HomeMy WebLinkAboutAgenda Report - November 7, 2007 E-14AGENDA ITEM r 14
CITY OF LODI
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Approve Waiver of Conflict of Interest for Folger Levin & Kahn in Representation of
the State of California Department of Water Resources
MEETING DATE: November 7,2007
PREPARED BY: CitvAttornev's Office
RECOMMENDED ACTION: Approve Waiver of Conflict of Interest for Folger Levin & Kahn in
their representation of the State of California Department of Water
Resources.
BACKGROUND INFORMATION: The City retained the law firm of Folger Levin & Kahn ("FLK") in
2004 to serve as outside counsel for the Environmental Abatement
Program litigation. Folger Levin & Kahn has now been retained by
the California Department of Water Resources (DWR) to represent them in relation to the DWR power
portfolio, including the development of "peakers" (power plants) in San Francisco, and the Department's
role as purchaser of electricity for private utilities, and dams on the Klamath River. The City Attorney's
office, Public Works Department and Electric Utility Department have all reviewed the request and can
find no actual conflict between the City of Lodi and DWR in connection with the proposed representation.
However the City is adverse to other Departments within the State of California on unrelated issues.
Rule 3-310 of the Rules of Professional Conduct for attorney's, provides that "A member shall not,
without the informed written consent of each client .. , represent a client in a matter and at the same time
in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to
the client in the first matter." Accordingly, Folger Levin & Kahn has asked that the City of Lodi confirm
that it consents to any potential conflict, and waives any actual conflict that may arise out of this situation.
It is my recommendation that the Council formally waive the potential conflict and authorize the City
Manager to execute the waiver. If that is acceptable to the Council, such waiver of conflict should be
communicated to Folger Levin & Kahn.
FISCAL IMPACT: NIA
APPROVED:
BlairMFqf City Manager
FOLGER LEVIN & KAHN LLP
October 30, 2007
WV 0112W
CRY ATTORNEY'S OFFICE
VIA MAIL AND E-MAIL
D. Stephen Schwabauer
City Attorney
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
ATTORNEYS AT LAW
Embarcadero Center West
175 BattM Street,23td Floor
San Francisco. California 94111
Telephone 415.986.2800
Facsimile 415.986.2827
Los Angeles Office:
1900 Avenue of the Stars. 28th Floor
Los Angeles, California 90067
Telephone 310.556.3700
Facsimile 310.556.3770
www.flk.com
Re: Potential Conflict of Interest - FLR's Representation of State of
California. Department of Water Resources
Dear Steve:
As part of the firm's growing energypractice, the California Department of Water
Resources ("DWR) has asked Folger Levin &. Kahn LLP to represent it with respect to issues
related to the DWR power portfolio, including the development of "peakers" (power plants) in
San Francisco, the Department's role as purchaser of electricity for private utilities, and dams on
the Klamath River. DWR is a department of the State of California.
Because the DWR is a department of the State of California, we have disclosed to
the DWR all matters in which the firm's existing clients are currently involved where a State
agency (other than the DWR) has interests that are or potentially could be adverse to the interests
of the firm's clients. This letter addresses actual or potential conflicts of interest between the
City of Lodi and the State, and requests that the City of Lodi waive any conflicts and potential
conflicts of interest and consent to Folger Levin & Kahn LLP representing DWR with respect to
the matters noted above.
As you know, we represent the City of Lodi with respect to several matters in
which the State of California (primarily the Department of Toxic Substances Control and
Regional Water Quality Control Board) has interests that are adverse or potentially may be
adverse to the City of Lodi regarding the Lodi Groundwater site. Our representation of the City
of Lodi includes serving as counsel and providing advice on specific legal matters and aspects of
State law when we are asked to do so. In addition, we have represented the City of Lodi with
respect to several matters and consent decrees in which the City of Lodi and the State of
California have interests that maybe or potentially may become adverse. Specific matters in
which the interests of the State are or may be adverse to the interests of the City of Lodi include:
FOLGER LEVIN & KAHN LLP
D. Stephen Schwabauer
October 30,2007
Page 2
■ People aP the State of California v. M & P Investments, et al.
USDC ED Cal. Action No. CN -S-00-2441 FCD KJM
■ Hartford Accident and Indemnity Co., et al. v. City of Lodi, et al.
San Francisco Superior Court Case No. 323658
■ Unigardinsurance Co. et al. v. The City of Lodi, California
USDC ED Cal. Action No. CIV -S-98-1712 FCD JFM
■ The City ofLodi, California. a California municipal corporation v.
Unigardlnsurance Company, a Washington corporation
USDC ED Cal. Action No. CN -S-01-1718 FCD JFM
■ City OfLodi v. Donovan, et al.
San Francisco Superior Court Case No. 441976.
We are pleased to serve as your counsel and, in that capacity, to represent your
interests with respect to the environmental investigation and remediation at the Lodi
Groundwater site. The subject matter, facts, and issues pertinent to the matters noted above are
completely different from the subject matter of our proposed representation of DWR with respect
to development of "peakers" (power plants) in San Francisco, the Department's role as purchaser
of electricity for private utilities, and dams on the Klamath River. Accordingly, we do not
anticipate obtaining any specific confidential information in representing DWR that would be
material in the matters on which we represent the City of Lodi, nor do we anticipate that we will
be impaired in anyway from exercising our independentjudgment in representing the City of
Lodi.
Attached is a copy of Rule 3-310 of the Rules of Professional Conduct of the
State Bar of California. Rule 3-310(C) provides that "A member shall not, without the informed
written consent of each client ... represent a client in a matter and at the same time in a separate
matter accept as a client a person or entity whose interest in the first matter is adverse to the
client in the first matter." Accordingly, we ask you to confirm that you consent on behalf of the
City of Lodi to any potential conflict, and waive any actual conflict, that may arise out of this
situation.
Should a conflict arise during the course of our engagement, we will endeavor to
apprise you promptly. If you should become aware of any actual or potential conflict, we ask
that you also advise us promptly so that we can assure a proper course of action.
Please review this letter carefully, and call me if you have any questions. You
may want to seek independent counsel regarding this request, and of course you remain free to
seek independent counsel at any time in the future
FOLGER LEVIN & KAHN LLP
D. Stephen Schwabauer
October 30, 2007
Page 3
If you consent to our representation as described above, please have an officer or
other authorized representative sign below and return the letter to me. Enclosed is an additional
copy of the letter which you should retain for your records.
MRD/es
Enclosure
City of Lodi
By: ---s
Blair
Title: City Manap-er
cc: Gregory D. Call
M. Kay Martin
2006818001573858.1
Very truly yours,
Margaret . Dollbaum
, t!��4
ire
.:
Rules of Professional Conduct Page I of 2
Printedfrom The State Bar of California website )www.calbar.ca.gov) on Tuesday, September 18, 2007
Location
Rules of ProfessionalConduct
Rute 3310. Avoiding the Representation of Adverse Interests
(A) Forpurposes of this rule:
(1)"Disclosure" means informing the client orformer client of the rel -evert circumstances and of the actual and reasonably foreseeable adverse
consequences totheclient or former client;
(2)'Informed written consent'meanstheclient's orformer cllent's written agreement to the representation following written disclosure;
(3) "Written' means any writing as defined in EvidenceCode section 250.
(9) A membershall not accept or Continue representation of a client without providing written disclosure to the dent where:
(1)The member hasa kgal. business. financial. professional, or personal relationship with a party or witness in the same matter, or
(2) The memberknows or reasonably should knowthat:
(a) the member previously had a kgal. business, Financial, pmfessimal.cr oersonal re+Oonship with a party or witness in the same matter,
and
(b) the previous relationship wouldsubstantlally affect the membes representation; or
(3)The member hasor had a kgal, business, financial. professional, or personal relationship with another person or entity the memberknows or
reasonably should know would be affected subsiantlaly by resolutionof the matter; or
(4) The member hasor hada kgal. business, financial. or professional interestin the subject matter of the representation
(C)% member shall not, without the informed written consent Cfeach client:
(1) Accept representation of more than one dent in a matter in Mich the interestsofthe clientspotentialy conflict; or
(2)Accept orcontinue representation of more than one client in a niotter inwtrtch the interests ofthe clientsactually conflict; or
(3) Representa Client in a matterand at the sametime in a separate matter accept as a Client a person or entity whose interest in the first matter is
adverse lotheclient inthefrst matter.
(D) A memberwho represents two or more clientsshall not enter into an aggregate settlement of the claimsof ar againstthe clients without the informed
written consent Cfeachdtetd.
(E) A membershall not. without the informed written consent ofthe client aformer client, accept employment adverse lothe client orformer client where, by
reason ofthe representatin of the Clientor former client,themember has obtained confiidential information material lothe employment.
(F7 A membershall not acceptcompensaiion for representing a dientfrom one other than the client unless:
(1) There're no interferencewiththe members independence ofprofessiomijudgment or with theclient-lawyer relationship; and
(2) Information relatingto representatin ofthe client'rs protected as required by Businessand Professions Code section 6068, subdivision(e); and
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Rules of Professional Conduct Page 2 of 2
(3)The memberobtains the client's informed written mnsent. provided that no disclosureor mnsent is required It
(a) suchnon&sciosure is otherwise authorized bylaw; or
(b) the member is renderinglegat services on behalf of any public agency which provides legal services to other public agencies or the public.
rt r-1 _1...l
Rule 3310 is not intended to prohipit a memberfrom representing parties having antagonistic po0ions on the same lega I question that hasarisen in different
cases, unless representation ofeIher client would be adversely affected.
Other rules and haws may preclude making adequate disclosure under this rule. If such disclosure is precluded, informed written consert islikewise precluded.
(See,e,g„ Business and Professions Code section 6068, subdivston (e).)
Paragraph (B) is not intended to a pply to the relationshipof a member to another party's lawyer. Such relationships are governed by rule 3-320
Paragraph (B) is not intended to require either the disolosure of the new engagement to a former client or the mnsentof the former client Iothe new
engagement. However. both disclosure and mnsent are requirecIA paragraph (E) applies.
While paragraph (5) dealswith the issuesof adequate d isclosure to the presentc1ient or clients ofthemember's present or past rels bonshi ps to other parties
orwitnesses or present interest in the subject matter ofthe representation, paragraph(E) isintendedlo protectthe confidences of another presentor former
client, Thesetwo paragraphsaretoapply as complementary provisions.
Paragraph (B) is intended to appy only to a member's own relationshipsor interests, Unless the memberknows that a partnerorassocliate in thesame firm as
the member hasor had a relationship with anotherparty or witness or has or hadan interest inthesubiect mattes of time representation_
Subparagraphs(C)(1) and (C)(2) are intended to appy to all types of legal employment, including the concurrent representation of multipleparties in litigation
or in a single transaction or in someothercommon enterprise or legal retlnnship. Examplesofthe latter includethefomration of a partnershipfar several
partnersor a corporation forseveral shareholders, the preparation of an ante -nuptial agreement, or joint or reciprocal willsfora husband and wife, or the
resolutionof an'unoontested' marital dissolution. In such situations, for the sake of convenience or economy, the parties maywell prefer to employ a single
counsel, but member mud disclosethe potentialadverse aspects d such multiple representation (e.g., Evid, Code. §562) and must obtain the informed
written consent of the clientsthereto pursuant to subparagraph (C)(1), Moreover, ifthepotent'el adversity should became actual. the membermust obtain the
further informed written consent of the clients pursuant I o subparagraph (C)(2).
Subparagraph (C)(3) is intendedto apply to representations of dents in both litigation and transactional matters,
In State Farm Mutual Automobile insurance Company v Federal insurance Company (I 9N) 72 Cal.App. 4th 1422[86 Cal.Rptr.2d 20], the court held that
subparagraph (0)(3) was violated when a member. retained by an insurerto defend one SUR, and whilethat suit was still pending, filed a direct action against
thesame'msurer in an unrelatedadionwilhout securing tha insurer's mnseni. Notwithstanding State Farm, subparagraph (C)(3) isnot intended Ioappry with
respect I o the relationship between an insurer and a memberwhen. in each matter, the insurers interest is on y as an indemnity provider and not as a direct
party to the adion.
There are some natters in which the conflicts are such that written mnsent may not suffice for non-dlsaiplinary purposes. (See Kbods v. Superior Gourt
(1983) 149Cal.App.3d 931 [197 Cal.Rptr, 1851, Kfernm v Superior Court (1977) 75Cai.App.3d 893 [142 Cat.Rpir. 5091; fshmael v. MfAsgfon (1966) 241
Cal.App.2d 520150 Cel.Rptr. 592],)
Paragraph (D) is not intended to apply to class action settlements subfect to court approval.
Paragraph(F) Isnot intended to abrogate existing relationshipsbetweeninsurers andinsureds whereby theinsurer hasthecontractuai rght lounilateraly
select counsel for the insured, where there is no conflict of interest. (SeeSan DAA NavyFederal CrWit Unlon v. CurWs insurance Society (1984) 152
Cal.App,3d 358[208 Cat.Rptr 494].) (Amended byorder of Supreme Court; operative September 14.3992; operative March 3, 2003.)
® 2007 The State Bar of Calffomla
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