City Attorney's Retaliation Blows $12.2 Million In Whistleblower Fiasco
Dennis Herrera and 12 million + loss
City Attorney Dennis Herrera Source: City Attorney’s Office
Derek Kerr
Dr. Derek Kerr

The City Attorney’s calamitous war against Joanne Hoeper’s Whistleblower Retaliation lawsuit has cost taxpayers $12,198,473. This whopping expense passed unnoticed due to maneuvers that we’ll describe a bit later. Here’s the breakdown;

Sewer-Gate: The Backstory

Joanne Hoeper
Whistleblower
Joanne Hoeper

The Westside Observer (WSO) has covered this saga since September 2014. Briefly, Jo Hoeper served as Dennis Herrera’s Chief Trial Deputy since 2000. In December 2011, the FBI notified her about fraudulent sewer repair claims submitted to the Claims Unit within the City Attorney’s Office (CAO). Hoeper’s investigation found that claims to replace sewers, allegedly damaged by City-owned tree roots had soared from $142,000 in 2002 to over $4 million in 2010. During the same period, the City paid a total of $4.8 million for “sewer-property damage.” No other California city paid so much for tree root invasions. Hoeper estimated that shady sewer claims had cost the City $10 million.

Plumbing companies used the Department of Public Works (DPW) list of streets with city-owned trees to target, then hustle homeowners into replacing sewer lines that were not damaged. Sales pitches promised that the City would pay, even when property owners were responsible for repairs. Several homeowners reported that their sewers had been replaced without permission and that plumbers badgered them to sign claims. Many claims were signed by plumbing company agents rather than property owners, making them invalid. Sewers were usually replaced rather than inexpensively repaired. And, sewer replacements charges were inflated by $3,000 above standard rates. The Claims Unit also allowed private plumbing companies to fix sewer lines that were the responsibility of DPW – without the required bidding process. Accordingly, taxpayers were funding private property improvements and plumbing company bonanzas.

quote marks

…the lawsuit and jury verdict serve a significant benefit on the general public: to deter government officials from engaging in unlawful retaliation against a whistleblower, in violation of various statutes. — Court documents

Hoeper’s warning about corrupt sewer claims caused a furor. Policies were revised. But in July 2012 she was ordered to wrap up her investigation. She turned in a report recommending further investigation of potential corruption plus an audit. Essentially, she faulted oversight within the Claims Unit - and the City Attorney’s Office. One week later, Herrera offered her a choice; unemployment or reassignment to the District Attorney’s Office. Once Hoeper transferred, the sewer probe evaporated. In January 2014, Herrera fired her.

Six Years of Costly Legal Wrangling

John Keker
John Keker

Hoeper filed a whistleblower retaliation claim on July 1st, 2014. Two months later, Herrera issued an indignant rebuttal. Mediation failed as Hoeper asked for $1,895,000 while Herrera countered with $355,000. Casting CAO lawyers aside, Herrera hired the powerhouse law firm of Keker & Van Nest at a dazzling $850/hour. Sometimes, hiring big-guns cows plaintiffs to capitulate. The opposite happened after a stunning blunder; CAO spokesperson Matt Dorsey was allowed to email Herrera’s rebuttal to the Westside Observer stating: “I read with interest your column on former Deputy City attorney Joanne Hoeper’s claim against city taxpayers for monetary damages, and thought you might be interested in the city’s formal response…”

This disclosure undermined Herrera’s central argument; that Hoeper could not reveal similar information to prove her case because it was attorney-client privileged.

Once Hoeper filed suit in January 2015, the City immediately sought dismissal arguing that she relied on protected attorney-client communications. On June 1st 2016 that claim was rejected in Superior Court – because the City had already leaked its version of events to the Westside Observer and the SF Chronicle. Further, the Court objected because the City’s “sweeping notions of privilege would bar most retaliation claims by attorney employees.”

The City then sought review by the Court of Appeal and the California Supreme Court. Both petitions were denied. On March, 17th, 2017, after a 13-day trial in Superior Court (Case # CGC-15-543553), Hoeper won a unanimous jury verdict and $2,630,987. That award included $601,630 for past lost earnings (doubled pursuant to the False Claims Act), $136,318 for future lost earnings, and $1,291,409 for emotional distress. The City filed a motion for a new trial. Motions contesting the verdict and awards followed. All were denied. Instead of settling the City kept brawling.

Hoeper’s motion to recover attorney’s fees was vigorously opposed by Keker & Van Nest. Ironically, their $850/hour rate surpassed what her attorneys charged. They sought to cut 319.5 hours from her attorney’s services. The Court approved a 34.6 hour cut, thus saving a measly $15,950. Meanwhile, legal fees mounted. Since Hoeper’s attorneys took her case on a contingency basis, they were entitled to a “multiplier” to boost their fees. Courts grant multipliers to encourage law firms to pursue public interest cases when clients can’t pay up front. Hoeper requested a multiplier of 2.0 whereas the City opposed any enhancement. The judge awarded a 1.35 multiplier because; “…the lawsuit and jury verdict serve a significant benefit on the general public: to deter government officials from engaging in unlawful retaliation against a whistleblower, in violation of various statutes.”

On August 3rd, 2017, the Court awarded Hoeper’s attorneys $ 2,408,468 in trial fees. To this sum the Court added; $226,046 in post-trial fees, $56,512 in interest to the original jury award, $68,141 in interest on back-pay, plus $80,984 in costs, for a total Judgment of $5,471,138.  The City’s one-sided campaign to cut costs had backfired. Instead of settling, Herrera charged headlong down a blind alley.

Karl Olson.
Karl OlsonPhoto: Mountain Democrat

On September 25th, 2017, the City appealed the judgment. Then came an intriguing switch; the appeal was handled by City attorneys rather than the pricey losers at Keker & Van Nest. In an exhaustive 97-page brief, the City argued that the trial court wrongly let Hoeper introduce evidence that was attorney-client privileged, that the jury erred in its finding of whistleblower retaliation, that Hoeper failed to mitigate her damages, and that her award for emotional distress was excessive. After poring through 4,000 pages of court records, Hoeper’s attorneys responded with a compelling 85-page rebuttal. The City then filed a 59-page reply brief.  On February 13th, 2020 the Court of Appeal unanimously rejected the City’s pleadings, stating; “None of these arguments is meritorious.”

Therese Cannata.
Lead Attorney: Therese Cannata

Beyond the legal trouncing, the 29 months of appeal-wrangling would be costly. Looming was the 7% interest on Hoeper’s unpaid $5,471,138 award - amounting to $1,049 per day. Another 1.35 multiplier hovered over her current attorney’s fees. Surely, the City would negotiate a settlement. Instead, after spending a month pondering a last-ditch appeal to the California Supreme Court, the City folded. On April 2nd, 2020, Deputy City Attorney Jonathan Rolnick informed Hoeper’s attorneys that he had been “asked to handle the resolution of the judgment.” Still, no settlement proposal.

DCA Rolnick reviewed – but did not contest - Hoeper’s May 5th, 2020, proposal for reimbursement of appeal expenses. Records show no City objections to the hours, rates and services detailed in laborious Declarations from her attorneys. The City simply agreed to an Amended Judgment that the Superior Court approved on May 19, 2020. Here’s the breakdown;

Judgement breakdown
Source: City Attorney's Office

Dodging Public Scrutiny

Records show that the CAO asked the Controller to pay $7.3 million to Canatta, O'Toole, Fickes & Olson – Hoeper’s lawyers. The money came from the City’s General Fund. In a 5/28/20 email, DCA Rolnick explained; “This was the quickest way to get the $ out the door and given the other issues the Controller is dealing with did not want to delay further.” It was also the quietest, least embarrassing way.

Saving face may explain the sudden ardor for the “quickest way” after dragging the case out for years. It also explains why post-trial settlements weren’t proposed. Settlements require a hearing and approval by the Board of Supervisors. By accepting defeat without a settlement, the payout eluded public inquiries and media coverage. Public scrutiny was also skirted by shelling out amid the COVID-19 tumult.

Records show that Herrera spent openhandedly to defend himself. The Westside Observer requested records showing that the CAO attempted to reduce the fees charged by Keker & Van Nest. No such records were provided. However, by using City attorneys to pursue the appeal, legal fees fell to one-third of Keker & Van Nest rates. Had the City deployed its own attorneys from the outset, about $2.8 million could have been saved. Another $2.2 million or so would have been saved without the appeal. We asked the CAO why it didn’t attempt a post-trial settlement; no response.

The City Attorney’s retaliatory sewer-gate debacle, alongside the FBI’s recent arrest of DPW chief Mohammed Nuru and others for public corruption, jab at the City’s anti-graft capabilities. As Hoeper wrote in “But Who Will Watch the Watchdog” in the February 2020 Westside Observer, her case casts doubt that the CAO can “conduct an impartial and thorough investigation into the allegations that led to the arrest of Mr. Nuru.”

In a June, 2003 Press Release, Dennis Herrera had praised Joanne Hoeper as “a public wrongdoer’s worst nightmare.” Back then, her efforts to “stamp out public corruption through aggressive legal action” were celebrated. Once Hoeper found fraud-enabling practices within his office, Herrera apparently contrived a pretext for termination – her supposed penchant for “knowing more than anyone else,” resorting to a “scorched-earth approach” and not making “earlier and more frequent efforts to settle.” In pot-versus-kettle irony, Herrera failed to follow his own counsel. Had Herrera listened to the jury and judges, tempered his lawfare, and settled earlier, taxpayers and whistleblowers would have thanked him.

Dr. Derek Kerr is a San Francisco investigative reporter Contact: watchdogs@westsideobserver.com

July 18, 2020

Dr. Derek Kerr is a San Francisco investigative reporter Contact: watchdogs@westsideobserver.com

Read more reporting from Derek Kerr.