The URL can be used to link to this page

Home My WebLink AboutAGENDA REPORT 1996 0306 CC REG ITEM 07CIT ENJ ;- AGENDA REPORT CITY OF MOORPARK TO: The Honorable City Council FROM: Lillian E. Hare, City Clerk �1 DATE: February 27, 1996 (CC Meeting 3/06/96) SUBJECT: CONSIDER REQUEST FROM THE LEAGUE OF CALIFORNIA CITIES FOR CONTINUED AMICUS SUPPORT IN THE CITY AND COUNTY OF SAN FRANCISCO V. STACY AND WITBECK - RIGHT OF CALIFORNIA MUNICIPALITIES TO PROSECUTE ACTIONS UNDER THE FALSE CLAIMS ACT. BACKGROUND The Council took action on December 7, 1994 to approve joining an amicus brief in Stacy and Witbeck, Inc v City and County of San Francisco (Stacy I) . The central issue was the preservation of municipalities' right to debar an irresponsible contractor, where Stacy and Witbeck had attempted to defraud San Francisco by claiming false labor costs amounting to more than $400,000. By the appeal, the appellate court was asked to recognize the right of California municipalities to disqualify contractors from bidding on public works projects where the contractors have acted "irresponsible". In "Stacy II" the focus is narrowed to whether the litigation privilege under Civil Code Section 47(b) provides a complete defense to an action for false claims. The effect of extending litigation privilege to the False Claims Act is that any time a contractor submits a false claim, but contends that the false claim was submitted in anticipation of litigation, the contractor would be immunized from liability. The Executive Committee of the Legal Advocacy Committee of the League has approved continued support of this issue. What is at stake is the ability of California municipalities to prosecute actions under the False Claims Act. The City Attorney has indicated that the City might wish to support the amicus in "Stacy IV. STAFF RECOMMENDATION: Support Amicus. Attachment: Amicus Support Request 000023 CITY AND COUNTY OF SAN FRANCISCO rt�COVNr} LOUISE H. RENNE City Attorney California City Attorneys OFFICE OF THE CITY ATTORNEY SHERYL L. BREGMAN C,eputy City Attorney DIRECT DIAL: (415) 554 -42.26 February 15, 1996 .qg:- 0itIVE0 RE: League of California Cities, Request for Continued Amicus Support gurM Williams & Sorensen Stacy and Witbeck II Dear California City Attorney: I am writing to request your continued support on an important issue presently before the California Court of Appeal. This issue could affect every California municipality that may prosecute an action under the False Claims Act, Government Code § 12650, et seq. The issue is whether the litigation privilege under Civil Code §47(b) provides a complete defense to an action for false claims. There is no direct precedent on this question, but courts in some recent instances have extended application of the Section 47(b) litigation privilege. We are concerned that such extension in this case renders the False Claims Act meaningless. The effect of extending application of the Section 47(b) privilege to the False Claims Act is that any time a contractor submits a false claim, but contends that the false claim was submitted in anticipation of litigation, the contractor would be immunized from liability. This result is antithetical to the provisions of the False Claims Act and contrary the purpose of the Section 47(b) privilege. The False Claims Act requires municipalities to investigate false claims, but prosecution is discretionary. If the litigation privilege is a viable defense to false claims actions, municipalities will still be required to investigate false claims, but will be precluded in most instances from prosecuting such claims; a contractor could always aver that it submitted a claim in anticipation of litigation--that is simply the nature of a "claim" or any request for payment or approval. Moreover, the purpose of the litigation privilege was merely to preclude tort actions (i.e., defamation) derivative of communications made during the course of litigation, so as to afford litigants free access to the courts, not to protect false claimants. You may recall the facts from which this issue arises. By letter dated November 4, 1994, San Francisco lead counsel Geoffrey Spellberg requested your support in Stacy and Witbeck Inc y C*1Y nab+ o .Francisco ("Stacy I) to preserve municipalities' right to debar an irresponsible contractor, where Stacy and Witbeck had attempted to defraud San Francisco by claiming false labor costs amounting to more than $400,000. Eighty-six cities joined in the amicus curiae brief, written by Hans Van Ligten of Rutan & Tucker. The resulting opinion of the Court of Appeal, reported at 36 Cal.App.4th 1074, is an important precedent for all California municipalities. The amicus curiae brief filed in Stacy II addresses directly the issue of the litigation privilege under Civil Code §47(b). The brief presents the argument that claims for additional compensation, FOX PLAZA • 1390 MARKET STREET, FIFTH FLOOR • SAN FRANCISCO, CALIFORNIA 94102 -5408 006024 RECEPTION: (415) 554 -4283 • FACSIMILE: (415) 554- 4248/9249 B''NS RECEIVED N: \CONSTRUC \SBREGMAN \STACYWBK \911 LRPV\AMICUS.LTR- &FEB-96 -. DAf��''1 ��'' CALENDARED Y/JN`LVT. CITY AND COUNTY OF SAN FRANCISCO Letter to California City Attorneys Page 2 February 15, 1996 OFFICE OF THE CITY ATTORNEY or change orders, were submitted pursuant to the administrative provisions of the public works construction contract and not pursuant to any judicial proceedings, and, therefore, such claims cannot be protected by the privilege. In Stay I, the Court of Appeal discusses the litigation privilege, and found that Stacy and Witbeck submitted its claim with dual purposes, for nonlitigation as well as litigation purposes. The Court of Appeal found that Civil Code §47(b) is not applicable to administrative hearings. The present action ("Stacy II ") involves the initial Superior Court order adjudicating this issue. The Superior Court granted Stacy and Witbeck summary judgment dismissing San Francisco's counterclaim under the False Claims Act, finding that Stacy and Witbeck's "contract claim" was absolutely privileged under Civil Code §47(b). The San Francisco City Attorney's Office has appealed the Court's order. The Executive Committee of the Legal Advocacy Committee of the League of California Cities has approved continued support of this issue. The Executive Committee has given authorization on an expedited basis because of the history of this matter, the previous level of support and the timing (briefing deadline is March 15, 1996). Geoffrey Spellberg, a former Deputy City Attorney who has been intimately familiar with the Stacy matter, will be preparing and filing the amicus curiae brief (based on the amicus brief already filed in 51&Qy ). Mr. Spellberg is now in private practice in the Law Offices of Geoffrey Spellberg ((415) 837 - 0456). Burk Delventhal, Chief Deputy at the San Francisco City Attorney's Office ((415) 554- 4233), is the League Advocacy Committee member who has been assigned to supervise the brief. The League and San Francisco are seeking all public entities concerned about this issue to join the amicus curiae brief. What is at stake is the ability of California municipalities to prosecute actions under the False Claims Act. For your convenience, we enclose an approval form and a self - addressed, stamped envelope. Kindly return the executed approval form as soon as possible, preferably by March 10, 1996. I apologize for such short notice, but please do not allow the timing to be preclusive of your support, as we will file a supplemental amici list, if necessary, after the filing of the brief. I urge and request that you join as an amicus on the brief. Please call me with any questions or comments. Thank you for your attention to this matter. Very truly yours, LOUISE H. RENNE City Attorney By: l L Sheryl L. Bregman Deputy City Attorney cc: JoAnne Speers, Esq. (League of California Cities) Geoffrey Spellberg, Esq. Burk Delventhal, Esq. r FROM: Cheryl Kane, City Attorney Burke, Williams & Sorensen 611 West Sixth Street, 25th Floor Los Angeles, CA 90017 DATE: TO: Geoffrey Spellberg, Esq. Law Offices of Geoffrey Spellberg 369 Broadway, Suite 200 San Francisco, California 941334512 Sheryl L. Bregman, Esq. Deputy City Attorney Office of the City Attorney 1390 Market Street, 5th Floor San Francisco, California 94102 RE: City and County of San Fr nr;SCo v 4tary and Witbed Court of Appeal Case No. AO 69340 League of California Cities Amicus Curiae Brief Counsel: On behalf of CITY OF MOORPARK, CALIFORNIA we offer our support for the amicus curiae brief in the above- referenced matter and authorize you to include the aforementioned city /cities among the amici on the brief. The contact person for our office is CHERYL J. KANE Signature CHERYL J. KANE Print or Type Name N. ICONS 7RUCISBREGMANSTACYWBK %9 /1LRPVUMINS.FRM - 15 -FEB -96