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NewsGovernmentMilpitas City Hall in turmoil after City Manager threatens lawsuit

Milpitas City Hall in turmoil after City Manager threatens lawsuit

The City of Milpitas might have another lawsuit on its hands…

Early in February, the majority of the Milpitas City Council voted not to renew the contract of City Manager Steve McHarris. Councilmember Anthony Phan and Councilmember Hon Lien voted in favor of keeping McHarris on as City Manager, while Mayor Carmen Montano, Vice Mayor Evelyn Chua, and Councilmember Garry Barbadillo voted not to renew his contract. No reason was given as to why. McHarris’ contract will be up this coming June. 

But now sources say that McHarris has obtained legal counsel and threatened litigation against the City. 

And then there’s the matter of a certain leaked confidential email…

A recent press release from the City of Milpitas stated that on February 24, their City Attorney emailed the Milpitas City Council a confidential analysis that delved into the demands of the “claimant,” whom The Beat has confirmed from multiple sources is McHarris. “This email was an attorney-client privileged communication and contained substantial attorney work product,” the City wrote. 

But on February 27, it was discovered that the email had been leaked. 

McHarris’s lawyer received a copy of the private email directly from McHarris. He then turned the email back over to Milpitas City Attorney Michael Mutalipassi. Where had McHarris attained the email from? 

A Milpitas City Councilmember.

Notably, at this Tuesday’s 3/21 City Council meeting, City Attorney Mutalipassi was subject to a public performance evaluation at the request of Councilmember Phan. 

Listed on the Closed Session agenda were two items: a conference with legal counsel about anticipated litigation (in the description of that item, it read, “Facts and circumstances related to the expiration of a contract to which the City is a party”) and the public employee performance evaluation of Mutalipassi. 

In other words, during the Closed Session, Council was set to discuss the potential litigation involving McHarris’s contract and also discuss how Mutalipassi is doing at his job. 

Before heading into Closed Session, tensions ran high. Councilmembers argued over the items on the agenda, at times skating close to being in violation of the Brown Act. (City Councilmembers are not legally allowed to discuss closed session agenda items with the public.)

However, Councilmember Garry Barbadillo expressed concern, wanting to know who placed the performance evaluation of the City Attorney on the closed session agenda, and what the proper legal procedure was for doing so. He was concerned that the move set the wrong precedent going forward.

Councilmember Anthony Phan revealed that he had requested the performance evaluation of the City Attorney, and that he’d asked McHarris to place it on the agenda. 

Deeper into the discussion, which became contentious at times, Phan articulated his reason for doing so: “In the [City Attorney’s] contract, in clause 6, it actually says in the first year of the agreement the City Council shall conduct an evaluation of the employee’s performance within 60 days. That was not done.”

As Phan spoke, Mayor Carmen Montano tried to interrupt, stating that it was a personnel item and thus should not be discussed with the public. 

“You’re violating my rights actually,” Councilmember Phan said to the mayor. “I’m talking about a public item.” 

Phan continued, stating that a second evaluation should also be conducted within 60 days of the City Attorney’s anniversary date. 

Mutalipassi will be coming up on his one-year anniversary next month. The City of Milpitas hired Mutalipassi as their in-house attorney back in April 2022, after the City Council decided to discontinue contracting the services of attorney Chris Diaz

After some back-and-forth between the Councilmembers, City Manager Steve McHarris chimed in, stating that he wished to communicate about his reasons for putting the item on the agenda and that “the only violation is that the City Attorney is not giving you the complete story…” 

Although it appeared McHarris had something of substance to say, Mayor Carmen Montano cut him off before he could finish. 

The Council did go into Closed Session at two different points during the evening, but had nothing to report to the public afterward.  

The Beat asked Councilmember Anthony Phan for a comment on the leaked email via text. In commenting, despite the fact that the leak came from a Councilmember, Phan implicated Mutalipassi: “It’s truly unfortunate that sensitive information was improperly distributed under the City Attorney’s watch yet once again. This kind of oversight is unacceptable and it’s concerning that it’s become a pattern.”

In an interview with The Beat, Mutalipassi had a statement of his own: “This is about naked corruption. What we have is an elected official who gave property of the city to a person who is adverse to the city, so the person who is adverse to the city can extract money from the city. It’s very rare for a city or any other entity, like a county, to do a pre-litigation press release like this. The only reason this got released is this issue. Somebody who got elected to represent the residents of Milpitas is acting in opposition to the residents by trying to give somebody else monetary gain.”

Said the aforementioned press release from the City of Milpitas, “The release of this confidential information has adversely impacted the City’s position and could result in further damage to the City.”

The release went on to state that the City Council had voted for the apparent leak by a Councilmember to be investigated by a forensic professional external to the City of Milpitas. As part of that decision, the results of the investigation will be forwarded to the Santa Clara County Grand Jury. 

Steve McHarris declined to comment on this story.

This article has been updated. 


Rhoda Shapiro & Eric Shapiro
Rhoda Shapiro & Eric Shapiro
Rhoda and Eric Shapiro are the editors of The Milpitas Beat.


  1. the City Attorney is not supposed to be reviewing Records Request except for in 1 instance and that is if a city employee or elected official is leaving office or moving and even then the City Attorney’s job is to only over see, monitor to make sure nothing is mishandled. The main issue is the city haa no idea what it’s own Municipal Codes say and whonis responsible for what. I predict, this won’t be the only lawsuit over emails.

  2. Please do your job and don’t fight each other. Do not waste public money. I pay a lot of taxes. I pay lot of money in taxes than I pay for anything else.

  3. Apparently, this problem arose because the City Council majority (3-2) voted to fire the City Manager. Because that earlier decision seems unjustified/unfair, it’s not surprising that people are starting to think that the rules are actually just suggestions. (Clearly, Trump has been operating that way for decades, and since taking the national stage his actions have been an example to the nation.) My first thought is that one of the 2 who voted against the firing leaked that email. However, if one of the 3 firing supporters was having second thoughts, this could be a way to stir things up so that reversing the firing becomes easier. Remember, only 1 of the 3 needs to change their mind to reconsider the firing decision. That would set up the opportunity for a 5-0 vote to retain McHarris — and put this fiasco behind us. Otherwise, Chris Martin’s prediction of other lawsuits seems likely.


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