Questions linger in wake of Hays, Donovan firing

Less than a day after the city terminated the legal team in its TCE/PCE lawsuit, the mood at City Hall was reportedly tense and there seemed to be more questions than answers on the future of the city's ongoing contamination litigation and the city's top legal position.

By a 3-2 vote, the Lodi City Council late Tuesday night fired City Attorney Randy Hays and cut relations with Envision Law Group led by attorney Michael Donovan.

Council members Emily Howard and Keith Land cast the dissenting votes.

Mayor Larry Hansen said the action was taken partly because of a culmination of years of litigation and millions in legal expenses.

Both are related to a lawsuit filed by the city in November 2000 against 15 Lodi businesses, including the News-Sentinel, with the hopes that their insurance companies would pay to clean up groundwater contamination.

"The only one who won in this was Donovan. There are no winners within the city," community activist Eileen St. Yves said in a Wednesday interview.

She has criticized the City Council for its conduct in handling the lawsuit and had even aided an effort last fall to recall all five members if they had failed to fire Hays.

On Wednesday, at least one council member said she would miss Hays, while a defense attorney cautioned that the termination was not cause for "celebration." Yet another offered compliments to the City Council members who led the cause.

Pat Patrick, president of the Chamber of Commerce, said he began to wonder about Hays' conduct at a meeting in August when Ron Bernasconi, a longtime critic of the city's lawsuit, stepped forward with a thick packet of court documents the man claimed City Council members had not received.

"I thought right then, 'If this is accurate, Randy Hays seems to have not done his job.' That was the first time I started to question our legal strategy in the hands of Hays and Donovan," Patrick said. "Since then it's been one thing after another."

He was talking about the Aug. 6 meeting in which Land unsuccessfully attempted to censure Susan Hitchcock, then mayor, and remove her from the council's top post for public comments she allegedly made regarding the city's strategy. On that night, information about the city's ongoing litigation was put under the microscope publicly for the first time.

Hitchcock, who has long been a critic of Hays and the city's legal defense, often criticizing both publicly, said the city's attorney told council members during Tuesday's meeting that the city would have run out of money if it went forward with the trial.

"It made my decision (on termination) pretty easy. They were never willing to check the compass and change the sail," she said.

Hansen, who attended Wednesday's federal court hearing in Sacramento along with Howard and Vice Mayor John Beckman, said he feels energized.

Beckman agreed, saying that the city can now focus on getting cleanup results. He is convinced Deputy City Attorney Steve Schwabauer will be able to perform the duties the City Council needs at this time.

"During the next few weeks, I don't think I'm going to be working on this full time. It will be overtime," said Hansen, who will not actually receive any money for working overtime since he is not technically a city employee.

"There will literally be hundreds of questions to answer," said the retired former police chief turned council member.

Without its regular legal representation, the city was represented in court Wednesday by Schwabauer who sat alone at a plaintiff's table which, until now, had been overflowing with lawyers led by Donovan and Hays.

Patrick said that while many questions surrounding the litigation remain unanswered, "Nonetheless, I still support our City Council. That Aug. 6 meeting was the real eye-opener for me."

Land did not return a message left Wednesday on his answering machine.

Former Mayor Phil Pennino, who was on the City Council when it entered into its agreement with Donovan, pointed out that the case has gone on for seven years.

"When we started this, we were told three to four years ... but I don't know all of the issues that have happened in the past year when I haven't been on the council," he said.

"I think all the citizens need to say a little prayer for the council members tonight because they need it."

Pennino also was on the City Council that hired Hays nearly nine years ago, but voted against his employment.

"But I said I would support him," he added Wednesday.

"I called Randy today and wished him the best of luck, and to see how he and his wife were doing.

"He was a good attorney in the areas of representing public power. ... I don't know what happened between him and the City Council."

Former Mayor Alan Nakanishi, now a state Assemblyman, had in his Capitol office Internet copies of the News-Sentinel article on the firings, according to an aide.

On Wednesday, Nakanishi said he saw Hansen two days ago and praised him for taking on what Nakanishi termed a "tough decision."

But Nakanishi said there is more information available to council members now than when he sat on the council from 1998-2002.

"I can't second guess them. They're looking at new data."

'Difficult decision'

City Hall watchdog Bob Johnson, also a columnist for the News-Sentinel, said he was anxious to see Wednesday's front page.

"The council made a very difficult decision, but it was probably the right one to make.

"Why? If you read the transcripts of the judge's comments, it was evident we were fighting a losing battle ... and it was time to reassess our situation."

On Monday, Federal Judge Frank C. Damrell Jr. blasted the city's legal strategy and described Donovan as "unprofessional."

Damrell also told the attorneys they should reconsider their entire legal strategy and gave them two days to relay his words to the council before reappearing in court Wednesday. (Council members met both Tuesday morning and evening to discuss that issue, as well as the personnel matters which led to the firings of Hays and Envision.)

Joseph Salazar, a Stockton attorney for M&P Investments, a defendant in the lawsuit, was not surprised by the City Council's decision one day earlier.

"I think the city's going to be in a better situation because it's such a bold move," he said. "They're going to get a fresh perspective.

"I have to be impressed by the leadership that's been expressed by the City Council, especially by Mayor Hansen and Susan Hitchcock. We're seeing leadership that we haven't seen in some time."

Marty Weybret, publisher of the News-Sentinel, which is a defendant in the suit, described the past path as a "tough road" and also complimented council members.

"But I think (Wednesday) we're starting to see some light at the end of the tunnel. Good judgment and sensibility is reigning," he said.

'Stopped digging the hole'

Bernasconi, who has emerged as one of the harshest critics of the city's lawsuit, said Wednesday that he was glad Hitchcock and Hansen went to court Monday to get the information straight from the judge's mouth.

Bernasconi, who was the man that stepped forward at the Aug. 6 council meeting with a pile of documents, felt that Tuesday's vote was a step in the right direction.

"At least we've stopped digging the hole," he said.

To date, the city has spent more than $23 million on legal fees and other costs related to the litigation, according to city Finance Department records.

JoAnne Mounce, a former City Council candidate and outspoken Eastside advocate, said she is happy to see "movement" within the pollution case. She has strongly supported council members seeking a second opinion regarding the city's legal strategy in the lawsuit.

"This is the appropriate step as a result of what council members found," she said, adding that she was disappointed there wasn't unity in the vote.

Howard felt the 3-2 vote didn't reflect the closed door discussion held by the full council.

Following Hansen's announcement of the firings, she told the audience of attorneys, citizens and the press that she is concerned that the outcome will have a short-term satisfaction for some and long-term heartache for the city of Lodi.

"I appreciate Mr. Hays and enjoyed working with him," Howard said Wednesday.

Beckman said Hays "is one of those rare attorneys that is actually personable and has a good sense of humor."

Moving on

Early Wednesday morning, Hays was cleaning out his office on the second floor of City Hall, according to one source. Another said his lights were on at 7 a.m.

Both, who requested not to be identified, said city staffers had been stopping by to talk to the outgoing city attorney almost as if paying their respects to someone who had died or lost a family member. The mood was gloomy, another unidentified source said.

Hays was an "at-will" employee who served at the pleasure of the council. He was one of three appointed employees -- the other two being City Clerk Susan Blackston and City Manager Dixon Flynn.

Hays' severance package includes six months full pay, according to his three-page contract signed in October 1995. The lump sum cash payment will be more than $60,000, based on his annual salary of $125,000.

Prior to coming to Lodi, Hays was apparently forced out of his position as city attorney in Redding after 15 years following criticism from community and council members there.

Around the same time Hays left, so did the city manager and the deputy city manager. Shortly thereafter, the directors of both personnel and finance also left.

Former Redding council members have declined to talk about Hays' December 1994 departure, citing a confidentiality agreement that was part of his resignation.

On Wednesday, Aaron Bowers, the Lodi attorney representing Odd Fellows Associates, one of the defendants in the contamination lawsuit, was not surprised by the council's decision to fire its attorneys.

"It was pretty clear, based on what we were reading, that council opinion had swung somewhat dramatically," he said.

"It's relatively unprecedented that you would have the sitting city attorney be fired the day before trial, as well as the outside attorneys. ... Whether it's right or wrong, no one can deny the city credit for taking decisive action.

"The termination of these lawyers is not a cause for celebration, because the fact of the matter is that lawyers come and go, but the environmental impacts on the city are still here."

News-Sentinel staff reporter Layla Bohm contributed to this report.

Contact reporter Jennifer Pearson Bonnett at jenniferb@lodinews.com.

Contact reporter Layla Bohm at layla@lodinews.com.

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Questions linger in wake of Hays, Donovan firing

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