The Morning Report
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Tuesday, March 07, 2006 | City Attorney Mike Aguirre suffered a pair of pension-related setbacks both in court and at the City Council on Monday, damaging his plans to become the retirement system’s attorney and injuring his push to keep the city from covering the legal tabs of former employees.
Superior Court Judge Jeffrey Barton ruled Monday afternoon that Aguirre cannot legally represent the San Diego City Employees’ Retirement System in its ongoing civil lawsuit with the city of San Diego. Minutes earlier at the council meeting, Aguirre’s proposal to make it more difficult to provide legal defense for the retirement officials he has sued failed to garner the votes needed for approval.
Monday’s episodes were peripheral to Aguirre’s major fight, which is to roll back about $700 million worth of pension benefit increases that were granted in 1996 and 2002. However, Aguirre has often stressed that his ability to advise SDCERS and that cutting off the legal defense of individuals he has alleged to be responsible for the city’s pension dealings were crucial to fixing the city’s pension problems.
“It is disappointing, but I will tell you that, throughout my entire life as a litigator for 30 years, I have learned that litigation is a marathon,” Aguirre said of his ongoing efforts. “Patience is the way to go.”
The city is currently engulfed in a financial crisis that has centered on its questionable pension deals. Prosecutors and critics say the deals raised the benefits for employees – including former retirement trustees who allowed the city to skirt its pension bill. Aguirre alleges those officials had a conflict of interest and the deals they approved should be voided. Currently, the city has a nearly $2 billion deficit and is the target of various probes by federal investigators and outside auditors.
Over the past year, Aguirre has pleaded with council members and the retirement board to discontinue or avoid paying the legal costs for former retirement officials who are named in civil litigation and criminal complaints, many of whom are former or current city employees.
With even more vigor, Aguirre has constantly reasserted his position that the elected city attorney should represent the retirement system as it does other city departments. Aguirre has staged public forums on the decision, pressed reporters to investigate the transfer of legal services to SDCERS, and appeared in court himself to dispute Barton’s tentative decision two weeks ago.
Aguirre contends that a lawyer hired by the retirement board will only give advice that pleases the board, which holds hiring-and-firing power over that attorney, and that the city attorney is independent because he is not beholden to the board’s agenda. The retirement system has argued that the debtor-creditor relationship would create an inherent conflict of interest for a city attorney who tried to represent both sides, and that Proposition 162 amended the state constitution to prevent conflicts like these.
The judge’s final decision Monday bars the city attorney from serving as the lawyer for SDCERS in its dispute with the city, but shied away from determining whether that applies to other legal affairs for the retirement system. The apparent uncertainty frustrated both Aguirre and retirement officials.
“It appears as if the judge is saying that, of course [SDCERS] must have its own attorney with respect to the lawsuit before his court, yet he totally ignored the big issue: whether [Aguirre] is the rightful legal representative of [SDCERS],” said Peter Preovolos, the retirement board’s president. “Everyone has gone to the courts to say, ‘help.’ To me ‘help’ is not clouded opinions or decisions, but it’s being decisive.”
Within days of taking office in December 2004, Aguirre revoked a 1997 memo that created a legal services department within SDCERS, sparking the retirement system’s lawsuit that Barton judged Monday.
Aguirre said that Barton’s decision was politically motivated and that, likewise, the city attorney would campaign to oppose the judge’s reelection to the Superior Court bench.
“That’s the ultimate appeal,” Aguirre said.
Still, he said he believed Barton could carry out the responsibility of overseeing the remainder of the legal dispute that judges the validity of the pension benefit increases.
Aguirre also criticized Barton’s decision to not consider two pieces of evidence he submitted since the issue was last argued in court. He cited a 1993 legal memo by former City Attorney John Witt that states that “it is the people’s prerogative to decide who should provide legal services to the Board,” and a 1996 legal opinion from then-Deputy City Attorney Lori Chapin that argues that the city attorney does not have a conflict of interest when assigning different deputies to represent the city and SDCERS.
But as far as fighting the who-is-the-lawyer-for-SDCERS question in court further, Aguirre said that conflict is now on hiatus because his major focus now is to undo the pension benefits that were granted in 1996 and 2002. Several attorneys in his office are working solely on that objective, he said.
The city attorney said he is confident that his arguments will be recognized in the near future by a retirement board that makes its own decision to install the City Attorney’s Office to be the chief legal advisor for SDCERS. Mayor Jerry Sanders has supported Aguirre’s quest to be the system’s lawyer, and the mayor has made two nominations to the board and is charged with assigning a representative from his office as well. However, current members of the board, as well as an incoming city employee trustee, have balked at the mayor’s request.
Tuesday’s ruling is coupled with a loss Aguirre suffered in January when Judge Linda Quinn sided with city employees and retirement officials who are named as defendants in the city attorney’s pension lawsuits.
Quinn ruled that state law requires the city to indemnify fingerprint examiner John Torres, management analyst Sharon Wilkinson, firefighters union President Ron Saathoff, former Assistant Auditor Terri Webster, former Human Resources Director Cathy Lexin and former Deputy City Manager Bruce Herring
The eight defendants were denied funding for their legal defense in August when a shorthanded council did not muster up the five council votes needed to provide indemnification. Quite similarly, only four of the five council members present Monday voted for Aguirre’s proposal to repeal a 2002 resolution that unconditionally pledged to “defend, hold harmless and indemnify” members of the retirement board. The resolution was approved by the council on the same day it approved the 2002 pension funding deal.
Aguirre wanted to strip the resolution from the city’s books and subject trustees to the language of the state government code that governs the indemnification of individuals who serve on government boards. He said that the guidelines for indemnification state law were fairer than the unconditional defense that was provided by the council in the 2002 resolution.
Aguirre argued that the city could avoid paying the bills for the defendants if it proved to judge by Monday afternoon that it repealed the resolution, although opposing lawyers said a council vote would not have altered the verdict.
“I can’t imagine it being applied retroactively, only prospectively,” said attorney Steven Strauss, who represents Herring.
The council voted 4-to-1 to repeal the resolution. Councilmembers Donna Frye, Ben Hueso, Kevin Faulconer and Brian Maienschein voted for Aguirre’s proposal, and Councilman Tony Young voted against it.
Three council members were absent from the meeting, which weakened the controversial proposal’s chances of being passed. Council President Scott Peters and Councilman Jim Madaffer were in Washington, D.C., at a national transportation conference.
Councilwoman Toni Atkins fell ill after a morning news conference, a staff member said, although Aguirre chastised her for not appearing for the vote. He accused Atkins of “running away” from a controversial vote.
“Toni Atkins should have been carried in on a stretcher today,” Aguirre said. “This was not a routine vote.”