Case Un-dismissed

Saturday, December 03, 2005 | A judge reversed Friday his earlier dismissal of a civil case against eight current and former city and pension officials after City Attorney Mike Aguirre argued that the defendants had profited beyond normal pensioners on deals they helped approve.

The complaint, which alleges the eight individuals charged in the case unlawfully benefited from deals struck in 1996 and 2002 left the retirement system underfunded, was thrown out in September by Superior Court Judge Charles Wickersham. The judge initially ruled that the Political Reform Act, the state law governing the case, does not make it illegal for officials to set their own salaries or pensions.

Aguirre is using the civil suit to prove that benefit enhancements granted in 1996 and 2002 are illegal and void. The benefits are the most high profile of the city’s financial burdens and at the heart of a pension deficit estimated to be more than $1.37 billion.

The defense attorneys in attendance argued that their clients received the same benefits given to city employees and that the city attorney hadn’t identified exclusive benefits in the amended complaint.

“There is no change in the law the city can point to, and no change in the evidence they can point to,” said attorney Paul Tyrell, who is defending former City Manager Bruce Herring.

Steven Strauss, another attorney representing Herring, said the complaint was relying on information that Aguirre compiled in a report in April.

Aguirre said that the pension board’s recent release of about 60,000 documents has produced new evidence, and that he will be able to show that “there was something for everyone” involved in the suit.

Deputy City Attorney Amy Lepine told the judge that the City Council’s decision in 2002 to provide legal defense to the pension board members is an asset not enjoyed by other city workers who benefited from benefit boosts.

Also, some defendants received benefits above and beyond the increases enjoyed by others enrolled in the retirement plan, she said.

The defendants are now suing the city over the legal indemnification after the City Council failed to authorize funds for their legal defense. Lepine pointed to this suit when trying to prove that that there was some value gained in the deal not enjoyed by average city workers.

Also, in a draft of the amended complaint, the City Attorney’s Office said that firefighters union President Ron Saathoff and former Assistant Auditor Terri Webster won benefits exclusive to them in the underfunding deals they allegedly helped enact. Saathoff improperly profited from a benefit exclusive to union presidents that allowed him to use his city and union wages toward his pension, and Webster was exempted from a provision that capped the total an employ can receive annually, the complaint alleges.

Less clear are how defendants Larry Grissom and Lori Chapin reaped benefits greater than other plan participants because the two pension system staff members were not guaranteed indemnification from the plan – which they also only worked on as staff and did not vote on. The draft of the complaint discussed in court Friday did not show how pension system administrator Grissom and in-house attorney Chapin gained extra from the deals.

Aguirre promised to outline how each defendant received new benefits above and beyond what was given to all city workers in a final version of the complaint, which is due in 10 days.

The city attorney said he did not have a claim against Grissom and Chapin immediately, but said he was confident his office would organize legitimate claims against them by the time the amended complaint was due. He also pledged to quickly identify the extra benefits given to the remaining four defendants as well.

Defense attorneys also said the 1996 agreement cannot be contested because the four-year statue of limitations has run out, but no ruling was made on that argument Friday. Aguirre chose the eight defendants named in the suit because he believes each was involved in both underfunding proposals, and he argues that coupling the two agreements together shows ongoing behavior that might be able to trump the statute of limitations.

The defendants in the case are Herring, Saathoff, Webster, Grissom, Chapin, former Human Resources Manager Cathy Lexin, white-collar union vice president John Torres and city management analyst Sharon Wilkinson.

Additionally, Saathoff, Torres, Webster, Wilkinson, Lexin and former Treasurer Mary Vattimo face similar conflict-of-interest charges filed by the District Attorney’s Office. Preliminary hearings for the criminal case began this week in Superior Court.

Wickersham, who has been reassigned to county juvenile court since the case was filed months ago, said he did not want to prematurely nip in the bud a case of such high public profile. He was willing to allow some leeway in order to let the case play out, he said.

“I have the inherent power to reconsider if I think I’ve made a mistake,” the judge said.

The case, titled People v. Grissom, will be transferred to Superior Court Judge Steven Denton.

Please contact Evan McLaughlin directly at