At the end of 2023, former Milpitas City Manager Steve McHarris filed a lawsuit against the City of Milpitas, alleging wrongful termination and breach of contract. The lawsuit, which has seen various developments since it was first reported on, has resulted in escalating legal costs – while no real progress has been made toward a resolution.
The Costs
The case’s financial dimensions are raising questions. The law firm Meyers Nave was contracted by the City of Milpitas last year. A total of $35,000 was put toward the Meyers Nave contract, as reported in a Council Finance Subcommittee report in April 2023.
On May 21, 2024, at a City Council meeting, Council was asked to authorize a reallocation of money from legacy law firm Best Best Krieger to Meyers Nave. This was for an additional $90,000 to cover Meyers Nave’s litigation work. This request was denied by Council.
The City then asked Council to approve $175,000 in legal fees for Meyers Nave at the June 4, 2024 meeting; Council didn’t approve this request either.
Stephen Jaffe, an attorney representing former City Manager Steve McHarris in the case, is wondering how Meyers Nave is continuing to work for the City of Milpitas despite Council not having approved the funds…
“They are essentially spending the settlement we initially requested on lawyers,” Jaffe told The Beat.
Councilmember Hon Lien informed The Beat that she had asked City Attorney Michael Mutalipassi how much money the City of Milpitas has spent on the case so far, but she didn’t get a clear answer.
“As a guess, I would say the rough estimate of what we’ve spent thus far is not under $300,000,” Councilmember Lien said. “I really think we should have negotiated early-on in the process. If it was my business and there was a lawsuit, I would negotiate instead of using possibly more money for attorney fees. I would settle and get the lawsuit done and over with.”
Lien feels that keeping the lawsuit going is taking staff’s time and attention away from the important work of running the City.
Jaffe also argued that spending hundreds of thousands on legal fees rather than settling could result in a worse financial outcome for the City if they lose the case. In the meantime, Jaffe stated to The Beat that his client would just like a fair settlement.
The amount McHarris is seeking from the City has not been disclosed.
The Case
In May 2023, McHarris stated in a claim against the City that he was wrongfully terminated by Council soon after the November 2022 election, despite his contract specifying that letting him go surrounding election time was not allowable. McHarris also alleged that the City damaged his reputation and fostered an intolerable working environment during his time there.
His claim also states that then-Mayor Rich Tran and then-Vice Mayor Carmen Montano pressured him to fire an employee, Eddie Truong, over unsubstantiated racism.
In a recent deposition of a department head at Milpitas City Hall, he was asked about the alleged pressure on McHarris to fire Truong. He replied: “Former Mayor Tran was of the belief that hiring Eddie Truong was not acceptable because of Mr. Truong’s personal relationship with another councilmember by the name of Anthony Phan.”
He also added, “I believe it had something to do with Mayor Tran and Councilmember Phan not being the best of friends. It was evident at council meetings they didn’t see eye-to-eye on a lot of items that came before them for Council consideration.”
On September 18, 2023, City Manager Ned Thomas signed an agreement with the Oppenheimer Investigations Group to conduct an impartial investigation into McHarris’ complaints. It’s unclear how much that investigation has cost the City.
Jaffe has stated that the City has refused to release the investigation’s findings, nor will they release recordings of past closed session meetings that could shed light on why McHarris was terminated. Jaffe also mentioned that the City has claimed that their current insurance does not cover these types of legal expenses, forcing them to use taxpayer money for the legal battle.
***
The Milpitas City Council is scheduled to meet in closed session this evening (Monday, August 5) to receive updates about the McHarris case from their legal team.
The Beat reached out to the City of Milpitas for comment on this story, but a City Spokesperson said that they were unable to comment on ongoing litigation.
“We are confident that if we go to trial, we will prevail,” Jaffe told The Beat. “I would try this case tomorrow if I could.”
Taxpayers like myself are concerned about the escalating costs of delaying a fair settlement with former City Manager McHarris. More importantly than the money are the issues of delayed justice and the bribe the Mayor apparently took. Like the lawsuits against DonOLD Trump, it appears this one is being deliberately delayed until after the election. That is an affront to our democratic system as it denies voters the transparency required to choose wisely.
.
We’ve known about the bribery charge since May ’23 when City Manager Steve McHarris filed a claim against the city. In December 2023, McHarris went further by filing a lawsuit (http://bit.ly/3UjCwZG) claiming that former-Mayor Tran had offered a bribe to candidates running for Council including Carmen Montano and Gary Barbadillo. Tran offered his active campaign endorsement in exchange for the candidate’s commitment, if elected, to remove McHarris as their first order of business. Shortly after taking office, Montano and Barbadillo were joined by Chua in firing McHarris who was well-regarded by people working with him. None of the 3 provided any explanation for their action which violated the City’s contract with McHarris.
.
Since the honorable Hon Lien is challenging Montano for Mayor in this year’s election, remember that Hon did not take the bribe; based on results, apparently Montano did. Who do you trust with your taxpayer dollars?
How long will the city pay with Public money meant for wrongdoings by selected elected members in their personal and elected capacity. There should be a reason city insurance is not covering. The tax payers need an answer.