REPORT TO COUNCIL
SUBJECT
Title
Authorize the Second Amendment to Outside Counsel Agreement with Stoel Rives for Litigation Services Pertaining to the Litigation of San Francisco Baykeeper v. City of Sunnyvale (U.S. District Court Case No. 5:20-CV-00824-EJD) Increasing the Not-to-Exceed Contract Amount by $400,000 to a new Not-to-Exceed Contract Amount of $800,000 and Approve Budget Modification No. 2 in the Amount of $400,000
Report
BACKGROUND
Approval is requested for a Second Amendment to the Outside Counsel Agreement with the law firm of Stoel Rives for legal services and representation of the City in the matter of San Francisco Baykeeper v. City of Sunnyvale (United States District Court Case Number 5: 20-CV-00824-EJD). The Complaint was filed by Baykeeper on February 4, 2020, and a First Amended Complaint was filed on April 28, 2020. Plaintiff alleges violations of the Clean Water Act and a federal discharge permit related to bacteria.
Melissa A. Thorme, formerly a partner at Downey Brand in Sacramento, now with the Stoel Rives law firm, specializes stormwater and wastewater regulatory issues, with experience in complex litigation matters. The City Attorney retained her and her firm under Section 908 of the City Charter to represent the City and provide legal services, consultation, and advice concerning the above-referenced case in litigation. Concurrently, Baykeeper filed a similar lawsuit against the City of Mountain View, which was consolidated with the Sunnyvale case. Ms. Thorme represents both Sunnyvale and Mountain View pursuant to a joint defense agreement, with each city paying 50% of the attorneys’ fees and other litigation costs.
The initial Legal Services Agreement between the Sunnyvale and Downey Brand for representation in the matter of San Francisco Baykeeper v. City of Sunnyvale was entered into on December 13, 2019, for an amount of $50,000. The First Amendment to the Legal Services Agreement, entered into on July 10, 2019, increased the amount of allowed compensation to $100,000. The Council authorized a budget modification and a Second Amendment to the Agreement in April 2021 (RTC No. 21-0435), increasing the not-to-exceed contract amount by $400,000, to a new not-to-exceed contract amount of $500,000. The Council authorized a budget modification and Third Amendment to the Agreement in November 2022 (RTC No. 22-1032), increasing the not-to-exceed contract amount from $500,000 to $750,000.
At the time Ms. Thorme left the Downey Brand firm, approximately $117,000 was left on the Downey Brand contract. A new Legal Services Agreement was entered into with Stoel Rives for a not-to-exceed amount of $250,000. In May 2025 (RTC No. 25-0567), the Council authorized a budget modification of $300,000 and contract amendment to increase the not-to-exceed contract amount to $400,000.
EXISTING POLICY
Pursuant to Sunnyvale Charter Section 1305, at any meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by affirmative votes of at least four members so as to authorize the transfer of unused balances appropriated for one purpose to another, or to appropriate available revenue not included in the budget.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
DISCUSSION
Trial in the case began on June 10, 2025, and was anticipated to last six days, but did not actually conclude until July 9, 2025. There were multiple delays caused by the judge’s illness, expert availability, and conflicting matters on the court’s calendar. The extended trial duration, as well as unanticipated costs associated with pre-trial discovery, briefing requested by the judge, and motions to address legal issues that arose during trial, have driven the need for a budget increase to cover these costs, as well as the cost of an anticipated appeal to the Ninth Circuit. The trial was delayed several times due to the court’s calendar, and the case went to trial on June 10, 2025, concluding on July 9, 2025. The judge requested a post-trial briefing, which has been submitted. We are now awaiting the judge’s verdict.
It is necessary to request additional funding in the amount of $400,000 for legal services through the approval of a budget modification and Second Amendment to the Outside Counsel Agreement, for a new not-to-exceed amount of $800,000. This amount includes trial costs already incurred as well as the anticipated Ninth Circuit appeal-related costs.
FISCAL IMPACT
Budget Modification No. 2 has been prepared to appropriate Wastewater Management Rate Stabilization Reserve funds in the amount of $400,000 for litigation costs to Project 835480 – Baykeeper Litigation Expenses. The resulting reserve balance would still meet policy requirements and would not have an immediate impact on rates.
Budget Modification No. 2
FY 2025/26
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Current |
Increase/ (Decrease) |
Revised |
|
Wastewater Management Fund |
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|
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|
Funding Source |
|
|
|
|
Wastewater Fund Rate Stabilization Reserve |
$90,257,361 |
($400,000) |
$89,857,361 |
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|
|
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Funding Use |
|
|
|
|
Project 835480 – Baykeeper Litigation Expenses |
$210,870 |
$400,000 |
$610,870 |
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Authorize the City Attorney to execute a Second Amendment, in substantially the same form as Attachment 1 to the report, to the Legal Services Agreement with the law firm of Stoel Rives LLP to increase the not-to-exceed amount by $400,000 for a new not-to-exceed contract amount $800,000, and approve Budget Modification No. 2 in the amount of $400,000.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
_X_ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Rebecca Moon, City Attorney
Reviewed by: Matthew Paulin, Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Draft Second Amendment to Legal Services Agreement