City hired oil-company attorneys for defense
CITY HALL — The legal team that helped City Hall win hundreds of millions of dollars in a landmark water-contamination settlement demanded payment from the City Council on Tuesday, bringing into public light a case headed for court if parties can’t agree on how much they should be paid.
Lawyers Fred Baron, Duane Miller and Vick Sher have hired Santa Monica-based lawyer Marshall B. Grossman to help them recover more than $60 million they claim City Hall owes for work they did helping to secure a new water-treatment plant and a multi-million dollar cash settlement for Santa Monica from oil companies. Those were the spoils procured in an MTBE case launched after the city’s water supply was tainted by errant oil companies.
City Hall in 2000 sued 18 oil companies that allowed methyl tertiary-butyl ether, a gasoline additive, to seep into the ground-water in 1996. The contamination forced the closure of five of Santa Monica’s 11 drinking-water wells.
All of the oil companies agreed to settle the lawsuits rather than go to court, paying City Hall more than $120 million. Three of the major oil companies also agreed to pay for the design, construction and maintenance of a water-treatment plant at Charnock Well Field, the city’s main water source, located in West Los Angeles. The plant has not been valued, but sources estimate it might be worth more than $220 million.
Grossman came to City Hall on Tuesday and spoke for three minutes during the public comment portion of the City Council meeting. He had several large display boards intended to disclose to the public “A Tale of Two Cities,” where the firm in which he is a name partner — Alschuler, Grossman, Stein & Kahan — is alleging City Hall has used his clients’ services in the record-breaking settlement and then refused to pay them for their work.
According to the lawyers’ contract, City Hall was to pay the lawyers 25 percent of the value of the settlement, up to $250 million. The attorneys were entitled to another 5 percent of the next $100 million, and 10 percent of any portion of the settlement in excess of $350 million, attorneys said.
City Hall admits the outside lawyers who helped in the case have not been paid for their involvement in the settlement, but not because the city has refused to pay them.
City Attorney Marsha Moutrie said she sent the attorneys a letter after the settlement inviting them to bill City Hall at an hourly rate for their work in the case and clearly indicated it would not bar them from their fight to secure more through the courts.
“The city has offered to pay its former counsel the reasonable value of services without prejudice to their contingency claim, which means they could receive reasonable value and continue their court fight to obtain more,” Moutrie said. “I’m disappointed that Mr. Baron and the city’s other former lawyers are attempting to bully and disparage their former client (City Hall).
“However, I trust that the matter will be resolved based on the law and the facts through the judicial process.”
Baron previously said that since his clients agreed to work on a contingency basis, meaning they would collect from the settlement, they had no intentions to charge for hours and rates.
City Councilman Richard Bloom on Tuesday asked how much exactly Grossman’s clients wanted to settle the case. Grossman didn’t respond with an exact amount.
Grossman said part of the reason he couldn’t give an exact amount is because the water-treatment facility has not yet been appraised. He added that part of the his clients’ payment was based on the value of the water-treatment facility, according to the lawyers’ contract.
Meanwhile, the same law firm that helped defend the oil companies in the water-contamination case has now been hired by City Hall to defend it in the legal-fee case.
“The city has created a terrible conflict situation by hiring the same lawyers to fight with my client who represented the oil companies against the city in the underlying litigation,” Grossman said. “In doing so, they have a road map on how to do battle with every other city in America facing MTBE contamination.
“Those documents will now be used to defend claims of MTBE contamination filed by dozens of other cities across the state.”
Andrea Sheridan Ordin — an attorney with Morgan, Lewis & Bockius, one of the firms that worked on behalf of the oil companies during the water-contamination case and is now helping City Hall defend itself — said Grossman’s claim that city records could be used to help her firm defend oil companies is not true.
“It is one of the great strengths that law firms can represent a wide range of clients,” Ordin said. “Our firm represents nonprofits as well as oil companies.
“Every client has a right to confidentiality.”
Moutrie said on Wednesday that Ordin was hired on her merits as an attorney.
“We hired her not because she works for an oil company, we hired her because of her background in public service and her ethics,” she said.
Originally published in the Santa Monica Daily Press print edition on April 14, 2005. Read the original PDF.