Calhouns Can(n)ons

Yes, Actually, That IS A Lawyer In My Pocket, But I’m Still Happy To See You, Anyway

In my Jan 1 posting,(“Is that a lawsuit in your pocket . . .”), I mused on the Taxpayers’ Watch lawsuit filed against five of the post-recall LOCSD Board members – individually, personally, not as a Board –alleging “sham settlement monies to their political supporters,” regarding the CSD’s settlement over the Measure B lawsuit originally filed by the recalled CSD Board majority.

In the comment section, a person identifying himself as Richard Le Gros (remember, Anonymous commenters are always anonymous, no matter who they say they are) had this to say about my posting . . .

“ Regarding the $600K settlements.....remember that the GRAND JURY found the settlements VERY QUESTIONABLE. As for that shrill McClendon, his reasoning will be very easy to dismiss in court.”

Well, apparently, “shrill McClendon” reads this blog on occasion and read both my posting and this “anonymous” poster’s comments, and emailed me the following. (It’s weird. My memory of Mr. McClendon was someone who was the exact opposite of “shrill.” Soft spoken, calm, measured, but “shrill?” Naw. Not that I ever saw. And since the subject line on his email stated “Re: That Shrill McClendon’g 2-2-06 LOCSD Public Meeting Presentation. . .” I would have to conclude that Droll McClendon would be more like it.)

In any event, as the person calling himself Richard Le Gros will see (below) the courts apparently have found just the opposite of “easy to dismiss.” What still remains a mystery, given the long history of the court’s ruling against people who try to stop elections, is why on earth the pre-recall Board majority ever filed that lawsuit in the first place. Unless they wanted to set up a post-recall board with a time bomb that would cost the citizens dearly? (If that’s the case, then we’re looking at Medea rather than mendacious.) Which is also why I wondered why some citizens haven’t also filed a lawsuit against Stan, Richard & Gordon – personally and individually – for gross negligence in filing a lawsuit that had such a clearly dangerous track record, thereby setting up the community for a hellacious financial hit. It’s a puzzle.

Then at the CSD meeting on 1/3/07, we learned that the Insurance Company that should have defended the Board Members under the policy requirements (Errors and Omissions Board coverage & etc, which covers this sort of thing) denied the claim--(Jeeze, they must think they’re Blue Shield or something) and so the CSD voted 5-0 to spend mo’money to hire an attorney to deal with both the Taxpayers’ Watch lawsuit and the denied claim.

(A side note: CSD attorney, Julie Biggs, noted that under California law, the district is compelled to furnish legal help when members, acting as a board, are sued. To that end, a law firm was found that agreed to take the case. And for good citizens who actually ARE concerned with the taxpayer’s money, it can only be hoped that the case won’t take too long (i.e. take too much money) to conclude.)

Also at that meeting, Joyce Albright of Taxpayers’ Watch accused the five Board members being sued (Tacker, Schicker, Cescena, Senet & former member, Fouche) of using the settlement money to pay” personal debts out of public coffers.” Personal debts? What? they each took the money to pay off their American Express bill for that Christmas purchase of 100 ginormous brand new HDTVs and a new Bentley??

Al Barrow also went to the podium to note that CCLO and CASE were the entities involved in the case and the settlement and none of the Board directors were members of either of those organizations at that time. So it will remain for a judge to decide what the definition of “crony” is. Or what a “personal debt” is. Or if he finds Mclendon’s settlement reasoning “easy to dismiss.” Or if there are other aspects of the case that are not so easy to dismiss.

On the other hand, IF Taxpayers’ Watch loses the case, will they be able to pay the court costs, seeing as how they still haven’t paid their LAFCO bill? (The CSD’s share of that LAFCO bill, to my knowledge, is being paid for by the citizens of this community, the very folks Taxpayers’ Watch claims to be looking out for.)

Well, it’s quite an interesting approach: Present yourself as the guardian of the people’s pocketbook, file lawsuits claiming fraud and public waste and private use of public coffers & etc, the defense of which costs a bundle out of the people’s pocketbook, and if you lose the cases but don’t pay the court costs, thereby causing the people to have to eat those costs, you still maintain that you’re the guardians of the people’s pocketbook. Very droll, I’d say.

Even more interesting, I spoke with Richard Margetson, who had had a restraining order filed against him before the recall by two recalled Board members. If you remember that case, the former Board Members swore, under penalty of perjury, that Margetson was a danger to them, they feared for their lives, and wanted him kept out of CSD meetings and etc, then lost the case when it was clear that it was all ginned up phony crap designed to use the law to silence a vocal critic. (I referred to it as the Emily Latella Case, from the wonderful Saturday Night Live skit with dear confused Emily nattering on about “violins” in the street, when the topic was “violence” in the streets, only to be corrected, at which point she looks into the camera with a wan smile and says, “Oh, Well, Nevermind.” )

At any rate, the recalled CSD two lost the case, but according to Richard, they have yet to pay the court costs and his attorney’s fees. If true, then an irony: One of the former board members involved with that fiasco, is still living in this town, so there’s a question: Until he pays that legal debt, doesn’t that launch the Dear Silly Donkey’s various comments on this blogsite about fiscal prudence and responsibility into the realm of Hypocritical Hokum?

And finally, I find of great interest, the final sentence of “shrill McClendon’s” piece, which I’ve bolded. Hmmmmm, very interesting. [Posted with permission.]

1
WHY SETTLE THE LITIGATION?
SHORT ANSWERS: (1) To eliminate the District’s litigation costs associated with these actions;
(2) To minimize the amount of attorney’s fees the District might have to pay;
(3) To help implement the settlement the SWRCB presented to the District.

Factual and Procedural Background:
• The LOCSD initiated the Measure B lawsuit against County Clerk Julie Rodewald in an
effort to prevent Measure B from going before the voters.
• Judge Hilton ruled in favor of the LOCSD and ordered Rodewald to keep Measure B off the
ballot.
• The Measure B proponents filed an extraordinary writ with the Court of Appeal seeking a
stay of Judge Hilton’s ruling.
• The Court of Appeal immediately issued an Order staying Judge Hilton’s ruling; later, the
Court of Appeal issued an “Order to Show Cause” commanding Judge Hilton to appear and
explain to the Court of Appeal why his ruling should be allowed to stand.
• Thereafter, Measure B went on the ballot and was approved by the voters.
• On October 14, 2005, attorneys for the Measure B proponents threatened to sue the LOCSD
if it failed to abide by Measure B.
• In October, the LOCSD engaged in Blakeslee-facilitated negotiations with SWRCB staff
regarding the SRF Loan.

Relevant Legal Authority:
There is a long-standing judicial bias against granting pre-ballot challenges:
California Supreme Court: “Finally, "‘it has long been our judicial policy to apply a liberal
construction the [the] power [of initiative and referendum] wherever
it is challenged in order that the right not be improperly annulled. If
doubts can reasonably be resolved in favor of the use of this reserve
power, courts will preserve it. [Citations.]’"” (Assembly v.
Deukmejian (1982) 30 Cal.3d 638, 652. Note: the Supreme Court
cited this case in its August 12, 2005 opinion in Costa v. Superior
Court, where it “conclude[d] that it would not be appropriate to deny
the electorate the opportunity to vote on Proposition 77 at the special
election to be held on November 8, 2005 . . . .”)

2
However, courts will uphold pre-ballot challenges in two situations as long as the defect is clear:
“We recognize that "it is usually more appropriate to review constitutional
and other challenges to ballot propositions or initiative measures after an election
rather than to disrupt the electoral process by preventing the exercise of the people's
franchise, in the absence of some clear showing of invalidity." (Brosnahan v. Eu
(1982) 31 Cal.3d 1, 4 [181 Cal.Rptr. 100, 641 P.2d 200].) However, the courts have
recognized two exceptions to the general rule limiting judicial review of ballot
measures to postelection proceedings. The first is where the electorate lacks the
"power to adopt the proposal in the first instance . . . ." (Id., at p. 6; italics supplied.)
"Thus, for example, election officials have been ordered not to place initiative and
referendum proposals on the ballot on the ground that the electorate did not have the
power to enact them since they were not legislative in character [citations], the
subject matter was not a municipal affair [citations], or the proposal amounted to a
revision of the Constitution rather than an amendment thereto." (Id.)

The second exception to the general rule proscribing preelection judicial
review, and the one invoked by the council in the present case, is where the
substantive provisions of the proposed measure are legally invalid.
"[Even] if a proposed measure is within the scope of the initiative power,
courts retain equitable discretion to examine the measure before the election upon a
compelling showing that the substantive provisions of the initiative are clearly
invalid. (See Harnett v. County of Sacramento (1925) 195 Cal. 676, 683 . . .; Gayle
v. Hamm (1972) 25 Cal.App.3d 250, 255 . . .; Note, The Scope of the Initiative and
Referendum in California (1966) 54 Cal.L.Rev. 1717, 1725-1729.)" (American
Federation of Labor v. Eu (1984) 36 Cal.3d 687, 696, fn. 11 [206 Cal.Rptr. 89, 686
P.2d 609].) We shall therefore proceed to consider the council's claim that the
referendum would be "clearly invalid" if enacted by the voters.” (deBottari v. City
Council (1985) 171 Cal. App. 3d 1204, 1209-1210; underlining added.)

The relevance of the foregoing legal authority to the Court of Appeal’s ruling on the Measure B
election is that the Court of Appeal was not persuaded that Measure B fit under either of the two
exceptions for pre-ballot challenges. In other words, it concluded that the LOCSD failed to make
a “compelling showing” that (1) the voters lacked the power to put Measure B on the ballot, or
(2) the provisions of Measure B were “clearly invalid.” If the Court of Appeal had thought
otherwise, then it would have affirmed Judge Hilton’s ruling, and Measure B would have not gone
before the voters.

Legal Analysis:
By successfully bringing Measure B before the voters despite the District’s efforts, attorneys
for the Measure B proponents claimed eligibility to recover their fees even if (1) the vote had gone Code of Civil Procedure section 1021.5 provides: “Upon motion, a court may award
attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor.” (1) the other way, or (2) a court later invalidated Measure B. The basis for such a recovery of fees is the Legislature’s codified of the judicially created “private attorney general” rule for recovery of attorneys’ fees in Code of Civil Procedure section 1021.5 (“Section 1021.5”).1 The purpose of awarding fees under Section 1021.5 is “to encourage suits effectuating a strong public policy by awarding substantial attorney’s fees to those who successfully bring such suits.” (Daniels v. McKinney (1983) 146 Cal.App.3d 42, 49.) According to the court in Woodland Hills Residents Assn. v. City Council (1979) 23 Cal.3d 917, 933, the private attorney general statute reflects a legislative policy that privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions, and that, without some mechanism authorizing the award of attorneys fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible.

The Measure B proponent would have been entitled to recover their attorneys’ fees under
Section 1021.5 if they showed that (1) their defense of Measure B “has resulted in the enforcement of an important right affecting the public interest,” (2) “a significant benefit, whether pecuniary or onpecuniary, has been conferred on the general public or a large class of persons,” and (3) “the necessity and burden of private enforcement are such as to make the award appropriate.” (Woodland Hills Residents Assn. v. City Council, supra, 23 Cal.3d at 935.)
It was likely that the Measure B proponents could have shown that they met all three factors.
Given the relevant law, there is no question that they met the first factor:
“. . . [T]he "state constitutional right of initiative or referendum is 'one of the most
precious rights of our democratic process." [Citation.] These powers are reserved
to the people, not granted to them. Thus, it is our duty to " ' "jealously guard" ' "
these powers and construe the relevant constitutional provisions liberally in favor of
the people's right to exercise the powers of initiative and referendum. (Rossi v. Brown
(1995) 9 Cal. 4th 688, 695 [38 Cal. Rptr. 2d 363, 889 P.2d 557].)" (Pala Band of
Mission Indians v. Board of Supervisors of San Diego County (1997) 54 Cal.App.4th
565, 573-574.)” (Wal-Mart Real Estate Trust v. City Council of the City of
San Marcos (Sept. 7, 2005) 132 Cal.App.4th 614.)
(See also Hull v. Rossi (1993) 13 Cal.App.4th 1763, an opinion from the local Court of
Appeal awarding attorney’s fees to a real party in interest.)
4
Since more than six thousand voters voted for and against Measure B, this factor would have
been met as well. Finally, given the type of action that the Measure B proponents were defending – the right of the people to exercise a constitution right – the third factor would have been met.

Once eligibility to be awarded attorney’s fees is established, the inquiry focuses on the
amount of fees to be awarded. Here, the court sets a reasonable hourly “touchstone” or
“lodestar” rate based on that prevailing in the community for similar work by attorneys with
comparable experience and expertise. (Serrano v. Unruh (1982) 32 Cal.3d 621, 640-641.)
“The Court is not limited to using standard billing rates in setting reasonable hourly
compensation . . . , rather the Court is obliged to use the ‘market value’ approach which is
more likely to entice competent counsel to undertake difficult public interest cases.”
(San Bernardino Valley Audubon Society, Inc. v. County of San Bernardino, supra, 155
Cal.App.3d at 755.) In approving market rate awards for the enforcement of statutory rights
without pecuniary recovery, the United States Supreme Court has said, “the amount of fees
awarded [under section 1988] shall be governed by the same standards which prevail in other
types of equally complex . . . litigation, such as antitrust cases and not be reduced because
the rights involved may be nonpecuniary in nature.” (Blum v. Stenson (1984) 104 S.Ct. 1541,
1547 fn.11.)

Based on my own experience in similar cases, the attorneys for the Measure B
proponents would have likely sought a lodestar in the $300-$400 an hour range. However, in
settlement negotiations, the District got them to agree to not only cap their total fees at less than their full hours, but to also accept a significantly reduced lodestar of about $200 per hour. As a result, the attorney’s fees paid were roughly half of what they would have been had the court set the lodestar at market rates.
Moreover, after multiplying the number of hours spent by the reasonable hourly rate, the
lodestar can be adjusted up or down by using a “multiplier” that’s based on several factors. (Serrano v. Priest (1977) 20 Cal.3d 25, 49.) We knew that the Measure B attorneys were going to seek an upward “multiplier” to their lodestar based on the fact that (1) their contingency representation of the Measure B proponents during the litigation; (2) their intensive and expedited work that was required during their opposition to the District’s lawsuit, and; (3) the complexity and importance of the litigation. Notably, in Greene v. Dillingham Construction, Inc. (2002) 101 Cal. App. 4th 418, the court expressly held that refusing to consider contingent risk as a factor in a decision not to apply a multiplier is reversible error.

However, in all of our settlement agreements, we got the attorneys to agree to waive their
right to seek a Serrano multiplier, which further reduced the District’s potential exposure.
In sum, by settling the Measure B litigation, the District reduced its potential exposure to a
judgment for private attorney general fees to a fraction of what it could have been. For example, if the Measure B attorney had established their hourly lodestar at $350 per hour and had been awarded a multiplier of 1.50 (neither number is uncommon), the District would have had to pay in over $325,000 in attorney’s fees in the Measure B litigation alone – $200,000 more than it actually did.
If one adds to this number the amount it would have cost the District for its attorneys to continue prosecuting the Measure B litigation, and the additional amount of hours the Measure B attorneys would have spent defending it, the District’s potential exposure for continuing to pursue this action after the Court of Appeal’s ruling might well have exceeded $500,000.
A similar analysis applies to the other cases.

As a practical matter with contingency lawyers, they have no “end game” to recover their fees except to win. Consequently, they do not usually give up until all possible avenues to achieving victory are exhausted. Had they been successful on even one of the remaining cases, the District could have found itself facing the prospect of having to pay significant private attorney general fees – again, in addition to the significant fees it would have paid to its own attorneys.

The SWRCB’s Settlement Offer to the District.
The final factor relevant to the District’s settlement of the Measure B litigation was the District’s
efforts to obtain certain concessions from the Measure B proponents that would have helped
facilitate the District’s implementation of the first “final offer” settlement proposal SWRCB staff
presented to the District in negotiations brokered by Assemblyman Blakeslee. The District was
hoping to (1) fast track a new election to modify or rescind Measure B by conducting the election
itself, and (2) forestall a future lawsuit by reaching consensus with the Measure B proponents on
which “feasible” alternatives would be presented to the voters if the vote required by Measure B hadto take place. Unfortunately, after the District obtained these concessions from the Measure B proponents, two things happened. First, the County declined to enter into a stipulated judgment addressing these issues.

Second, thanks to a Public Records Act request presented by the San Luis
Obispo Tribune to the SWRCB, it was revealed that the SWRCB had undertaken the Blakeslee
negotiations in bad faith and had presented their “final offer” to the District knowing full well that
the SWRCB never intended to approve it even if the District accepted it. [emphasis mine]

And Now Onto Something REALLY Serious

At the 1/3 CSD Board Meeting, Maria Kelly announced another Water Conservation Faire,” Saturday, January 19, 10 – 2 at the Methodist Church at Pine and LOVR. There’ll be a variety of experts there to help you figure out ways to reduce your water use.

In addition, at the CSD meeting, during public comment, it was noted that on Jan 15, the Board of Supervisors will be discussing the water conservation and retrofit issues. Right now, the plan is to allow building outside the PZ if builders or developers retrofit X-number of existing houses. The concern expressed was this: You now allow builders outside the PZ to build by “cherry picking” the retrofit opportunities, while those inside the PZ are forbidden to do the same until the sewer is built. Then, when they can finally build, all the easy retrofits will be gone, thereby giving outside the PZ folks an advantage denied those lot owners living inside the PZ.

Also, of course, is the strange notion that when you have NO WATER, why should you allow anyone to building anything anywhere? Folks building outside the PZ are still sucking the same water out of the same overdrafted aquifer, so when the sewer’s built and the folks inside the PZ are allowed to build and there’s now no water left . . . oh, darn? . . . what then?