Question
In 2010 our City Council was contacted BY the IRS about a series of Build America Bonds that the City had received. The IRS felt that the money was spent improperly (by spending on acquiring an undeveloped parcel related to an unrelated legal settlement rather than by initiating a ”shovel ready” project). The IRS threatened to take the money back which would likely have bankrupted the City.
This was made public two years later in April 2012. During that time, the only notice on the City Council Agenda was “Significant Exposure to Litigation Pursuant to California Government Code Section 54956.9B) (1 Anticipated Case)” which reoccurred from time to time.
Since the IRS already knew about their threat of litigation and since public knowledge of this threat would not compromise the City’s ability to negotiate, wasn’t the City Council required to identify the source of the anticipated litigation and to provide the letter(s) from the IRS which raised the issue in the first place? When it was made public it was a complete surprise to the media and public.
Answer
The Brown Act at Govt. Code section 54956.9, authorizes an agency to hold a closed session to consult with counsel on a specific threat of litigation against it. When a closed session is agendized on the basis of “significant exposure to litigation,” the facts and circumstances creating the threat of litigation must be accessible to the public, that is, either listed on the agenda or announced in the open session from which the closed session is called. See California Alliance for Utility etc. Education v. City of San Diego, 56 Cal. App. 4th 1024 (1997).
This disclosure is required unless the facts and circumstances are not yet known to the likely plaintiffs. The city’s disclosure obligations are set forth in Govt Code section 54956.9(b)(3)(B) – (E) provides that:
(B) Facts and circumstances, including, but not limited to, an accident, disaster, incident, or transactional occurrence that might result in litigation against the agency and that are known to a potential plaintiff or plaintiffs, which facts or circumstances shall be publicly stated on the agenda or announced.
(C) The receipt of a claim pursuant to the Tort Claims Act or some other written communication from a potential plaintiff threatening litigation, which claim or communication shall be available for public inspection pursuant to Section 54957.5.
(D) A statement made by a person in an open and public meeting threatening litigation on a specific matter within the responsibility of the legislative body.
(E) A statement threatening litigation made by a person outside an open and public meeting on a specific matter within the responsibility of the legislative body so long as the official or employee of the local agency receiving knowledge of the threat makes a contemporaneous or other record of the statement prior to the meeting, which record shall be available for public inspection pursuant to Section 54957.5.
The records so created need not identify the alleged victim of unlawful or tortious sexual conduct or anyone making the threat on their behalf, or identify a public employee who is the alleged perpetrator of any unlawful or tortious conduct upon which a threat of litigation is based, unless the identity of the person has been publicly disclosed.
Thus the facts and circumstances should be disclosed, and the letter itself made available for inspection.
Bryan Cave LLP is general counsel for the First Amendment Coalition and responds to FAC hotline inquiries. In responding to these inquiries, we can give general information regarding open government and speech issues but cannot provide specific legal advice or representation.
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