gng) 384-555 fax: 384-5238 email: attorney @chr;ty_nrg APPROVED AS TO FORD: James F. Penman, City Attorney By: i 1 ® Share of Estimated Fees �j Sipple et al. v. City of Alameda et al. LASC Case No. BC 462 270 Last Updated: July 14, 2011 of Total Share of Share of Agency Claim Amount Claimed $250k $600k Budget Budget Berkeley $ 706,641 5.58% $ 13,947 $ 33,472 Burbank 1,001,766 7.91% 19,771 47,451 Calabasas 266,454 2.10% 5,259 12,621 Chula Vista Not Yet Available TBD TBD TBD Culver City 795,890 6.28% 15,708 37,699 Cupertino 267,669 2.11% 5,283 12,679 Daly City Not Yet Available TBD TBD TBD Downey Not Yet Available TBD TBD TBD East Palo Alto 56,359 0.44% 1,112 2,670 Gardena 92,741 0.73% 1,830 4,393 Glendale 1,001,766 7.91% 19,771 47,451 Grover Beach Not Yet Available TBD TBD TBD Hercules Not Yet Available TBD TBD TBD Huntington Beach Not Yet Available TBD TBD TBD Inglewood Not Yet Available TBD TBD TBD Long Beach 1,062,927 8.39% 20,978 50,348 Los Alamitos 52,330 0.41% 1,033 2,479 Montclair 25,711 0.20% 507 1,218 Monterey 64,847 0.51% 1,280 3,072 Moreno Valley 218,923 1.73% 4,321 10,370 Mountain View 521,910 4.12% 10,301 24,722 Oakland Not Yet Available TBD TBD TBD Orange Cove Not Yet Available TBD TBD TBD Pico Rivera 75,303 0.59% 1,486 3,567 Richmond 503,606 3.98% 9,939 23,855 Salinas 11,439 0.09% 226 542 San Bernardino 327,995 2.59% 6,473 15,536 San Jose 3,369,070 26.60% 66,494 159,585 San Luis Obispo 104,314 0.82% 2,059 4,941 Sierra Madre 56,861 0.45% 1,122 2,693 Stockton 742,076 5.86% 14,646 35,150 Sunnyvale 477,729 3.77% 9,429 22,629 Torrance 862,542 6.81% 17,024 40,857 Tulare Not Yet Available TBD TBD TBD Total $ 12,666,869 $ 250,000 $ 600,000 Colantuono & Levin, PC 300 S. Grand Avenue, Suite 2700 Michael G.Colantuono Los Angeles, CA 90071-3137 MCoiantuono @CLLAW.US Main: (213) 542-5700 (530)432-7359 FAX: (213) 542-5710 WWW.CLLAW.US August 11, 2011 VIA E-MAIL AND U.S.MAIL Diane Roth Senior Assistant City Attorney City of San Bernardino 300 North "D" Street, 61"Floor San Bernardino, CA 92418 Re: Retainer Agreement for Sipple et al, 'v. City of Alameda et al., Los Angeles County Superior Court Case No. BC 462270 Dear Diane: We recently sent a form of letter retainer agreement for our firm to represent the City of San Bernardino with respect to the lawsuit identified above. We agreed to represent the City subject to the terms and conditions of that agreement. However, in subsequent discussions, your office requested that certain provisions of that agreement be revised. In particular, you requested that we eliminate the requirement that the City submit disputes over our fees to binding arbitration. The agreement specifically requires that "you agree that all disputes between us regarding services rendered or fees charged not resolved by the County fee arbitration process will be submitted to binding arbitration in the Los Angeles,to be conducted by JAMS in accordance with its commercial arbitration rules." We have considered the issue and are willing to grant your request. By this letter, Colantuono & Levin waives the requirement that the City submit disputes between us regarding services rendered or fees charged to binding arbitration as contemplated by the agreement. However, to be clear, the provisions of the letter retainer agreement labeled "Agreement Among Agencies" are not affected by this letter. We have no authority to alter the agreement of our clients. 1P 1 Ex h% b + 1(6)) 103397,2 Diane Roth, Senior Assistant City Attorney August 11, 2011 Page 2 if you have any further questions about this issue, please feel free to call me at the direct- dial number above. Very truly yours, MAJ,4, (81� Michael G. Colantuono MGC:brg cc: Client Relations Committee Sandra J. Levin,Esq. Q 1 Patrick J. Morris, Mayor APPROVED AS TO, KRHft I macs F. Pentnan, City Atto iwy By: 103397.2 Colantuono & Levin, PC 300 S. Grand Avenue, Suite 2700 Sandra J. Levin Los Angeles, CA 90071-3137 SLevin @CLLAW.US Main: (213) 542-5700 (213)542-5707 FAX: (213) 542-5710 WWW.CLLAW.US July 14, 2011 VIA E-MAIL AND U.S. MAIL Shauna M. Britton, Deputy City Attorney City of San Bernardino 300 North"D" Street, 6 1 Floor San Bernardino, CA 92418 Re: Sipple et al. v. City of Alameda, et al., Los Angeles County Superior Court Case No. BC 462270 Dear Shauna: Introduction. As promised, I write to propose a form of letter retainer agreement for our firm to represent the City of San Bernardino ("you" or "the City"), with respect to the lawsuit identified above. More than 30 of the 135 defendants in this case have contacted us regarding representation and we anticipate that we may be asked to represent others as well. Subject to the decision-making of the Client Relations Committee referenced below, we will agree to represent you and any other defendant in this case on the terms provided herein. Colantuono & Levin, P.C. ("the firm") and all of its professionals are very pleased to have the opportunity to assist the City in this way. This letter sets forth the basis upon which we will provide you legal services and bill you for services and costs. If it is acceptable, please have it executed on behalf of the City and return it to me by fax and mail. Instructions for completing this agreement appear on page 7 of this letter. If you have questions or concerns about this form of agreement, please call me at the direct-dial number listed above. Conflicts of Interest. The firm maintains a conflict of interest index which lists all clients of our firm and matters in which we represent them. We will not represent any party with an interest that may be adverse to an indexed person without first determining if a professional conflict of interest would arise. We propose to index the following names with respect to this matter: Client-affiliated parties: The agencies listed in the attached spreadsheet Client-aligned parties: All other agencies named as defendants in the suit 102877.1 Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 2 Adverse parties: Donald Sipple John Simon Karl Simonsen Christopher Jacobs New Cingular Wireless PCS LLC, a Delaware limited liability company. Please let me know if any of these names are incorrect or misspelled, or if there are other parties with an interest in this issue that we should list. Unless we hear from you to the contrary, we will assume that the above listing is accurate and complete. Given the nature of this representation, which involves defending a large number of cities in a dispute involving all cities and counties in California that impose utility users taxes, careful thought must be given to conflicts of interest. First, we have multiple clients for purposes of this engagement. It is possible, perhaps likely, that differences of opinion and different interests may exist or develop among them. This could occur if a settlement proposal were made, for example, that offered different terms to taxing agencies based on the language of their tax and claiming ordinances. As different agencies have different ordinances representing several generations of model ordinances and competing approaches to modernizing older ordinances, such a settlement proposal would affect agencies differently. Different clients could also have different views on strategy, settlement, whether to answer, demur or cross-complain, whether to appeal, and other issues. In addition, our firm serves as City Attorney for the Cities of Auburn, Barstow, Calabasas, La Habra Heights, Los Alamitos and Sierra Madre and we have current, general- and special-counsel relationships with other local governments throughout California. We are representing the San Diego County Water Authority in San Diego County Water Authority v. Metropolitan Water District of Southern California, et al., San Francisco Superior Court Case No. CPF-10-510830. This is a challenge to Metropolitan's rates which affects agencies which provide water service throughout the six-county southern California region that Metropolitan serves. We also represent 47 Los Angeles County cities in a case pending in the California Supreme Court entitled Alhambra v. County of Los Angeles, et al., Case No. S185457, which challenges the manner in which Los Angeles County calculates and withholds property tax administrative fees from those cities. However, none of our clients in those other matters, or the public agencies which have interests adverse to our clients, has an interest in this case that is not comparable to the interest of the agencies retaining us to defend the suit. All cities and counties in California that tax telephony have a common interest in defeating or minimizing the refund claims at issue in this case. Nevertheless, an attorney cannot represent clients in unrelated matters if those two clients have a legal conflict or other adversity between them, even if that 102877.1 Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 3 conflict is unrelated to the work the attorney is handling without their informed, written consent. Nor can we undertake this representation if it would impair our ability to continue to represent our existing clients. Accordingly, your retention of our firm to represent you along with other defendant cities and counties in this case represents your agreement to waive any conflict of interest that does or may hereafter exist among the defendant agencies, accepting that any limitation on our ability to represent individual cities' and counties' interests made necessary by our service to the group as directed by the Client Relations Committee referenced below is acceptable to you in light of the efficiency, cost savings and other benefits to you of joint representation. You agree not to share with us any confidential information of the City which you do not wish us to share with the Client Relations Committee and the other agencies which retain us in this case and to look to your own City Attorney or other independent counsel for any advice you may desire as to issues in which your interests do not align with those of other agencies we are to represent. Further, you agree that we may represent you in this case and represent our existing general and special counsel clients, and new clients, on matters unrelated to this case even if you have a legal conflict or other adversity with that other client, such as a different position on a claim against an insurance risk pool, a boundary dispute, a commercial dispute, any other inter- agency dispute, or other disagreement. You agree not to share with us any confidential information unrelated to this case which might impair our ability to represent our existing general and special counsel clients and other clients in unrelated matters notwithstanding any legal conflict or other adversity between you and those other clients. You should consider these conflict waivers carefully and consult with your own City Attorney or other independent counsel before signing this letter agreement. Agreement Among Agencies. By signing this agreement and retaining our firm to defend you in this case, you agree that our firm may take direction regarding the case, including action on a settlement proposal (although no agency can be bound to a settlement or to filing a cross-complaint without its independent consent), from a Client Relations Committee made up of five or fewer members selected by the participating agencies, with each agency having one vote in the election of Client Relations Committee Members and each member of the Client Relations Committee having one vote on that committee, with a majority of the committee required to establish a quorum and to take action. The initial Client Relations Committee is comprised of Berkeley City Attorney Zach Cowan, Burbank Assistant City Attorney Juli Scott, and Torrance Finance Director Eric Tsao, who will serve until a meeting of all participating cities' representatives confirms their appointments or select others to serve in their place. In the event of a vacancy on the Committee, the remaining Committee members may appoint a successor to serve until a meeting of all participating cities representatives confirms or replaces that appointee. There has been discussion of a Steering Committee to represent all defendants in the Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 4 case, whether or not represented by Colantuono & Levin, in certain factual investigations and review in connection with a potential settlement of the case. That Steering Committee is distinct from the Client Relations Committee created by this agreement and if created will have only the role reflected in the joint defense and confidentiality agreement creating it and as the defendants may subsequently agree. You agree that our fees and charges for services in this case will be divided among our clients in proportion to the amounts they have at stake. Unless and until the Client Relations Committee approves a better estimate of the amount at stake for each City or County, their relative stakes shall be determined according to the dollar amount of the refunds sought by the plaintiffs in this case in written claims under local claiming ordinances and /or the Government Claims Act. Our current understanding of the amounts in issue for the clients who have contacted us to date is reflected in the attached spreadsheet. Please confirm that the figure shown there for your City is correct. Your share of fees and costs is presently estimated at 2.59% but the percentage will change if any listed agency determines not to participate and, as may be likely, if other defendants join our group. When the list of agencies who retain us is complete and the amount of the refund claimed from each is confirmed, we will submit a further version of the attached spreadsheet to the Client Relations Committee for approval and, once approved, that spreadsheet will control unless and until the Committee approves revisions to it. The decisions of the Client Relations Committee will be governed by the amount in issue against each defendant as measured by a written claim or by other evidence which reasonably supports the Committee's determination. Unless the Client Relations Committee otherwise directs, you will be responsible for your percentage share of the cost of all of our services and all of the costs incurred in defending the case up to the date of your termination of our representation. However, if particular issues arise in the case that affect only some agencies — such as decisions to cross-complain — the Client Relations Committee may direct us to bill work on those issues separately. In that case, those charges will be borne by the benefited agencies in proportion to the amounts they have at stake, as determined by the Clients Relations Committee in the manner described above. An initial estimate of the potential range of our total fees is reflected in the enclosed spreadsheet. Further, the City of Torrance (or any agency later appointed in Torrance's place by the Client Relations Committee, in which case references in this letter to Torrance shall refer to that successor agency) will serve as Treasurer of the Client Relations Committee, will receive funds from the participating agencies and disburse those funds to us and to any vendors retained in defense of the case after the Client Relations Committee authorizes it to do so. You should forward a check payable to the City of Torrance, with a memorandum that the funds are for the defense of"Sipple et al. v. City of Alameda et al.," in the amount of$6,473 at the same time that you provide a signed copy of this letter to me. The Client Relations Committee will request IM277 t Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 5 additional deposits be paid to Torrance if our initial budget estimates prove unattainable and we obtain Client Relations Committee approval of an increased budget. This initial deposit reflects the attached fee-sharing spreadsheet. Further deposits and any refunds to participating agencies will reflect the final fee-sharing spreadsheet approved by the Client Relations Committee and credit (or debit) any agency which has contributed more (or less) than its then-current share when the additional deposit or refund is made. The Client Relations Committee will direct return of your proportionate share of any unexpended funds when the case is resolved. These five paragraphs labeled "Agreement Among Agencies" represent a contract among the defendant agencies which retain us to defend them in this matter. We cannot be involved in negotiating or interpreting that contract or resolving any disputes regarding it, as doing so would necessarily involve us in a matter as to which our clients have conflicting interests. Accordingly, you agree that you will seek independent legal advice whether to enter into this Agreement and that any dispute among our client cities in this case that cannot be resolved by the Client Relations Committee or in mediation will be resolved by binding arbitration in Los Angeles to be conducted by JAMS according to its commercial arbitration rules and that our firm and its professionals will represent no party in such a dispute. Other Terms of Representation. The $250,000 to $600,000 estimate of total fees in this case reflected in the attached spreadsheet is an estimate of the fees we expect to charge through a trial court judgment; it is not a guarantee. It does not cover the cost of an appeal, which may be likely. It assumes that the plaintiffs will not engage in tactics (such as pursuing numerous pre-trial motions against all defendants) designed to raise the cost to prosecute the case, that unexpectedly intensive discovery will not be required, and that we can resolve this case without jury trial. We believe these are all reasonable assumptions based on what we presently know about the case but, of course, cannot guarantee them. If these assumptions are not realized or we believe the budget bears review for other reasons, we will present a revised budget to the Client Relations Committee for its review and approval. We will, of course, make every effort to represent you as efficiently as possible. Torrance will receive monthly statements stating our fees and costs incurred during the prior month and circulate those invoices as directed by the Client Relations Committee. Michael Colantuono, Holly Whatley and I will have primary responsibility for your representation, and the firm will use other attorneys and legal assistants in the best exercise of our professional judgment. If at any time you have questions, concerns or criticisms, please let Michael, Holly or me know. Naturally, we expect you to keep us reasonably informed of significant developments in matters relating to this representation. We review all statements before they are issued to ensure that the amount charged is appropriate. The statement for fees is simply the product of the hours worked multiplied by the hourly rates for the attorneys and legal assistants who did the work. 102877.1 Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 6 Our hourly rates are based upon the experience, reputation and ability of the professional performing the services and for 2011 range between $175 and $425 per hour for attorneys' time, and between $110 and $145 for the time of paralegals and legal assistants. However, we agree to cap our fees on this project at $350 per hour as a professional courtesy to you. Our rate structure in general and the rates of particular lawyers may be increased from time to time, and are usually adjusted as of the beginning of each calendar year, but we will not alter the $350 per hour cap without agreement of the Client Relations Committee. It may be necessary to bill you for items such as, but not limited to, authorized travel, long-distance telephone calls, mileage at the IRS rate, filing fees, photocopying, word processing, secretarial overtime, computerized legal research and the like. These items are separately itemized on our statement as "disbursements." These amounts will be billed in addition to our professional fees. We will send the Client Relations Committee monthly statements, and expect payment within 45 days of the billing date. If payment is not received within 60 days of the billing date, we reserve the right to charge interest on the unpaid balance at the rate of one percent per month and to terminate our representation. We rarely have disputes with clients over our fees. Nevertheless, you should be aware that you are entitled to require that any fee dispute be resolved by binding arbitration in Los Angeles or Nevada Counties pursuant to the arbitration rules for legal fee disputes of the respective County Bar Associations. Whether or not you choose to utilize the County Bar Association procedures, you agree that all disputes between us regarding services rendered or fees charged not resolved by the County fee arbitration process will be submitted to binding arbitration in the Los Angeles, to be conducted by JAMS in accordance with its commercial arbitration rules. You have the right to terminate our representation at any time but agree that we may continue to represent any other defendants in this case. We also have the right to terminate our representation of the City, subject to an obligation to give you reasonable notice to arrange alternative representation. In either circumstance, you agree to secure new counsel to represent you as quickly as possible and to cooperate fully in the substitution of the new counsel as counsel of record in this case. Notwithstanding the termination of our representation, you will remain obligated to pay us your proportionate share of all fees and costs incurred prior to termination. I apologize for the formality of this letter, but we are required by California law to provide this information to you in writing. We are also required to inform you that we currently carry professional liability insurance. 102R77.1 Shauna M. Britton, Deputy City Attorney July 14, 2011 Page 7 Conclusion. Please review the foregoing and, if it meets with your approval, have a copy of this letter executed on behalf of the City and returned to me by fax and mail. If you have any questions, please feel free to call me at the direct-dial number above, Michael at (530) 432-7359 or Holly at (213) 542-5704. We look forward to representing you. Thank you for the opportunity to do so! Ve truly yours, ra . evin SJL:sjl Enclosure: Fee-sharing spreadsheet Directions for completing agreement: I. Have this letter agreement executed on behalf of your City where indicated below. 2. Provide a name and contact data on this page below for your City's representative empowered to vote for Client Relations Committee Members. 3. Confirm the amount of the claim filed against your agency by the Sipple plaintiffs on the attached spreadsheet and if is not correct, provide the correct amount here: $ and fax a copy of the claim to us along with this letter to the fax number shown in point 4. below. If the amount shown is correct, we will not need a further copy of the claim. 4. Return a signed copy of this letter by mail to Brian R. Guth, Colantuono & Levin, P.C., 300 So. Grand Avenue, Ste. 2700, Los Angeles, CA 90071- 3137 and by fax to (213) 542-5710. 5. Send a check for$6,473, made payable to the City of Torrance and bearing a memorandum "Sipple et al. v. City of Alameda et al.,"to: Eric E. Tsao, Finance Director City of Torrance 3031 Torrance Boulevard Torrance, CA 90503 1 n?s77 i I Shauna M. Britton, Deputy City Attorney July 14, 2011 I Page 8 On behalf of the City of San Bernardino, I hereby agree to retain Colantuono & Levin, P.C. to provide legal services as described above and to waive conflicts of interest as stated above. By: Printed Name: Title: The City's designated representative for this case and his/her contact information are: name: Chaiing,_.rj.-Bri tT_nn title: Deputy City Attorney phone: Colo) 384-5355 fax: (gpg) 384-5238 email: attcrneY@Rbri ty_nrg APPROVED AS TO FORM: James F. Penman, City Attorney By: 102877.1 Share of Estimated Fees Sipple et al. v. City of Alameda et al. LASC Case No. BC 462 270 Last Updated: July 14, 2011 %of Total Share of Share of Agency Claim Amount Claimed $250k $600k Budget Budget Berkeley $ 706,641 5.58% $ 13,947 $ 33,472 Burbank 1,001,766 7.91% 19,771 47,451 Calabasas 266,454 2.10% 5,259 12,621 Chula Vista Not Yet Available TBD TBD TBD Culver City 795,890 6.28% 15,708 37,699 Cupertino 267,669 2.11% 5,283 12,679 Daly City Not Yet Available TBD TBD TBD Downey Not Yet Available TBD TBD TBD East Palo Alto 56,359 0.44% 1,112 2,670 Gardena 92,741 0.73% 1,830 4,393 Glendale 1,001,766 7.91% 19,771 47,451 Grover Beach Not Yet Available TBD TBD TBD Hercules Not Yet Available TBD TBD TBD Huntington Beach Not Yet Available TBD TBD TBD Inglewood Not Yet Available TBD TBD TBD Long Beach 1,062,927 8.39% 20,978 50,348 Los Alamitos 52,330 0.41% 1,033 2,479 Montclair 25,711 0.20% 507 1,218 Monterey 64,847 0.51% 1,280 3,072 Moreno Valley 218,923 1.73% 4,321 10,370 Mountain View 521,910 4.12% 10,301 24,722 Oakland Not Yet Available TBD TBD TBD Orange Cove Not Yet Available TBD TBD TBD Pico Rivera 75,303 0.59% 1,486 3,567 Richmond 503,606 3.98% 9,939 23,855 Salinas 11,439 0.09% 226 542 San Bernardino 327,995 2.59% 6,473 15,536 San Jose 3,369,070 26.60% 66,494 159,585 San Luis Obispo 104,314 0.82% 2,059 4,941 Sierra Madre 56,861 0.45% 1,122 2,693 Stockton 742,076 5.86% 14,646 35,150 Sunnyvale 477,729 3.77% 9,429 22,629 Torrance 862,542 6.81% 17,024 40,857 Tulare Not Yet Available TBD TBD TBD Total $ 12,666,869 $ 250,000 $ 600,000 Colantuono & Levin, PC 300 S. Grand Avenue, Suite 2700 Michael G.Colantuono Los Angeles, CA 90071-3137 MColantuono @CLLAV US Main: (213) 542-5700 (530)432-7359 FAX: (213) 542-5710 WWW.CLLAW.US August 11, 2011 VIA E-MAIL AND U.S.MAIL Diane Roth Senior Assistant City Attorney City of San Bernardino 300 North"D" Street, 61"Floor San Bernardino, CA 92418 Re: Retainer Agreement for Sipple et al, 'v. City of Alameda et al., Los Angeles County Superior Court Case No. BC 462270 Dear Diane: We recently sent a form of letter retainer agreement for our firm to represent the City of San Bernardino with respect to the lawsuit identified above. We agreed to represent the City subject to the terms and conditions of that agreement. However, in subsequent discussions, your office requested that certain provisions of that agreement be revised. In particular, you requested that we eliminate the requirement that the City submit disputes over our fees to binding arbitration. The agreement specifically requires that "you agree that all disputes between us regarding services rendered or fees charged not resolved by the County fee arbitration process will be submitted to binding arbitration in the Los Angeles, to be conducted by JAMS in accordance with its commercial arbitration rules." We have considered the issue and are willing to grant your request. By this letter, Colantuono & Levin waives the requirement that the City submit disputes between us regarding services rendered or fees charged to binding arbitration as contemplated by the agreement. However, to be clear, the provisions of the letter retainer agreement labeled "Agreement Among Agencies" are not affected by this letter. We have no authority to alter the agreement of our clients. 103397,2 Diane Roth, Senior Assistant City Attorney August 11, 2011 Page 2 If you have any further questions about this issue, please feel free to call me at the direct- dial number above. Very truly yours, Michael G. Colantuono MGC:brg cc: Client Relations Committee Sandra J. Levin, Esq. Patrick J. Morris, Mayor A PROVED AS TO FORM! Jr-x,ncs F. Penman. ClItY Attorli .v 103397.2