Meyers Nave

Jan 212014

turbineThe Heron Bay Homeowners Association is set to win the lawsuit they filed against the City of San Leandro, concerning the City’s decision to give a height variance to Halus Power Systems to build a wind turbine tower on their property, for research and testing purposes.  The HOA objected to the turbine for aesthetic reasons, but grounded their legal pleadings on assorted – though very weak – environmental concerns.  Still, the judge overseeing the case issued a tentative ruling (TR) granting the HOA’s petition that Halus obtain an environmental impact report  (EIR) on the project.  The EIR would cost Halus hundreds of thousands of dollars and may very well prompt the small wind turbine company to move out of San Leandro.

The City is challenging the tentative ruling and a hearing has been scheduled for February 11.  Judge Evelio Grillo, somewhat unusually, did not post the actual contents of the TR online and, instead, only e-mailed it to the lawyers.  It’s thus impossible to actually comment on his reading of the case.  However, it’s rare for a judge to change his position once a TR is filed.  Best known as the judge in the Jahi McMath case, Grillo has a reputation for being smart and “by the book.”  Still, the City’s attorney – in particular, Meyer Nave‘s Edward Grutzmacher, who seemed to be the principal litigator in this case – didn’t precisely  ingratiate himself to Grillo by getting involved in petty legal shenanigans early in the procedures.   Now, Halus and San Leandro taxpayers may be paying for their lack of professionalism.

When plaintiffs sue a city under the California Environmental Quality Act (CEQA), they need a copy of the administrative record detailing all the  proceedings on the matter before the different City bodies. This has to be assembled and certified by the City and the plaintiff must pay for it. The City estimated that it would cost between $4800 and $6200, which the plaintiff’s lawyer accepted. The City started compiling the record, but did so at a slow pace.  There are  e-mails after e-mails from the plaintiff’s lawyer asking for updates on the status and cost estimates of the compilation.  Replies by Grutzmacher were less than responsive.   Finally, Grutzmacher said the record was ready but the HOA’s attorney could only have it  after delivering a $24K+ check.  He contended that it had taken 187 paralegal hours to compile the record, each charged at $125/hour.   He would not, however, give an actual accounting of how they came up to that amount and instead held the record hostage – though at one point, he gave the HOA’s attorney a one-time, take-it-or-leave-it opportunity to get the record for about $20K.    Finally, the HOA’s attorney had to ask the Court to force the City to give them the record.  The Court ruled that they could have it upon payment of $6200.

While I am the Heron Bay’s HOA number one critic – I thinks this lawsuit is an abuse of process, based purely on prejudice and animus by the HOA’s leadership -, the behavior of the lawyer representing the City was just as contemptible.  The impression I got after reading the e-mail exchange between Mr. Grutzmacher and the HOA’s lawyer, was very much that Mr. Grutzmacher was playing a game: first denying the HOA’s lawyer the information he needed, then holding the record hostage by demanding an absurd amount of money, and then, when the HOA’s lawyer asked for an explanation of the charges, by falsely claiming that the HOA lawyer wanted to get the whole thing for free.  Mr. Grutzmacher’s behavior on e-mails and pleas was not only childish, but offensive. We can speculate how the judge reacted to Grutzmacher’s attempt at gamesmanship.

We will not know Judge Grillo’s reasons for ruling for the HOA until the hearing – unless one of the parties decides to release the brief or some enterprising journalist goes to the trouble of obtaining it -, but we do know that it’s likely that these legal shenanigans will cost the taxpayers plenty.  If the HOA wins, the City will not only be stuck with having to pay its own attorney costs, but also the $25K Grutzmacher alleges it cost to assemble the administrative record.  It will also have to pay for the court costs and the HOA’s attorney’s fees, which are much greater than they would be if he didn’t have to spend countless hours fighting Grutzmacher over the administrative record. Once again, Meyers Nave profits from getting the City into a legal mess and the taxpayers are left to pay for it.

This was a case that the City should have won easily.   But Meyers Nave has shown that it either lacks the competence or the will to actually offer sound legal representation for the City.   Indeed, the tens of thousands of dollars their botched representation will cost this City in this case pales in comparison to the almost $3 million the City lost on the Faith Fellowship case, the $4 million+ it lost on the former Albertsons’ property case and the almost $8 million it lost on the King Family Trust lawsuit.   While these were all lawsuits that the City should not have had to face to begin with – and wouldn’t, if they had gotten competent advise from the let go -, Meyers Nave poor representation definitely did not help along the way.

I said it almost three years ago: “It’s time to fire Meyers Nave” and it’s even more true today.   San Leandro’s taxpayer money should go to pay for fixing our streets, housing our homeless and providing after-school activities for our children.  It should not go to pay for expensive lawyers who give the City bad legal advice, and then benefit when the City gets sued.


Aug 212012

District judge Phyllis J. Hamilton is presiding over the case.

Court rules City is not responsible for lost contributions.

San Leandro won a partial victory on August 20th in its ongoing legal battle against the Faith Fellowship Four Square Church.  A federal judge ruled that the City is not liable for the contributions the Church alleged it has lost by not being able to grow its congregation.  Faith Fellowship had been rapidly growing through 2006, when they reached the limit of how many people their existing facilities could accommodate.  They bought a much larger property in the industrial area of town, but the City stopped them from using it as the zoning code did not allow non-commercial assembly use in that area.  Faith Fellowship alleges that this has cause them $19M to $23M in total damages, including $10.4M to $14.3M in contributions it would have received, had it been able to move to its new facilities and further grow its congregation.  The Court  found these specific damages were too speculative to be considered.

The Court also found, however, that the City may be liable for the “hard” damages incurred by the Church as it was forced to sell the property at a loss, as well as for the mortgage, insurance and taxes it paid while it owned the property.  According to the Church, these add up to about $8.4M.

The case is scheduled to go to trial in October, when a jury will decide whether the City imposed a “substantial burden” on the Church by not allowing them use of their newly acquired property.  If so, the jury will also determine the amount of damages that should be paid to the Church.  The Court will then decide whether the City must also pay the Church’s legal fees.  The City has spent close to $1M on its own legal fees, and may be liable to the Church for a similar amount for theirs.

If the jury finds for the City, the Church may still appeal to the 9th Circuit alleging that the City violated the equal treatment clause of the Religious Land Use and Institutionalized Persons Act (RLUIPA) by allowing commercial entertainment in properties zoned industrial, but not religious assemblies.  Recent jurisprudence makes it very likely that the Church would win on these grounds.  The case may then be sent back to trial for a determination of the monetary damages.  This whole procedure is likely to cost the City hundreds of thousands of dollars in additional legal fees.  We better hope we lose at trial this October and the jury doesn’t feel too generous with the Church.

Many interesting things have been happening on this case in the last few months, and I will write about them in a different post.




Mar 122012

The Fox Cinema in Vancouver shows adult movies all day long.

Proposed Amendments to the Zoning Code would ban recreation and entertainment from the industrial area – but would allow “adult businesses” to continue.

Ban likely to be unconstitutional and won’t help with the Faith Fellowship lawsuit.

If Meyers Nave, the law firm that represents the City of San Leandro, gets its way, strip bars and peep shows could flourish in the industrial area of San Leandro.  But theaters, cinemas and recreational venues would not be welcomed.  Shakespeare would be OK, but only if all the actors were nude and got frisky with one another.

At its next meeting, the City Council will again consider banning entertainment and recreational uses from the industrial area of town.  This short-sighted plan was concocted by Meyers Nave  in response to the Faith Fellowship litigation.  Currently, the Zoning code allows entertainment and recreational uses of properties zoned industrial, but not assembly or religious uses.  The 9th Circuit recently ruled that such unequal treatment violates RLUIPA.

The City has potentially two ways in which to amend the code to comply with federal law.  It can either allow religious/assembly uses in the industrial area or it can ban entertainment and recreational uses.  The former approach can contribute to the development of the industrial area, it can bring new people to San Leandro – who will then be likely to shop and dine in this city -, and it can create competition for the purchase of properties, bringing up property values.

The City Council, however, has chosen to focus on the second option: banning entertainment and recreational uses in the industrial area.  I have written before as to why this is a bad idea: the high-tech companies we want to attract realize the importance of combining entertainment and recreation with work – it makes for happier, more productive employees.  Indeed, this is a point that David Johnson, CEO of the San Leandro Chamber of Commerce, has repeatedly made to the City.  Johnson spent a decade working on economic development in Oakland and knows first hand how companies seek to move to cities that don’t make them jump through hoops.  When presented with these facts, the Planning Commission voted twice to reject the entertainment and recreation bans.

The City’s attorneys, however, are adamant about further restricting uses in the industrial area, and they hold a lot of sway with the City Council.  At the last Council meeting, Deborah Fox admitted that the only reason to amend the code was to facilitate the city’s legal strategy on the Faith Fellowship case.  She stated that the district judge will consider the Zoning code as it stands when trial begins, and thus there is a hurry to make these changes soon.

I am unable, however, to figure out what advantage Fox thinks the City will gain by making these changes.  Leaving the issue of adult entertainment aside, the proposed changes in the Zoning code would likely prevent the Church from obtaining a declaratory judgment to the effect that the City’s Zoning code violates RLUIPA.  The district court, however, would still have to decide whether the City violated the equal terms clause of RLUIPA back when it stopped FF from moving into the property they’d bought, and if so, award monetary damages to the Church.  The only “advantage” I can see for the City is in being able to stop Faith Fellowship from acquiring another property in the industrial section and putting a church there.  This may seem very petty, but the City Attorney may have been able to sell this approach to the Council as some sort of “victory”.

In any case, their strategy is very unlikely to work. The Zoning code amendments will bar entertainment and recreational uses from the industrial area, but will continue to allow adult businesses, including adult entertainment businesses, to operate.  The City doesn’t have much of a choice about this, it must allow such businesses to locate somewhere in town and the industrial area seemed the most unobjectionable one when the code was last amended.  But this means that in order to ban adult entertainment in the industrial area, the City must first allow it elsewhere within City limits.  That would open a whole new can of worms that the City, of course, wants to avoid.

But if the Zoning code isn’t changed to disallow adult entertainment in the industrial area, the City is in exactly the same position that it is today: treating churches differently than entertainment venues, and that’s what the 9th circuit has said they cannot do.

As if this wasn’t enough, it seems quite likely that the City doesn’t have the right to ban entertainment from the industrial area in the first place.  Entertainment is considered a form speech and therefore protected by the first amendment.  In Schad v. Mount Ephraim, the US Supreme Court ruled that any ban on entertainment must be “narrowly drawn and must further a sufficiently substantial government interest”.    Schad concerned a city ordinance which prohibited live entertainment in the commercial district, while allowing businesses such as motels, lumber stores, restaurants and office buildings.  In that case, the Court could not find any “substantial government interest” accomplished by the ban.  But a Court looking at an entertainment ban in San Leandro would not even have to look that far – Deborah Fox is on record saying that the only reason for the ban was to gain an advantage in their litigation against Faith Fellowship.  No Court in the land will consider that to be a legitimate, much less a “substantial,”  reason for restricting speech.

We are left with the question, then, of what the City’s attorneys reasons for pushing these changes are.  As I’m not a mind reader, I can only speculate:

Incompetence.  Meyers Nave handled this case badly from the start, neglecting to tell the Council about the risks and potential costs of stopping FF from building their church.   Deborah Fox, in particular, did a horrendous job of arguing the case before the 9th circuit; she seemed surprised by the questions posed by the judges and had no answers.  Her whole handling of the situation since does not inspire confidence in her legal acumen.  So it may simply be that Meyers Nave didn’t look carefully enough at the Zoning code or the law to actually understand the issues at play.

Presumed incompetence.   Meyers Nave tried very hard to have the amendments to the Zoning code be made as quietly as possible.  City staff made up reasons for why these changes were needed, they hid the actual nature of the changes, and the City Council was only informed about them in closed session – very likely in violation of the Brown Act.   They probably believed that they could sneak them by without Faith Fellowship’s attorneys noticing.  I wouldn’t be surprised if Meyers Nave is also hoping that FF’s lawyers won’t re-read the Zoning code and notice that the “adult-oriented businesses” clause will remain in place.

Profit.  The City pays Meyers Nave a very generous amount for general City Attorney services, but they must pay them by the hour for any litigation services.  This means that the more bad advice Meyers Nave gives the city, the more likely the city is to get sued, and the more money Meyers Nave will make in attorney’s fees.  Smart cities avoid this clear conflict of interest by having the City Attorney be an employee, and thus not personally benefit from any litigation