HomeMy Public PortalAbout2004-11-18 Retainer Agrmt Phillips & Cohen LLPPHILLIPS g COHEN LLP.
2000 MASSACHUSETTS AVENUE, NW
WASHINGTON, DC 20036
C202) 833-4567
FAX C202) 833-1815
Mary A. Inman
(415) 836-9006
ATTORNEYS AT LAW
13l STEUART STREET
SUITE SOl
SAN FRANCISCO, CA 94105
0415) 836-9000 FAX C415) 836-9001 705 12TH STREET
www.phillipsandcohen.com SAN DIEGO, CA 92101
C619) 23l-6655
FAX C619) 231-9777
writer's a-mail
mai@pcsf.com
December 1, 2004
Via T T C l~/fail
Christian Bettenhausen
Jones & Mayer
3777 North Harbor Boulevard
Fullerton, CA 92835
Re: City of Banning, et al. v. James Jones Company, et al., Case No.
BC321513 (Los An elg es Superior Court
Dear Mr. Bettenhausen:
Enclosed please find afully-executed, original retainer agreement between the City of
Fullerton, Phillips & Cohen LLP and Irell & Manella LLP regarding our representation of the
City in the above-referenced matter.
As you will see, we have made the following hand-written revision to numbered
paragraph 1 of the agreement: we have removed "Tyco International (US) Inc." from the list of
defendants against whom the lawsuit is to be filed. Unfortunately, Tyco's name had been
included inadvertently. James Jones Company, Watts Industries, Inc. and Mueller Co. are the
only defendants named in the above action.
Once you have reviewed and hopefully approved this hand-written revision, please place
your initials and the date beside it to indicate your approval thereof, make a copy of the
agreement for your files, and return the original to me at the address provided above.
Mr. Christian Bettenhausen
Page 2
December 1, 2004
Thank you for your help. We look forward to working with you on this matter.
Sincerely,
~-
Mary .Inma
Enclosure
cc: Eric R. Havian (w/o encl.)
Mark Paluch (w/o encl.)
RETAINER AGREEMENT 0 R I G f NA L
This Retainer Agreement represents the understanding and
the City of Fullerton, a municipal corporation ("City"), Phillips &
and Irell & Manella LLP ("I&M").
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Retention of P&C and I&M ,~,r,~ . -~ ~'' ~ ~~ ~ ~ k A ~ . Ple
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1. City hereby retains P&C and I&M to r resent it in an action to be filed
against James Jones Company, Mueller Co., and Watts
Industries, Inc. (collectively, "Defendants") regarding fraud committed against over
one hundred California public water systems, including City (the "Lawsuit"). The
Lawsuit is based on the same facts as the pending action in Los Angeles Superior
Court, State of California ex rel. Nora Armenta v. James Jones Company et al., Case
No. BC 173487 (the "Armenta Action"), in which City is a real party in interest.
P&C and I&M also represent ui tam plaintiff/relator Nora Armenta ("Armenta"),
and real parties in interest Alameda County Water District ("ACWD"), City of
Pomona ("Pomona"), City of Burbank ("Burbank"), City of Vallejo ("Vallejo"), city
of Santa Cruz ("Santa Cruz"), and the Contra Costa Water District ("CCWD")
(collectively, the "Other Clients"), and have separate retainer agreements with each
of them.
2. City hereby authorizes P&C and I&M to associate or consult in this
representation with such other counsel as they may deem necessary.
Notwithstanding any such association of other counsel, and unless such authority is
expressly delegated by P&C and I&M to other counsel with the consent of City,
P&C and I&M shall at all times retain the full authority and responsibility of
counsel in any litigation pursuant to this Retainer Agreement. Unless otherwise
agreed to by City, P&C and I&M in writing, P&C and I&M shall be responsible for
compensating any counsel with whom P&C and I&M associate or consult.
Scope of Employment
3. City understands that the Lawsuit will be filed to enforce common law
claims by City as well as numerous other California public water systems. city
understands that the representation presently undertaken by P&C and I&M is limited
to matters necessary to bring the Lawsuit to a conclusion before the trial court. The
representation currently includes pursuit of claims on behalf of the Other Clients,
and may, in the future, include pursuit of California False Claims Act Claims and
common law claims on behalf of other California public water systems.
4. City has been informed and understands that P&C .and I&M do not
represent it in connection with the negotiation of the terms of this Retainer
Agreement. Rather, P&C and I&M are each acting on its own behalf and City is
entitled and encouraged to review this Retainer Agreement with separate counsel.
] 67382.1 07
5. In the absence of a written agreement to the contrary, P&C and I&M do
not represent City in any legal matter other than as set forth herein.
Cit_y's Obligations
6. Where appropriate, City, P&C and I&M will attempt to consult with
one another before discussing the Lawsuit with the media or any other third party.
7. City agrees to provide promptly any and all information requested by
P&C and I&M and to cooperate fully in the prosecution of the Lawsuit, including
but not limited to, attending scheduled hearings and meetings, answering truthfully
any interrogatories propounded by opposing parties, appearing for the taking of any
deposition, and participating cooperatively in any judicial or other proceeding as
may arise during the course of the Lawsuit.
8. While P&C and I&M will act as outside counsel for City in prosecuting
its claims in the Lawsuit as provided in this Retainer Agreement, the City Attorney
of Fullerton ("City Attorney") shall at all times remain City's general legal advisor.
The City Attorney shall have responsibility for facilitating access of P&C and I&M
to City's personnel and records in connection with the Lawsuit. As between P&C
and I&M, on the one hand, and the City Attorney on the other, the City Attorney
shall have primary responsibility for informing, advising and consulting with its
City Council or other governing body with respect to the Lawsuit, including without
limitation issues relating to its settlement.
Attorneys' Fees, Costs and Ezpenses
9. City understands that, as a political subdivision that did not intervene in
the Armenta Action, City is required under the California False Claims Act to
provide to Armenta - as the dui tam plaintiff - at least 25% but not more than 50%
of the money recovered by City from Defendants under the California False Claims
Act in the Armenta Action. City also understands that it has no legal obligation to
share with Armenta any of the money it recovers from Defendants under its
common law claims. City nevertheless agrees to share any common law recovery
with Armenta in order to minimize the conflicts of interest that might otherwise
arise between Armenta and City. Therefore, City, P&C, I&M, and Armenta
understand and agree that City will pay to Armenta 33% of the full amount of any
award or settlement City recovers from Defendants, or any of them, as a result of the
Lawsuit ("the Relator's Share"). To compensate P&C and I&M for their services,
City, P&C, and I&M understand and agree that, in addition to paying Armenta the
Relator's Share, City will pay to P&C and I&M 5% of the full amount of any award
or settlement City recovers from Defendants, or any of them (before payment of the
Relator's Share) as a result of the Lawsuit ("the contingent fee").
167382.1 07 - 2 -
10. City has been informed and understands that the above fees are not
prescribed by law but are negotiable between attorney and client. City has also been
informed and understands that Armenta has agreed to pay to I&M and P&C a
percentage share of her portion of any recovery in the Lawsuit.
11. For as long as they remain counsel to City in the Lawsuit, P&C and
I&M agree that they will advance all funds needed to pay for the following expenses
incurred in connection with representing City in the Lawsuit: filing fees, faxing,
postage, phone, routine photocopying, transcripts, court reporters and expert witness
expenses as well as the costs involved in taking and defending depositions and
preparing for and prosecuting City's claims at trial. The parties agree that all
internal costs and expenses of the Lawsuit including without limitation
photocopying expenses incurred by or on behalf of City in connection with
responding to subpoenas and document requests, shall be advanced by City. To the
extent that any costs and expenses advanced or incurred by P&C and I&M are later
awarded to City by the court or recovered through settlement, City hereby assigns to
P&C and I&M such award or settlement proceeds. Any reasonable costs and
expenses associated with the Lawsuit that are incurred or advanced by P&C, I&M or
by City, but that are not awarded by the court or recovered through settlement, shall
be reimbursed to the party who incurred or advanced the expenses from City's
recovery, if any, prior to the division and distribution of such recovery referred to in
paragraph 9 above.
12. City shall not be obligated to pay or to guarantee payment of any
compensation to P&C or I&M for services rendered or costs incurred in the Lawsuit
other than as set forth in this Retainer Agreement. If for any reason there is no
recovery in the Lawsuit, City shall not be obligated to pay for or reimburse to P&C
or I&M any costs incurred in connection with the Lawsuit, except as provided in
paragraph 11 above.
13. City agrees to cooperate fully in the prosecution of any claim by P&C
and I&M for court awarded expenses, costs, or fees.
Termination of Representation
14. City may discharge P&C and/or I&M at any time by written notice to
P&C and I&M. Upon termination (or otherwise), City retains the right to demand
return of all of its client files, including confidential communications, provided,
however, that P&C and I&M may keep a copy of and continue to use City's
confidential information in their continuing representation of other parties in the
Lawsuit.
15. If P&C and/or I&M determine at any time that it is no longer feasible
or desirable to pursue the Lawsuit on behalf of City, P&C and/or I&M may, after
providing thirty days written notice to City, withdraw from further representation, as
167382.1 07 - 3 -
provided by law. In that event, the withdrawing firm shall be entitled to a portion of
the contingent fee as provided by law. As provided in paragraph 22 below, in the
event P&C and/or I&M terminate representation of City, P&C and I&M may keep a
copy of and continue to use City's confidential information in their continuing
representation of other parties in the Lawsuit.
16. City understands and agrees that in the event P&C and/or I&M is
discharged and (i) City proceeds with the Lawsuit with or without substitute
counsel; (ii) City receives a recovery from Defendants, and (iii) P&C and I&M are
not entitled to their full 5% contingent fee as provided in paragraph 9, then City
shall pay the discharged counsel on a quantum meruit basis. The parties agree that
for purposes of this Retainer Agreement quantum meruit shall be measured as a
portion of the 5% contingent fee described in paragraph 9 in proportion to the
percentage of the hours expended by the discharged counsel compared with the
hours expended by substitute counsel, if any (appropriately weighted based upon
normal hourly rates). In addition, City understands and agrees that, if I&M and/or
P&C is discharged, Armenta's right to share in any recovery obtained _from
Defendants shall not be affected, i.e., Armenta shall continue to receive 33% of the
full amount of any award or settlement City recovers from Defendants as a result of
the Lawsuit, including the California False Claims Act and common law claims, as
provided in paragraph 9 hereto. City also understands and agrees that it will not
object to the discharged counsel's continued representation of the Other Clients.
Waiver of Potential Conflicts Arising from Representation in Matters Unrelated
to the Lawsuit
17. City hereby agrees that P&C and I&M, at any time, may represent
existing or new clients in any matter (including without limitation any litigation,
action, proceeding, transaction or negotiation) that is not substantially related to the
Lawsuit, even if the interests of those clients are directly adverse or potentially
directly adverse to City. City hereby expressly waives any conflict of interest that
may hereafter arise in connection with such representation. By way of example, and
without limiting the generality of the foregoing, City understands and agrees that
I&M and P&C may in the future, represent existing or new clients with interests
adverse to City in matters relating to City's distribution of water to its residents or
relating to soil or ground water contamination from business operations, and City
agrees that such actions, without more, are not substantially related to the Lawsuit.
18. Except as to information disclosed to other clients whom I&M and
P&C represent in the Lawsuit, City's confidential information obtained in the course
of the Lawsuit will remain confidential and will not be disclosed to any clients of
I&M and P&C, other than those who are parties to .the Lawsuit. In the event of such
representation adverse to City, I&M and P&C, as appropriate, will establish
appropriate procedures to make certain that no attorney or paralegal working on
]67382.1 07 - 4 -
such matter has access to any confidential information which City has provided to
P&C and/or I&M.
Waiver of Conflicts Resulting From Joint Representation of City and Clients in
Lawsuit
19. As noted above, P&C and I&M also represent the Other Clients in the
Armenat Action and in the Lawsuit. P&C and I&M may, in the future, take on the
representation of additional public water systems in the Lawsuit. The Other Clients
(excluding Armenta) together with any other municipalities or public water systems
whom P&C and I&M may represent in this Lawsuit in the future shall be referred to
as the "Additional Municipal Clients."
20. City is aware that while multiple representation may result in economic
or tactical advantages, it also involves significant risks. City understands that P&C
and I&M's joint representation of City, Armenta, and the Additional Municipal
Clients creates the potential for a conflict of interest to arise between or among
them, or any of them, in the future. The potential for conflict exists for at least the
following reasons: (i) because P&C and I&M are entitled to statutory attorneys' fees
under the California False Claims Act for the prosecution of Armenta's claims but
P&C and I&M are not entitled to statutory fees for the prosecution of the claims of
City or any Additional Municipal Clients; and (ii) because City may wish to pursue
a litigation strategy or tactic, including without limitation settling the Lawsuit; with
which Armenta and/or one or more of the Additional Municipal Clients disagree or
believe to be contrary to their/its interests. Conversely, Armenta and/or one or more
of the Additional Municipal Clients may want to pursue a litigation strategy or
tactic, including without limitation settling the Lawsuit, with which City disagrees
or believes to be contrary to its interests. City hereby expressly waives any such
conflicts of interest that may currently exist or hereafter arise between it on the one
hand, and Relator and the Additional Municipal Clients, or any of them, on the other
hand. P&C and I&M represent that they have informed the Other Clients of the
potential for a conflict of interest arising from the joint representation and the Other
Clients have each executed a formal, written conflict of interest waiver.
21. Should a conflict of any type develop in the course of the
representation of the City by P&C and I&M in the Lawsuit (including without
limitation those waived in paragraphs 17 and 20 above), P&C and I&M might reach
the conclusion that they cannot continue to represent all of their then clients. City
hereby agrees that, should P&C and I&M in their sole discretion reach such a
conclusion, P&C and I&M may terminate their relationship with City pursuant to
the terms of the Retainer Agreement and continue to represent one or more of their
other clients in the Lawsuit, even though P&C and I&M would be in possession of
City's confidential information and even though, as provided in this Retainer
Agreement, City agrees that P&C and I&M may keep a copy of and use that
confidential information in their continued representation of other clients in the
167382.1 07 - 5 -
Lawsuit and those other clients may be adverse to City. City understands that in the
event that P&C and I&M determine that a conflict does exist and that P&C and I&M
could not continue to represent all of their then clients, P&C and I&M would
continue to represent Armenta and one or more of their other clients rather than
City. City hereby agrees that, in the event P&C and I&M terminate their
representation of City and continue with representation of other clients, City will not
assert any conflict of interest (such conflicts having been expressly waived herein)
and will not seek to disqualify P&C and/or I&M from representing Armenta and/or
any Additional Municipal Clients notwithstanding any conflict or adversity that may
develop. City further understands that, even with thirty days written notice, the
termination of P&C and I&M's representation of City, as provided by law, could
come at an inopportune time (even at trial). In the event P&C and I&M terminate
their representation of City, they agree to take reasonable steps to reduce any
hardship or prejudice to City, including supporting reasonable requests for
extensions or reasonable delay of trial in order to allow City an opportunity to obtain
replacement counsel.
22. City hereby agrees that in the event that P&C and I&M terminate their
representation of City, P&C and I&M shall be entitled to keep a copy of and use
City's confidential information in their continued representation of other clients in
the Lawsuit. Further, City hereby agrees that P&C and I&M at any time may share
City's confidential communications with Relator and the Additional Municipal
Clients whom P&C and I&M are jointly representing in this matter (even if P&C
and I&M are no longer representing City).
23. Furthermore, because P&C and I&M will be jointly retained by both
City and the other clients in this Lawsuit, in the event of a dispute between City on
the one hand and Relator and the Additional Municipal Clients, or any of them, on
the other hand, the attorney-client privilege generally will not shield City's
communications with P&C and I&M from discovery by the other parties whom
P&C and I&M are jointly representing.
24. Conflict waivers are always serious matters and always have potential
downsides to the waiving party. In this case, the City's waivers may result, for
example,. in P&C and I&M being adverse to City while in the possession of
confidential or other information which City has provided. In addition, it is possible
in accordance with these waivers that P&C and I&M would be simultaneously
representing City and parties adverse to City and that this may cause City to lose
confidence in P&C and I&M at an inopportune moment when it would be
disadvantageous to City to discharge P&C and I&M. The waivers set forth in
paragraphs 17-23 above are particularly critical to City's rights and interests. For
this reason, and because of the importance and complexity of conflict waivers
generally, P&C and I&M strongly recommend that City consult with independent
]67382.1 07 - 6 -
counsel prior to executing the Retainer Agreement so that City may independently
be advised of its rights and needs.
Arbitration
25. IN THE EVENT OF A DISPUTE BETWEEN OR AMONG THE
PARTIES HERETO REGARDING FEES, COSTS, OR ANY OTHER
MATTER RELATED TO OR ARISING OUT OF THIS RETAINER
AGREEMENT, THE LAWSUIT, OR THE ENGAGEMENT BY CITY OF
THE ATTORNEYS HEREIN, INCLUDING WITHOUT LIMITATION THE
QUALITY OF THE SERVICES RENDERED, THE DISPUTE SHALL BE
DETERMINED, SETTLED AND RESOLVED BY ARBITRATION IN
CALIFORNIA. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, THE PARTIES EXPRESSLY AGREE THAT ANY AND ALL
QUESTIONS AS TO WHETHER OR NOT AN ISSUE CONSTITUTES A
DISPUTE OR OTHER MATTER ARBITRABLE UNDER THIS
PARAGRAPH 25 SHALL THEMSELVES BE SETTLED BY ARBITRATION
IN ACCORDANCE WITH THIS PARAGRAPH 25. ANY AWARD SHALL
BE FINAL, BINDING AND CONCLUSIVE UPON THE PARTIES, AND A
JUDGMENT RENDERED THEREON MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF. THE PREVAILING PARTY IN ANY
SUCH ARBITRATION SHALL BE ENTITLED TO REASONABLE
ATTORNEYS' FEES AND COSTS.
Arbitration may be demanded by the sending of written notice to the
other party or parties. If arbitration is demanded, within twenty (20) days of
the demand City shall present a list of five (5) qualified individuals who
would be willing to serve that City would find acceptable to act as arbitrator.
To serve as arbitrator, the individual must be a retired judge having served on
any federal court or the California Superior Court or higher court in the State
of California. Within twenty (20) days of P&C and I&M receiving City's list,
P&C and I&M may at their sole discretion (i) select any individual from that
list and that individual shall serve as the arbitrator, or (ii) propose their own
list of five (5) individuals for arbitrator. If P&C and I&M choose to present a
separate list, City may within twenty (20) days select any individual from that
list and that person shall serve as arbitrator. If no arbitrator can be agreed
upon at the end of this process, City on the one hand and P&C and I&M on
the other hand shall select-one individual from their own respective list and
those two persons shall jointly select the arbitrator. The arbitration shall be
conducted pursuant to the procedures set forth in the California Code of Civil
Procedure § § 1280, et seq., and in that connection City, P&C and I&M agree
that Section 1283.05 thereof is applicable to any such arbitration. Unless
inconsistent with California Code of Civil Procedure §§ 1280, et seq. (in
167382.] 07 - 7 -
which case § § 1280, et seq. shall prevail), the arbitration will be conducted by
the American Arbitration Association pursuant to its then current rules.
Miscellaneous
26. The entire agreement between City, P&C and I&M relating to the
subject matter of this Retainer Agreement is contained herein. No promises,
inducements, or considerations have been offered, accepted or given except as
herein set forth. This Retainer Agreement supersedes any prior oral or written
agreement concerning the subject matter of this Retainer Agreement.
27. This Retainer Agreement may not be modified, changed, altered or
amended in any way except in a writing signed by all parties. The parties expressly
agree that no oral modification of this Retainer Agreement shall be effective,
notwithstanding any provisions of the governing law that may allow for oral
modification.
28. Tlie parties hereby acknowledge that they have read and understand. the
foregoing, that they have had the opportunity to consult with independent counsel,
and that they agree to the representation on the terms set forth in this Retainer
Agreement.
167382.1 07 - 8 -
29. THIS AGREEMENT CONSISTS OF TWENTY-NINE (29)
PARAGRAPHS (INCLUDING THIS ONE) SET FORTH IN NINE (9) PAGES.
PARAGRAPH 25 CONTAINS AN AGREEMENT TO ARBITRATE AND THUS
WAIVES RIGHTS TO COURT PROCEEDINGS AND JURY TRIAL.
Dated: l~ 8
Dated: ~~ ~ ~ ~
By: a -
PHI P & COHEN
~~l
By.
IRELL & MANELLA LLP
AGREED; CONFLICTS WAIVED AS PROVIDED ABOVE:
Dated: ~d/1.S~f~
By:_~ G'•
THE CITY OFF LLERTON
By signing below, I understand and agree to the Relator's Share provided in
paragraph 9.
Dated: a
,~ ~,
B.y:
ORA A ' NTA
167382.1 07 - 9