February 24, 2015 Suzanne Ambrose, Executive Officer State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Ef!.':mJJ.eview ofPersonal Services Contract Dear Ms. Ambrose: Pursuant to Government Code section 19132 and California Code of Regulations, title 2, § 547.64, California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment ("CASE") requests that the California State Personnel Board ("'SPB") review and disapprove a contract for legal services entered into by the California Public Utilities Commission (HCPUC") because the services contracted for can be provided by civil service employees. CPUC has entered into a contract with Sheppard Mullin, LLC to provide legal services to CPUC. Under the contract, CPUC pays attorneys with the law firm "discounted" hourly rates of up to $882 per hour. (Decl. \\'halen, .. 10.) The scope of work specified in the contract includes representation of PUC "in all criminal, civil, and administrative proceedings and investigations ... involving directly and indirectly, any allegations of inappropriate interactions by CPUC personnel with Pacific Gas & Electric and any other utility .... " (Decl. Vvl1alen, c: 10.) As reeent news reports have indicated, CPUC is currently undergoing at least two separate investigations into possible criminal wrongdoing. To the extent CPUC needs experienced criminal defense counsel, the State of California has an entire office of trained criminal defense attorneys at the Office of the State Public Defender. There are at least 27 attorneys at the Office of the State Public Defender who handle some ofthe most complex crilninal cases at all levels of the state and federal courts. (Decl. \Vhalen, ~ 5-6.) In fact, attorneys employed by the Office of the State Public Defender are able to represent clients in a proceeding of any nature where a person is entitled to representation at public expense. Senior Deputies in the class are assigned 1 1231 I Street· Suite 300 • Sacramento' California 95614 800-699-6533' toI916-669-4200 • fax 916-669-4199· 8rlail [email protected] • 'Nob www.calattorneys.org .. ~~i) cases of the greatest sensitivity that are very likely to be appealed to the highest courts. (Ibid.) Furthermore, the Office of the State Public Defender has offices in both Oakland and Sacramento, and thus is conveniently located to the CPUC headquarters in San Francisco and the CPUC office in Sacramento. (Dec\. Whalen, ~ 11.) The contracting of civil service work is prohibited, unless it complies with the merit principle found in Article VII of the Constitution and falls within the exceptions listed in Government Code, § 19130. CPUC has failed to demonstrate that any exception in section 19130 is applicable. Moreover, CPUC has failed to demonstrate whether they even requested representation from the civil service attorneys and the Public Defender's Office. CPUC is paying outside counsel far more than it would pay for civil service attomeys to perform this work. (Dec!. Whalen, ~ 7-9.) While the contract is only for a total of $49,000, given the e»iremely high hourly rates, CASE is concemed that the dollar linlit of this contract could be reached fairly quickly and could be amended to provide for a substantially higher contract anlOunt. Under Government Code section 19132, upon the request of an employee organization, "shall review the adequacy of a proposed or executed contract." This letter eonstitutes the wTitten request for review contemplated by California Code of Regulations, title 2, § 547.61. CASE hereby requests the contract be disapproved, and that CASE be awarded any and all other appropriate damages and costs. Attached to this request are a supporting declaration and a proof of service of this request on CPUC. Very truly yours, Patrick Whalen CASE General Counsel 2 DECLARATION OF PATRICK WHALEN IN SUPPORT OF REQUEST TO DISAPPROVE CONTRACT FOR NON-CIVIL SERVICE LEGAL WORK I, Patrick 1. Whalen, declare as follows: I. I am General Counsel for California Attorneys, Administrative Law Judges and Hearing Officers in State Employment ("CASE"). CASE is, and at all times herein mentioned was, a nonprofit corporation organized and existing under the laws of the state of California, with its principal place of business in the County of Sacramento, State of California. 2. CASE is the exclusive collective bargaining representative oflegal professionals in State Bargaining Unit 2 pursuant to Government Code section 3520.5. CASE represents approximately 3500 legal professionals in more than 90 different state agencies, departments, boards, and commissions, including the California Public Utilities Commission and the Office of the State Public Defender. 3. In my capacity as General Counsel, I am familiar with the diverse membership of CASE, and in the course of participating numerous "meet and confer" sessions at many of the departments that employ CASE members, I have attained a familiarity with the type oflegal work our members do. I am also familiar with the number of CASE members that work at the various state departments, based on monthly reports supplied to CASE by the State Controller's Office. 4. Each month, CASE is provided employment data from the State Controller's Office identifying all of the Bargaining Unit 2 members employed by the State of California, including their department, pay level, and other data. 5. Approximately 94 rank and file attorneys and administrative law judges are employed at the California Public Utilities Commission. This number does not include managing or supervising attorneys who are not in the bargaining unit. Approximately 27 rank and file attorneys and administrative law judges are employed at the Office of the State Public Defender. This number does not include managing or supervising attorneys who are not in the bargaining unit. 6. The Office of the State Public Defender employs attorneys that are often at the cutting edge of criminal law. The attorneys there have appeared before the California Supreme Court in hundreds of cases, and have appeared before the United States Supreme Court. According to the job specifications of the Deputy State Public Defender series approved by the State Personnel Board, incumbents are able to represent clients in "[a] proceeding of any nature where a person is entitled to representation at pnblic expense." Senior Deputies in the class "are assigned cases of the greatest sensitivity that are very likely to be appealed to the highest courts." 7. On behalf of the State of California, the California Department of Human Resources (formerly the Department of Personnel Administration) has repeatedly produced salary services which demonstrate that the State's legal professionals suffer a pay disparity compared to other public sector legal professionals in California. The disparity can be as much as 35% depending on geographic location and years of experience. 8. CASE has conducted its own analysis and has determined that when compared to the private sector, the pay disparity can exceed 100%. Under Government Code section 19826, the State is required to consider both public and private sector salaries in setting compensation rates for civil service employees. 9. Depending on their classification, civil service attorneys employed at the California Public Utilities Commission and the State Public Defender's Office are paid monthly salaries that equate to between $30 and $65 per hour. 10. Pursuant to Government Code section 11045, CASE received notice of a contract entered into by the California Public Utilities Commission \'I'ith Sheppard Mullin. Under the contract, CPUC pays attorneys with the law firm "discounted" hourly rates of up to $882 per hOUT. The scope of work specified in the contract includes representation of CPUC "in all criminal, civil, and administrative proceedings and investigations ... involving directly and indirectly, any allegations of inappropriate interactions by CPUC personnel with Pacific Gas & Electric and any other utility.... " 11. The Office of the State Public Defender has offices in both Oakland and Sacramento. The California Public Utilities Commission has its headquarters in San Francisco and another office in Sacramento. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and based on my personal knowledge, and if called to testifY to these facts, I would do so competently and truthfully. Executed this cb'1'"'Jay of February, 2015 , in Sf 5mento, Ct Lr;tQ L- Patrick J. Whalen. rnia. PROOF OF SERVICE I am a citizen of the United States and a resident of the County of Sacramento, Cali fornia. I am over the age of eighteen (18) years and not a party to the above-entitled action. My business address is 1725 Capitol Avenue, Sacramento, CA 95811. On February 24, 2015 I served the following documents: I . Request for Review of Contract 2. Declaration of Patrick Whalen I served the aforementi oned document(s) by enclosing them in an envelope and (check one): ~_depos iting the sealed envelope with the United States Postal Service with the postage fully prepaid. _ _ placing the sealed envelope for collection and mailing follow ing our ord inary business practices. I am readily familiar with thi s business' practice for collecting and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. The envelope was addressed and mailed as follows: Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94102 I declare under penalty of perjury under the laws of the State of California that the uted on February 2 . foregoing is true and correct and that this Declaration was e Ellison Reprei¥ntini;~k St~j~'~ LeJl,ftlJi~Jf)f141S ',~ ",-~"-,' -~~" '~ ,- -'="''''''''-'=''~''=-''Y, March 19,2015 Suzanne Ambrose, Executive Officer State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Rg:Review ofPersonal Services Contract,: related to SPB File No. 15-002(b) Dear Ms. Ambrose: By letter dated March 18, 2015, the California State Personnel Board ("SPB") placed in abeyance a challenge to a contract between the California Public Utilities Commission ("CPUC") and the law firm of with Sheppard Mullin, LLC to provide legal services to CPUC, pending an anticipated challenge to an amendment to that contract. California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment ("CASE") has now received a copy of that amendment, and hereby files the instant request for review. SPB indicated in its March 18,2015 letter that upon the instant filing, the challenge to the original contract would be consolidated 'l'.1th the challenge to the amendment. Pursuant to Government Code section 19132 and California Code of Regulations, title 2, § 547.64, CASE requests that the SPB review and disapprove an amendment to a contract for legal services entered into by CPUC because the services contracted for can be provided by civil service employees. The amendment, a copy of which is attached to this request for review, expressly refers to the prior, underlying contract by number: 14PS5019 and expressly incorporates the amendment into that prior contract by reference. Accordingly, CASE expressly incorporates by reference all of the prior factual and legal arguments made in its original challenge, filed on or about February 24,2015. In addition, CASE makes the follo'l'.ing observations and arguments. While the original contract was for only $49,000, the amendment is for $5,187,000, and increase of more than 100-fold. The purported tenn is from November, 24, 2014 through June 30, 2016. The amendment provides more insight into the scope of legal services contemplated by the agreement: 1 1231 I Siree1 • Suite 300 • Sacramento. California 95814 800-699-6533' lei 916-669-4200 • fax 916-669-4199' ema:1 [email protected] • web www.calattorneys.org Sheppard Mullin agrees to represent the Commission in the federal and state investigations. This may include representation of current and/or former employees of the Commission designated as "witnesses" by the Investigators for the purpose of investigative meetings only. (See Attachment, Exh. A, '\IS.) Based on this, it is even more apparent that the legal work can and should be done by civil service employees. As previously explained, the State has established an Office of the State Public Defender staffed with competent attorneys who are experienced in criminal defense. The amendment makes no effort whatsoever to even attempt to explain why this contraet is justified under Government Code section 19130. Attached to the amendment is a one-page "Budget Detail" spreadsheet that makes it even more clear that this work can be done by civil service attorneys. Specifieally, the amendment contemplates that hundreds of thousands of dollars will be spent each month for private lawyers performing the following tasks: • Reviewing documents • Producing documents • Drafting privilege logs • Meetings and interviews of employee witnesses • Communications with prosecutors and investigators • Meetings with commissioners and client representatives • Legal Research (See Attachment, Exh. B.) None of these legal tasks is so complex as to warrant the use of outside counsel. In fact, virtually every civil service attorney has extensive experience in each of these garden variety legal chores. Moreover, the fact that the contract in contemplated to run through June 30, 2016 indicates that the nature of the services is far from temporary. In the original request for review, CASE expressed concern that the dollar limit of the original contract could be reached fairly quickly and could be amended to provide for a substantially higher contract amount. That concern has now become reality. Nevertheless, the amendment suffers from all ofthe legal infIrmities of the underlying agreement which it purports to amend. The contracting of civil service work is prohibited, unless it complies with the merit principle found in Article VII ofthe Constitution and falls within the exceptions listed in Government Code, § 19130. CPUC has failed to demonstrate that any exception in section 19130 is applicable. Moreover, CPUC has failed to demonstrate whether they even requested representation from the civil service attorneys and the Public Defender's Office. Under Government Code section 19132, upon the request of an employee organization, "shall review the adequacy of a proposed or executed contract." This letter constitutes the 1"Titten request for review contemplated by California Code ofReguiations, title 2, § 547.61. CASE hereby requests the contract be disapproved, and that CASE be awarded any and all other appropriate damages and costs. Attached to this request are a copy of the amendment, as well as the original request for review 2 filed by CASE, which is hereby incorporated by reference. CASE respectfully requests that this request for review be incorporated with the prior challenge as both the contract and the amendment relate to same scope of legal services. Very truly yours, Patrick Whalen CASE General Counsel 3 STATE OF CALIFORNIA STANDARD AGREEMENT AMENDMENT STD. 213 A (Re\l 6103) D CHECK HERE IF ADDlTIO';ALPAGES ARE ATIACHED Pages 3 ------AMENDMEN;fNUMSER AGREEMENT NUMBER 01 14PS5019 REGISTRATION NUMBER t This ,.,,, tis I into I ,and the State below: 'NAME California Public Utilities Commission CONTRACTOR'S NAME 2. Sheppard Mullin.... The term of this ~~~~~~~~~~~~~~~~~-~~~~-""""""""-- Agreement is November 24, 2014 through June 30, 2016 3. The maximum amount of this $5,187,000.00 ..... Agreement after this amendment is: Five Million One Hundred Eighty Seven Thousand Dollars 4. The parties mutually agree to this amendment as follows. All actions noted below are by this reference made a part of the Agreement and incorporated herein: Exhibit A - Amendment Exnibit B - Budget Detail and Paymen~ Provisions (1 Page) All other terms and conditions shall remain the same. IN WITNESS WHEREOF, this Agr.ement has heen executed hy the parties hereto. CONTRACTOR CONTRACTOR'S NAME (If other than an individual, state whether a corporation, partnarshlp, &lC,) Sheppard Mullin I BY (AuthorIze<! Signature) CAUFORN1A Department of General ServiCes UseOoly DATE SIGNED (Do not type) Z PR1NTED NAME AND TiTlE OF PERSON SIGNING Raymond C. Marshall, Partner AODRESS Four Embarcadero Center, 17th Floor San Francisco, CA 94111 STATE OF CALIFORNIA AGENCY NAME California Public Utilities Commission BY (Authorized Signat1...'re) I DATE SIGNED (Do not typej Z PRINTED NAME AND TITLE OF PER.SON SIGNING AOORESS 505 Van Ness Avenue San Francisco, CA 94102 Exempt per: Sheppard Mullin Amendment 14PS5019,01 Exhibit A Amendment to Agreement No. 14PSS019 The following Amendment to Agreement No. 14PSS019 (the "Amendment") shall amend, modify and supplementthe terms of Agreement No. 14PSS019, between the California Public Utilities Commission ("CPUC" or the "Commission") and Sheppard, Mullin, Richter & Hampton LLP ("Sheppard Mullin"), and all amendments thereto (collectively, the "Agreement"). To the extent that the terms of this Amendment are inconsistent with or conflict with the terms of the Agreement, the terms of this Amendment shall control. This contract amendment is allowable under the State Contracting Manual Section 3.02,18.4, The Commission and Sheppard Mullin hereby agree that the following terms amend, modify, supplement and are made a part of the Agreement: 1. Waiver of Conflicts with Other Clients. Sheppard Mullin has many attorneys and multiple offices, including a large energy practice and communications practice, Sheppard Mullin currently represents and may in the future represent PG&E Corporation, Sempra Energy, Time Warner Cable, Cox Communications, their subsidiaries and affiliates, other utilities, other communications companies and other clients (collectively, "Private Parties") in matters involving the CPUC. Sheppard Mullin's representation of the Private Parties is not substantially related to its representation of the Commission in the Investigation or the Litigation and may involve seeking discretionary or ministerial approvals by the CPUC or affiliated agencies or authorities, or otherwise advising Private Parties in connection with or advocating on behalf of Private Parties in connection with matters before or otherwise subject to the jurisdiction of the CPUC. Such representation may include, without limitation, real estate, land use, enVironmental, construction, electronic communications, or other matters; representation of plaintiffs or defendants in civil actions; representation of defendants in civil or criminal enforcement actions; and transactions between Private Parties and the CPUC such as preparing and negotiating environmental reports, agreements, licenses, applications, permits or other documents. Sheppard Mullin may also represent Private Parties in litigation, arbitration, audits, examinations, inquiries, project approvals, administrative appeals, and other adversarial proceedings in which the interests of the Private Parties are adverse to the interests of the CPUc. All such matters in which the Commission may be involved are collectively referred to herein as "Unrelated Matters." The Commission hereby consents to Sheppard Mullin's present and future representation of Private Parties in Unrelated Matters, waives any potential conflicts of interest, and agrees that our representation of Private Parties in any unrelated matters as set forth above will in no way be used as a basis to prevent or seek to prevent Our firm from representing any other client in any unrelated matter, including the matters specified above. 2, Waiver of Conflicts with Firm Counsel. Sheppard Mullin may have occasion to seek legal advice about its own rights and responsibilities regarding its engagement by the Commission, Sheppard Mullin may seek such advice from attorneys in its internal Office of the General Counsel who do not do work [1] Sheppard Mullin Amendment 14PS5019.01 Exhibit A for the Commission or from outside attorneys at its own expense. The Commission agrees that any such communications and advice are protected by Sheppard Mullin's own attorney-client privilege and neither the fact of any communication nor their substance is subject to disclosure to the CPuc. The Commission hereby consents to such consultation occurring and waives any claim of conflict of interest based on such consultation or resulting communications that would otherwise disqualify Sheppard Mullin from continuing to represent the Commission or from acting in its Own behalf, even if doing so might be deemed adverse to the interests of the Commission. 3. Settlement of Disputes In the event of a dispute, Contractor shall file a "Notice of Dispute" with the California Public Utilities Commission, Executive Director or designee within ten (10) days of discovery of the problem. Within ten (10) days, the Executive Director or designee shall meet with the Contractor and Project Manager for purposes of resolving the dispute. The decision of the Executive Director or designee shall be final. In the event of a dispute, the language contained within this Amendment and Standard Agreement 14PS5019 in this matter, Exhibit D, item 2 shall prevail over any other language including that of the bid proposal. 4. Budget Update to Commission. The maximum amount of this Agreement after this amendment is Five Million One Hundred Eighty Seven Thousand Dollars ($5,187,000). If and when the CPUC has incurred One Million Five Hundred Thousand Dollars ($1,500,000) ($3,000,000 and $4,500,000) in fees under this Agreement, Sheppard Mullin shall make a presentation to the Commission to explain the work and services provided by Sheppard Mullin for which those fees represent, and advise the Commission as to what fees Sheppard Mullin anticipates will be incurred under the remaining term of this Agreement, and the expected time frame in which those fees will be incurred. Thereafter, should expenses above One Million Five Hundred Thousand Dollars ($1,500,000) be incurred, Sheppard Mullin shall consult with the project manager and seek approval to continue incurring expenses whenever an additional Seven Hundred Fifty Thousand Dollars ($750,000) in expenses is incurred. At Sheppard Mullin's sale expense, Sheppard Mullin shall provide the project manager with a written status report of the work being performed, and expected to be performed, by Sheppard Mullin under this Agreement. 5. Representation of the Commission and "Witnesses' Onlv. Sheppard Mullin agrees to representthe Commission in the federal and state investigations. This may include representation of current and/or former employees of the Commission designated as "witnesses" by the Investigators for the purpose of investigative meetings only. [21 Exhibit B Sheppard Mullin Amendment II1PS5019,fJl These numbers include the discount appli,,>d to the total bllllngs In the [ollowing In(1'emenl~ $0· $1,000,000 0% $1,000,000. $3,500,000 1% $3,500,000· $5,000,000 5% 10% Review of documents for responsivene.1S ilnd prhlilege~ Document production Drartlng of privilege logs Meetings and if1teNlews of employee witnesses Communication.'i with prosecutors and investigatoN: Ml!:etings and TIC w:th Commissioners, Counsel and chent reprC5cntatlve$ Legal research TOTAL Review 01 documenb for resrotuj\lenes~ and privilE'gf''i Document production Drafting of prillliege logs Meetings ,and interviews of emplovee wilm:S50:; Communications with prosecutors and investigators Meetings and T/Cwith C.ommissioners, CouMel ,)nd clIent rep;esentatives lcg,al research TOTAl. Copy of Amended Budget 14I'S5019.01_B8CrDAC Jtllluary $385,000 28,000 24,000 21,000 20,000 40,000 febrl,lary $318,000 27,nO 113,760 30,1:90 29,800 49,600 12,635 $iSi.305 M', 27,nO 23,760 20,79(1 19,800 39,600 13,960 $468,l80 ~(~. $532,000 Jaml3t¥ $49,638 25,270 21,660 18,953 18,050 36,100 Marth $322,150 27,120 2:U60 20,790 19,800 39,600 $52,250 26,600 22,800 19,950 19,000 38,000 13,300 $191,900 26,600 22,800 19,950 19,000 38,000 '"Iv 27,120 23,760 20,790 19,800 39,600 13,360 $313,830 ~ Feb~ual'V $168,300 27.710 23,760 20,790 19,800 39,600 Aprll ------s39,s00 25,600 12,aoo 19,950 19,000 38,000 13,300 $179,550 13.300 ~ August $184,150 27,720 23,760 20,790 19,800 39,500 September $155,165 27,720 23,760 20,790 19,800 39,600 ----- October $74.250 27,720 23.,750 ZO,790 19,800 39,600 B~860_ $219,780 M"$36,100 26,600 22,800 19,950 19,000 38,000 $196,030 27,720 23,750 20,790 19,BOO 3.9,600 26,600 22,800 19,950 19,000 38,000 13,300 $172,900 December $51,750 27,720 23,760 19,950 19,000 38:,320 26,600 22,800 19,950 L9,000 38,000 13,300 $201,400 FebrualY 24,2015 Suzanne Ambrose, Executive Officer State PersolUlei Board 80 I Capitol Mall Sacramento, CA 95814 Re: Review ofPer-sonal Services Contract Dear Ms. Ambrose; Pursuant to Government Code section 19132 and California Code of Regulations, title 2, § 547.64, California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment ("CASE") requests that the California State PersolUlel Board ("SPB") review and disapprove a contract for legal services entered into by the California Public Utilities Commission ("CPUC") because the services contracted for can be provided by civil service employees. CPUC has entered into a contract with Sheppard Mullin, LLC to provide legal services to CPUC. Under the contract, CPUC pays attorneys with the law firm "discounted" hourly rates of up to $882 per hour. (Decl. Whalen, ~ 10.) The scope of work specified in the contract includes representation of PUC "in all criminal, civil, and administrative proceedings and investigations ... involving directly and indirectly, any allegations of inappropriate interactions by CPU C persolUlei with Pacific Gas & Electric and any other utility.... " (Decl. Whalen, ~ 10.) As recent news reports have indicated, CPUC is currently Imdergoing at least two separate investigations into possible criminal wrongdoing. To the extent CPUC needs experienced criminal defense counsel, the State of Califomia has an entire office of trained criminal defense attorneys at the Office of the State Public Defender. There are at least 27 attorneys at the Office of the State Public Defender who handle some of the most complex criminal cases at all levels of the state and federal courts. (DecL Whalen, '15-6.) In fact, attorneys employed by the Office of the State Public Defender are able to represent clients in a proceeding of any nature where a person is entitled to representation at public expense. Senior Deputies in the class are assigned 1 1231 I Street • SUite 300 • Sacramento • California 95B14 aO(H;)99-6533 .1eI91S..a69..4200. fax 916-669~4199. email [email protected] • "<Jab www.calattorneys.org .~50' cases ofthe greatest sensitivity that are very likely to be appealed to the highest courts. (Ibid.) Furthermore, the Office of the State Public Defender has offices in both Oakland and Sacramento, and thus is conveniently located to the CPUC headquarters in San Francisco and the CPUC office in Sacramento. (Dec\. Whalen, '\Ill.) The contracting of civil service work is prohibited, unless it complies with the merit principle found in Article VII of the Constitution and falls "Iovithin the exceptions listed in Government Code, § 19130. CPUC has failed to demonstrate that any exception in section 19130 is applicable. Moreover, CPUC has failed to demonstrate whether they even requested representation from the civil sen'ice attorneys and the Public Defender'S Office. CPUC is paying outside counsel far more than it would pay for civil sen'ice attomeys to perform this work. (Decl. Whalen, 117-9.) While the contract is only for a total of$49,000, given the extremely high hourly rates, CASE is concerned that the dollar limit of this contract could be reached fairly quickly and could be amended to provide for a substantially higher contract amount. Under Government Code section 19132, upon the request of an employee organization., "shall review the adequacy of a proposed or executed contract." This letter constitutes the written request for review contemplated by Califomia Code of Regulations, title 2, § 547.61. CASE hereby requests the contract be disapproved, and that CASE be awarded any and all other appropriate damages and costs. Attached to tbis request are a supporting declaration and a proof of service of this request on CPUC. Very truly yours, Patrick Whalen CASE General Counsel 2 DECLARATION OF PATRICK WHALEN IN SUPPORT OF REQUEST TO DISAPPROVE COXfRACT FOR NON-CIVIL SERVICE LEGAL WORK I, Patrick J. Whalen, declare as follows: I. I am General Counsel for California Attorneys, Administrative Law Judges and Hearing Officers in State Employment ("CASE"). CASE is, and at all times herein mentioned was, a nonprofit corporation organized and existing under the laws of the state of California, v"ith its principal place of business in the County of Sacramento, State of California. 2. CASE is the exclusive collective bargaining representative of legal professionals in State Bargaining Unit 2 pursuant to Government Code section 3520.5. CASE represents approximately 3500 legal professionals in more than 90 different state agencies, departments, boards, and commissions, including the California Public Utilities Commission and the Office of the State Public Defender. 3. In my capacity as General Counsel, I am familiar '>'.1th the diverse membership of CASE, and in the course of participating numerous "meet and confer" sessions at many of the departments that employ CASE members, I bave attained a familiarity with the type of legal work our members do. I am also familiar with the number of CASE members that work at the various state departments, based on monthly reports supplied to CASE by the State Controller's Office. 4. Each month, CASE is provided employment data from tbe State Controller's Office identifying all of the Bargaining Unit 2 members employed by the State of California, including their department, pay level, and other data. 5. Approximately 94 rank and file attorneys and administrative law judges are employed at the California Public Utilities Commission. This number does not include managing or supervising attorneys who are not in the bargaining unit. Approximately 21 rank and file attorneys and administrative law judges are employed at the Office of the State Public Defender. This number does not include managing or supervising attorneys who are not in the bargaining unit. 6. The Office of the State Public Defender employs attorneys that are often at the cutting edge of criminal law. The attorneys there have appeared before the California Supreme Court in hundreds of cases, and have appeared before the United States Supreme Court. According to the job specifications of the Deputy State Public Defender series approved by the State Personnel Board, incumbents are able to represent clients in "[a] proceeding of any nature where a person is entitled to representation at public expense." Senior Deputies in the class "are assigned cases of the greatest sensitivity that are very likely to be appealed to the highest courts." 7. On behalf of the State of California, the California Department of Human Resources (fonnerly the Department of Personnel Administration) has repeatedly produced salary services which demonstrate that the State's legal professionals suffer a pay disparity compared to other public sector legal professionals in California. The disparity can be as much as 35% depending on geographic location and years of experience. S. CASE has conducted its own analysis and has determined that when compared to the private sector, the pay disparity can exceed 100%. Under Government Code section 19826, the State is required to consider both public and private sector salaries in setting compensation rates for civil service employees. 9. Depending on their classification, civil service attorneys employed at the California Public Utilities Commission and the State Public Defender's Office are paid monthly salaries that equate to between $30 and $65 per hour. 10. Pursuant to Government Code section 11045, CASE received notice of a contract entered into by the California Public Utilities Commission with Sheppard Mullin. Under the contract, CPUC pays attorneys with the law firm "discounted" hourly rates of up to $882 per hour. The scope of work specified in the contract includes representation of CPUC "in all criminal, civil, and administrative proceedings and investigations ... involving directly and indirectly, any allegations of inappropriate interactions by CPUC personnel with Pacific Gas & Electric and any other utility...." 1 I. The Office of the State Public Defender has offices in both Oakland and Sacramento. The California Public Utilities Commission has its headquarters in San Francisco and another office in Sacramento. J declare under penalty of peciury under the laws of the State of California that the foregoing is true and com:ct and based on my personal knowledge, and if called to testiry to these facts, J would do so competently and truthfully. Executed this J, "i'"':ray of February, 2015. in~a1l1.ento, CIfI. ;ifornia. J(l e0'\~.< L-''\--, PatHckT\\lhalen. PROOF OF SERYt<:E I am a citizen of tlle United States and a resident of the County of Sacramento, California. I am over the age of eighteen (18) years and not a party to the above-entitled action. My business address is 1725 Capitol Avenue, Sacramento. CA 95811. On February 24.2015 I served Ihe following documents: I. R"quesH~r::Jt~~:i~'!LofJ:o}!t..r::act 2. Declaration of Patrick Whalen J served the aforementioned docul11ent(s) by enclosing them ill an envelope and (check one): _XX_ depositing the sealed envelope with the United States Postal Service with the postage fully prepaid. _ _ placing the sealed envelope for collcction and mailing following our ordinary business practices. I am readily familiar with this business' practice for collecting and processing conespondence for mailing. On the same day that conespondcnce is placed for collection and mailing. it is deposited in tbe ordinary course of business wilb the United States Postal Service in a sealed envelope wilh postage fully prepaid. The envelope was addressed and mailed as follows: Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94]02 I declare under penalty of pCIjUry under the laws of the State of Califomia tl1at the foregoing is tTue and correct and that this Declaration was ey~ol1 February 2l(i1iR. I 1_= \cJ<y ~ .. PROOF OF SERVlCE I am a citizen of the United States and a resident of the County of Sacramento, California. I am over the age of eighteen (18) years and not a party to the above-entitled action. My business address is 1725 Capitol Avenue, Sacramento, CA 95811. On March 19,2015 I served the following documents: I. Request for Review of Amendment I served the aforementioned document(s) by enclosing them in an envelope and (check one): _XX_depositing the sealed envelope with the United States Postal Service with the postage fully prepaid. _ _ placing the sealed envelope for collection and mailing following our ordinary business practices. I am readily familiar with this business' practice for collecting and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. The envelope was addressed and mailed as follows: Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94102 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this Declaration was executed on March 19,2015. I~'" ~ ~ P ERSONNEL ~ARO Go>o • •,,,,, Edmu"" G """'" Jr. M arch 27, 2015 californ ia Public Ut~itlel Commission San Francisco Office Headquarters 5050 Van Ness Avenue San Francisco, CA 94102 Patrick Whalen, General Coulsel CASE 1231 I Street, Suite 300 Sacrameoto, CA 958 14 Rs: Request 10 Oisapprove Existing Contracllor Legal Services Sheppard Mullin, Contracl Nos.: Unknown lie E~eculed by SPB File No.: lS-0002(b) Dear Parties; On March 18, 2015, the above-feleranced matter was placed i1 abeyance pending the tiling 01 a challenge by CASE to an amendment to the above-referenced contfacl104' »gal services. On MatCh 19, 2015, the Slale Persomel Board (SPB) received CASE's requeGl review an am&r'lltnetlilo the contract (attached). These matt &rs are now consolidated lor review by the SPB and the original challenge is taken out 01 abeyance. In accordance with California Code of Regulations, title 2, section 547.62, the Californ ia Publ ic Utilities Commission (CPUC). Is required 10 se lVa a copy 01 the enclosed request from CASE on the proposed vendor within seven days of receipt 01 this correspondence. In addition, with in 15 days from the date of this correspondence, CPUC Is required to file with the SPB and serve on CASE a copy of the proposed or executed cootract and a written response to the review req uest. The response shall Include: Specific and detailed factual information tM! demonstrates how the contracl meets one or more of the conditions specified in Goyemmenl Code 19130, subd ivision (b): and Doctunenlary evidence and'or declarations in support of the ag ency/department's positlon. StoIo oICIIiIomio IGo $4.4.' ~~ 0.-_........, :u. _ _ '''-e5J·'028 I "'"*"~ ~6-65:)·om ~Ro'>"_, ~ ~le , e~l on< ",!;lIfQ g,e·5~·100J Mateh 27, 2015 California Public Uliities Commission Patrick Whalen, General Comsel Page 2 0/2 CASE may file with the SPB and seNe on CPUC a wn1ten reply to the response. Pursuanllo California Code 01 Aegulalions, title 2, section 547.63, CASE's reply must be Hied with the SPB and served on the responding department(s) wfthin live days after receiving the response. After reviewing Ihe written positions of the parties, the SPB will render a decision as to the validity 01the contracts. The failure 10 comply wilh the filing and service deadlines, however, may resun In the SPB rendering a decision without your Input. Please dirac! all inquiries and correspondence in this matter to my attention and with reference to SPB File No. 15·0002(b). Sincerely, Enclosure: Marct119, 20151e1l8r from CASE s..dc.a.... I~()pet_~ISt.-~_d E.-.No.. .1&653-10211 COL.' aRe. "*Y~ _~ ~~l·om elS-Ml-OiU< legoiOlb 9t6-fI63.1«11 • ... ... --.~i' £-1 ' " mCUflVf OffICE Mardi 19, 2015 Suzanne Ambrose, E)(ecuti~e Officer Stale f ersoMe] Board 801 Capitol Mall Saeramento, CA 958 14 18. lOIS, the California State Penonnel Board ("SPB ,,) piKed in abeyance I challenge to I tol1tracl bel: ~n the Califl;lI'l1ia Public Utilities COITIll\inion ("CPUC") and !he II.w firm of with Sheppard Mull in, LLC to provide legal services to CPUC, pending In Mlicipated challenge 10 an amendment to that con lfllCl. 8y leiter dated March Califomi. Attorneys, Administrati ve Law JudIlU, , nd Hearing Officers in Statt Employment ("CAS E',) has now received a copy of that amendment, and hereby files !.be instant requesl {or review, spa indicated in iu Marth 18,201S !ener lha\upon the instant filillJ, the chall enge 10 the origin.1 contract woul d be OOIl5Olidated with the ch.llenge 10 the amendment. Pursuant to Oovmunent Code sectio\\ 19132 and Cal ifornia Code of Regulations, title 2, § 547.64, CASE request!! lhal the spa review and di$8JlPl'OYe an amendment 10 a C(lntrKt for legal ~rviees entered into by CPUC b=iuse!he scrvicn conlnK:lt'd for can be provided by civil service employees. The amendment, I copy of which is lnached to this request for ~vjew, uJlfe$S1y refers to tl'lc prior, undetJyill~ contract by number. 14PSSO l 9 Mel expressly illCOl'pOlales Ihe amendmenl into thaI prior contl'lCt by refel'e11a. Accordingly, CASE e)lpressly illcorporatts by ~fe~llce.1I of the prior factual and legal argWTIell15 made in il5 original challenge , filed on or about February 24,20 15. In addition, CASE makes the followina observatiOIlJ &lid &riumellts. While the oriaina.l contract was for only 149,000, the ameodment is for SS,I87,ooo, and increase ofmore titan 10000(0Id. lbc pulpOtlcd ttrm is from Novembn, 24, 20]4ihroua)l June 30, 2016. The amendment provides agreement: 800 _ mo~ insight into tiM: KOpC of kall services conttmplated by the -. 1231 11h_ • _.300 .........."'" • C"IIOm .. * ' 4 1513' ""' ." , . 1200' fa:< .,.._..41119 · ...,.. ~_y .. orv • .-.e_.""..tIof"",,"1II1II Sheppard Mullin agrees 10 repTeSelll the Commission in the federal and state investigations. This lNy include representalion ofcutten1 andfor former employees of the Commission desiS!\aled as "'witnesSeS" by lhe Investigaton for the purpose of investigative ~titli' only. (See Anaclunent, Exh. A, '5.) Based on Ibis, il is even more apparent that the lepl wort eM and should be done by civil service employees. As previously explained, the State has established an OffICe of the State Public Defender staffed witb competent anomeys who are experienced in criminal defense. The amendme nt makes no effoo whatsoever 10 even anempt to expla in why this contract is justified under Oovenunent Code Stttion 19130. An.ched 10 the IIITIClldmrnt is I OIK-paie ~Budget Detail" SpR'adsbeet that makes it even more clear that this work eM be done: by civi l service &nomeY'. SpeciflC3lly,lhe amendment contemplates that hundreds of thousands of dollars will be spent each month for priVile lawyers performing !he following tasks; • Reviewing documents • Producing documents • Dra-Mnll privilege logs • Meetings and interviews of employee witnesses • Conununications with prosecutors and investiglton • Meelinp with commi ssioners and client representatives • Legal Researc h (See An.chment, Exh. 8 .) None of these legal tasks;' SO complex as 10 warrant tbe use of outside counsel. In fact, vinuaIJy every civil service tnomey has e~tensive experience in each of these aaroen variety legal chores. Moreover, the fact that the tontnICI in contemplated to run ttvou&h June 30, 2016 indicates that the nature oftbe servioes is far from temporary. In the ori&inal requesl for review. CASE expressed eorteem thatlhe dol t.l- limi t of the oriainal contraCt could be reached fairly qu)ckly and could be IIITIoCtlded to provide for a substantially higher tonnet amowM. That concern has flOW be«lme realiry. Nevertheless, the amendment sutTers from al l of thie legal infirmities of the I.II"Iderlyina agreement which it purportS to amend. The contracting of civil service wort is prohibited, un less it complies with the merit principle found in Article VII orthe Constitution and falls within tbe exceptions listed in Government Code, § 19130. CPUC hu failed to demollSbate that any exception in section 19130 is applicable. Moreover, CPUC has railed to demonstrate whether they even requested representation from thie eivil service anorneYSlnd the Publ ic Defender's Office. Under Government Code Stttion 19132, upon tbe ~UC$I ofan employee organization, ~wJl review the adequacy or. proposed or e~ecuted COntract. This letter constiMes the "'irinen request for review contemplated by Californil Code of Rcgulatlons. title 2, § 547.6\. H CASE hereby mrueSlS the eonlrkl be disapproved, and that CASE be awarded any and . 1I other appropriate dlmages and eos:cs. Attached to this request are a copy oftbe amendment, u well as tbe original request for review 2 filed by CASE, which is hereby iOCQrporated by refereoce. CASE respectfully requests that this request for review be incorporated with the prior challenge as both tIx colltract and tbe amendmenT relale to same scope of legal services. Very truly yours, Patrick Whalen CASE Ckneral Couns<:l 3 ""''''''= • AGREEUENT AMENDMENT STANDARD . .. Q.ij fornia Public un~ies CoavnIsslcNro ~-- I -------------------------------------- ....... ~~ CO N'lItACTOR SlATE C# CAUFOFttU. ~.dM""Un Amendmenll.PSSo019.01 ExIIlbii " The fonowinCAmendm,nllo ........,'nt No. 14P$S01' (It.. 'Amendmenl') .... lllmltnCl", modify MId supplcmltnt the terms 01 ..... o:erMnI NO. l<U'SSOl', ~_n lhe (.aIifomilt Public UtlI~1ts Commission ("O'UC' or the ·c.ommluiotl·) I nd Sheppard, Mullin, IUdIt .. & Hampton liP ("Shtp,N.d Mull"" ,nd I. Imendments !heretO !coIleaIwty, the ·.....-nr). To the e"'tntl"'t the le-rm, 0' thit -,",-",mt<ll iIf4I ~ttnl with Of """ftict witt! the term. of the .....Mment l he lerml 01 thh Amendrnatll shill cont.oI. Thb <ontrlct amendment it aIIDwlbIe uncI.. IN Stlte COtlI. lctinC ",.nul l S«l ion 3.02.18.4. The Commission inc! SilePPl.d Mullin lIIt.eby luppl.mltnl .nd Ire mid, • L p,lIrt vl .,ree IhII the follow.... termllmend, mod;t.,-. th, " , , _ nl: W'!Rr pi Con!!!cu With Othtr C!!tnu. ~ MoAin hu mtn'f' ,"omevs and multiple vffices, includif1ll I"le ~ Pflctic:•• nd communicati<> ... prxtIoo. She",,1Id Mullin currently .~t1eftts ...... _~ In the future .~seM I'G&E Cofporillon, Sem.,... (nerlV. r""" Wi,ner Clblt, Co~ (.QmmunlcillooflJ, thel. subskll.rlc. and .Hohltel, other lIIiIities, other communlc;ltlons ~"liet Ind oth •• dlcntJ (collKtlvtly, "PrI\I.te I'lrtlfl") In mallefJ Involv1ns th. (PU(. Sh'pp,ll,d tJlul~n' • •eprlsenlat""" or thl P.iII. " Partla II not oubstantl.1Iy rellted 10 Its represent.tlon of lhe Commlulon in IIIIt 1n"4S1!JitJOII or the titi,'ti<>n .nd mly "....OM seekin, discretlOl\llV Of mlnlsttnll.""rov.lt bo; the (PU( or .ffill.lltd "i,ncie1 o. I-UtlIoriI:ie" or otl>e<wise ~ 1";"'111 Pattles ... g;,MC(tion with G1 .dwcMinI on behalf of Privott P.nifl in connection with ....11".. befor. or otherwise ..,bject 10 I'" jUthdiaian or I1Ie Cl'UC. Such reprHottlUtion IMY Include.. without llmitltiot\. re~ tit.ile.lind use, envI""""'In(M, ~ elearonic o;omm ..... k.n\on$, or othe, _!tIn; ,ep.nenutian 01 ploiMiffl or defmdants In civil.ctl<>nl; reprntnlltlon 01 delendant$ In dY~ 01 <rim"... 1enfOrtffMM Iotti:>ns; .nd l ronuctlons bltwMn Privllif 1'.11;.,. ...... the O'UC such .. pr'p.lri"llnd ntCOtillin& environme,,1I1 ",portl, ",'Mments, IlteMes. ippliaotlofll, permltl or other documenll. ShtPPI.d Mumn m"y "I,., " prtitnt Privale Pan ,," In IIllpti<>fl. Ifbltfltion, ludit!, .nmln"tlOfll, Inqulrlts, pr<>l"t iPp.oval., I<:fmlnlstritNe 'ppoIlt., .nd other I<:fvenarill procH<fin •• in which IhI Inte.ti" 01 lhe P",,"le Pin;'" ¥41 ~rS4110 the Interests 01 the (:Puc. All such mlltefJ in whidl ttt. Commllslon m~ be inwalved Iff collectiwly ~m!d 10 he."in "I -U ...... ttd M.lttn." The Commlulan ht.tby consentJ to ShfP\Mrd MuIlia'. protS4lnt .nd flit ... r.p.--lltitlon 01 "'1.-111 Ponies in Un.riated MKan, _ ....... "1 pottntill cOtlflic:tJ of lnterl1l, and ....""' !hit our '..,...,sentltion 01 PrivlIte p"rtlftln anv ""•.JIIIN! millen .. sel forth abo¥t w;l11n no WI, be used III bam to p.eyeM or SMt to ",tWnt OIl. Itrm from "presentl.... any other d~ntln any unrellted _Iter, Indudln, the ",,"en .ptCifoed .bove. 2. w.!ytr of Confirm With f in!! C9!1nHI. Sheppotd Mumn m.y h.w oca.1on 10 stet 1ts,,1 idYlt, .""dlne aboullts own fIItIts Ind responsibilities Itt 'f1I"Iemenl bo; lhe eommt..1on. Sheppard MuI~n rnay ~k from .ltOf1"otYS ... Its Inl ..... t Offi« 01 1M Gtne~ Coo,oru.eI who do not do wort; ,ud"!.cMc:. '" Shepp.t.eI Muliin for !he Commi..ion or from 0UUick .nof1'leV' II its - ' eo:peftSe . The ~sioI\ " ' " ' It..! ...... ouch tor\'\f'P\UniullDns and .dv!te .re prQl:K1~ bot Sheppwd Mullin's own ~no<N!'Y~ ",Mwe' HId M II"..!he fltt of .tty comm~nItlotion nor IheIr Wb$1,r.ct ;. wbjHIIO diodosu ... to tho! CPUC. The Colntnlu.ion I'Itrtbv con~/IU to such CDfIluitlllon oo:urr!nc and w~;'es any t;\Ilm 01 connlct 01 interest boIsed on ouch consuitllion o. ,~su!tI"I (OmmunlQllons lkal would othtrwiJe cliJl\u.11fy SII~~rel Mulli~ Irom continul.,.lo '~'... nl th. Commlsslonorlrom KtI~1I in ill own btklll, tvtn It dolnt 10 ml,hl N d.emtel ar;iverM to the In","" of the Commlulon. ). Srtdtmtftt In lho! _ 0' Qisputn of • dispute, Conttxtor sn,Il file • "Notiot 01 ~te·..oth t~ Clfllornl. Publk ~;Iil~ CommIssIon, £Ioecutiw oncto. or des ___ within leA (10) d~ of ~ of !he problem. Within !eft (10) c\rfI. the ExftutiIooe Oi~ or ~5i&net sNIt mHI with 1M ConUKtor and P'o;ea Manl'" for PlJrpoMI of "'soMnc rho! elisput •. Tht ckdsiorI 01 tht £Io1tCU!We Oir~ or dtsll"" sNIl be 1itIaI. In l ho! e¥<Int of • diljlU1~, the 1~"'''''le conUIMd within thll Mlendment .no:! Stlncbrd A.uH .... nl 14PSSOU In this ml llt', £Iohjbjl D, !\em 2 skill prev.M over ..,., oth~ . I~su~ee Ind udinc tkllo' tho! bid pioposal. t. 'wdcel UpeI." '0 (o"""ln!on. Tho! fI\lI ~lmu m _oun, of this .... 'Hmenl .M' thil ,m ,"drn.~' II Ftv. Million One Hund red £itIhty Sc~n Thousand Oob" 155,111,000). If and whom lhe CPUC II.. trw;urrl!<! One Milion Five Hundred Thouuno:! 00Uin (5 t ,SOO,OOO) (53,000,000 and $4,500,0(0) in 'HI under tNo .... _ t I l , Sh~rd Mu l~n s~1 m., • pr • .,nlll;on to , ho! Commis$lon 10 ..pe.in tht 1O'Ot1<.nd SoI!MceS provid<!d bot 5heppord Mo.rIlin 101" wtIIch I ~ fHs ~nl, and ~ lho! (.ommlu!on .. to wtlJt fees Shcpp;Ird MulWn ",fldpl' " wil botlno:u<l-~ unde. tho! te"" of this .... '""""" and tht txp«!ed time fmnt in which tlloM .... will bot incurred. Thtftlfllr, sI>oukI bpCMQ.bovt 0 ... Mllion fIYt ....ndfed Thousand OoII~I$l500,ooo) ~ inc\IfTed, ~d M~UIn ,hili conwh witl> the projtct manoa" ;MId R .... tpprO¥lIlO "",tinuc incurTirC eope-nses ~_ .n .ddition.1 Seven Hundred f ifty ThouSind DoII;j~ (S7SO,OOO)In ex~ses is incurnd. Al SMppl,d remit""" Mullln'J $Ole .~ptrUe. SIIepPI,d Mumn sJI, 11 proyI~ the project min."" with. written status re~rt o f tM worIc belftl perfonned, and • • peaed 10 be perform,d, by Shepplrd Mullin un~' IIIb ....... m .... t. s. Rur'gnlltlonol th,Cgmmlu!QII,nsI "W"ntun'Only. Sheppa,d Mulin apeeslo repr..ent the Commission In ,ho! l~e"'l ~nd Jlltl In~Jtlcllloft$ . This m..-, ;ndu~ representltion of CUrT ....I Ind/o, forme. em~ of the eommlnlon ~)\I ... t~ as "witnc-sses" by the I~.ton /Of' the p..-poM: of InvttlllatiYe _etl..". odt. ,>, i I • ! I I I I, I PROOF OF SERVICE [am. ci lizen oftke United Slalel.oo I resi dent of the County of Sacramento, Californi•. I am over Ihe ascof ei&hteen (18) years and nor a Piny 10 the .bove-entitled action. My business Jddress is 172S Capilol Avenue, SlCrmIcnto, CA 9S811 . On Man:h 19, 20IS I sef'led the followingdocumeIIl$: I mved the .forementioned dlKwnent(s) by enclosing them in an envelope and (check one): _XX_depositing the sea led envelope wilb the United States Postal Service wilh the postage fully prepaid. _ placing Ihe sealed envelope for coll ecti on and mailing following our ordi nary business pnctiees. I am readily familiar wilh this businelS' practice for colledilli and processi ng enrrespondenoe for mai ling. On the same day Ih.1correspondence is placed. (or enllcetion and mailing, it is deposiled in the ordinary en=ofbusiness ..... ilh the United. Stites Postal Service in I sealed envelope with postage fully prepaid. n.e envdope was addressed and mailed as follows: Public Utilities Commission 50S Van Ness Avenue San FBllcillOO, CA 94102 I declare under penalty of perjury under the l.ws of the SUIte ofCalifomia Ibal lhe foregoing is true and correct and thai this on 19, 2(11 S.
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