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HomeMy WebLinkAboutItem No. 06 - Approval of Request for Legal Representation Page 1 Staff Report City of San Bernardino Request for Council Action Date: April 15, 2020 To: Honorable Mayor and City Council Members From: Teri Ledoux, City Manager Subject: Approval of Request for Legal Representation Recommendation Review and consider request for legal representation for Mayor John Valdivia pursuant to Government Code Section 995 and select attorney for requested representation. Background The City has now received three tort claims containing allegations against Mayo r Valdivia and the City. The City has engaged the law firm of Leibert Cassidy Whitmore to advise the City on the claims, including advising the City on a related and pending investigation. Mayor Valdivia has requested legal representation to assist in defending himself against the claims. Discussion The Mayor’s Office is established by the voters of the City of San Bernardino through its City Charter. The Charter provides that the Mayor shall be a full-time position with the City. As a current elected official the Mayor is entitled to a legal defense funded by the City. Public Entity’s Duty to Defend and Indemnify its Employees Generally, public entities must provide for the defense of civil claims and actions brought against a current or former elected official and employee for an act or omission of the employee within the scope of his employment. (Gov. Code, § 995.) The primary purpose of the indemnification statute is to avoid “dampen[ing] the ardor” of employees who might otherwise be inhibited by the possibility of having to personally finance and pay large judgments in torts suits arising for the performance of their duties. (Rivas v. City of Kerman (1992) 10 CA4th 1110.) A public entity may refuse to defend its officer or employee under the following circumstances: (1) the act or omission was not within the course and scope of employment; (2) the employee acted with (a) actual fraud, (b) actual corruption, or (c) actual malice; or (3) the defense of the action would not create a specific conflict of interest between the entity and the employee. (Gov. Code, §§ 995 and 995.2.) (See also Stewart v. City of Pismo Beach (1995) 35 Cal.App.4th 1600.) A public entity’s duty to defend is not unconditional. If there is an issue whether an employee was acting outside the scope of employment, it is in the best interest of the public entity to provide for the defense of the employee, but it may do so under a 6692 Page 2 reservation of rights. If a public entity provides a defense for its employee, or former employee, without reserving its rights against him or her, and the employee reasonably cooperates in good faith in the defense of the action, the entity has an absolute duty to pay the judgment or any compromise or settlement to which it agreed. (Gov. Code § 825(a).) The entity may have to pay even if the judgment established that the employee was not acting within the scope of his or her employment at the time of the tort. The public entity may condition an agreement to conduct the defense for an employee or former employee on the employee's consent to a reservation of the entity's right “not to pay the judgment, compromise or settlement until it is established that the injury arose out of an act or omission occurring within the scope of his employment [by] the public entity.” (Gov. Code, § 825(a).) When so agreed, the entity's duty to pay arises only when the requisite fact is established. A public entity’s duty to defend does not automatically translate into the employee’s or official’s right to retain his or her own counsel at the entity’s expense or to control his or her own defense. According to Government Code section 996, the public employee's defense may be provided in one of three ways: (1) Supplying the entity's own attorney as counsel; (2) Employing other counsel; or (3) Purchasing insurance that requires the insurer to provide the defense. The City Council has the following options: 1. Authorize the Mayor to select an attorney and provide for a maximum hourly rate or total representation at an initial maximum expenditure of $50,000; or 2. Select an attorney for the Mayor based on hourly rates similar to those currently paid by the City and subject to City oversight, at an initial maximum expenditure of $50,000. The initial expenditure should be more than sufficient for representation related to the initial phase of reviewing and responding to the claims. The City Manager may execute a contract for less than $50,000. Any expenditure for more than $50,000 will require City Council approval. An initial review of potential attorneys are: Patrick “Kit” Bobko Rates: $330-$250 per hour- municipal law transactional and litigation experience and a former elected official Michael Zweiback Rates: Blended rate of $400 per hour-public official and government entity investigations and litigation Gerald Sauer Rates: $495 per hour - complex employment litigation Sonya Goodwin Rates: $450 per hour - labor law investigations and litigation 6692 Page 3 2020-2025 Strategic Targets and Goals This action aligns with Key Target No. 1d: Financial Stability - Minimize risk and litigation exposure, as it ensures the City’s compliance with its duty to defend an employee. Fiscal Impact Funding for either option 1 or 2 for can be absorbed in the FY 2019 -20 adopted budget under the City Attorney’s budget and as such, no General Fund appropriation is required. The legal representation provided will have a cap on fees and expenses of no more than $50,000. Conclusion It is recommended that the City Council review and consider th e Mayor’s request for legal representation and either authorize him to select an attorney with parameters or make the selection for him. Attachments Attachment 1 Mayor Valdivia’s Request for Counsel Attachment 2 Proposed Engagement Letter from Zweiback, FIset & Coleman LLP to Mayor Valdivia Ward: All March 11, 2020 Mayor John Valdivia City of San Bernardino 290 North "D" Street -- 8th Floor San Bernardino CA 92401 Re: Engagement Letter Dear John: We are pleased that you, John Valdivia (“you” or the “Client”), have chosen Zweiback, Fiset & Coleman LLP (“us” or the “Firm”) as your legal counsel. The purpose of this letter is to confirm the terms of our engagement. This written agreement (“Agreement”) shall govern this engagement. This Agreement will not take effect, and we will have no obligation to provide legal services, until you return a signed copy of this Agreement. 1. Defining Scope of Engagement. We understand that the scope and nature of our engagement are limited to representation in a city investigation of you related to allegations of sexual harassment made by current and former city staff, and matters related thereto including any resulting litigation. The scope of our engagement under this letter may be enlarged from time to time as you ask us to perform additional services and we agree to perform such additional services. No additional agreement will be required to document these periodic changes. We will provide those legal services reasonably required to represent you in this engagement. You agree that you will be truthful with us and cooperate with us in this matter and keep us informed of any information that comes to your attention that is material to the engagement. You agree to pay your fees under this Agreement on time and to keep us informed of your location and contact information. You agree to assist us in providing necessary information and documents. All discussions during our meetings are protected by the attorney-client privilege and thus, confidential and protected. 2. Lawyers Working on Engagement. I will be the lawyer primarily responsible for working on this matter. From time to time I may also involve other partners and associates under my supervision. John Valdivia March 11, 2020 Page | 2 3. Fee Arrangement. Throughout the period of this engagement, we will send monthly statements for our legal services rendered in the previous month to you. Payment is due upon receipt. Each statement describing our services will be presented in a form acceptable to you and us. Should you have a question about any statement or charges, please call me promptly. For this matter, we have agreed to a blended rate of $400/hour for all attorneys. Our engagement will commence once the engagement letter has been signed returned to me. Client understands that the fees will be paid by a third party, and Client consents to such an arrangement. Even though your fees will be paid by a third party, Client alone has an attorney- client relationship with the Firm regarding this case. The Firm’s sole duty of loyalty in the matters is to the Client. Privileged information cannot and will not be disseminated to any third party unless directed by you. We understand a third party will direct our handling of the fees in this matter. You have authorized us to prepare a single bill for them each month for our services, including redactions of any attorney/client privileged information. Accordingly, all billing statements in connection with this agreement shall be directed to the following: if to the Firm, Michael Zweiback, Esq. Zweiback, Fiset & Coleman LLP 523 W 6th Street, Suite 450 Los Angeles, CA 90014 if to you, Mayor John Valdivia City of San Bernardino 290 North "D" Street -- 8th Floor San Bernardino CA 92401 4. Costs and Expenses. In addition to legal fees, the statements will include charges for related expenses and services such as: computerized research; travel; document production and binding; court costs; delivery services; filing fees; and secretarial overtime to the extent required by the particular assignment. 5. Mutual Right to Terminate. As in any professional relationship where mutual trust and confidence are essential, it is appropriate for either you or Zweiback, Fiset & Coleman LLP to be able to terminate our engagement at any time by reasonable written notice. If our engagement is terminated, you agree to take whatever steps are reasonably necessary to indicate that we are free from any obligation to perform further and to pay us for unpaid fees for legal services rendered and for related expenses and services incurred to the date of termination. 6. File Retention. Except for those files that, at the option of either the Client or us, we return earlier, it is our current policy to retain files relating to an engagement for seven (7) years following the conclusion of the engagement. At our discretion, we may retain the files in John Valdivia March 11, 2020 Page | 3 either hard copy of electronic format. If you object to our retaining them only in electronic format, we should be advised before the termination of the engagement. During the time that we retain the files following the completion of our engagement, you may request that we assemble and return to you those files to which you are entitled, with the costs and fees of that task to be paid by you. We retain the right to retain copies of all files, and you agree to pay the costs for making these copies. If, at the end of seven (7) years you have not requested the return of those files, you are giving us permission to destroy those files without further notice to you. 7. Arbitration of Fee Disputes Provision. In the event a disagreement over our billings for fees or costs arises that cannot be resolved by candid discussion between us, you have the right to timely request non-binding arbitration of the disagreement pursuant to the Mandatory Fee Arbitration Act (Cal Bus. & Prof. Code Section 6200, et seq.), which is administered through the Los Angeles County Bar Association. 8. Client Acceptance of Terms of Engagement. Your signature below will confirm that this Agreement correctly reflects the terms of our engagement. Please sign and date this Agreement where indicated below and return to me a signed copy. We look forward to a long and mutually beneficial relationship. Should you have any questions please do not hesitate to contact me. Best regards, Michael Zweiback AGREED AND ACCEPTED _______________________________ Dated: _______________ John Valdivia