The Morning Report
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Wednesday, August 03, 2005 | The City Council decided Tuesday not to pay legal defense fees for city employees named in a civil lawsuit filed by City Attorney Mike Aguirre last month, probably exposing the city to a new lawsuit for failing to do so, a hired attorney and some council members said.
After attorney Steven Strauss told the City Council that it was obligated under a “binding, valid, enforceable” resolution as well as state law to fund legal counsel for six municipal employees accused of conflict-of-interest charges, the council voted 4-to-2 against indemnifying the defendants. The proposal needed five votes to be approved.
Strauss, who works for San Diego-based Procopio Cory Hargreaves & Savitch, told the council in a written opinion that the city should pay for the defense of six of the eight pension officials named in a case accused of abusing their duties by taking part in contracts that increased their own pension benefits.
Six of the defendants – Ron Saathoff, president of the firefighters union; John Torres, a fingerprint analyst; Sharon Wilkinson, a management analyst; Terri Webster, former assistant auditor; Cathy Lexin, former human resources director; and Bruce Herring, deputy city manager – must be defended because they are either, formerly or currently, trustees of the San Diego City Employees’ Retirement System or city employees, Strauss said.
Strauss suggested that the other two defendants, Lawrence Grissom, the retirement system’s administrator, and Loraine Chapin, lead counsel to the retirement system, do not have to be indemnified by the council because they are employees of SDCERS, not city of San Diego employees or SDCERS trustees.
Councilmembers Donna Frye and Brian Maienschein voted against the recommendation. Frye and Maienschein cited Strauss’ assertion that the city is no longer responsible for providing legal defense to employees who acted fraudulently, and both said they believed the defendants named in Aguirre’s suit did not act “in good faith.”
Frye also said she was provided other opinions that varied from the one Strauss gave Monday, but that they were protected by attorney-client privelege and could not be shared. City Manager Lamont Ewell said he was unaware of any other legal opinions in the council’s possession.
The eight named in the lawsuit were accused of being central to deals struck in 1996 and 2002 that underfunded the public pension system while granting additional benefits to future retirees.
Judie Italiano, president of the 6,000-member Municipal Employees Association, said the decision was discouraging to city workers.
“I’m ashamed of Donna and Brian for turning their backs on city employees who act in the course of their duty,” said Italiano, whose union was represented by Torres on the SDCERS board.
Councilman Scott Peters said he believes the defendants will sue the city as early as tomorrow.
“I would,” he said.
Peters also said the employees named in the suits will probably sue the city to each have their own attorney, where as Strauss said that the council could have assigned all of the defendants to one attorney if it had approved of their legal defense Tuesday.
The council also refused in a closed session held later that night to provide legal aid to members of the current SDCERS board who are named in a cross-complaint with Aguirre. The city attorney is requesting that a court place the retirement system in the hands of a court-appointed expert, also known as receivership. SDCERS Board president Peter Preovolos asked that pension trustees be provided defense by the city, but the request was shot down behind closed doors by a 4-to-2 vote.
Aguirre would not say publicly whether he would suggest providing legal defense for the defendants, but argued that the November 2002 resolution that was cited as part of Strauss’ argument was invalid.
“It’s illegal because it’s a quid pro quo that created a prohibitive interest for public policy,” Aguirre said, asserting that it was part of a deal to let pension board members off the hook.
Aguirre walked out of the council meeting during the discussion, saying that he believed the hiring of the Procopio firm as outside counsel was illegal because the City Attorney’s Office did not sign off on it. Council members were constantly asking during Strauss’ proposal that Aguirre return to help them make a decision, but Aguirre said in an interview later he did not want to be a party to the discussions in case there was a legal challenge in the future.
“You can’t go shopping for an attorney who will tell you what they want to hear,” he said.
Several council members said they were confused by Aguirre’s actions Tuesday, and that he changes roles – representing the people of San Diego one moment, the City Council the next – to suit his own interests.
“Mr. Aguirre is wearing a hat as prosecutor, yet he changes hats without changing seats,” Councilman Jim Madaffer said. “Through all this, I am compelled to accept his advice.”
Aguirre said he sees himself as both in the role of San Diego’s legal department, whereas the council is the policy department of the city.
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