PARTIAL TRANSCRIPT
                          AUGUST 2, 2005
                    SAN DIEGO, CALIFORNIA


           PARTIAL TMNSCRIPT OF CLOSED SESSION PROCEEDINGS,                       1 the record before some ef you came in, ltem No. 2 and
         commencing a t the hour of 5 2 4 p.m., on Tuesday,                             ltem No. 6 1 wouid merge my discussion.
         August 2, 2005, a t 202 C Street, 'l2th Floor, S a n Diega,
         California, before Keren M. Gueuara, C e r t i f l ~ d                   3           This is last week's agenda.
         Reporter i n and for the State of California.                            0           MR. GIRARD: It's the same.
                                                                                  5           MR. MCGRATH: What's the SDCERS lawsuit
              DEPUTY MAYOR TONl ATKINS                                            6     number, L e s ?
              SANDIEGO CITYCOUNCIL:                                           7               MR. GIRARD: 2 and 6.
              DISTRICT t: SCOTT PETERS                                            8           MR. MCGRATH: 2 and 6. 1 apologize.
              DISTRICT 2 (Vacant)
              DISTRICT 3: TONl ATKINS                                             ?           What happened    - and Mr. Peters, Iheard your
              DISTRICT 4: TONY YOUNG                                              0     comments. Iwas listening to the television, even
              DISTRICT 5: BRIAN MAIENSCHEIN                                       1 though Iwasn't in the room.
             DISTRICT     DONNA FRYE
                                                                              .2                           e
                                                                                              MR. PETERS: W missed you.
             DISTRICT 7: J I M MADAFFER
             DISTRICT 8 (Vacant)                                              .3             . MR. MCGRATH:    Iknow. 1would have loved t o
                                                                              .4        have been there.
                                                                              .5      When you were gone on your recess, we

               ClTY MANAGER LAMONT EWELL                                       6 determined that the three-year statute on 1090 would run
                                                                                  7     on the Sunday before we filed this lawsuit.
               CHIP FLAHERTY
               DAVID KLEINFELD
                                                                                  8 Accordingly, we Sled. We do not believe, as you said
                                                                              .9        i n there, that we can wait for Bonnie Dumanis.
                                                                              !0            (Mr. Ewell enters the closed session room.)

                                                                              !l                           e
                                                                                        M R MCGRATH: W think the statute is three
                                                                              ! 2 years from the date of the event. Ergo, we moved as we
                                                                              !3              e                e
                                                                                        did. W did not serve. W still haven't served. So
                                                                              i 4 that's what happened on that lawsuit.
                                                                              !5          R
                                                                                         M . PETERS: And Grissom?
                                                                          L                                                                        4
     1      AUGUST 2,2005, 3 2 4 PM,
                                  . .          SAN DIEGO, CALIFORNIA          1                 R
                                                                                               M . MCGRATH: After that, we came to you and
     2                                                                        2         told you what we had done. After that, our opponents
     3           MS. ATKINS: I'm going to go ahead and call                   3         demurred, and just so you kind of get a little flavor of
     4   the Closed Session meeting to order.                                 4         howmuch fun these people are      - excuse me, Iwouldn't
     5           And for the record, we have District 1,                      5 d o this to you. Would you not? Come on.
     6   District 4, District 3, District 5, 6, and 7 are all                     6            MS. ATKINS: You guys, stop.
     7   here.                                                                7                MR. EWELL: He's complementing you.
     8           And Mr. Girard, can you lead i n telling us who                  8             S
                                                                                               M . ATKINS: Look, please, let's all pay
     9   else i s here?                                                           9     attention, and let's hear Mr. McGrath.
    10           MR. GIRARD: Yes. Assistant City Attorney,                    -0                o
                                                                                               G ahead, sir.
    11 Les Girard.                                                            .1                R
                                                                                               M . MCGRATH: A demurrer is a simple motion,
    12           MR. MCGRATH: Assistant City Attorney,                        .2        normally. This i s what they filed. They had to get
    13   Don McGrath.                                                         .3        permission from the Court. That is what I'm facing on
-   14           MR. FLAGHERTI: Assistant City Attorney,                       4        the 23rd with these people.
    15   Chip Flagherty.                                                      5                Tomorrow morning   - or last week, SDCERS
    16           MR. KLEINFELD: David Kleinfeld, of Heller                    L   6 decided to file it's own lawsuit, which is exactly the
    17   Ehrman.                                                              17        same as our cross-complaint i n the case against Aguine
-T8              MS. ATKINS: Okay. Thank you very much.                       L8        and the City, SDCERS. Idon't know why they did it.
  19             Mr. McGrath, Ithink, for the record, we're                   L 9 Most of you seem t o know more than I know because
  20     going to hold over ltem No. 1, Brown Field Aviation, and             ! O somehow everybody talks to everybody, but apparently,
    21 No. 7,    California State University of Board Of Trustees.            1
                                                                              !         that's what they decided to do.
    22   And we're going to start with ltem No. 2.                            !2               They now have a judge named Wickersham, and
                 Go ahead, Mr. McGrath.                                       23        tomomow morning all four unions are coming in i n front
    ~4           MR. MCGRATH: Iwill he as brief a s Ican.                     24        of Judge Wickersham to intetvene.
    25           And Iwould say to you, as I've said it off                   25               Ihaven't even talk to you about the lawsuit,
         1    l e t alone be retained or whatever w e d o o n that. I'm                 1    within t h o s e walls a r e t h e i a c t s .
              not s u r e what I'm going t o do tomonow morning. I just                 2            I can't get in there. They won't l e t m e in.
              may not go and then somebody c a n figure it o u t later. I               3    They won't let Aguirre in. That's t h e lawsuit t h a t they
              don't know. B u t t h a t ' s where I am.                                 4    filed, t h e main lawsuit.
                     What t would make       - what I wouldsuggest,          if         5            S o as t h e time i s going, t h e s t a t u t e i s
              you would let me, is t h a t t h e judge I h a v e presently,             6    running on t h o s e s t a t u t e s , if i t hasn't already run.
             who is J u d g e Barton - a n d that's t h e low number rule               7    That's t h e s e c o n d reason I a s k e d t o hire Heller, a n d
             a n d should b e t h e judge for t h e c a s e , b u t somehow t h e        8   that's under     - w h a t would t h a t b e Les, 67
             Court is not picking it up that way        - h a s been very                9           MS. ATKINS: 2.
             good. J u d g e Wickersham is a nice man, b u t I don't know               LO           MR. GIRARD: No, your Honor. T h i s i s t h e
             why w e have t o fight t h e s a m e lawsuit o v e r again in his          .1 anticipated litigation, which i s T a b 8.
             court.                                                                     .2           MS. &TKINS: Oh, we're b a c k t o t h e book t h a t
                  My position would b e t o consolidate, move t o                       .3   you provided-          t o l a s t week.
             consolidate both actions, a n d s e n d t h e m to                         .4           M R . M C G ~ T H : - Yeah;                            .      ,

             J u d g e Barton for trial. Now, that's basically it.                      .5           MS.-ATKINS: o k a y . Okay. Got it. I'm sorry.
                     It's our opinion - a n d I just said something                     .6           MRd MCGRATH: I t would b e u n d e r T a b 6 today,
             t o Mr. Young t h a t I've never said t o you, b u t here's why             7 wouldn't it?
             I w a s hired. I'll tell you why I w a s hired. Every                      .8           MR. GIRARD: No. I'm sony, Your Honor. Let
             lawsuit i s t h e same. 30 years of this, it's all t h e                    9   me   - let me clarify.          The cross-complaint i s number            -   '

             same. You file, you s c r e a m and yell, you s c a r e e a c h            !0 Closed Session I t e m No. 2
             other, somebody thinks they're going t o lose, a n d you                   !1            T h e new lawsuit t h a t Mr. McGrath. h a s referred
             set$le.                                                                    !2 to b y t h e C E R S hoard challenging t h e legality o r raising
                  \;ve    enlisted J u d g e Lany Irving, w h o i s                                                                               -
                                                                                        ! 3 t h e i s s u e of t h e - b e n e f i t s l s under t a b s Closed
             probably t h e finest.settlement judge in t h e wsrld. I                   !4 S e s s i o n ltem No. 6.
    25       mean, literally, he's doing.Enmn. And he's consented                       !5            T h e initiation of litigation which Mr. McGrath
                                                                                    i                                                                           8
I                                    ---
     1       t o represent or t o mediate o u r c a s e for t h e City free of          1    h a s referred t o a g a i n s t various professionals i s listed
     2       charge.                                                                    2    under Closed Session ltem No. 8, and t h a t you would be
                  H e i s a t t h e e n d of my rainbow. 1 would have                   3    authorizing of initiation o r a t l e a s t a report back on
             expected t o be with Mr. Aguirre for a b o u t a year. As                  4    initiating litigation against t h e professionals t h a t
             it's going, I think I'll b e here longer. But at s o m e                   5    Mr. McGrath h a s mentioned.
             point, t h e unions a r e going t o say, Gee, w e might lose               6            S o t h e r e a r e three i t e m s t h a t w e r e kind of
             Somebenefits. And you all say, Gee, well, maybe we                         7 discussing in here. Closed Session ltem No. 2, Closed
             should pay s o m e more, maybe through t a x e s or Lamont is              8 Session l t e m No. 6, and Closed Session ltem No. 8. In
             going t a x l e a s e s or whatever. I hope w e don't sell real            9 t h e booklet t h a t Mr. McGrath provided you l a s t week
             estate, but whatever you decided t o do, we're all going                   0 t h e r e a r e various reports.
             g o in front of somebody like Larry lrvine s o m e day, and                1                                               -
                                                                                                    And if you look a t t a b s Tab 2 i s a report
             that's where I'm coming.                                                   -2   o n t h e prospectsfor litigation a g a i n s t Gabriel Rodder
                   At present, I'm over - I'm undermanned.                               3 a n d Smith.
             That's why I've a s k e d t o hire Heller Ehrman t o help me.               4               I
                                                                                                     Tab ' i s the prospects for litigation against
             And I'm asking you again.                                                   5 Callan     B Associates. This is in t h e booklet provided by
    16              We put t h e receiver a t t h e end of o u r c r o s s              - 6 Mr. McGrath l a s t week. And I think that covers i t
    17       complain. It's a thing w e should do, and I'll tell you                     7           MR. MCGRATH: And t h e receivership, then,
                                                                                        V P
                                                                                         -on. t n a t wm¶%7iEko.                                                a.
    19              Somehow t h e board h a s lost t h e control of                     19           And I've done a more commonsensical memo on
    20       their rudder. They have within their walls bad people,                      0
                                                                                        ! that, which I have s e n t via e-mail and asked you t o
    21 people would have committed legal malpractice,                                   ?1 insert in your notebooks. S o that's where I'm coming
    22 accounting malpractice, brokerage malpractice, and                               !2   from.
             actuarial malpractice.                                                     !3            And I'm not capable of handling this
    .i             HOWmuch is t h a t worth? I don't know. Could                        !4   litigation alone. The office just doesn't have that
    25 be worth a s much a s a hundred million dollars, but                             !5   t y p e of man   - horsepower -- e x c u s e me, people power.
 1       Pretty simple. But, Idon't have the wherewithal to                1    bring forward the budgetary item for consideration i n
 2       hire Heller. Ineed to come to you.                                2    Open Session.
 ?               Should we have ever filed the crosscomplaint              3              S
                                                                                         M . ATKINS: Okay.
 4       without your permission? It would have been nice to               L              S
                                                                                         M . FRYE: And Iwould move that.
 5       wait for you to come back, but Iwas scared to death               5              S
                                                                                         M . ATKINS: And for clarification   -
 6       we'd run that statute, and that's why Idid it. No                 6              R
                                                                                         M . PETERS: Ihave a question. I have
 7       other reason.                                                     7    questions.
 8               R
                M . GIRARD: Your Honor, if Imight just                     8              S
                                                                                         M . ATKINS: Okay. You have questions.
 9   suggest perhaps an order of potential motions here for                9             Ms. Frye has a motion.
10   you because Mr. McGrath has identified a lot of issues                0             Let me just make sure. You said that is
11 that he needs your guidance on.                                         1    Item 6 on today's Closed Session docket?
12                   ,
                No. 1 Iwould point out that the issue o f the              2              R
                                                                                         M . GIRARD: It would actually encompass part
13   legality of the benefits is absolutely joined now                     3             ,
                                                                                of ltem 2 Your Honor, which would be the prosecution of
14   between the parties. And we would recommend strongly                  4    the crosxomplaint and a defense i n ltem No. 6 i n the
15   that you pennit our oftice       to proceed in the                    5    action bought by CERS.
16   cross-complaint and defend against the new complaint                  6        S
                                                                                   M . ATKINS: Okay. For purposes of
     using these offi~es       of Heller Ehman to assist
     Mr. McGrath i n that effort.
                                                                           7 discussion, 1'11 second the motion.
                                                                           8              o
                                                                                         G ahead, Mr. Peters.
19              That will result i n a decision on the legality            9             MR. PETERS: Okay. So we had a little bit of
20   of these benefit9 one way or the other, which Ithink                  0    a decision on this before, but there's   - Sections I,
21   everybody needs. So that would be one motion.                         1    and 3 of the complaint had to do with the action which
22              Another pptentiai motion to be to authorize
                                                                  -        2    we approved last time, which was who's their counsel.
23              MS. FRYE    Mr. Girard.. l'm sony. IfI                     ' 3 We want to find that out. We agreed last time.
24   can    -                                                              '4       But 2 and 3 had to do with the validity of
25              MS. ATKINS: Yes.                 .                         5     P1
                                                                                M . and the validity of MP-3. And then the rest of it
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                MS. FRYE: Just to keep things simple.                      1    had to do with suing individuals for damages. We got
                MS. ATKINS: Ms. Flye. Go ahead.                            2    rid of the damages.
                MS. FRYE: I f you don? mind because Ilike                  3             MR. MCGMTH: I'm sorry. I didn't bring you
     simple. Iwould move the motion, i f you can just say it               4    up to date.
     again. Iwould appreciate it                                           5              R
                                                                                         M . PETERS: Okay.
                M . GIRARD: A potential motion would be to                 6              R
                                                                                         M . MCGRATH: That issue, Imeant to tell you,
     authorize the prosecution        - the service and prosecution        7    is really moot because w e have been      - even though we
     O the cross-complaint and a defense i the new action
      f                                   "                                8    never served, these people have come i n and asked for
     brought by the retirement board, which i s Closed Session             9    permission to demur, and they are demurring. One law
     ltem No. 6, and to retain Heller Ehman t o assist i n                 0     im
                                                                                fr    on behalf of those named individuals as the SDCERS
     that effort in an amount not to exceed        - Mr. Kleinfeld,        1 board.
     did you     - 1forgot i f you proposed a budget for this,             2              R
                                                                                         M . PETERS. Okay.
     or was it an all inclusive budged?                                    3              R
                                                                                         M . MCGRATH: So that Ithink your fears
                MR. KLEINFELD: It was an all inclusive                     4    should be    - should go away on that issue.
     budget. Ithink it is behind       - at least - Idon't                 5              R
                                                                                         M . PETERS. All right. So I'm willing to
     know what book you have i n front of you today. It was,
     Ibelieve, ltem 4 on the      -
                                                                           6 support Ms. Frye as to the declaratory rellet -he
                                                                           7 validity of the benefits.                                      -
     M      R     . GIRARD: Let me suggest that actually the               8             Is that w                h                   p              -
     budget item would have to come before you i n Open                    9             Is that what your motion was?
     Session anyway. Ibelieve Mr. Kleinfeld had noted a                    '0             R
                                                                                         M . GIRARD: Correct. Ijust suggested a
     potential budget of half a million dollars for all                    '1   potential motion would be to pursue the cross-complaint.
     services presently.                                                   '2   You can debate it and modify it as you deem appropriate.
                So this motion would be merely to prosecute                '3             R
                                                                                         M . PETERS. Ican support the declaratory
     the cross-complaint and defend against the new action
     and retain Heller Ehrman for that purpose. And we'll

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                                                                                relief parts, but Ican't support the rest of it a t t h g
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            1              1 don't know what I have in front of me, Les.                            1 you - you have         - you might have created in prior
            2       1just can't, but I remember    - Ionly have the first                           2    years. That's your point.

(,-.        3       couple of pages.                                                                -
                                                                                                    7              MR. PETERS: Right.
            4             And Iguess while you're looking for that,                                 4               R
                                                                                                                   M . MCGRATH: And Ithink it's well taken. I
            5       too, we also want to clarify that I'm concerned about                           5    could go along with that, i f it's legal to let
                                                                                                    6    Mike Aguirre, City Attorney of San Diego        - you know,
            7       Mike Aguirre had any problem with it,                                           7   and then wedo a resolution authorizing him to bring
                                                                                                    8   that action. He would be that party in the
                                                                                                    9    cross-complaint. Then we would merge the SDCERS case.
                                                                                                   10              I don't know what the end result may look
                                                                                                   11 like, but either way, the Issue is coming up, and you're
        12          that takes that position, not the City Council.                                1 2 not a plainfitr trytng to set asme Deneilts you might
        13                MS. FRYE: Could Ijust get a clarification?                               13 have created, and 1 think Scott is legally conect.
                          MS. ATKINS: Yes, Ms. Frye.
                          MS. FRYE: Thank you.
                                                                                                         hat      doesn't look good, and it probably isn't good.
                                                                                                                   M . ATKINS: Okay. Ms. Frye, are you      -
       16                 That the benefits that we just approved        --                        16             MS. FRYE: I'm just going to keep listening
       17       which benefits are you talking abou                                                17   until everyone is done talking. That's why Iwanted t o
       18       ones most recently?                                                                18   start with one motion and try and keep i t simply because
                                                                                                   1 9 nothing i s simple here anymore.
       20                 MS. FRYE: 2005?                                                          20              S
                                                                                                                  M . ATKINS: And I'm going to go t o Mr. Young,
       21                 MR. PFTERS: Yeah.                                                        21   but let me just clarify, since I seconded a motion, I
       22                                          .r
                          f don't think it's that had of an issue,                            ii 2 2    concur with Mr. Peters on that. Idon't want to take a
       23       Ms. Frye. Ij                   u                     s                    t!       23   ,position where      - Iam in agreement because IdonY want
       2 4 e e City Council believes that benefits are iilegal
       25       because ldon't think that' s
                                                   - l don't think that's '.
                                                                                              i 25
                                                                                                        to   - Idon+ be accused of bad faith bargaining
                                                                                                        either. Iwant the declaratory relief. Idon't want

                                                                                                    PETERSON &ASSOCIATES COURT REPORTING &VIDEO SERVICES

                                                             -----                ----
        1       po
                 p                                                                            j 1 , to - you know, but Ijust            - so Imay have to - I
        2                MS. ATKINS: But you will       -                                     !    2    seconded the motion, but          -
        3                MR. PETERS: I'm willing to authorize the City                        !    3               MS. FRYE: We can work on this.
        4       Attorney to state that he believes it and to prosecute                        1!   4               M . PETERS: 1 think that those people who
                the action on that basis, which would result i n - i t
                would have the same result.
                                                                                              i 5
                                                                                              j     6
                                                                                                        want the issue litigated have been helped a l o t b y the
                                                                                                        fact that CERS has filed this complaint because now it's
        7       .        MS. FRYE: So what is the difference in part                          !
                                                                                              .    7 . joined. Ithink it takes away a lot of issues.
        8       of my motion? I mean       -                                                       8 d9n.t want us to be pleading that the City Council
        9                MR. MCGRATH: It i s changing the name of the                              9 believes that's these benefits are illegal, because I
       '10      cross-defendant. Taking the City out and putting                                   10    think then that could expose the City to a problem we
                Aguirre in, w-
                         We've tried researchwise to come up with a way
                                                                                                         don't need now, especially since they filled this
       13       to have attorney be     - City Attorney be - ifs called                            13              Do you have a copy of the complaint,
       14       ex rel. We're not terribly     - we have not been        -    '                    1 4 Mr. Girard?
       15       successful i n giving him a title that would make him                              15        M . MCGRATH: I have it.
                equal to you as the City Council, but i f you authorize
                that, it might work.
                                                                                              1; 17
                                                                                                        do with the
                                                                                                                   M . PETERS: Because my other comment had to
 -------1~1~;9~~~~:-~ee+'fnrttr'~-irthattheg%                                                      rW    m    l    i   . Iprcc;Rnnl:   Ine rest ot it.
       19       pled in their action as Aguirre. So Ithink it should                          i 19                 Do you want my copy, or do you want me to read
       20       be okay. Right?                                                               / 20       you the headings?
       21                MR. MCGRATH: And he's there, and so are you.                         i1 2 1               MR. PETERS. Ihave the headings. Ijust
       22                Icould understand you're saying t o us, We                           i    22    don't have the rest. For some reason Ihave the first
  I             don't want to be a plaintiff or a defendant in their                          1 23       four pages in my binder.
       -4       lawsuit. Maybe you'll have to be a defendant, but you                              24              MR. GIRARD: It is actually copy of the first
       25       don't want t o prosecute setting aside the benefits which                          25    amended cross-complaint.
                                                                                         li                                                                            17
          1               MR. MCGRATH: No, s e c o n d a m e n d e d .                                     1               MR. PETERS: A tolling a g r e e m e n t .
       2                  MR. PETERS: I don't h a v e that.                                                2               M R YOUNG: What's t h a t ?
                      MR. MCGRATH: T h e s e c o n d a m e n d e d                                         3               MR. MCGFSTH: I d o u b t it, n o t w i t h t h e s e
       4       cross-complaint, I i s dec relief.                                                          4       people. T h e r e ' s n o   - there's     hate.
       5             2 i s d e c relief.                                                                   5               MS. ATKINS: Explain for              -
       6                 3 i s d e c relief.                                                               6               MR. PETERS: T h e i d e a i t h a t I think w h a t
       7             4 i s d e c relief, t o w h i c h I u n d e r s t a n d y o u                         7       Mr. - a n d I don't k n o w t h e m e r i t s of t h i s    -
       8       don't object.                                                                               8       Mr. McGrath i s saying, y o u only h a v e s o m u c h t i m e t o
       9                5 i s b r e a c h of t h e trust.                                                  3       bring a c l a i m f o r d a m a g e t o recover f r o m people.
     10                 6 i s b r e a c h of fiduciary duty.                                              10               What h e ' s saying i s t h a t t h e d a y h e filed was
     11                 And t h i s i s mostly pled a g a i n s t the S a t h o f f s                     11 at o r n e a r t h e last d a y h e h a d to bring d a m a g e s a g a i n s t
     12        a n d t h e p e o p l e t h a t really g o t u s into this. T h i s i s       -            12 t h e s e p e o p l e t o g o a f t e r t h e i r p e r s o n a l a s s e t s to g e t
     13 they're d e f e n d a n t s in t h o s e a c t i o n s . Nobody t o d o with                      ! 3 money f r o m them. And h e saying t h a t if w e d i s m i s s it,
     14       t h e p r e s e n t board.                                                                  1 4 w e won't b e a b l e to r e i n s t a t e it s o t h a t it's timely.
     15                 7, f r a u d a n d negligence.                                                    .5             MR. MCGFUTH: No. It's n o t m y goal to g e t
     16                 8, fraud, intentional m i s r e p r e s e n t a t i o n .                           6 t h e i r p e r s o n a l a s s e t s . My goal i s to set a s i d e the
     17                 9, fraud a n d c o n c e a l m e n t .                                            .7 b e n e f i t s u n d e r 1092, w h i c h s a y s a n y t h i n g illegally
     18                 10, negligence.                                                                   8 c o n s t i t u t e d c a n b e set a s i d e civilly. And that's a
     19                 11, conspiracy.                                                                   . 9 three-year s t a t u t e . That's w h a t I'm t r y i n g to do.
     20                 12, writ of m a n d a t e .                                                       !0             Yes, t h e r e a r e s o m e a r g u m e n t s t h a t t h e s e
    21              And t h i s i s t h e w a y w e g e t o u r reswlt i s w e                            !1 p e o p l e personally could b e liable f o r d a m a g e . It's not
    2 2 a s k the SLICERS b o a r d to r e s t a t e t h e b e n e f i t s , a n d t h e r                !2 m y main goal.
    2 3 i n s t r u c t t h e City Auditor to g o a h e a d a n d \a y them.p                    .        !3             MR. PETERS: So a r e you - w h e n you're t a l k i n g
    2 4 It's j u s t t h e m e t h o d o l o g y t h a t w e s e l e c t e d .                            ! 4 a b o u t your dismissing d a m a g e c l a i m s a g a i n s t a l l t h e
    25                  I c a n tell y o u m o s t of t h i s will p r o b a b l y be                          -
                                                                                                          !5 b o a r d m e m b e r s     -
                                                                                                    1t                                                                                              20

      1       butchered over t h e next f e w months, b u t that's w h a t                                1                MR. MCGRATH: P r e s e n t
     2        w e ' v e pled.                                                                             2                MR. PETERS: - p r e s e n t board members, y o u
     3                                                         -
                      MR. PETERS: Well, I j u s t m y o w n p e r s o n a l                               3        still have d a m a g e claims a g a i n s t    -
      4               -
              v i e w a n d I'm i n t e r e s t e d i n h e a r i n g e v e r y o n e e l s e ' s    -    4                                              a
                                                                                                                          MR. MCGRATH: ~ a t h o f f n d t h e others.
     5        i s I'm n o t i n t e r e s t e d in s p e n d i n g City m o n e y o n t h e               5          MR. PETERS: Yeah. See, f o r me, I don't k n o w
     6        f r a u d a n d i n t e n t i o n a l c o n c e a l m e n t a n d all t h a t stuff. I      6 h o w much m o n e y w e c a n r e c o v e r from Ron Sathoff. He's
     7        j u s t don't t h i n k t h a t t h a t ' s i m p o r t a n t t o u s .                     7 going. to p r o t e c t h i s house. He's probably g o t a car.
     8                 I t h i n k w h a t we n e e d i s a r e s o l u t i o n of                        8 -It's n o t worth i t for m e t o d o that
     9        w h e t h e r t h e b e n e f i t s a r e legal. And I'm j u s t n o t                      9          To t h e e x t e n t t h a t Mr. McGrath w a n t s
    10        i n t e r e s t e d in t h e r e s t of it.                                                  0       declaratory relief or w a n t s t o u s e t h o s e a s a w a y t o
    11                 MR. MCGRATH: L e t m e j u s t s a y o n e t h i n g t o                            1 invalidate t h e benefits, I think t h a t t h a t c a n b e d o n e
    12        h e l p you. It w o u l d b e e a s y f o r y o u to t e l l m e t o d r o p                .2       through declaratory relief.
    1 3 t h e cross-complaint. I can't b e c a u s e that's w h e r e m y                                 .3       You s a y t h a t t h e s e people committed fraud, a n d
    14 statute i s s t o p p e d .            T h a t ' s h o w I pled    - w h y I pled                   4 therefore - s o I'm not - I'm n o t sure. Maybe y o u
    1 5 w h e n you w e r e gone.                                                                          5 could explain w h y w e have fo d o t h a t if w e - I don't
    16          If I d r o p p e d t h e c r o s s - c o m p l a i n t , I c o u l d b l o w              .6 w a n t t o g o personally a f t e r t h e s e people's p e r s o n a l
    17        t h e statute, which gives u s t h e leverage t o s a y maybe                                7 assets.
    18        u n d e r 1090,1092 w e c o u l d void t h o s e b e n e f i t s t o j u s t                 8       MR. MAIENSCHEIN: On t h i s point                        - d o you mind
    19        s a y f o r g e t a b o u t t h e complaint.                                                .9 if I interject on t h i s point?
    20            Let's g o with t h e n e w lawsuit a n d b e                                            '0         MS. ATKINS: Go ahead. And t h e n I w a n t to g e t
    2 1 d e f e n d a n t s . I don't w a n t to a g r e e t o t h a t , if y o u                         !1 t o Mr. Young.
    72        understand.                                                                                 '2         MR. YOUNG: No.' That's okay.
                     MR. PETERS: C a n y o u g e t a tolling a g r e e m e n t                            ?3               MS. ATKINS: Okay. Go a h e a d , Mr. Maienschein.
    L4        o n those?                                                                                  '4               MR. MAIENSCHEIN: T h a n k you.
    25               MR. MCGRATH: A w h a t ?                                                             15               Don, if I understood your r e s p o n s e t o
                                                                                                     1'                                                                                           21
    1    Mr. Peters, was that i f you   - i f you could get the                1    courteous.
    2    statute tolled   - Imean, the reason you sort of filed                2          MR. PETERS: Just s o you understand. The
    3    this while the Council was on leg recess was to protect               3    breach of trust, for instance, the fifth cause of action
    4    the statute, correct?                                                 4    against Grissom, Chapin, Sathoff, and Lexin, and so
    5            MR. MCGRATH: Yes, sir.                                        5    forth, seems to be pled -this is paragraph 80        - As a
    6            MR. MAIENSCHEIN: And so i f you could get a                   6    direct and proximate result of the actions, the City
    7   tolling agreement, would you be willing      - 1 mean, i n             7    suffered substantial loss of injury i n the amount
        other words, would you be willing to write a letter to                 8    according to prove a t trial.
        say that i n the exchange -you know, i wrll dismiss                    9          So that's just my concern is that it looks
        this cross-complaint in exchange for a tolling agreement               0    like these are a l l pled as a way t o validate the
        to protect the statute?                                                1    benefit, and i t would just be cleaner t o rely on the
                MR. MCGRATH: See, Idon't think Sathoff and                     2    general allegations of invalidity rather than go into
        those people could answer that letter because they're                  3    personal assets.
        under criminal indictment, so i t wouldn't do any good.                4          M . MCGRATH: It could be done.
                Icould do   - i f that is the only way to get                  5          MR. PETERS: Okay. So with those
        Your vote   - what Scott asked - and get rid of the                    6    clarifications that's acceptable.
        personal damages against them, plead the dec relief as                 7          We're going t o talk about the budget later
        we've pled, and retweak the thing so it would be an                    8    because Ihad questions about that, but I'm okay with
        attempt to avoid, if you wanted MP-3.                                  9    Ms. Frye's motions, if those clarifications are
                Ithink in this room Iwould say MP-1 i s                        0 acceptable t o her.
        probably dead because of statute, but we're just trying.               1      MS. ATKINS: Okay. Other comments, Mr. Young.
        It's our job.                                                          2        M R YOUNG: Just really quick, so Ican make
                So i f you said to me, we don't want you suing        '        3 sqre I'm clear, the purpose of the complaint, t h e
        Sathoff and those other people for dollars damages. We                 4 crosrtomplaint, is really t o determine i f MP-1 and -2
25      only want you to bring them for purpose of your dec                    5 are legal? 1s that really what the purpose is, Don?
                                                                      22                                                                24
        relief, which i s a declaration that MP-1 and MP-2 are                 1          M . MCGRATH: I apologize. I ' m trying t o
        void, Iwould follow your instructions.                                 2    catch a note from -.
                MR. MAIENSCHEIN: But I'm not sure I                            3          MR. YOUNG. That's all right.
        understand your response, though, on the tolling.                      4          Is that the purpose? The purpose of the
                You don't think   - why don't you think we                     5    crosscomplain is to determine ifMP-4, MP-2 are legal?
        could get a tolling agreement from the other side?                     6    hat's really the   - that's what we're really trying to
                MR. MCGRATH: Ithink the other side is not                      7    get at?
        the pension board. They can't control this.        It's all            8          MR. MCGRATH: Yes, sir.
        the people who are being sued. Sathoff, the dirty sixes                9          MR.   YOUNG:     Now, isn't there another    -   ,

        we call them, and they're not going to give me a tolling               0    there's another complaint out there that was filed that
        agreement because their criminal lawyers wouldn't let                  1 has asked for the exact same thing.
        me.                                                                    2           MR. MCGRATH: That's correct. That was filed
                And there's also an argument, and Il tell
                                                   'l                          3 last week entitled SDCERS plaintiff versus the City of
        you up front, Iknow the argument, that the statute may                 4 San Diego, in a separate cause of action assigned to
15      have run years ago. It may be a one-year statute. I                    5 Judge Wickersham.
16      don't know. Imean, you know, it's too risky.                           6           MR. YOUNG: Okay.         YOU   don't believe that that
17              On some of the professionals, when we get t o                  7    will come to the same end? Would we get the same              -
         -~em, -- y 6 e f h i d gtve m e a t3Illng
             -- yeah, m a                                                      F d i f f e m ruling7
19      agreement because it's kind of normal, but Idon't want                 9           Is it a different way of   - Imean, we have to
20      to   - even want to bother asking these people who are                 ! 0 have two complaints for this?
21      indicted.                                                              !1        MR. MCGRATH: No. Iwould move to consolidate
22              MR. MAIENSCHEIN: Thank you.                                    !2   those two. And ifScott's motion carries, Iwould do i t
                Thank you, Madam Chair.                                        !3   on dec relief on the cross-complaint in this case. I'd
k   s           MR. PETERS: Can Ijust follow up.                               ? 4 put them together.
25              MS. ATKINS: Thank you, Mr. Young. You're so                    15        One of the reasons Iwanted t o do that is I
                                                                          2.                                                                      25
        i    have a judge that's a good judge. The judge t h e y ended                     1         MR. YOUNG: I'm sorry. Donna, I just w a n t to
        2    up with is a nice man, but he's older t h a n I am, and                       2 s a y this, I'm trying t o t a k e away t h e legal maneuvering
 /      3    that's older than dirt.                                                       3     and just kind of discuss t h i s on a -
        4            MR. PETERS: That's true.                                              6           MS. FRYE: I would prefer t o h a v e Mr. McGrath
        5           MR. MCGRATH: To b e honest with you.                                   5     have the control. Plus, I think t h a t t h e issue t h a t
        6           MS. ATKINS: Typing.                                                    6     he's raising i s b e c a u s e of t h e timing of when c e r t a i n
       7            But a s a matter of correction, though, I think                        7     actions w e r e filed t h a t it's necessary t h a t h e j u s t keep
       8     i ' Ms. Frye's motion, Mr. McGrath.
              ts                                                                           8 his action moving forward b e c a u s e of t h e three-year
       9           MR. YOUNG: Yeah.                                                        9     statute    - potenttal s t a t u t e of limitations.   That's   -
      10            MS. ATKINS: Go a h e a d , Mr.       -                                 0     t h a t makes s e n s e t o me.
      11            MR. MCGRATH: He just wanted to amend it t o                            I             I don't w a n t to rely on t h e CERS board a n y
      12    g e t rid of t h e damages.                                                    2     more than I have to, and quite frankly, I can't rely on
      13          MR. YOUNG: S o t h e reason why we're just not                           3 them a t all right now in order t o d o w h a t I think i s in
      14    allowing t h a t suit t o g o through and we're not filing                     4     t h e best i n t e r e s t s of t h e City.
      1 5 t h e suit i s b e c a u s e you don't like t h e judge?                         5             The o t h e r thing t h a t could happen i s t h e y
      16          You don't think t h e judge would give u s a fair                        6     could drop t h a t lawsuit a t any time. There i s n o          -
      17    ruling? 1 s t h a t what you're saying?                                        7 t h e r e is nothing t h a t requires them to move forward. In
      18          MR. MCGRATH: Kind of.                                                    8 o t h e r words, w e have absolutely n o control o v e r it.
      19           MR. YOUNG: S o that's why you're asking u s t o                         9           If Mr. McGrath d o e s it, a t l e a s t w e h a v e - a t
      2 0 m a k e t h i s decision.                                                        0     l e a s t w e h a v e s o m e level of control. And I'm tired of
      21           MR. MCGRATH: That's a reason. T h e s e c o n d i s                     1 giving up t h e little bit of control w e d o have.
      2 2 t h a t w h e n I pled in t h e cross-complaint. I pled timely                   2              S o that's why I think it's really important
      2 3 enough t o s t o p t h e s t a t u t e o n t h e 1090, which would void          3 t h-t \ e l e t t h e m follow t h e legal strategy they think is
                                                                                                a w
      2 4 MP-1 a n d MP-2.                                                                 4     b e s t on t h i s     instance. I just f e e l
      25        I think their lawsuit a g a i n s t u s i s a f t e r t h a t              5     comfortable with it, and I c a n - w e c a n figure o u t t h e
                                                                                    2E                                                                                  28
                                                                                           PETERSON & ASSOCIATES COURT REPORTING &VIDEOSERVICES
       1 fact, a n d w e may not b e a b l e t o g e t t h a t relief. It's                1 motions, if you w a n t t o a m e n d it afterwards, to m a k e
       2    serious stuff. S o w h a t I d o i s s m a s h t h e m together,               2     Mr. Peter's      -
       3    hopefully g e t t h e judge I like, a n d we're o n our way.                   3              MR. PETERS: I'll s a y it again.
       4            MR. YOUNG: Okay. And t h e n t h e question i s t o                    4            MS. ATKINS: Okay. Thank you.
       5    the   -- t o my colleagues.
                                   And then, I wasn't h e r e for                          5            MR. YOUNG: J u s t o n e m o r e question a b o u t t h e
       6    t h o s e t w o decisions, b u t I mean, i s t h a t w h a t you w a n t       6     n e w complaint.
       7    t o do? We w a n t t o file to find o u t if t h e decision t h a t            7            There's a n e w complaint t h a t y o u mentioned.
       8    you actually m a d e w e r e legal? That's w h a t you w a n t t o             8     What e x a c t l y i s that, or -
       9    do?                                                                            9          MR. MCGRATH: T h e o n e t h a t t h e y filed            -
      1 0           MS. FRYE: If 1 may.                                                     0 SDCERS filed a g a i n s t t h e City?
      11            MR. YOUNG: Sure.                                                        1           MR. YOUNG: Yeah.
      12            MS. FRYE: First of all, I don't think a n y of                          2           MR. MCGRAM: That's entitled Complaint for
      1 3 u s w e r e h e r e in 2996.                                                                                                         -
                                                                                            3 D e c Relief, a n d it's basically a d e c relief s a y s , you
      14           MR. YOUNG: Right.                                                        4 s a y I s a y who's right. That's kind of w h a t you do.
      15          MS. FRYE: I could b e wrong, but I don't                                  5           You're throwing u p your h a n d s saying, J u d g e ,
      16    remember any o u s being on t h e Council and voting.
                          f                                                                                           -
                                                                                            6 t e l l m e w h a t a n d t h e y give you our s i d e a n d their
      17          Second of all, y e s , if, in fact, t h e                                .7 side. Of c o u r s e , their s i d e is t h e y w a n t it to b e okay
      18    information t h a t t h e City Council m e m b e r s w e r e given         -   .8    a n d w e don't.
      19  and remember, a lot of this, you know, l i k e I said, you                       .9             But it's t h e s a m e e x a c t thing t h a t we've
      2 0 w e r e here, but you weren't here, you know, actually in                        10    already pled in t h e cross-complaint. I don't know why
      2 1 t h e Closed S e s s i o n - yeah, i t would b e n i c e t o know.               11    t h e y did it. I've read their minutes. I don't know why
      77            MR. YOUNG: But t h e thing is, you're going t o                        12    t h e y do anything over there. It may b e b e c a u s e t h e y
          g e t t h a t information anyway. I mean, it's already b e e n                   !3     didn't like t h e rulings they're g e t t i n g from t h i s o t h e r
      1 4 filed though on your behalf.                                                     !4    judge. They figure you won't okay my cross-complaint
      25            MS. FRYE: Again, I'm n o t t h e attorney, but              -          '5     b e c a u s e 1 didn't a s k your permission o r something.
                                                                                    2.                                                                                  29
              1           You know, they know more about us than we know               1      there are certain benefits that these individuals who
           2      about them and visa versa. Idon't know what they're up               2      have retired, who have made their        - you know, their
,          3      to,   but that could be. They may think, Ah-ha, the                  3      plans, their life-long plans, and now a l l of a sudden
           A      Councii is going to tell this dope to drop that lawsuit.             4     we're saying that you can't have them anymore. And
           5      Then Iblow the statute on the 1090. And Ihave to play                5     that's   - Ithink that's an ethical question that w e
           6      it their way with their judge, and that's   - I hope not             6     also have to determine.
           7      to have t o ever do that.                                            7              Yes, this is a means to figure out if we can
           8              MR. Y U G Okay. That makes sense.
                               O N :                                                   8     get rid of benefits because it's     - you know, it's   a
          9        Just a couple other questions. In plain                             9     burden to us. It's making us make tough budgetary
         1 0 English, other than the fact, you know, of what we just                   0     decisions. It's difficult decisions that we have t o
         11 talked about, what are the other basic elements from -                     1     make because of ourfiscai        situation.
         1 2 not from a legal description, but what are the other                      2              But we also have to consider those retirees
         13       basic elements of this cross-complaint?                              3     who are on fixed incomes, and so that's the other side
         14               MR. MCGRATH: Well, as it's pled now or the                   4     of this. And so I'm not     - you know, I'm not really
         15       way Scott would like i t pled?                                       5     sure where to go with that.
         16               MR YOUNG: Well, Iunderstand what Scott        -I             6              MR. MCGRATH: Well, Icould just tell you that
         17       know what his amendments were, and Iunderstand what his              7     we've analyzed i t upside down. Imean, that's a l l I've
         18       discussions were.                                                    8 been doing since I've been here.
         19               M . MCGRATH: Okay. A dec relief is merely, I
                           R                                                           9       There's not going to be enough money for the
         20       say it's legal. You say it's not.                                    0     people that     - Mr. Flagherty's age, the young man behind
         21               Our side of it is, the prior Cwncil on MP-1                  1     me, who is a deputy. There will be enough money in the
         22       gave away benefits with no hmding. That's pretty                     2                     ? years to pay for them ever. I
                                                                                             next, say, 12, l 20,
         23       serious, and we say the same on 2002.                                3     don't know what%,Court         wi!l do.
         24              And that's what those people have been                        4              I'm going to tell you my iegal opinion, my not
        .2 5      indicted for. Under 1 S that's a criminal action. If
                                       OO                                              5     legal   - my street law opinion is a judge is going t o be
                                                                                  3I                                                                        32
(                                                                                 -
                  that's correct, then those things could be voided.                   1     hard pressed to hurt somebody that's already out there.
                           Il tell you, the unions w i l l tell you that's             2     The whole thing is going to go i n a big room just like
                  wrong, and I'm crazy and everything else, but that's                 3     this with the unions yelling, and we're going to
                  what the unions are there for, t o protect their side.               4     renegotiate the whole dam thing.
                           MR. YOUNG: I s that a part of t h e complaint,              3              You want a bet? Ican? bet, but you would
                  the part where it could be voided?                                   5     say that's about a 60,70 percent chance a t some point
                           MR. MCGRATH: Yes.                                           7     that could happen.
                           MR. YOUNG. That's it's voided?                              3              MR. YOUNG: So it could be a finding that they
                           MR. MCGRATH: Yes. It's i n the        - it's i n the        9     were     -- it was determined illegal, b u t i h e benefits
                  first part where you tell your facts. It says a t                    0 still stay, or      -
         1 page 9, Manager's Proposal 1 and then Iexplain what
                                       ,                                               1          R
                                                                                                 M . MCGRATH: Could be. Could be any way you
         12       happened there.                                                      2     want it. I'm talking about      -
         13               And then Manager's Proposal 2 a t page 1 , and
                                                                  1                    3               R
                                                                                                      M . YOUNG: Imean, a judge could do that,
         14       then what Ido is incorporate that whole part, and I                  4     right?
         15       say, cross-complainants incorporate b y reference and                5              MR. MCGRATH: He could do it.
         16       realize paragraphs 1 through 61, and Iplead for Dec                  6              MR. YOUNG: Or she could make that decision.
         17       Relief 1.                                                            7              MR. MCGRATH: But I'm thinking you'll settle
~ D e c R e l i e M ; l - i n ~ o r ~ a I 1 ~ r d e c - 8 1 ~ l - t h t n ~ g o u ' l l - m ~ ~ Lamont~ t h
                                                                                                t ~ d
         19       relief under the cause of action. That's the way we dl               9     taxing this or that. You know, raising        - 1don't know
         20       it.                                                                  0     how you raise taxes, whatever you do.
         21                MR. YOUNG: And Iguess the question to my                    1              There will someday be enough money t o pay a         '

         22       colleagues would be, you know, Iguess there is a                     2     logical, legal pension benefit to everybody        - not me
    '      1 question i n my mind. Okay. It could have been an                         3     and not Lamont because we cut ourselves out             - but to
         ~4       illegal act. Idon't know. Idon't know i f these                      4     people who are coming through the ranks.
         25       were    - it was made under illegal basis, but you know,             5               That's the hardest argument we have with
                                                                                  3                                                                         33
     1    police officers and such. They don't get it. "We're                  voted on something illegal. Idon't think it was
 2        entitled to retroactive." Sure we are. There's no                    illegal.
 3        money. How you going to get it? Where you going to get                      And I'm also -you know, just for the record,
 4        it?                                                                  I think that the legal theory is novel that because you
 a                  So we do i t through litigation and w e kirid of           don't have a funding source it's illegal. Now, I
     6    squeeze everybody until somebody budges, and then we                 understand that there's   - a lot research has gone into
 7       give. W take. We give. W take. That's where I'm
                e                e                                             it, but i f Ihire a roofer who fixes my roof, and I
 8       hoping we'll go. Otherwtse, Iwouldn't have come back                  can't say, you know, "When Imade the contract with you
 9       out of retirement.                                                    Ididn't have the money t o pay for it, so it was
10                MR. YOUNG: Iunderstand.                                      illegal."
11                M . GIRARD: Your Honor? Yes, a quick follow
                   R                                                                  And so Ithink it's a challenge, but let me
12       to what Mr. McGrath thought and just follows from                     just say that Ithink that it's also   - it's a very real
13 Mr. Peter's comment about unfair labor practices-                           thing that people are out there in the public, you know,
14                The determination - i n our opinlon, based                   giving tremendous credence t o this Third Interim Report.
15       upon the research we've done, the determunation whethe                We've got to know the answer.
16       or not the benefits are legal or illegal does"?                              So Ithink it was a blessing that the
17       necessarily lead to a conclusion that there's been bad                Retirement Board sued the City, and said they wanted
18       faith bargaining. The law       - the law geneally says               declaratory relief. So let's find the answer.
1 9 that i f a benefit        -   benefits can be taken away,                         But let me say where Idiffer a little bit is
20       provided that something of similar or equal value is                  Iwant the answer. Idon't want to do -Idon't want
21       given.                                                                to do a year litigation and spend half a million
22                So when all of this is said and done, i f the                                          o
                                                                               dollars, which could be a m i         dollars doing a bunch
23       Court finds that the benefits are illegal, they're                    of depositions just t o delay thB answer..      .
24       illegal.                                                                     My goal would be that we actual try to get t o
25                The question of whether you're bargaining i n                the Court pretty soon, and get a ruling because I-want
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  EE S N               O R                                                 P T R O & ASSOCIATES C U T REPORTING & VIDEO SERVICES
                                                                            EE S N               O R

1        good faith or dealing with your employees or retirees i n         1   the answer.
2        good faith will depend upon what you do i n light of that         ?          And Idon't see this   - you know, Iknow, you
3        declaration. And so Ithink Mr. McGrath i s correct. A             3   know in previous lives that sometimes litigation was a
 4       determination is either on it's way or gets made, and             I   tool to get you to the table, and there's always that
 5       then everybody goes i n a room and figures out how to             3   part of it. But you know, Iwant it talk about things
 6       deal with the situation.                                          3   like stipulating to interventions, stipulating to facts.
7                 So Ithink that's far enough down the road,               7          Idon't want, you know, Dave here to be
8        and what you really need -and Iknow the City Attorne!             3   spending a lot of money doing depositions that, Is t h i s
9        would say that the funding for these benefits i s                 3   document true and accurate, when a lot of that stuff
10       probably the single biggest component of the unfunded             0   should be agreed to. It's public money we'll be
11       liability. And so he would urge that you a t least start          1 spending on both sides.
12       down the road to try to get a decision on whether these           2          So, just, you know, although 1would love to
13       are valid or not. And then -and then, hopefully,                  3 see a resolution where we sat down and talked, Idon't
14       people will come t o the table, and we'll figure out a            4   want the litigation t o be used as some sort of hammer to
15       way to solve it.                                                  5   get us to the table. Ireally would like t o see a
16                MS. ATKINS: Mr. Peters.                                  6   resolution of it because it's out there, and the public
17                MR. PETERS: All right. Ijust want t o say,               7   has a legitimate question about whether these things are
18       to follow on Mr. Young, and Ihate t o take too much               8   legal. l think we should answer the question.
19       time, but it's a pretty significant     thing we-re doing         9           o
                                                                                      S , you know, that's why, you know, my motion
20       here.                                                             0 is t o do this in the least mean way we can, which i s to
21                I don't want - t h e reason I said Iwanted it            1 just do the declaratory relief, but to get on the
72       to be the name of the City Attorney i s Idon7 want my             2   problem, answer   - answer the question that CERS has now
         name on anything that says that Ithink these benefits             3   put t o us to say that it's the City Attorney who has
~4       are illegal. Idon't think they're illegal. So I                   4   declared that this is an illegal benefit, but at least
25       just   - Ijust don't     want to be pleading that Ithink I        5   not to necessarily say that the City Council says one
                                                                       3                                                                     3i
  EE S N              O R
                                                                                                                        E VC S
        1    way or the another because Ms. Frye and Imay have a            1    saying that is that one of the remedies pled for i s the
        2    different opinion about that, but not to say i t all.          2    receiver. And we've decided already t o put that off
        3          And when we talk about the budget, Ithink we             3    until after the demurer. We learned that.
     4       Ought to be talking about things like how t o make it go       4           MR. GIRARD: And for the record, Your Honor,
     5       more smoothly and more cheaply so we can get a                 5    the other thing was previously yon authorized the City
        6    resolution of this. And Iwould like   - Iwould like to              Attorney to pursue the question i n the cross-complaint
     7      get to the answer. I'd like to do it soon.                           about who's the lawyer for the CERS board.
     8             MS. ATKINS: Okay. Ms. Frye, in t e r n s of your                    That's in the cross-complaint, and the City
     9      motion, since Iseconded it, can we just get some                     Attorney will proceed with that issue, based upon your
    10      clarification.                                                       prior direction. That was either last week or the week
    11              S
                   M . FRYE: Yeah. Let's see if we can work                      before.
    12      with Mr. Girard and Mr. McGrath and have them assist me                    MS. ATKINS. Okay. So let me just make sure,
    13      i n putting together a motion and seeing if that works.              Ms. Frye, are you okay with the motion as stated?
    14             MR MCGRATH: I'm incompetent. I'm a                                    S
                                                                                        M . FRYE: Yes.
    15      litigator. That's his job.                                                 MS. ATKINS: As am I the seconder of the
    16             MR. GIRARD. Well, let me start with what the             6 motion.
    17      motion was, and then what we need to do is clarify what         7       Mr. Maienschein and then Mr. Madaffer.
    18      Mr. Peters would like to amend to that motion, and then         8         R
                                                                                    M . MAIENSCHEIN: Thank you.
    19      see if you agree.                                               9       Les, did I hear you also include Mr. Peters'
    20             MS. FRYE: Sure.                                          0 point about taking the names of the Council off?
   21              R
                  M . GIRARD: The motion was t o prosecute the              1       MR. GIRARD: That was included i n the comment
   22       Cross-complaint, t o defendant the companion action, the        2    that it would be trimmed to make ~ l e a r ~ t hthe dispute
   23       new case, and retain Heller Ehrman for purpose.                 3    is between the City Attorney with respectito this, which
   24             MS. FRYE: Right                                           4    would involve amending the caption, I assume,
   25             M R GIRARD: And then Mr. Peten requested                  5    Mr. McGath.                                                     .
                                                                       38                                                                   40
    1       that the cross-complaint be generalized, be trimmed down        1          M R MCGRATW. Yeah. God bless us all.
    2       such that the action reflects a dispute by the City             2           R
                                                                                       M . MAIENSCHEIN: And then, secondly, Ididn't
   -3       Attomey with respect to these issues, and we       - and        3    hear a cost. W e haven't gotten to that yet.
    4       it's merely declaratory relief only, and we're not              4          Thank you.
    5       seeking damages or penalty against named individuals.           5           S
                                                                                       M . ATKINS: Mr. Madaffer.
    6                       is
                  Mr. M~Grath that         -                                6           R
                                                                                       M . MADAFFER: I've been listening to all
    7             M . MCGRATH. Yes. To be safe, I'd like a
                   R                                                        7    this, and I'm just curious.
    8       resolution from the Council which authorizes the City           8          Today, sitting in the City Council meeting, I
    9       Attorney to do i .
                            t                                               9    found out that the City Attorney released at 12 o'clock
   10             M . PETERS: Okay.
                   R                                                        0    noon to the public and members of the media the Kroll
   11             MR. GIRARD: But that would be the motion if               1    documents that were subject t o the attorney-client
   12       the maker of the motion i okay with that.
                                    s                                       2    privilege waiver discussion last night.
   13             MS. FRYE: I s that     -                                  3          While on the surface that might make sense, I
   14             MR. PETERS: Sorry, just to confirm.                       4    thought   - and I've asked to get a copy of the tape - I
   15             MS. FRYE: -what you're wanting?                           5    thought I heard the City Attomey say yesterday, perhaps
   16             M . PETERS: Also, we decided at the last
                   R                                                        6    it was Mr. Girard, that made a statement on the record
   17       meeting that the issue of receiver is coming back to us         7    that seemed to indicate that it might not necessarily
-1-8ilfter-the-heanng            err-the-demurrer;-Anhototheextent---       - 8 - m a k ~ ~ h a r f ~ d o c u m e n r F b e
                                                                                                                      released to fhe
   19       that that's   - Idon't want that necessarily taken out          9    media, since there was an -"going investigation.
   20       of the cross-complaint, but we're not taking an action          '0         S
                                                                                     M . ATKINS: Mr. -can Ijust ask, is this
   2 1 on that today.                                                       '1 related to this item?
   22             MR. GIRARD: Well, let's deal with that                    '2         M . MADAFFER: Yeah. I'm getting to it.
            separately, i f we may. This is solely on the issue of          '3          S
                                                                                       M . ATKINS: Okay.
            the validity of the benefit.                                    '4          R
                                                                                       M . MADAFFER: I'm so sorry. I've just been
   25             M . PETERS: Just so you know, the reason I'm
                   R                                                        '5   sitting here listening. l appreciate that.
                                                                       39                                                                   41
                   So that being said, I'm not going t o vote for                              REPORTER'S CERTIFICATE
         this today sitting in h e r e because a s m u c h as I support
          t h e spirit of it and I think you've got s o m e good                    COUNTY OF SAN DIEGO)
         compromise going on, I'm really all of a sudden just                       STATE OF CALIFORNIA)
         kind of not really trusting anything that's being said.
                   I mean, I know t h a t part of this includes a                          I, Keren M. Guevara, Certified Shorthand
         resolution with respect to receivership, and I still                       Reporter licensed in t h e S t a t e of California,
         have a lot of unanswered questions o n that, more                          License No. 12478, Registered Professional Reporter,
         questions since I got t h e binder. So I'm just really                     hereby certify t h a t t h e deponent w a s by m e first duly
         not confident that w h a t I'm voting on i s w h a t I'm                   sworn and t h e foregoing testimony w a s reported by me
         getting.                                                                   and w a s thereafter transcribed with Computer-Aided
                  MR. MCGRATH: Well, I think you've known m e                       Transcription; t h a t t h e foregoing is a full, complete,
         for a number of years, a n d I'm going to give you w h a t                 and true record of said proceeding.
         you a s k for.                                                                   I further certify t h a t I a m not of counsel or
                  MR. MADAFFER: I trust you.                                        attorney for either or any of t h e parties in t h e
                  MS. ATKINS: Thank you.                                            foregoing proceeding and caption named or in a n y way
                  So w e have a motion and a second.                                interested in t h e outcome of t h e c a u s e in said caption.
                  I'd like t o n o further comments?                                      In w i t n e s s whereof, I have hereunto set m y hand
               Call for any question.                                                      this day:
               And all those in favor s a y "Aye."
               MR. PETERS, MR. YOUNG, MS. ATKINS,
               M R MAIENSCHEIN, MS. FRYE: Aye.                                                   KEREN M. GUEVARA, CSR, RPR
               MS. ATKINS: Opposed.                                                                                                           *\
               MR. MADAFFER: No.
    25         MS. ATKINS: P a s s e s 5-t with District 7 in
    1    opposition.                                                        i
    2                     **                                                1
    3          (Whereupon t h e discussion on t h i s s u b j e c t w a s   /
    4          adjourned at 6:09 p.m.)                                      1
    5                                                                       !

                                                                          Page 45

accurate 37:9

                    answer 22: 13

 25:14 28:8

                                                                  butchered 19:l

                                                                  case5:1.7 6:8 7:l

                                                                  CERS 8:22

Certified 2:4                                                    decisions 27:6

                                  consented 6%                   declaration 23:l

                                                                 demurrer 5: 11

                                                                 difference 15:7

...                                                                     Page 47

                  elements 30: 1 I

                 enters 4:20

                                                       . . . . . .- .

Page 48

Guevara 2:4

                                                Kleinfeld 2:16

hammer 37: 14                                                    Les 3:11 4:6 8:8
hand 44:18

hands 29:15

                 incomes 32:13

                                                                 limitations 28:9
                 indicate 41 :17

hereunto 44:18
hire 7:14 8:7

hold 3:20
                 initiation 8:25

                                                                                               Page 49
    lost 7.19                20:3,8,15 21:l  32:19.21 33:21       needs 1O:l 1.21  opposition43:l
    lot 10:lO 17:5,7         21:4,9 22:5,12  34:3 36:9 37:8       negligence 18:lj order3:4 10:9
      27:19 36:6             23:7 24: 14
      37:8,9 42:s            25:1,8,12,21   months 19.1           negotiated 14:lO ought 38:4
    love37:12                26:5,8,11,18   moot 13:7             never6.17 13.8 outcome44:17
    loved 4.13

                    30:19 31:7:9                motion 5.1 1
                    32:16 33:11,15               10:21,22 11.4    nice6:lO 10:4        ~age31:11,1
    M 2:4 44:6,22   33:17 34:12                  1 1 :6,23 12:9     26:2 27:21
    Madaffer 2:12   35:3 38:12,14                12:17 13:19,21   night41:12
     40: 17 41:5,6  39:6,7 40:25                 15.8 16:18,21    noon 41:lO
     41:22,2442:15  41~1 42:12                   17-225:22        normal 23: 19
     4224          mean 6:25 15:8                26:8 37:19       normally 5:12        part 12:12 15:7
    Madam 23:23     22:2,7 23:16                 38:9,13,17,18    note25.2
                                                                                       PARTIAL 1:11
     21:24 22:6             37:20 42:6          motions 10:9
     23:3,22 40:17         means 3 2 : ~         24:19 29:l       number4:6 6:7        particular28:24
     40:18 41.2            meant 13:6           move6:13 11:4      8:1942:13
     42:22                 media 41:10,19
    main 8:4 20:22         mediate 7:1           28:17            ..
    maker 39:12                     3:4         moved 4:22
    making 32:9             39:17 41:s          moving28:8        office 9:24 10:15 Passes 42:25
    malpractice            members20:25         MP-1 12:25        officers 34:l
     7:21,22;22,23          21 :2 27118          22:20 23:l       offices 10:17
    man 6: 10 9:25          41:lO                24:24 2 5 5      Oh 8:12
     26:2 32:20            memo 9:19                     24
                                                 ~ 6 ~ 30:21      okay 3:18 8.15    penalty 39:5
    MANAGER                mentioned 9:5               2
                                                ~ p - 23:1 25:5     8:15 12:3,8,16 pension23:8

                                                                       15:20 16:15     people 5:4,14
                                                                       21 :22:23 24:15   7:20,21 9:25
mandate 18:20                merge4:i 16:9                             243 8,21 25:16    13:s 17:4
maneuvering            -     merits 20:7
 28:2                        metho,jology       name 15:9 35:22        29:24 30:8,19     20:12,21 21:13
matter 26:7                    18:24              35:23                31:23 38:s
MAYOR2:8                    Mike 14:7 16:6      named 5.22
McGrath 2:14                 million 7:25         13:10'39:5           40:13 41:23
 3:12,13,19,23                 11:21 36:21,22    44:16
 3:24 4:5,8,13               mind 11:3 21 :is   names 40:20
 4:21 5:1,9,11             . ' 31~23            near 20:11
 - + W*
-S % k                     minutes ZY:ZI
     9:5,9,16,17           mi,repre,enta.~.       34:17 37:25     Open 11:19 12:2   10.4 13.9
     10:10,18 13:3          18~16                 39:19 41:17     opinion 6:16
     13:6,13 15:9          missed4:12           necessary 28:7     32:24,25 34:14 permit 10:15
     15:21 16:4            modifi 1 3 ~ 2 2     need 10.2 17:ll    38:2
     17:15,18 18:l         money 19:5             19:s 35:8 .     opponents 5.2
     18:319:11,25           20:1321:6             38:17           Opposed 42:23    22:17 24:13

Page 50

personally 20:2 1 prefer 28.4

  4:25 12:6:18        presently 6:6

  13:15,23 14:19 pressed 33:1

                       -30:22 35:19    putting 15:l

                                                                                       rest 12:25 13:24
  20:23 21 :2,5      previously 40:s   ~     -     . .       .
                     prior 16:1 3021       ...           Q       ..                    restate l8:22

 2~9:335:16,17 privilege41:12                    27:4 29:s
 38:18:25 39: 10 probably 6:24

 16:12 25:13         proceeding 1:10             34:11
                                                                                       retroactive 34:2

 22: 17 3 1:16       Professional

pled15:1918:11 Proposal31:ll                                          remedies 40: 1

 22:l8 24:5,10       proposed 11:12

 10:22 11:6,21       proximate24:6

                                                                          Page 51

  Scott's 25122
  scream 6:20
. SDCERS 4:5

 Sections l2:20

Page 52

                                                                  12.9 3:5,20 9:14

                                                                  10904:16 19:18

                                                                  12478 1 :24 44:8

                                 week5:15 8:13

                                 weren't 27:20
trust 18.9 24:3

                                                        P a g e 53


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