Opposition Brief — Pacific Legal Foundation v. Kayfetz

| Buprema Court, U.S |

FILED

APR 19 1993

In the Supreme Court

OF THE

United States

No. 92-1544

OCTOBER TERM, 1992

PACIFIC LEGAL FOUNDATION,

Petitioner,

VS.

PAUL KAYFETZ; VICTOR AMOROSO; DIANA LOPEZ

FARNSWORTH; Doris ELAINE LEMIEUX; JACK BOWEN

McCLELLAN; WILLIAM NIMAN; ORVILLE SCHELL;

MARGUERITE HARRIS; JUDITH WESTON; and

BOLINAS COMMUNITY PUBLIC UTILITY DISTRICT,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE NINTH CIRCUIT COURT OF APPEALS

BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

RICHARD E.V. HARRIS*

GEORGE A. YUHAS

ORRICK, HERRINGTON & SUTCLIFFE

Old Federal Reserve Bank Building

400 Sansome Street

San Francisco, CA 94111

Telephone: (415) 392-1122

Attorneys for Respondent

Bolinas Community Public

Utility District

* Counsel of Record

{Of Counsel on inside cover]

BOWNE OF SAN FRANC. SCO NC + 343 SANSOME ST + SF CA 94104 + (415 362 2300

DaviID J. BECHT

POPELKA, ALLARD,

McGoOwAaN & JONES

633 Battery Street, Sth Floor

San Francisco, CA 94111

(415) 982-8955

Attorneys for Respondent

Victor Amoroso

PAMELA MILLS CASEY

LANGLEY, LAMBERTO &

DECKARD

2470 E] Camino Real

Suite 214

Palio Alto, CA 94306

(415) 857-1100

Attorneys for Respondent

Judith Weston

MATTHEW N. WHITE

PEAVEY & WHITE

160 Spear Street, #214

San Francisco, CA 94105

(415) 543-8800

Attorneys for Respondent

Marguerite Harris

LAURENCE F. PULGRAM, ESQ.

HOWARD, RICE, NEMEROVSKI,

CANADY, ROBERTON & FALK

Three Embarcadero, #700

San Francisco, CA 94111

(415) 434-1600

Attorneys for Respondents

Diana Lopez Farnsworth

Jack Bowen McClellan

Doris Elaine LeMieux

GARY L. GINDER

GINDER, BELKIN, FOSTER &

DOYLE

1995 University Ave., #300

Berkeley, CA 94704

(510) 548-5200

Attorneys for Respondents

Orville Schell

William Niman

PAUL KAYFETZ

P.O. Box 310

Bolinas, CA 94924

(415) 868-0480

In Propria Persona

Questions Presented

3 Whether the district court, in the exercise of its

inherent powers, may impose a limited monetary sanction

against the entity (the “public interest law firm”) employing

all of the attorneys, where the sanctionable matter permeated

years of litigation, and where the court expressly found, inter

alia, that the entity

(a) had “circulated no fewer than eleven attorneys

through the case, none appearing or withdrawing by

formal leave of court,”

(b) had “actively participated in all phases of the case”

(c) had been “the sponsor of th[e] litigation;”

(d) had represented itself “as counsel” exercising “quality

control” in litigation,

(e) had been “one of the intended beneficiaries of the

offending conduct,” and

(f) where the court further found that “in the

circumstances of this case” imposing such inherent

powers sanctions directly upon the entity was

necessary to the operations of the court.

‘& Whether a district court, which found that the

imposition of sanctions directly upon the entity employing the

attorneys was necessary to the court’s operations, has

“jurisdiction” over the entity sufficient to sanction it, where,

inter alia,

(a) the entity was expressly found to have “actively

participated in all phases of the [underlying] case;”

(b)

(Cc)

(d)

(e)

il

the entity’s attorney employees signed stipulations

filed in court expressly in the name of the entity

during the underlying litigation;

the entity’s name and logo were prominently

displayed on virtually every sheet of paper filed in

court by the entity’s attorney employees during the

underlying litigation;

the entity’s out of court statements to a party, to the

counsel for other parties, and to the public claimed

that the entity had filed the suit; and

the entity appeared and participated in the sanctions

proceedings, was expressly represented by counsel for

the entity, and the entity’s opposition papers filed

during 1988 and 1989 did not even contain the word

“jurisdiction” and the entity did not raise

“jurisdiction” as an objection at any time prior to the

Special Master’s final liability report in 1990, which

expressly confirmed that the entity (and not its clients)

Should be sanctioned.

ill

TABLE OF CONTENTS

Questions Presented ........-- +--+ eee ee reee i

STATEMENT OF THE CASE ........----+:+:> l

1. Ruckgreed kk 0 es ee l

é. Bolinas Community Public Utility

Distries CBCPUD ") ow ce 2

3. The Individual Respondents ........ 3

4. Petitioner Pacific Legal Foundation

OES. 5 as 4c 5 eee 3

3. PP "s CA oo 6 ak PEO See 4

6. The Sanctions Proceedings ......... 5

I. The Petition’s First Question Is Not Raised By

The Decisions Below: Imposing Sanctions

Directly On The PLF Was Expressly Found

To Be Necessary Under the Particular

Circumstances of This Case ..........-.-- 8

I. There is No Conflict Between The Fourth

Circuit’s Decision In Blue And The Decision

NT ee eee eee eee eee eee 11

l. Unlike Blue, no preclusive order was

enpeved Rape gw 8 kk ee 12

iV

2. Unlike Blue, the sanctionable actions

herein occurred while the attorneys

were employed by the PLF acting as

employees of the PLF ........... 12

3. Unlike Blue, the PLF sponsored and

financed the litigation herein and did

so from the outset ............. 13

Il. The Imposition Of Sanctions On The PLF

Was Neither Novel, Unprecedented, Nor

I. yc u's oe ae ee ae Oe 13

l. California charitable corporations are

regularly held responsible for the acts

of their employees 2... cece 14

> Congress has expressly recognized the

propriety and wisdom of imposing

sanctions directly upon a pro bono

legal services organization ........ 15

a The Federal tax exemption policy

regarding tax-exempt law firms like

PLF neither condones nor immunizes

abusive litigation tactics ......... 16

4. PLF itself, not the individual PLF

attorneys, would have received any

attorneys’ fees awarded in_ this

ND 6 ass WV so a ee en ee 16

5. The imposition of sanctions upon a

tax-exempt public interest law firm has

already been reviewed and approved

by the Eleventh Circuit .......... 17

Vv

6. The sanctions herein do not require

any impermissible “interference .... . 17

‘i The sanctions herein do not threaten

any legitimate public interest litigation

a ae ae a ae ee ee ee 18

8. The sanctions award is fully compatible

with the First Amendment ........ 19

9. Numerous traditional common law

principles support the District Court's

decision, which further illustrates the

absence of any novel question

requiring this Court’s attention ..... 20

10. Agency issues involving non-profit

entities do not require this Court’s

attention because they involve “settled

rules” which have already been

adequately addressed in previous

RE OC he ad ate ate aces 21

The Petition’s Second Question Is Not Raised

By The Decisions Below: The PLF Appeared,

Did Not Contest “Jn Personam Jurisdiction”

From The Outset, And Was Not Outside The

CE I oo oa Gn ge kbd. Chae ae 22

¥ The District Court expressly found that

PLF had participated in the underlying

PPT eee ee eee Ce 22

vi

Z. The Ninth Circuit expressly affirmed

the findings regarding the PLF’s

participation in the underlying

I ae eg eer are 23

a The PLF also appeared and

participated in the sanctions

proceedings without’ raising or

a

preserving an in personam

jurisdiction” objection .......... 24

4. Imposing sanctions on the PLF was not

“in direct conflict” with this court’s

decision in Zenith v. Hazeltine ..... 26

5. Imposing sanctions on the PLF was

also not in conflict with the Seventh

Circuit’s decision in Panther Pumps .. 26

CRGEIEE 6 Ne 5 hb oe ee 28

Po ae ere re ee ae ee oe

RE a Oe es vo ee ee ee O-1

SP as nk ace a ee ee ee P-1

PE Es ne ek ee ee ee ee Q-1

EE Ty eae ea es ane R-1

Vil

TABLE OF AUTHORITIES

CASES

Allard v. Church of Scientology, 58 Cal. App. 3d

439, 129 Cal.Rptr. 797 (1976) ............ 15

Avirgan v. Hull, 932 F.2d 1572 (11th Cir. 1991),

cert. denied, 112 S.Ct. 913 (1992) .......... 17

Blue v. Department of the Army, 914 F.2d 525

CO GE, TONE vk ek ee hee ews 11, 12, 13, 18

Claiborne v. NAACP, 458 U.S. 886 (1982) ....... 21

Cohen v. Cowles Media, 111 S.Ct. 2513 (1991) .... 19

Continued Casualty Co. v. Phoenix Construction Co.,

46 Cal. 2d 423, 296 P. 2d 801 (1956)........ 11

Gilbert et al. v. State of California et al.,

No. 636481-0 (Nov. 22, 1991) ............. 3

Gilbert v. State 7f California, 218 Cal. App. 3d

Se ME oe oe oe ee te we es 3

Hazeltine Research, Inc. v. Zenith Radio

Corporation, 388 F.2d 25 (7th Cir. 1967) ..... 26

Hydrolevel vy. American Society of Engineers, 456

es Dk. Oe eee 4 ees eee 21

In Re Primus, 436 U.S. 412 (1978) ............ 19

Malloy v. Fong, 37 Cal.2d 356, 232 P.2d 241 (1951) . 15

Miller v. International Church, 225 Cal. App. 2d

243, 37 Cal. Rptr. 309 (1964) ............ 15

NAACP vy. Button, 371 U.S. 415 (1962) ......... 19

Panther Pumps & Equipment Co. v. Hydrocraft, Inc.,

~ ew Fee Le As: 26

Phoenix Assur. Co. v. Salvation Army, 83 Cal. App.

aD, Ze. ROMERO) 6 6 ek ie ee es 15

Rice v. California Lutheran Hospital, 27 Cal. 2d

ye eG ts .) 15

Silva v. Providence Hospital of Oakland, 14 Cal. 2d

Pee, OF ee TPE RD is ee a ewe wea 15

Vili

Valentine v. La Societe Francaise De Bienfaisance

Mutuelle De Los Angeles, 76 Cal. App. 2d 1, 172

a Se EE 5 Oe eine bare ae eee 8 15

Vind v. Asamblea Apostolica De La Fe En Christo

Jesus, 148 Cal. App. 2d 597, 307 P.2d 85 (1957) 15

Zenith Corp. v. Hazeltine, 395 U.S. 100 (1968) .... 26

STATUTES

Califormia Labor Code § 2802 ... 2... cc cece eas 11

Coleraes BAe COGe 6 aeee wk ew 1]

California Corporation Code § 5238 ............ 11

Oe Be a ee a ek a eae ds 10

Oe Ws © OPPO ee ewe we ew eee 15, 18

OTHER

ee ees ss ae a ae es 10

Restatement of Torts (Second), § 886B,

Sg SER a ener a ee 11

Restatement of Agency (Second) § 7, p. 28 (1958) ... 20

Restatement of Agency (Second) § 8, p. 30 (1958) ... 20

Restatement of Agency (Second) § 8A, p. 36 (1958) .. 21

ev. Pee. Finds, THT OLB. SG wk 16

Rev. Proc. 75-13, 1975 C.B. G62 .......... 16, 23

STATEMENT OF THE CASE

1. Background. These sanctions arose out of litigation filed

by the Pacific Legal Foundation (“PLF”) in 1982 against

Bolinas Community Public Utility District (“BCPUD”), a

small semi-rural district, and against numerous present and

former directors and private citizens who had participated in

civic affairs. Clerk’s Record (hereinafter “CR”) 1. The

complaint included a plethora of purported antitrust and

constitutional claims, which the Court quickly recognized

“were supported by little more than overbroad, legally

conclusory allegations that fail[ed] to adequately identify their

legal or factual bases.” See, e.g., C-20-22.' The damages

sought -- more than $30 million plus attorneys’ fees (over

100 times the operating budget of BCPUD) -- were also

sought personally from the individual defendants, who were

sued in their personal capacities (as well as any official

capacity they might have or they might ever have had during

a period extending back more than a decade). CR 1; C-17,

C-34.

Recognizing early that the mere pendency of the

litigation could have a potentially chilling impact on

defendants’ exercise of their First Amendment rights, the

District Court directed that certain information be provided

in an amended complaint. C-20-22. Despite the District

Court’s order, and despite its other warnings and expressions

of concern regarding the potentially chilling impact of this

type of litigation, the additional information was not

provided. C-26.

' Petitioner’s Appendix "C". Citations to Petitioner’s

Appendices "A" through "M" will be in this form, as will citations

to Respondent’s Appendices "N" through "S" (which are at the end

of this opposition).

2

Instead, the amended complaint expanded the number

of vague claims and added still more parties. After

reviewing the circumstances of this case, the Special Master

concluded during the sanctions proceedings, as did the

District Court Judge, that this refusal to comply with the

Court’s order had been in bad faith.

It was but one of several specific situations involving

bad faith litigation conduct where PLF had

attempted to contort what could have been a relatively

Straightforward case into a massive, complex,

conceptually dense, expensive litigation, and, along

the way, persisted in pursuing theories . . . for which

there was no credible factual support.

E-9.

2. Bolinas Community Public Utility District (“BCPUD”).

BCPUD is a small public utility district in western Marin

County. Formed in 1967, BCPUD operates a water system

inherited from two even smaller districts; it provides water

services to approximately 580 water meter connections. In

1977 BCPUD enacted a moratorium on water hookups to its

systems, which was in effect when this action was filed.

(Previous moratorium resolutions, enacted in 1971 and 1973,

were repealed in 1977. CR 384, Exh. A.) In 1982 the

California Department of Health Services (“DOHS”)

expressly conditioned BCPUD’s operating permit on a

continuation of the BCPUD moratorium on new hookups,

although BCPUD had made significant improvements to the

system. See CR 350, Exh. D (DOHS Engineering Rptr.,

Aug. 1982) (“Due to the limited storage capacity and the

many leaks in the aged distribution system, it is not possible

for the system to support additional connections at this

time.”). The DOHS imposed this condition on BCPUD’s

3

operating permit prior to the filing of this litigation. The

DOHS condition has been upheld by the state courts in other

PLF litigation involving the parties herein, see Gilbert v.

State of California, 218 Cal. App. 3d 234 (1990), as has the

BCPUD moratorium, which the state court found to have

been “justified from its inception”. Gilbert et al. v. State of

California et al., No. 636481-0 (Nov. 22, 1991).’

3. The Individual Respondents. The nine individual

respondents include three current BCPUD board members

(Kayfetz, Amoroso and McClellan) and six former board

members (Niman, Schell, Harris, Weston, LeMieux and

Farnsworth). They were among the more than twenty

individual defendants who were sued personally for more

than $30 million in this litigation. Several respondents,

unable to secure representation, appeared in propria persona

during parts of the litigation.

4. Petitioner Pacific Legal Foundation (“PLF”). PLF

generally describes itself to the federal and _ state

governments, the legal community and the public as a “public

2 The final state court decision upholding the BCPUD

moratorium concluded that (a) "there is a solid factual basis for

declaring a water shortage emergency” and (b) “the moratorium has

been justified from its inception to the present based upon realistic

concerns . . . about the capacity of the District’s water system to meet

conservative demands in times of continuing drought, particularly

given the marginal capacity not only of the storage system, but the

delivery system, as well." R-1-4. Ignoring the final, binding decision

about the moratorium, the petition points to an earlier preliminary

decision of the Ninth Circuit which reversed part of an earlier

summary judgment as to certain claims, none of which affected the

bases of the District Court's sanctions. Moreover, the Ninth Circuit’s

decision "at this preliminary stage" reflected an express preference for

"(rjesolution by plenary hearing rather than by summary

judgment . . . [in] claims for regulatory taking." H-8-9.

4

interest law firm.” See, e.g., C-35; O-3-7, 10; and CR 537,

Exhs. A, B, D. It claims to be the largest law firm of its

type in the country. O-3-7, 10; CR 500, Exhs. I, J; see also

Q-3, 42 (PLF revenues during this litigation). The PLF’s

President, CEO and Board Member (and the senior PLF

attorney in this litigation) has said of this case: “The PLF

filed suit” against BCPUD. The case was “brought by the

PLF.” It was “[ojne of the most significant PLF law suits.”

“This case will be an extremely important one for PLF.”

C-33-34. It was, he said, “The case we have been waiting

for.” O-6-7; CR 536, Exh. C. The District Court found

that “PLF has circulated no fewer than eleven attorneys

through this case.” C-34. The PLF’s CEO was also joined

on this case by the PLF’s Deputy Director and a PLF Section

Chief. See CR 500, Exhs. G, I, J; CR 1 & CR 168; CR

249; and CR 607, Tab 40. “Plaintiffs have been represented

throughout this action only by PLF attorneys.” C-34, 439.

“PLF was. . . actively involved in all phases of the case.”

C-33. 436.

5. PLF’s Clients.’ PLF’s clients in this litigation were

real estate developers, Anton Holter and Mesa Ranch (his

partnership) and the Lockarys, Gilberts and Macey.

Holter/Mesa Ranch owned 210 acres. All was outside

BCPUD boundaries, except one acre with a water meter.

Contrary to the petition’s suggestion (Pet 3), Holter/Mesa

Ranch were not seeking a water hookup; Holter already had

one and was receiving water from BCPUD. See C-14-15, 4

5. The other plaintiffs owned small, unimproved lots within

BCPUD’s boundaries without water meters. The Lockarys

and Macey bought their land just before the litigation with

> The PLF refers to a person represented by PLF attorneys

as a "client" of the entity. C-35, { 40.

5

full awareness of the existing moratorium. C-14, & C-26.*

6. The Sanctions Proceedings. BCPUD and the

individual defendants filed motions for sanctions and

attorneys’ fees in February 1988. CR 472, CR 480-503.

The District Court Judge directed that the motion be referred

initially to a special master. CR 528. United States

Magistrate Judge Wayne D. Brazil, an agreed-upon

candidate, acted as Special Master. CR 543.

Additional briefing of sanctions issues for the Special

Master was completed in early March 1989. At a conference

on March 14, 1989, the Special Master noted shortcomings

in the responses and submissions of PLF and the plaintiffs;

he then provided them yet another opportunity to file papers.

Leaving the choice up to them, he also offered the

opportunity to present testimony through affidavits, or live at

an evidentiary hearing (an option they declined). At the

March 14 conference, the Special Master prompted sua

sponte a special discussion of the First Amendment. He also

provided a separate briefing opportunity to address

specifically “what, if any, significance arises in the context

of these proceedings due to the nature of PLF as a non-

profit, public interest law firm.” CR 599, 44. PLF filed a

brief on this issue (CR 616), to which defendants responded.

CR 631-32.

‘Contrary to the petition’s suggestion (Pet 2), plaintiffs were

not simply “parties who could not otherwise afford to present their

claims in court." The developer plaintiffs (Holter/Mesa Ranch) used

private counsel when suing the United States, an adversary far more

formidable than tiny BCPUD, in contemporaneous litigation for taking

the same property. See, e.g., 222 Ct. Cl. 623 (1980) & 2 Cl. Ct. 700

(1983).

6

A draft recommendation was filed by the Special

Master in early September 1989. CR 634. After receiving

comments from BCPUD, PLF and Holter/Mesa Ranch, the

Special Master filed a Report and Recommendation re:

Liability Aspects of Defendants Motions for Sanctions on

January 11, 1990. C-1-106. The 103-page report contained

detailed findings, including multiple findings of bad faith, as

well as a finding that PLF had “abundant” notice of the

sanctions risk from the beginning, that PLF had “actively

participated in all aspects of the case,” and that “in every

meaningful sense of the word, PLF shared responsibility for

the bad faith actions.” The report also found that the District

Court needed and possessed the inherent powers authority to

sanction the PLF itself, and, with respect to certain identified

matters, but not others, it recommended that sanctions be

imposed on the PLF.

FiLF filed objections on January 29. CR 648. A

review followed. by the District Court Judge, who had

handled the underlying action since its filing in 1982. On

April 2, the Court adopted the findings of fact and

conclusions of law and accepted the recommendations in the

Special Master’s report. S-1-2. The Court additionally

found that the “circumstances of this case clearly support”

the imposition of monetary sanctions on PLF.

Following the District Court’s April 2 order, the

Special Master conducted further proceedings to determine

the amount of the sanctions. On January 28, 1991, the

Special Master issued his Recommendation re Character and

Magnitude of Sanctions. E-1-105. The report further

addressed considerations that shaped the sanctions

recommendation, general mechanics of the calculations, and

7

specific calculations for each defendant. Id.° PLF filed

objections. CR 741. On February 11, 1991 the District

Court adopted the Special Master’s recommendations and

awarded the sanctions. CR 743. On September 9, 1992, the

Ninth Circuit affirmed in part and reversed in part the

sanctions award. A-1-32.

5 The Special Master’s January 11, 1990, report had also

recommended additional show cause proceedings with respect to

potential personal liability of certain individual PLF attorneys for

sanctions, and the District Court’s April 2 order accepted the

recommendation. Pursuant to the briefing schedule established at the

June 21 conference, briefs for the individual PLF attorneys were filed

on July 23 (CR 671 & CR 674), with responses and replies on

August 17 (CR 688-89 & CR 692-93) and August 30 and 31 (CR 694-

702). On October 22, the Special Master recommended that the

proceedings regarding the amount of the PLF sanctions continue but

that those regarding personal sanctions awards be terminated. CR

710. Despite believing that he could proceed with “an open,

persuadable mind" in considering personal sanctions awards against

individual PLF attorneys, the Special Master observed that the way

the findings had been articulated in the January 1990 liability report

might suggest otherwise. The Court accepted the Special Master’s

recommendation, noting expressly that (i) “the expenditure of time

and effort to further adjudicate these issues is not outweighed by any

benefit that might accrue from the continued adjudication” (ii) the

proceedings may already “have given counsel an opportunity to reflect

upon their conduct in this case” which “may be helpful to counsel in

their future practice” and (iii) the Special Master was to be

commended “for the thorough and fair assessment of the sanctions

issues.” CR 711 (emphasis supplied).

8

| a The Petition’s First Question Is Not Raised By The

Decisions Below: Imposing Sanctions Directly On

The PLF Was Expressly Found To Be Necessary

Under The Particular Circumstances Of This Case

The Petition notes that inherent power sanctions may

not be imposed “absent a determination that the exercise of

sue h power is necessary to the courts’ operation” (Pet 8) but

then states, inaccurately, that no court here found that the

imposition of sanctions was “necessary to protect the district

court’s authority.” Pet 11.

The District Court herein was keenly aware of the

care, caution and restraint appropriate to the exercise of its

inherent powers. See, e.g., C-36-38; E-2-12; see also CR

634 at 60-62. Sanctions were imposed only after a District

Court Judge, intimately familiar with the litigation since its

filing in 1982, and an agreed-upon Special Master, previously

unfamiliar with the litigation, each found that sanctions were

appropriate and that imposing those sanctions upon the PLF

was both appropriate and necessary under the particular

circumstances of this litigation.°

Necessity was directly addressed and ruled on by the

District Court. For example, the court found:

° The PLF “appeared before the district court to defend against

the sanctions motions" (Pet 13) and had a full opportunity to respond

to them. See, e.g., CR 599 (Special Master sua sponte (a) provided

PLF and others a third opportunity to submit additional evidence in

response to sanctions motions, (b) requested briefing whether PLF’s

status as public interest law firm raised any special First Amendment

issues, and (c) provided the PLF an opportunity to review and

comment on an initial draft report.)

—

9

In the circumstances of this case, which we describe

in detail infra, we feel that the District Court must

have the authority to impose sanctions on PLF itself

if the Court is to be able to protect itself from

misuse, to protect the interests of litigants who

proceed in good faith, and to protect the viability of

the rules of procedure that Congress and the

Supreme Court have adopted. In every meaningful

sense of the word, PLF shared responsibility for the

bad faith actions that we describe below. As we

show in subsequent sections, PLF was the source, the

sponsor, and one of the intended beneficiaries of the

offending conduct. There is no reason to believe that

PLF did not know how this litigation was being

handled, or that PLF was a mere passive and abstract

institutional backdrop against which an individual

attorney acted independently. Instead, PLF’s

principal officers formally associated themselves with

and publicly claimed credit for the pleadings and

other papers that we have concluded were filed in bad

faith. Moreover, because PLF circulated at least 11

different attorneys through this case (without ever

seeking permission for any attorney to join or to

withdraw as counsel of record), it would be

impossible for the District Court to meaningfully

enforce the norms that Congress and the Supreme

Court have established if the Court could not impose

liability for offending those norms on PLF itself.

These norms carry a promise of procedural fairness

that the courts could not fulfill if they could not

impose sanctions on an entity like PLF in

circumstances like those described in the pages that

follow. Thus we recommend that, relying on its

inherent authority, the Court impose sanctions on

PLF.

10

C-8-9 (Emphasis supplied.); see S-1-2 (District Court

adoption of findings). These findings of necessity were well-

supported by the record.’

Moreover, Rule 11 of the Federal Rules of Civil

Procedure (“Rule 11”) and 28 U.S.C. § 1927 (“Section

1927”), to the extent applicable to the individual PLF

attorneys, were expressly considered, and proceedings were

undertaken to employ them. See, e.g., C-9-10, C-105-106,

E-1-2. Considerations of overall fairness, not lack of

culpability, resulted in those proceedings terminating without

individual monetary sanctions awards. See, e.g., F-1-2 &

note 5, supra, see also A-9, nl. Although that process did

not result in monetary sanctions being imposed separately on

individual PLF attorneys, the PLF has no cause to

complain.* Under the particular circumstances of this

7 See e.g. C-60-61 & n.25 (an example of bad faith conduct

extending “throughout the course of this litigation”; six attorneys

identified on the papers; “difficult .. to point to the specific PLF

attorneys responsible”), C-92-95 (continued impact of “no

meaningfu! effort to comply with Judge Wili:ams’ order”) & F-1 2

(district court order: sanctions proceedings attempting to alloca

responsibility among individual PLF attorneys terminated;

“continuation ... may harm individual attorneys not at fault, and the

expenditure of time and effort to further adjudicate these issues is not

outweighed by any benefit that might accrue from the continued

adjiidication”; “past process ... [has] given counsel an opportunity to

reflect upon their conduct in this case and highlighted improper

behavior ... and may be helpful to counsel in their future practice”;

"PLF sanctions proceedings not terminated.”)

* Significantly, PLF did not object at any time to termination

of the sanctions proceedings against the individual PLF attorney

employees, and it did not appeal the District Court’s decision to

terminate those proceedings. See note 5, sopra. If anyone had cause

to complain, it would have been the defendants. See, e.g., A-9, nl.

11

litigation, Rule 11 and Section 1927 were found to be

inadequate to protect the Court “from misuse,” “the interests

of litigants” and “the viability of the rules of procedure.”

Fulfilling the “promise of procedural fairness” required use

of the court’s inherent powers.

The petition’s first question assumes “the absence of

any determination” that invocation of the court’s inherent

powers was necessary. Such a determination was made.

Thus, the first question is not presented, and the petition

should be denied.

I. There Is No Conflict Between The Fourth Circuit’s

Decision In Blue And The Decision Herein.

The petition claims that the decision herein is in

“conflict with the decision of the Fourth Circuit in Blue v.

Department of the Army, 914 F.2d 525 (4th Cir. 1990).” Pet

12. In attempting to manufacture a conflict, the petition has

ignored both the facts of Blue and the facts herein. No such

conflict exists, as a brief comparison of the two cases readily

confirms. For example:

Moreover, as the corporate employer, PLF remained free to explore

indemnification, if indemnification was appropriate. See, e.g., Cal.

Labor Code §§ 2802, 2865, Cal. Corp. Code § 5238. See, also,

Continued Casualty Co. v. Phoenix Construction Co. , 46 Cai. 2d 423,

428 296 P. 2d 801 (1956) (An employer who has been held liable for

the unauthorized negligent act of his employee may recoup his loss in

an action against the employee), and Restatement (Second) of Torts

§ 886B, p. 344 (1977). The PLF’s current objections are simply

another attempt to secure practical immunity for the sanctionable

conduct.

——————————

12

1. Unlike Blue, no preclusive order was entered

herein. In Blue, the District Court’s sanctions order

prohibited the NAACP Lega! Defense Fund (LDF) from

paying the sanctions imposed on an attorney. The order

there was clearly preclusive. No preclusive order was

entered herein; the sanctions were imposed on the entity

without any effort to restrict its financial sources or to

preclude internal allocations of responsibility within the

organization. Moreover, the record below demonstrates

appropriate sensitivity to such issues. See, e.g., CR 565

(BCPUD suggested that, if desired by PLF, any sanctions

order could expressly preserve any rights-to contribution that

PLF might have.). The absence of a preclusive order is but

one fatal flaw in the claimed conflict.

2. Unlike Blue, the sanctionable actions herein

occurred while the attorneys were employed by the PLF

acting as employees of the PLF. The situation was very

different in Blue. One of the attorneys sanctioned

(Chambers) happened to be employed by LDF when the

sanctions were imposed, and he was sanctioned for conduct

unrelated to his LDF employment. The sanctionable conduct

was related to his private law practice. See Blue, supra at

531-32.? In Blue the sanctionable litigation had been

° The pre-filing investigation by Chambers’ private law firm

began in the spring of 1980. The action was filed in September 1981.

The junior associate, Sumter, joined the law firm in January 1983,

and trial began January 1984. With Sumter acting as counsel, Blue

abandoned numerous claims. The U.S. Army moved for sanctions

regarding the “abandoned claims,” and the “remainder of Blue’s

claims went to trial in April 1984." In 1987 the court “awarded

sanctions based on the abandoned claims". The “claims which Blue

... had dropped were frivolous, ... both plaintiffs and their counsel

had either entered into or maintained the baseless litigation in bad

faith.” The sanctions for the bad faith pursuit of the frivolous claims,

which were dropped in April 1984, were unrelated to LDF, because,

13

investigated, filed and handled by attorneys at the private law

firm acting as such, and Chambers was sanctioned in his

private law firm role. Id. at 546 (“as an experienced senior

partner in charge of the case from its outset”). The PLF’s

relationship herein stands in sharp contrast to the LDF’s in

Blue. “PLF circulated no fewer than eleven attorneys

through this case,” and the plaintiffs were “represented

throughout ... only by PLF attorneys.” C-34, { 39.

3. Unlike Blue, the PLF sponsored and financed the

litigation herein and did so from the outset. Nothing in Blue

supports the petition’s suggestion that the LDF “financed the

litigation” (see Pet 12) or that the Fourth Circuit’s opinion

creates a conflict over a district court’s “authority to make

distributional judgments as between attorneys and non-parties

who fund their litigation activities.” Pet 13. In addition to

there being no such preclusive order here, the precluded

entity in Blue had not financed the litigation in which the

sanctionable conduct occurred. Sanctions must be adapted to

the circumstances of the case. Blue and PLF are materially

different. Here, PLF was the “sponsor of the litigation,”

“was actively involved in all phases of the case,” and

represented that it “exercises ‘quality control’ in litigation.”

Its president, the senior PLF attorney on the case, asserted

not only that “[t]he PLF filed suit,” but also that this “PLF

suit ...[would be] an extremely important one for PLF”. See

C-33-35.

No conflict exists between the decision herein and the

Fourth Circuit’s decision in Blue. If anything, Blue provides

additional support for denying the petition. See JII. 7.

inter alia, it was not until “July 1984” that Chambers assumed his

position at LDF. Jd. at 532.

id

Ill. The Imposition of Sanctions On The PLF Was

Neither Novel, Unprecedented, Nor Inappropriate.

During sanctions proceedings, the PLF itself

appeared, was represented by counsel and enjoyed multiple

Opportunities to present evidence after knowing that

defendants had requested that, inter alia, sanctions should be

imposed on the PLF itself. The factual findings adopted by

the District Court by its April 2, 1990, order included: (i)

PLF circulated eleven attorneys through the case (C-9); (ii)

“deliberate” bad faith conduct “extended throughout the

course of the litigation” including instances where more than

half the PLF attorneys were involved (C-60 & C-56-61); (iii)

PLF was “the source, sponsor and one of the intended

beneficiaries of ithe offending conduct” (C-8); (iv) PLF

shared responsibility “in every meaningful sense of the

word,” (C-8) and (v) express findings of necessity that, under

the circumstances of this case, the District Court “must have

the authority to impose sanctions on the PLF itself” to

protect the “court from misuse,” to protect the “viability of

the rules of procedures,” and to “protect litigants who

proceed in good faith”. C-8.

These factual findings, and the extensive record

supporting them, show that imposing sanctions upon the PLF

itself was appropriate under the circumstances of this

litigation. It is important, however, to appreciate that

holding such an entity responsible for the acts of its

employees is not novel, and the decision to do so presents no

new policy issue or significant question requiring this Court’s

attention.

1. California charitable corporations are regularly

held responsible for the acts of their employees. PLF is a

California non-profit corporation. Such organizations are

regularly held accountable for the misconduct of the entity

15

and of the entity’s employees or other agents. PLF has no

reasonable basis for expecting the sanctions immunity which

it continues to seek.'°

2. Congress has expressly recognized the propriety

and wisdom of imposing sanctions directly upon a pro bono

legal services organization. The petition suggests that

holding the PLF responsible is both novel and bad policy. It

is not, as Congress itself has already recognized. See, e.g.,

42 U.S.C. § 2996e (f) (Legal Services Corporation: Costs

10 See, e.g., Malloy v. Fong, 37 Cal.2d 356, 232 P.2d 241, 247

(1951) (“‘The incorporated charity should respond to private

individuals, business corporations and others, when it does good ina

wrong way.’”); Rice v. California Lutheran Hospital, 27 Cal. 2d 296,

163 P.2d 860 (1945) (non-profit hospital liable for professional

employee’s negligence); Miller v. International Church, 225 Cal.

App. 2d 243, 37 Cal. Rptr. 309 (1964) (church held liable for

negligence of minister); Vind v. Asamblea Apostolica De La Fe En

Christo Jesus, 148 Cal. App. 2d 597, 307 P.2d 85 (1957) (church

liable for employee’s negligence); Phoenix Assur. Co. v. Salvation

Army, 83 Cal. App. 455, 461-62 256 P. 1106 (1927) (rejected

immunity because it would cause "the agents of charitable institutions

to render less than due care"); Valentine v. La Societe Francaise De

Bienfaisance Mutuelle De Los Angeles, 76 Cal. App. 2d 1, 172 P.2d

359 (1946) (hospital liable for employees’ negligence); see also Allard

v. Church of Scientology, 58 Cal. App. 3d 439, 129 Cal.Rptr. 797

(1976) (church liable for both punitive damages and compensatory

damages caused by church employee’s statements; "egregious case of

malicious prosecution subjects the judicial system itself to abuse,

thereby interfering with the constitutional rights of all litigants") and

Silva v. Providence Hospital of Oakland, 14 Cal. 2d 762, 97 P.2d 798

(1939) ("To require an injured individual to forego compensation for

harm when he is otherwise entitled thereto, because the injury was

committed by the servants of a charity, is to require him to make an

unreasonable contribution to the charity, against his will, and a rule

of law imposing such burdens cannot be regarded as socially desirable

nor consistent with sound policy").

16

and fees imposed in action commenced or pursued for

harassment purpose or involving abuse of legal process “shal!

be paid by the Corporation.”) California has also recognized

that holding charitable corporations responsible financially is

good public policy. See, e.g., supra, note 10.

3. The Federal tax exemption policy regarding tax-

exempt law firms like PLF neither condones nor immunizes

abusive litigation tactics. In both courts below, the PLF

asserted its tax-exempt status as if it somehow should confer

upon the PLF some immunity from court-awarded sanctions.

It does not. If anything, the PLF’s tax-exempt status imposes

upon it additional obligations to ensure that litigation abuse

does not occur. See, e.g., Rev. Proc. 71-39, 1971 C.B. 565

(Requirement: The organization does not attempt to achieve

its objectives through a program of disruption of the judicial

system, illegal activity, or violation of the applicable canons

of ethics.)

4. PLF itself, not the individual PLF attorneys, would

have received any attorneys’ fees awarded in this litigation.

This litigation was authorized by the PLF. The complaints

expressly sought attorneys’ fees. See, e.g., CR 1, (complaint

sought statutorily authorized attorneys’ fees.). The attorneys’

fees, however, could not properly have gone to the individual

attomneys. See Rev. Proc. 75-13, 1975 C.B. 662 (attorneys’

fees received by public interest law firms go “to the

organization rather than to individual staff attorneys.”); see

also CR 500 (IRS Form 990, Part IV, schedule 7: PLF’s

receipt of “court-awarded attorneys’ fees”). Since the PLF

was the potential beneficiary of any attorneys’ fees awarded,

equity also supports imposition on the PLF of the modest

sanction which partially reimbursed defendants for some of

the additional attorneys’ fee burdens caused by the

sanctionable conduct.

17

5. The imposition of sanctions upon a tax-exempt

public interest law firm has already been reviewed and

approved by the Eleventh Circuit. The Ninth Circuit’s

decision approving the imposition of sanctions upon the PLF

was not the first circuit court to approve a sanctions award

against a tax-exempt, public interest law firm. See A-14

(“We agree with the Eleventh Circuit that ‘[s]tatus as a

public interest law firm or the nature of a claim does not

confer immunity from attorneys’ fees for bringing and

maintaining frivolous lawsuits.”) In Avirgan v. Hull, 932

F.2d 1572, 1582-83 (11th Cir. 1991), cert. denied, 112

S.Ct. 913 (1992) a sanction of more than $1 million was

affirmed. The sanction herein was modest and only a small

fraction of PLF revenues. See also Q-3 (PLF revenues

exceeded $25 million from the filing of the complaint to

sanctions determination) & CR 500, Exh. A; N-3 (BCPUD’s

entire annual operating budget when sued herein for $30

million was approximately $280 thousand).

6. The sanctions herein do not require any

impermissible “interference.” The petition’s “interference”

point is a red herring. First, the PLF has long touted itself

as exercising “‘quality control’ in litigation.” -35, {40

(finding); C-61 (“self professed ‘quality control’ monitor

over the litigation”); see also CR 676, {4 9-11. Second, no

evidence offered by the PLF even suggested that the PLF’s

management wanted the PLF attorney employees to behave

differently but were afraid to “interfere.” Third, the PLF

management had actual control all along, so no

“interference” was needed. Throughout the litigation, the

PLF’s CEO, a PLF Board Member, was the senior attorney

of record, aided herein by the PLF’s Deputy Director and a

18

PLF Section Chief.'' Fourth, as Congress expressly

recognized, prohibiting inappropriate interference need not

prevent ensuring professionalism of the highest degree.’

7. The sanctions herein do not threaten any legitimate

public interest litigation activity. Contrary to the petition’s

suggestion, the decision herein will not cause the decline of

public interest litigation. Pet 18. First, public interest

litigation does not require immunity from sanctions for bad

faith litigation conduct. See, e.g, Blue v. Department of the

Army, 914 F.2d 525 (4th Cir. 1990) (Sanctions affirmed;

distinguished civil rights attorney held responsible for

conduct of subordinates: “The authority which the federal

courts possess, an authority often summoned to the side of

racial justice is ... built upon respect for the judicial process.

That authority cannot, in the long run, be effectively invoked

on behalf of civil rights enforcement if civil rights litigants

could themselves disregard it with impunity.”) Second, the

decisions herein reflect consideration and sensitivity towards

public interest litigation, further demonstrating the judicial

caution and restraint employed here, as well as the absence

'' See, e.g., Appellees’ Brief on Appeal, p.23 n15 (linking

names to PLF reports identifying management positions); CR 500,

Exh. G, I & J; C-18-19, & CR 607, Tab 40 (state court litigation

harassing BCPUD; another PLF Section Chief at trial level where

state court found case “clearly frivolous,” “brought to harass the

District” and “for an improper motive”; PLF CEO and PLF Deputy

Director were also on the meritless appeal for which the appellate

court awarded additional fees).

12

See, e.g., 42 U.S.C. § 2996e (h)(3) (Legal Services

Corporation: “ensur[ing]” compliance with professional

responsibilities and not “interfer[ing] with carrying out professional

responsibilities both mandated in same section)

19

of any threat. The district court itself observed herein:

“No litigant should be penalized for a good faith,

straightforward effort to extend, modify, or reverse

the course of the law. Reasonable people may

disagree about what the law is or ought to be, and it

is imperative to the vitality of our democracy that

individuals be afforded fair opportunities to try to

persuade those who fix the terms of the law to change

them. If PLF had engaged in a straightforward effort

to change the law, there would be no occasion for

these sanctions proceedings. That is not the course,

however, that PLF chose to pursue.”

E-8-9; see also -1 & DA-14.

8. The sanctions award is fully compatible with the

First Amendment. In the courts below, the PLF also tried to

avoid responsibility by claiming that it had some type of First

Amendment immunity from sanctions. Although PLF has

abandoned that argument, the petition closes by citing the

same two cases on which it had relied, NAACP v. Button,

371 U.S. 415, 431 (1962) and In re Primus, 436 U.S. 412,

428 (1978), neither of which supported immunity from

sanctions for litigation misconduct. See A-14 (Ninth Circuit:

Cases cited by PLF do not support the “PLF’s position that

abuse of the court system is constitutionally protected when

a public interest law organization is the perpetrator.”); see

also Appellee’s Brief on Appeal, p.33, n.26; cf Cohen v.

Cowles Media, 111 S.Ct. 2513, 2518 (1991) (“generally

applicable laws do not offend the First Amendment simply

because their enforcement against the press has some

incidental effects on its ability to gather and report the

news”; “‘publisher of a newspaper has no special immunity

from the application of the general laws. He has no special

privilege to invade the rights and liberties of others.’”).

20

9. Numerous traditional common law principles

support the District Court’s decision, which further illustrates

the absence of any novel question requiring this Court’s

attention. The PLF is a corporation and, as such, can only

act through its agents. Even without the District Court’s

express findings of responsibility and of active participation,

traditional principles of agency would adequately support the

District Court’s decision. Here, the senior attorney was the

PLF’s CEO, and the PLF’s Deputy Director was also

involved. Here, the PLF paid the “improper motive” and

“harassment” sanctions for other litigation against BCPUD

which had been supervised by a PLF Section Chief and,

following the sanctions award, promoted him to PLF

Director of Litigation. See, supra, note 11 and compare CR

500, Exh. I with CR 500, Exh. J. Both actual authority and

apparent authority were reasonable inferences.'? In addition

to the principles of actual authority, apparent authority, and

-estoppel,'* there is the doctrine of “inherent agency power”

which is power derived “solely from the agency relation and

exists for the protection of persons harmed by or dealing with

‘9 See, e.g., Restatement of Agency (Second), § 7, p. 28 (1958)

(“Actual Authority”), Comment b (“agent’s conduct is authorized if

he is reasonable in drawing an inference that the principle intended

him so to act although that was not the principle’s intent”);

Comment c (“most authority is created by implication”); & § 8, p. 30

(“Apparent Authority”), Comment a (“manifestation of the

principle . . . or by continuously employing the agent”), Comment c

(“to the extent that it is reasonable to believe that the agent is

authorized”).

'* PLF attorneys signed in the PLF’s name; the PLF told

everyone that it was a “law firm”; and one PLF attorney making an

application in the PLF’s name wrote BCPUD that "PLF is the

attorney for the plaintiffs in Lockary”. See O-8-10; P-4; Q-4-14.

Dt seach a ae Ss

21

a servant or other agent.”

10. Agency issues involving non-profit entities do

not require this Court’s attention because they involve

“settled rules” which have already been adequately addressed

in previous decisions. The responsibility of non-profit

organizations for the acts of their employees acting under

colorable authority is not a new question. See, e.g.,

Claiborne v. NAACP, 458 U.S. 886, 930 (1982) (“The

NAACP -- like any other organization -- of course may be

held responsible for the acts of its agents throughout the

country that are undertaken within the scope of their actual

or apparent authority.”) (emphasis supplied) and Hydrolevel

v. American Society of Engineers, 456 U.S. 556, 565-70

(1982) (“The apparent authority theory has long been the

settled rule in the federal system.“ “In a wide variety of

areas, the federal courts. . . have imposed liability upon

principals for the misdeeds of agents acting with general

authority.” Non-profit corporation held liable for act of

employee writing on corporation’s stationery) (emphasis

supplied).

Imposing sanctions upon the PLF itself under the

circumstances of this particular case was neither novel,

unprecedented nor inappropriate. Numerous separate,

sufficient and independent bases exist to support the District

Court’s decision and the Ninth Circuit’s affirmance. The

petition should be denied.

‘5 See, e.g., Restatement of Agency (Second), § 8A, p. 36

(1958) (“Inherent Agency Power”), Comment a (power based “neither

upon consent nor upon . . . manifestations“ is applicable to numerous

situations including where “agent does something similar to what he

is authorized to do, but in violation of orders,” where “an agent acts

purely for his own purposes,” and where an agent “departs from the

authorized method.”)

’

22

IV. The Petition’s Second Question Is Not Raised By

The Decisions Below: The PLF Appeared, Did Not

Contest “In Personam Jurisdiction” From The

Outset, And Was Not Outside The Court’s Reach.

The petition’s second question assumes that the

District Court did not have “in personam jurisdiction” over

the PLF. Pet i. The question is not presented by the petition

or the record, and the petition should be denied.

1. The District Court expressly found that PLF had

participated in the underlying litigation. The District Court

found that the PLF had been “actively involved in all phases

of the case” (C-33, ¢ 36), and had been “on notice from the

beginning” that defendants were likely to seek sanctions.

C-32, | 34; see also C-106 (“PLF has had abundant notice

that sanctions were possible”). The PLF’s own public

Statements regarding the litigation asserted that it had

“actively participated” in the underlying litigation. C-34, 4

38. Early in the case, a PLF attorney repeatedly signed

papers filed in the litigation in the PLF’s name. See 0-7-9,

noting examples at CR-5, CR-6, CR-9, CR-15, CR-17, &

CR-18. A government records act application expressly in

the PLF’s name (see CR 604, ¢ 6 & Exh. B) was made to

help circumvent the court’s discovery stay order. C-18.

Another PLF attorney wrote on PLF letterhead to BCPUD

Stating openly that: “PLF is the attorney for plaintiffs in

Lockary.” Id., 44 & Exh. A. The PLF’s CEO, counsel of

record in the underlying litigation, also repeatedly referred to

the case as one that “PLF filed.” C-33-34. “Virtually every

page of every pleading filed by plaintiffs ... has been on

paper imprinted with the PLF logo, name, address, and

telephone number.” C-35, ¢ 39. That same PLF logo is

used by the PLF to represent itself as a “public interest law

firm.” See CR 500, Exh. J and O-10 (logo and PLF’s

23

description). Moreover, the underlying litigation sought

attorneys’ fees under federal statutes, and any such fee

recovery would have gone “to the [PLF] organization rather

than to individual [PLF] staff attorneys.” See Rev. Proc.

75-13, 1975 C.B. 662. Under these circumstances, the PLF

cannot reasonably be said to be the stranger to the underlying

proceedings that its petition tries to portray.'°

2. The Ninth Circuit expressly affirmed the findings

regarding the PLF’s participation in the underlying litigation.

The Ninth Circuit said:

PLF also takes issue with the district court’s factual

finding that it was responsible for the sanctionable

conduct. PLF contends that it merely provided

logistical support to the individual attorneys who

represented the plaintiffs, and did not participate as an

entity in any way in this suit. The record belies this

assertion. While the PLF attorneys did not identify

themselves as PLF employees in the signature block

of the motions and pleadings, the heading of each

court paper they filed listed the attorneys’ names,

followed by the name and address of PLF.

Moreover, the plaintiffs were represented by a

constantly changing cast of PLF attorneys, including

PLF’s president. PLF funded the litigation in its

entirety. In its analysis of PLF’s involvement, the

district court relied on statements by PLF’s president

16

The record is also replete with PLF’s official publications and

filings with the government that describe itself as a “public interest

law firm.” See, e.g., O-3-8 and Q-4-14. Although the Ninth Circuit

was willing to accept the PLF’s protestations that it was not really a

“law firm,” it also concluded that PLF had actively participated in the

underlying litigation. A-12.

24

vaunting the importance of the Bolinas suit for PLF,

and placing the case in the context of other, similar

suits by PLF. The district court found that PLF was

not “a mere passive and abstract institutional

backdrop”, but was, rather, “the sponsor of this

litigation, and was actively involved in all phases of

the case.” We agree.

A-12."

3. The PLF also appeared and participated in the

sanctions proceedings without raising or preserving an “in

personam jurisdiction” objection. The petition concedes, as

it must, that the PLF “appeared before the District Court to

defend against the sanctions motions”. Pet 13. Did it

attempt to file a “special” appearance? No. See, e.g., CR

506 (first paper signed by attorney who separately appeared

for PLF in sanctions hearing), & CR 510 (PLF’s first

‘7 The quoted portion of the Ninth Circuit’s opinion deals with

the findings actually made by the District Court. It clearly states its

agreement with the District Court’s findings of actual participation,

sponsorship and responsibility. Contrary to this clear affirmance, the

petition dwells on the Ninth Circuit’s incidental observations regarding

post-remand events subsequent to the sanctions ruling, points on

which the District Court did not rely and could not have relied, and

other later events involving claims for which the PLF was not

sanctioned. See BCPUD Opposition to PLF’s Petition for Rehearing,

p. 5-7. From these irrelevancies, however, the petition tries to

suggest that the Ninth Circuit rejected the District Court’s findings

and “found" its own facts on which it affirmed. While the Ninth

Circuit may not have thought it necessary to characterize the PLF as

a“law firm,” something the PLF itself had been doing for decades, it

clearly agreed with the District Court that the PLF was “actively

involved in all phases of the case” and was the entity “directly

responsible for the sanctioned misconduct.” A-11-13 & n.2.

25

opposition brief.)'* Did it promptly raise an objection in

terms of “in personam jurisdiction” or “personal jurisdiction”

in the first paper filed? No. Did it do so in the second or

third paper? No. See CR 510 & CR 585. The petition

asserts, inaccurately, that when the PLF filed CR 510 (April

1988) and CR 585 (February 1989), it “opposed the sanctions

motions, arguing, among other things that the district court

lacked in personam jurisdiction over petitioner.” Pet 3-4.

The PLF’s opposition papers, however, do not even contain

the word “jurisdiction,” let alone the expressions in

personam jurisdiction” or “personal jurisdiction.” In fact,

the PLF did not express an objection to “in personam

jurisdiction” while participating for nearly two years in the

sanctions proceedings during 1988-1989.

Moreover, when the District Court indicated that it

was going to refer the sanctions motions to a special master,

the PLF participated in the process of nominating and

recommending the agreed-upon candidates. See CR 528 &

CR 543 (request for nominations; agreed nominations

letter & referral order). The criticism (Pet 4) that the

“district court ignored petitioner’ s jurisdictional argument and

referred the motions to a federal magistrate sitting as special

master” is unfounded. None of the PLF papers filed before

the referral (CR 506 & CR 510) even contained the word

“jurisdiction. ”

In CR 506, through counsel expressly signing for the PLF,

the PLF joined with the others in a stipulation setting forth and

requesting a briefing and hearing schedule, but PLF did not assert or

reserve any objection to “in personam jurisdiction.”. On CR 510, the

attorneys for PLF in the sanctions proceedings simply listed their

appearance as “Attorneys for Pacific Legal Foundation” without any

attempt to qualify or restrict their appearance.

26

4. Imposing sanctions on the PLF was not “in direct

conflict” with this court’s decision in Zenith v. Hazeltine. In

this litigation, the District Court imposed sanctions on the

PLF, which not only appeared and actively participated in the

sanctions proceedings, but also was found to have “actively

participated” in the underlying litigation. Zenith Corp. v.

Hazeltine, 395 U.S. 100, 108-112 (1968) did not involve

sanctions issues or a court’s need to protect itself or its

procedures from misuse. The case is inapposite, and no

conflict exists requiring this court’s attention.’

5. Imposing sanctions on the PLF was also not in

confiict with the Seventh Circuit’s decision in Panther Pumps.

Similarly, there is no conflict between the Seventh Circuit’s

decision in Panther Pumps & Equipment Co. v. Hydrocraft,

Inc., 566 F.2d 8 (7th Cir. 1977), and the Ninth Circuit’s

decision herein. It is also inapposite, another non-sanctions

'? For example, in contrast to the PLF’s participation in both the

underlying litigation and the sanctions proceedings, Hazeltine, the

corporation whose name appeared in a judgment “based wholly on the

stipulation of HRI,” “did not execute the stipulation,” “never formally

appeared at trial,” and “never had its day in court”. The judgment

against Hazeltine was on a counterclaim which only named HRI as a

defendant. “Hazeltine made no appearance in the litigation until

Zenith proposed that judgment be entered against it, at which time,

Hazeltine filed a ‘special appearance.’” The Supreme Court also

noted that the record did not show that, when Hazeltine made its

special appearance, the district court found it to have been “in active

concert or participation” with HRI. See also Hazeltine Research, Inc.

v. Zenith Radio Corporation, 388 F.2d 25, 30 (7th Cir. 1967) (“At

no time during the trial did [Hazeltine] have an opportunity to show

that it was not the alter ego.”) The PLF herein had numerous

opportunities to address the sanctions issues and actually appeared and

participated in the sanctions proceedings.

27

case involving a company which did not participate in either

the underlying litigation or the post-judgment proceedings.

If anything, the Seventh Circuit’s willingness to hold Beck in

contempt based on his relationship to the underlying

litigation, although he had not been a party to the underlying

litigation, would tend to support the District Court’s decision

herein. That it dismissed the appeal as to Universal, a

company formed by Beck after the initial judgment, is

immaterial. Unlike Universal, which apparently did not

participate in Beck’s show cause proceedings, the petition

herein concedes that the PLF “appeared before the district

court to defend against the sanctions motions”. Pet. 13.

The District Court found that “PLF actively

participated” in the underlying litigation. The petition

concedes PLF’s appearance and participation in the sanctions

proceeding. The petition, however, inaccurately asserts that

PLF raised and argued an “in personam jurisdiction”

objection in CR 510 and CR 585. Pet. 3-4. The petition’s

second contention is not presented by the petition or the

record, and the petition should be denied.”

*” The absence of an express “in personam jurisdiction”

objection and argument is telling, because the PLF did argue even

minor technical points jf it desired to raise them. A court order had

expressly extended the time in Local Rule 270-1. CR 472.

Nevertheless, PLF did try to argue in CR 510 that the motions were

untimely for failure to comply with that very rule, despite the court’s

express order and despite that rule’s express reference permitting the

judge to “grant extensions of time for the filing of an application.”

This “point” would hardly have been “jurisdictional,” and it was

certainly not an “in personam jurisdiction” argument. It does

illustrate, however, that the PLF’s failure to raise “in personam

jurisdiction” expressly was a conscious decision. The argument now

made is merely a contrivance.

28

CONCLUSION

The claims presented by PLF’s petition are neither

significant nor meritorious, and the lower court’s actions are

fully supported by the copious record that was developed so

painstakingly by the Special Master and the District Court.

For these reasons, granting the petition would serve no useful

purpose. By contrast, allowing PLF to prolong these

proceedings would impose serious additional hardship upon

BCPUD. Its meager financial resources have already deen

severely taxed, and further litigation in this Court would only

add to these burdens. That hardship would remain even after

BCPUD prevailed on the merits of the issues which PLF’s

petition attempts to raise.

RICHARD E.V. HARRIS

GEORGE A. YUHAS

ORRICK, HERRINGTON & SUTCLIFFE

Old Federal Reserve Bank Building

400 Sansome Street

San Francisco, CA 94111

Telephone: (415) 392-1122

By: Richard E.V. Harris

Attorneys for Respondent

Bolinas Community Public Utility District

APPENDICES

N-1

APPENDIX N

RICHARD E. V. HARRIS

GEORGE A. YUHAS

ORRICK, HERRINGTON & SUTCLIFFE

600 Montgomery Street

San Francisco, CA 94111

Telephone: (415)392-1122

Attorneys for Defendant Bolinas

Community Public Utility District

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MATTHEW LOCKARY, SUSAN _ ) Civ. No.

IRLAND LOCKARY; PHYLLIS ) C-82-6191 SW

GILBERT; CHARLES GILBERT; )

JAMES MACEY; ANTON ) DECLARATION OF

HOLTER: MESA RANCH INC.,a_ ) RICHARD E.V. HARRIS

California limited partnership, ) IN SUPPORT OF

) BCPUD’S

Plaintiffs, ) APPLICATION FOR

) ATTORNEYS’ FEES

Vv. ) AND EXPENSES

)

PAUL KAYFETZ; VICTOR ) Date: April 6, 1988

AMOROSO; MARY LOWRY; ) Time: 10:00 a.m.

N-2

DIANA LOPEZ FARNSWORTH; |)

EDWARD C. RILEY; PETER )

WARSHALL; DORIS ELAINE )

LeMIEUX; JACK BOWEN )

McCLELLAN; J. MICHAEL )

GROSHONG; WILLIAM NIMAN; )

ORVILLE SCHELL; )

MARGUERITTE HARRIS; )

JUDITH WESTON; BOLINAS )

COMMUNITY PUBLIC UTILITY )

DISTRICT,an incorporated public +)

utility district; BOLINAS )

PLANNING COUNCIL, a )

non-profit corporation; JOHN )

GOODCHILD; GREGORY C. )

HEWLETT; STEVE MATSON; )

PATRICIA L. SMITH; RAY )

MORITZ; ROBERT J. SCAROLA; )

DIANE MIDDLETON McQUAID; )

FREDERICK G. STYLES; and the _)

COUNTY OF MARIN, )

)

)

)

Defendants.

I, Richard E. V. Harris, do hereby declare as follows:

l. I am a partner with the law firm of Orrick,

Herrington & Sutcliffe and am one of the attorneys for

defendant Bolinas Community Public Utility District

("BCPUD"). If called as a witness, I could testify to the

following of my own personal knowledge.

r 2 My firm was retained by BCPUD to represent

it in this action in November 1982. BCPUD is a public

utility district which provides water service and sewer service

N-3

to customers in the Bolinas area. As indicated by financial

and other reports, BCPUD has always been in precarious

financial condition. Attached to this Declaration as Exhibit A

is a true and correct copy of BCPUD’s audited financial

statement for the fiscal year ending June 30, 1982. As

shown therein, for the fiscal year which preceded the filing

of this lawsuit, BCPUD’s total revenues amounted to only

$278,571. For that same period, BCPUD’s expenses totalled

$277,115. To finance its defense efforts, BCPUD was forced

to impose a special assessment which, I am informed,

substantially increased the economic burden on users of

BCPUD water sources.

- The financial difficulties which BCPUD would

(and did) face in defending the claims asserted against it in

this action were well-known. Attached to this Declaration as

Exhibit B are the reported comments of one of the plaintiffs,

Matthew Lockary, who is said to have commented about a

month before this action was filed that BCPUD was “nearly

broke" and would be hard pressed to defend the suit.

- ~ ~

8. In recognition of the fact that focused

discovery would be virtually impossible in light of the broad,

garbage-can nature of the complaint and amended complaints,

I proposed to this Court at an early stage that all discovery

be stayed until the motions to dismiss were resolved. On

March 3, 1983, in its initial status conference order, this

Court ordered a stay of discovery until defendants’ motions

to dismiss were resolved.

9. Notwithstanding the stay of discovery which

was ordered by the Court, plaintiffs’ counsel made a request

on September 30, 1983 under the California Public Records

Act that asked BCPUD to produce virtually each and every

———eo—«xXxXa—s-_——__

N-4

document in its possession relating to the moratorium.

Notwithstanding the extraordinary broad nature of the request

and the existence of the discovery stay, BCPUD did its best

to respond. After obtaining certain clarification and

limitations on the request, BCPUD made available virtually

all of its documents relating to its water system or the

moratorium. Nevertheless, the Pacific Legal Foundation

("PLF") pursued litigation in state court seeking a writ of

mandate against BCPUD to produce the requested documents.

10. In response to the PLF’s complaint, the

Superior Court of Marin County concluded that the PLF’s

claims were wholly without merit. The Court went on to

find that the plaintiff's case was "clearly frivolous" and

brought solely “to harass the District" and "for an improper

motive." The Court awarded sanctions against the PLF.

Attached to this declaration as Exhibit E is a true and correct

copy of the Superior Court’s decision. This decision was

affirmed on appeal. Attached to this declaration as Exhibit F

is a true and correct copy of the decision of the First

Appellate District affirming the lower court’s decision.

me baad baal

16. I am aware that the PLF is a well-financed

organization engaged primarily in the "business" of litigation.

Attached as Exhibit G is a true and correct copy of the PLF’s

Periodic Report filed with the State of California for the year

ending February 28, 1983. That annual report reflects that

the PLF received gross contributions for that year in excess

of $2,200,000. The PLF Periodic Reports for the subsequent

three years each reflect gross contributions in excess of

$2,000,000.

17. Attached to this declaration as Exhibit H is a

PLF publication which discusses the Lockary litigation. On

N-5

page 2 of that publication, the PLF’s president explains his

rationale in asserting massive damages claims against so

many individual defendants.

18. 1am aware that the PLF has made reference

to the Lockary litigation in reports to prospective contributors

and has publicized its efforts in this case. Even after the

claims in this action were rejected by the Court, the PLF

continued to publicize its litigation effects against BCPUD.

Thus, within the past few months, the PLF publicized its

more recent filing of a state action against BCPUD

challenging the same moratorium that was the subject of the

present action. Attached to this declaration as Exhibit H

through K are copies of some of the PLF publicity references

to its litigation against BCPUD.

Executed this 16th day of February, 1988, at

San Francisco, California.

I declare under penalty of perjury that the foregoing

is true and correct.

Richard E. V. Harris

APPENDIX O

RICHARD E. V. HARRIS

GEORGE A. YUHAS

ORRICK, HERRINGTON & SUTCLIFFE

600 Montgomery Street

San Francisco, CA 94111

Telephone: (415)392-1122

Attorneys for Defendant Bolinas

Community Public Utility District

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MATTHEW LOCKARY, PHYLLIS ) Civ. No.

GILBERT; CHARLES GILBERT; _) C-82-6191 SW

JAMES MACEY; ANTON )

HOLTER, ) DECLARATION OF

) RICHARD E.V. HARRIS

Plaintiffs, ) AND REQUEST FOR

) JUDICIAL NOTICE RE:

v. ) (a) PACIFIC LEGAL

) FOUNDATION LAW

PAUL KAYFETZ; VICTOR ) FIRM AND (b) THE

AMOROSO; MARY LOWRY; ) $30 MILLION-PLUS

DIANA LOPEZ FARNSWORTH; ) PRAYER

EDWARD C. RILEY; FREDERICK )

B. McCLELLAN; PETER ) Date: June 15, 1988

WARSHALL; DAVID L. VAN ) Time: 10:00 a.m.

0-2

DUSEN; DORIS ELAINE

LeMIEUX; JACK BOWEN

McCLELLAN; J. MICHAEL

GROSHONG; WILLIAM NIMAN;

JUDITH WESTON, as individuals;

BOLINAS COMMUNITY PUBLIC

UTILITY DISTRICT, an

incorporated public utility district;

BOLINAS PLANNING COUNCIL,

a non-profit corporation; JOHN

GOODCHILD; GREGORY C.

HEWLETT; STEVE MATSON;

PATRICIA L. SMITH; RAY

MORITZ; ROBERT J. SCAROLA;

DIANE MIDDLETON McQUAID;

FREDERICK G. STYLES, as

individuals; and the MARIN

COUNTY PLANNING

DEPARTMENT,

Defendants.

ee ee ee ee ee ee ee ee ae ee ae ae ee ee ae ae ae a a

DECLARATICN

I, Richard E.V. Harris, do hereby declare that:

1. I am a member of the Bar of the State of

California, a member of the bar of this court, and a member

of the law firm of Orrick, Herrington & Sutcliffe, attorneys

for defendant Bolinas Public Utility District ("BCPUD")

herein.

0-3

(a) PLF LAW FIRM

2. I have read the separate opposition papers filed on

behalf of the Pacific Legal Foundation, which I found rather

curious. Throughout the separate opposition filed by the

Pacific Legal Foundation, it refers to itself variously as (i) "a

California nonprofit corporation qualified under Internal

Revenue Service Rules to receive tax-deductible donations,"

(ii) "not a party in this case", (iii) "a charitable corporation",

(iv) "a nonparty corporation", (v) "a nonparty-nonattorney

corporation", and (vi) "neither a party to this case nor an

attorney admitted to practice before this Court."

3. Nowhere in the papers does the Pacific Legal

Foundation refer to itself as it, and its attorneys, normally

describe it -- a "law firm" or, more particularly, a “public

interest law firm." This declaration provides some

illustrations. (Unless otherwise indicated, the emphasis in

quotations in this declaration has been supplied.) Defendant

BCPUD requests judicial notice of the particular references

identified. The exhibits (attached hereto and those attached

to the Harris Declaration filed February 16, 1988) are

provided in further support of that request.

4. The Pacific Legal Foundation has represented

itself to be a law firm which participates in litigation “as

counsel" and which exercises “quality control." For

example, the Pacific Legal Foundation’s "Tenth Annual

Report 1973-1983" the first page of text includes the

following:

It was to evolve into the Pacific Legal

Foundation, the largest nonprofit public

interest law firm of its kind. . .. PLF’s case

selection... . PLF participates in cases

nationwide as plaintiff, as counsel and as

—————

0-4

"friend of the court. ... insured quality

control....

(See Harris Decl. filed February 16, 1988, Exh. I.)

5. The Pacific Legai Foundation has represented

itself to the Internal Revenue Service and to the Attorney

General of California as a "Public Interest Law Firm." A

copy of the Pacific Legal Foundation’s Periodic Report to

Attorney General of California for the year March 1, 1982

through February 28, 1983 which expressly incorporates the

IRS Form 990, Return of Organization Exempt from Income

Tax, for the same period, is attached as Exhibit G to the

Harris Declaration filed February 16, 1988. See IRS Form

4562 where the business or activity of the Pacific Legal

Foundation is expressly stated to be "Public Interest Law

Firm." Attached hereto as Exhibit A is a true and accurate

copy (provided by the State of California at my request) of

the Pacific Legal Foundation’s Periodic Report to Attorney

General of California for the period March 1, 1983 through

February 29, 1984 (when the amended complaint was filed

herein), also expressly incorporating IRS Form 990 which

also includes IRS Form 4562 expressly identifying the

business or activity of the Pacific Legal Foundation as

"PUBLIC INTEREST LAW FIRM."

6. Ronald A. Zumbrun (the senior PLF attorney,

whose name is on all or virtually all papers filed in this case

by the PLF) refers to the Pacific Legal Foundation as a "law

firm" and also refers to someone represented as a "Pacific

Legal Foundation client". For example, the May 13, 1985

issue Of The Recorder (at page 4) contains a "viewpoint"

article by Ronald A. Zumbrun entitled "Pacific Legal

Foundation Reviews Critical Property Rights Cases".

Identified as "one of a series of articles by Ronald A.

Zumbrun, President of the Pacific Legal Foundation," the

0-5

text of the article begins by stating that, when the Pacific

Legal Foundation was formed in Sacramento in 1973,

it became the first nonprofit public interest

law firm which litigated in support of the free

enterprise system... .

Halfway through the article, Mr. Zumbrun turns to a Coastal

Commission matter in this way:

Ponder the plight of another Pacific

Legal Foundation client, Viktoria Consiglio.

7. On the next day, May 14, 1985, The Recorder (at

page 2) contained another viewpoint article by Ronald A.

Zumbrun, who is identified as "President of the Pacific Legal

Foundation, a Sacramento-based public interest law firm that

litigates in support of limited government... ."_ This

viewpoint article includes references to the Gilberts’ claim

against BCPUD, including the following:

If the Gilberts prevail, they will be entitled to

damages against the members of the board of

directors of the water of district who, under

the Civil Rights Act, would be personally

liable to those individuals whom they have

intentionally damaged. If successful, this

lawsuit will have precedential value nationally

and could single-handedly reverse the

confiscatory trends in the area of land use

regulation.

This Zumbrun viewpoirt article is entitled "Pacific Law

Foundation’s Involvement in Limiting Reach of

Government." Attached hereto as Exhibit B are true and

accurate copies of these articles from the May 13 and 14,

a

O-6

1985 issues of The Recorder.

8. The March, 1983 issue of Pacific Legal

Foundation’s The Reporter contains a "President’s Message"

column by Ronald A. Zumbrun which is entitled "Just

Compensation: The Case We’ve Been Waiting For." In it,

his references to the Bolinas litigation include:

PLF has filed suit against the district in

federal court, thus circumventing the

California courts, which have been decidedly

reluctant to clarify the just compensation issue

in_ other PLF cases. We are seeking

substantial personal damages from the water

district board members, putting all government

entities on notice that we are going to the mat

with this one.

On the first page of that same issue of the The Reporter,

there is another article referring to this litigation entitled

"PLF Files Major Water Rights Case." (Mr. Zumbrun’s

column’ expressly references that article.) The article

includes the following references:

One of the most significant PLF lawsuits in

recent years was filed late last year in San

Francisco federal court... .

PLF filed suit on behalf of five property

owners in Bolinas... .

By filing this suit in federal court, PLF hopes

to stem this frightening practice from moving

nationwide.

Oe

O-7

As in many land use cases - brought by

ee

The PLF suit alleges that water district

policies violate the Fifth Amendment

guarantee of payment of just

compensation,.... This case will be an

extremely important one for PLF,... .

Attached hereto as Exhibit C is another copy of the above

stories from Pacific Legal Foundation’s March 1983 issue of

The Reporter.

9. The Pacific Legal Foundation’s literature soliciting

contributions also describes the PLF as a "law firm." For

example, the fizst page of a December 22, 1982 solicitation

letter (sent shortly after this case was filed) contains the

following:

Pacific Legal Foundation is an independent

nationwide public interest law firm defending

individual freedom, private property rights,

and the free enterprise system. PLF is

successfully confronting governmental

bureaucracies, environmental extremists,

welfare rights organizations, and other special .

interest groups.

Later, the solicitation letter states: ~- >

Today, PLF is handling more than 100 legal

proceedings across the United States. Your

financial assistance will make it possible to

carry this burden to conclusion.

Attached hereto as Exhibit D is a true and accurate copy of

, |

O-8

the PLF’s December 22, 1982 solicitation letter.

10. At the beginning of the PLF’s separate opposition

papers, there appears this sentence:

Pacific Legal Foundation has not signed a

"pleading, motion, or other paper" to be filed

in this court.

The statement was apparently made in an effort to dispel any

idea that the Pacific Legal Foundation really has had anything

to do with this litigation. While I have not reviewed all the

files, a quick beginning revealed the following examples

where papers were expressly signed on behalf of the Pacific

Legal Foundation:

PACIFIC LEGAL FOUNDATION

By: /signed/

DARLENE E. RUIZ

Attorneys for Plaintiffs

MATTHEW LOCKARY; PHYLLIS GILBERT;

CHARLES GILBERT; JAMES MACEY;

ANTON HOLTER

(See Docket No. 5)

Pacific Legal Foundation

by ___/signed/

Darlene Ruiz

Attomey for Plaintiffs

(See Docket No. 6)

0-9

Pacific Legal Foundation

by /signed/

Darlene Ruiz

Attomey for Plaintiffs

(See Docket No. 9)

PACIFIC LEGAL FOUNDATION

By /signed/

DARLENE E. RUIZ

Attorneys for Plaintiffs

(See Docket No. 15)

PACIFIC LEGAL FOUNDATION

By /signed/

Darlene E. Ruiz

Attorneys for Plaintiffs

(See Docket No..17)

PACIFIC LEGAL FOUNDATION

By /signed/

DARLENE E. RUIZ

Attomeys for Plaintiffs

(See Docket No. 18)

O-10

11. Of course, the Pacific Legal Foundation’s logo,

name, address and telephone number were already preprinted

on the thousands of pages of papers filed in this action by the

PLF attomeys. (See, e.g. Complaint, Docket No. 1 and

Amended Complaint, Docket No. 112.) Other PLF use of

the law firm logo includes the following example from the

PLF’s "Tenth Annual Report 1973-1983:"

[INSERT LOGO]

(See Varris Decl. filed February 16, 1988, Exh. I, last page.)

In addition, the PLF attorneys’ correspondence with the court

regarding this litigation, as well as correspondence with

opposing counsel and others, has been on Pacific Legal

Foundation letterhead.

(b) THE $30 MILLION--PLUS PRAYER

12. The plaintiffs sought enormous damages from,

among others, BCPUD and the individual defendants.

Plaintiff's opposition papers inaccurately suggest that “the

$30 million prayer for damages and the terrifying effect of

such a prayer" “was laid to rest nine months after the filing

of the Complaint." (Opposition, p. 2: 10-16.) The

opposition papers also suggest that the cloud over BCPUD’s

finances "could only exist, if at all, for about nine months the

time between the onginal Complaint, filed November 10,

1982, and the Amended Complaint, and that after the

Bree ea

O-11

dismissal of the antitrust claims, “any cloud existing in

BCPUD’s imagination surely should have evaporated since

the basis for trebling damages was gone." (Id., p. 56: 6-15.)

13. The original Complaint’s prayer had numerous

references to damages, including the following:

WHEREFORE, plaintiffs pray for judgment

against defendants as follows:

1. Damages for violation of plaintiffs’ civil

rights in the amount of $10 million.

ba aiaslaad

4. Judgments for three times the amount of

actual damages for violation of Sections 1 and

2 of the Sherman Act which plaintiffs e

are in excess of $10 million to be trebled as

provided by law.

ORC

r B Interim damages for a _ temporary

taking ....

8. In the alternative and cumulatively as

appropriate to plaintiffs’ prayer for

declaratory, injunctive, and interim damage

relief prayed for hereinabove, plaintiffs pray

for judgment against defendants as follows:

a. damages for the fair market value

of the property in an amount not

presently precisely ascertainable but

not 1 h 10 million. A more

O-12

precise amount of damages will be

proven and prayed for at time of trial;

b. Interim damages for a temporary

taking in an amount not yet precisely

ascertainable.

12. Other consequential damages flowing

directly from defendants’ course of conduct

herein described which plaintiffs may have

suffered but not discovered or which they may

hereafter suffer.

aK KK

14. Although the Amended Complaint may have

dropped the express dollar amounts, nothing alleged that

plaintiffs had changed their position regarding fair market

values, the magnitude of actual damages, or the expansive

damages sought. Indeed, the Amended Complaint filed

August 3, 1983, increased the number of plaintiffs, the

number of defendants, and the number of "claims." There

was no reduction in the amount of property allegedly "taken"

(which plaintiffs alleged in the original Complaint had a "fair

market value... not less than $10 million"). Both

complaints sought a determination and trebling of the actual

damages resulting from the alleged antitrust violations (which

the plaintiffs alleged in the original Complaint were "in

excess of $10 million"). Additionally, the prayers in both

complaints continued to seek civil rights damages, interim

damages, attorneys’ fees, litigation costs, and other monetary

items, including "[o]ther consequential damages flowing from

the defendants’ course of conduct . . . which plaintiffs may

have suffered but not discovered or which they may hereafter

O-13

suffer."

15. When the Amended Complaint was filed, there

was no formal or informal statement by plaintiffs or plaintiffs

counsel that the Amended Complaint sought less in damages

than was sought in the original Complaint. Although the

prayers in both complaints state that damages for the fair

market value of the property allegedly taken would be proven

and prayed for at the time of trial, I can find nothing in the

Amended Complaint which, for example, backs off the

allegation of the original Complaint that the fair market value

of the property taken is "not less than $10 million."

16. In April 1984, other defense counsel and I met

with plaintiffs’ counsel to discuss various matters relating to

discovery. Following up on oral requests made at that

meeting, I wrote plaintiffs’ counsel on April 23, 1984

requesting, among other things, their contentions as to the

amount of damages each plaintiff was seeking plus the basis

for the claimed damages. A true and accurate copy of my

letter of April 23, 1984 is attached hereto as Exhibit E. The

information was not provided, despite repeated requests, both

oral and written. Attached hereto as Exhibit F is a copy of

my letter dated May 9, 1985 to plaintiffs’ counsel, which

contains another written request for the damages contention

information. The requested information regarding the

damages amounts (and bases) was never provided.

17. As recently as the Ninth Circuit prebriefing

conference, which was held on March 28, 1988 plaintiffs’

counsel informed me and other defense counsel that plaintiffs

were not willing to eliminate any claims against any

defendants from their appeal. Plaintiffs’ suggestion that the

"terrifying effect" of their damages claims "was laid to rest"

Sa

0-14

in August 1983 is, I believe, inconsistent with the record in

this litigation.

Executed this Ist day of June, 1988 at San Francisco,

California.

I declare under penalty of perjury that the foregoing

is true and correct.

Richard E. V. Harris

P-1

APPENDIX P

RICHARD E. V. HARRIS

GEORGE A. YUHAS

ORRICK, HERRINGTON & SUTCLIFFE

600 Montgomery Street

San Francisco, California 94111

Telephone: (415)392-1122

Attorneys for Defendant Bolinas

Community Public Utility District

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MATTHEW LOCKARY; )

SUSAN IRLAND )

LOCKARY; )

PHYLLIS GILBERT; )

CHARLES GILBERT; )Civ.No. C-82-6191SW/WDB

JAMES MACEY; )

ANTON HOLTER; MESA )SUPPLEMENTAL

RANCH INC., a )DECLARATION

California limited )OF RICHARD E.V.

partnership, HARRIS RE: (a) PLF’S

)STATUS, AND (b)

)SANCTIONS PAID BY

Plaintiffs, )PLF IN CONNECTION

YWITH 1983 PUBLIC

BOLINAS COMMUNITY

PUBLIC UTILITY

DISTRICT; PAUL

KAYFETZ;

VICTOR AMOROSO;

MARY LOWRY;

DIANA LOPEZ

FARNSWORTH;

C. RILEY; PETER

WARSHALL; DORIS

ELAINE LeMIEUX;

JACK BOWEN

McCLELLAN;

J. MICHAEL GROSEONG;

WILLIAM NIMAN;

ORVILLE SCHELL;

MARGUERITTE HARRIS;

JUDITH WESTON;

BOLINAS COMMUNITY

PUBLIC UTILITY

DISTRICT, an

incorporated public

utility district;

BOLINAS PLANNING

COUNCIL, a non-profit

corporation; JOHN

GOODCHILD; GREGORY

C. HEWLETT; STEVE

MATSON; PATRICIA L.

SMITH; RAY

MORITZ; ROBERT J.

SCAROLA; DIANE

MIDDLETON McQUAID;

P-2

JRECORDS ACT

)LITIGATION

)AGAINST BCPUD AND

)SUBSEQUENT APPEAL

)

)

)Status Conference

)

)Date: March 14, 1989

)Time: 10:00 a.m.

~"

a ee ae ae ee ee ee ae ae ee ae ee ae ae ee ee ee Le Le Lae a Lae a ae

P-3

FREDERICK G. STYLES;

and the COUNTY OF

)

)

MARIN, )

)

Defendants. )

)

I, Richard E.V. Harris, do hereby declare as

follows:

1. I am a partner with the law firm of Orrick,

Herrington & Sutcliffe and one of the attorneys for defendant

Bolinas Community Public Utility District ("BCPUD"). If

called as a witness, I could testify to the following of my

own personal knowledge.

A. PLE’S STATUS

2. This portion of this declaration supplements the

DECLARATION OF RICHARD E.V. HARRIS AND

REQUEST FOR JUDICIAL NOTICE RE: (a) PACIFIC

LEGAL FOUNDATION LAW FIRM AND (0) THE $30

MILLION-PLUS PRAYER, filed June 1, 1988, and made

part of BCPUD’s APPENDIX filed January 6, 1989, at Tab

No. 9. In paragraphs numbered 2-11, and the exhibits

thereto, I referred to various Pacific Legal Foundation

("PLF") statements that it was a “law firm," that it

participated in cases “as counsel," and that a person

represented was a "Pacific Legal Foundation client." In

paragraph 10, I also referred to specific instances in this

Court’s files where papers were expressly signed on behalf

of the Pacific Legal Foundation.

3. In its recent "RESPONSE OF PACIFIC LEGAL

FOUNDATION TO THE MOTION FOR SANCTIONS," the

LT

P-4

PLF states on page | that "PLF is neither a party to this case

nor an attorney for a party." On page 4 the PLF states that

"BCPUD requests sanctions against ‘plaintiffs and their

attorneys’ -- a group that does not include Pacific Legal

Foundation within its membership." And, on page 6, the

PLF states that "PLF was not ’plaintiffs’ counsel’ in this

action, ....”

4. The recent statements by the PLF in its response

to the motion for sanctions seemed to me to be at odds with

not only the PLF’s statements in its own publications and the

record referred to above, but also with PLF correspondence

with BCPUD after this case had been pending for

approximately one year. In a letter to BCPUD’s general

manager from PLF attorney James I. Collins on Pacific Legal

Foundation letterhead, Mr. Collins stated:

PLF is the attorney for plaintiffs in Lockary; it

is not a party.

Attached hereto as Exhibit A is a true and accurate copy of

the November 2, 1983 letter from PLF attorney Collins to

BCPUD General Manager Buchanan, which copy is attached

to a Declaration of Phil Buchanan in Wolfe v. Bolinas

Community Public Utility District (Marin County Superior

Court No. 115257).

B. SANCTIONS PAID BY PLF

a In its response to the motion for sanctions and

attorneys fees herein, the PLF apparently is attempting to

distance itself from the state court decisions in Wolfe v.

Bolinas Community Public Utility District by stating that "no

sanctions were expressly levied against PLF." (Emphasis

original.) A true and accurate copy of the Marin County

P-5

Superior Court’s January 19, 1984, Order is in BCPUD’s

Appendix filed January 6, 1989 at Tab No. 8, Exhibit E. It

states, in part:

Respondent would be entitled to attorneys fees if

the Court finds that the "plaintiff's case is clearly

frivolous... ."

It would appear that petitioner

brought this action to harass respondent district\

Petitioner is represented by Pacific Legal

Foundation as is the plaintiff in the federal

action. It appeared that the disclosures plaintiff

sought in this action were to be used in

prosecuting the federal action. A review of

events leading to the filing of this action

convinces this Court that this action was brought

for an improper motive. Therefore, respondent

is entitled to reasonable attorneys fees and costs.

A reasonable fee for such services is $1,360.00

plus court costs of $14.50. Respondent shall

have judgment against petitioner for said sums.

6. The Marin Court Superior Court’s decision was

affirmed by the Court of Appeal for the First Appellate

District. A true and accurate copy of that appellate decision

can be found in BCPUD’s Appendix at Tab No. 8, Exhibit F.

In a unanimous decision, the court stated, in part:

Appellant argues that the judgment

must be reversed because . . . and (3) the action

was brought in good faith. We disagree with

each of these contentions.

On September 30, 1983,

P-6

appellant, through his attorneys, the Pacific

Legal Foundation, contacted respondent. He

requested that he be permitted to inspect, as the

trial court put it, ’virtually all of [respondent’s]

records.’

Finally, appellant disputes the trial

court’s finding that he brought the action for an

improper motive and meant ’to harass respondent

district.’ Considering the sheer volume of

documents which appellant designated, his

demands of immediate compliance with these

extensive requests; his insistence on filing suit in

spite of respondeni’s keeping him constantly

informed of its progress; and his going forward

with the December 9 hearing even though

respondent had already made the _ records

available to his satisfaction, the trial court’s

determination was reasonable and well supported

by the evidence. Respondent was properly

awarded costs and attorneys fees. (Emphasis in

originai)

yA Although the recent PLF response states that "no

sanctions were expressly levied against PLF," it does not

State that the sanctions were not, in fact, paid by the PLF.

As outlined below, the PLF, not Wolfe, apparently did pay

the sanctions/attommey fees resulting from the two state court

decisions in Wolfe.

P-7

8. With respect to request for BCPUD’s documents,

the formal application signed by PLF attorney lists the

"Pacific Legal Foundation" as the "applicant," not Wolfe or

anyone else. A true and accurate copy of the BCPUD form

signed by the PLF attorney is attached hereto as Exhibit B.

9. The bad faith and harassment findings having

been affirmed along with the Government Code Section 6259

attorneys fee award, BCPUD sought additional fees and costs

of $4,708.80 under that Government Code Section in a state

court filing on July 21, 1986.

10. ~_I was informed shortly after September 5, 1986

that the $4,708.80 was paid by a Pacific Legal Foundation

check, numbered 2602, dated 8-25-86, drawn on a PLF

account at the Great American Federal Savings and Loan

Association in Sacramento, California, sent to BCPUD’s

attorney in Wolfe. Attached hereto as Exhibit C is a true and

accurate copy of the cover letter I received together with a

copy of the PLF check. I have subsequently been informed

that the remainder of the $6,274.25 (the $1,274.50 awarded

by the trial court in 1984 and $190.90 interest) were paid

using Great American cashier’s checks, dated 7-10-86 and

7-17-86, which were also sent by the PLF to BCPUD’s

attorney in Wolfe.

Executed this 6th day of March, 1989, in the City

and County of San Francisco.

I declare under penalty of perjury that the

foregoing is true and correct.

Richard E. V. Harris

Q-1

APPENDIX Q

RICHARD E. V. HARRIS

GEORGE A. YUHAS

ORRICK, HERRINGTON & SUTCLIFFE

Old Federal Reserve Bank Building

400 Sansome Street

San Francisco, California 94111

Telephone: (415)392-1122

Attorneys for Defendant Bolinas

Community Public Utility District

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

Civ. No.

C-82-6191 SW/WDB

MATTHEW LOCKARY,

SUSAN IRLAND LOCKARY;

PHYLLIS GILBERT; CHARLES

GILBERT; JAMES MACEY; DECLARATION OF

ANTON HOLTER: MESA RICHARD E. V.

RANCH INC., a California HARRIS IN

limited partnership, FURTHER SUPPORT

OF BCPUD’S

Plaintiffs, APPLICATION FOR

SANCTIONS/FEES

Vv. [STAGE 0

PROCEEDINGS]

PAUL KAYFETZ, VICTOR

AMOROSO; MARY LOWRY;

a i ae ae a a a a ae ee eee

Q-2

DIANA LOPEZ

FARNSWORTH; EDWARD C.

RILEY; PETER WARSHALL;

DORIS ELAINE LeMIEUX;

JACK BOWEN McCLELLAN;

J. MICHAEL GROSHONG;

WILLIAM NIMAN; ORVILLE

SCHELL; MARGUERITTE

HARRIS; JUDITH WESTON;

BOLINAS COMMUNITY

PUBLIC UTILITY DISTRICT,

an incorporated public utility

district; BOLINAS PLANNING

COUNCIL, a non-profit

corporation; JOHN

GOODCHILD; GREGORY C.

HEWLETT; STEVE

MATSON; PATRICIA L.

SMITH; RAY MORITZ;

ROBERT J. SCAROLA; DIANE

MIDDLETON McQUAID;

FREDERICK G. STYLES; and

the COUNTY OF MARIN,

Defendants.

ee ee ee ee a a ee a a a a a a ee ee ee ee eee eee eee

I, Richard E.V. Harris, do hereby declare as follows:

l. I am a member of the Bar of the State of

California and member of the Bar of this Court. I am also

a member of the law firm of Orrick, Herrington & Sutcliffe,

attorneys for defendant Bolinas Community Public Utility

District ("BCPUD") in this action. If called as a witness, I

could testify to the following of my own personal knowledge.

Q-3

PLF OPERATIONS:

FINANCIAL RESOURCES

2. According to the IRS Form 990’s filed by the

Pacific Legal Foundation ("PLF") with its Periodic Reports

to the Attorney General of California, the PLF’s annual

revenues have been substantial during each of the years that

the Lockary case has been pending. Total PLF revenues (by

fiscal year) are shown on those reports as follows:

PLF

Fiscal PFL Revenues Per

_Year IRS Form 990

1982-1983 $2,559,274

1983-1984 2,446,651

1984-1985 2,481,839

1985-1986 2,265 ,076

1986-1987 2,405,115

1987-1988 2,905 ,457

1988-1989 4,217,701

1989-1990 5,835,885

From 1982-83, when Lockary was filed, through February

1990, the PLF’s total revenues, as shown on these reports,

were $25,116,998. True and accurate copies of excerpts

from the IRS 990’s filed as part of those reports are attached

as Exhibit A.

3. The PLF publishes In_ Perspective, a

newsletter. The Winter 1989 issue contained the PLF’s

description of one of its fundraising activities. Entitled "PLF

Fundraising Event Brings Private Property Advocates

Together," the PLF description contained the following:

More than 250 members of the nation’s

Q-4

real estate development community gathered in

Sacramento on November 2 for a special

fundraising tribute to PLF’s activities in the

land use and private property arena.

x * me

Following, Zumbrun, Raymond Watt,

chairman of Watt Industries in Los Angeles

and a member of the Host Committee,

expressed his thanks to the Foundation and

asked everyone present to carry the PLF

fundraising flag.

"If every PLF supporter would call just

one other potential supporter, we could take

care of PLF’s funding needs overnight,” he

said.

Attached as Exhibit B is a true and accurate copy of the page

from the Winter 1989 issue of the PLF’s In Perspective.

PLF OPERATIONS:

LITIGATION LAW FIRM STATUS, LITIGATION

AND TRAINING FUNCTIONS

4. Additional information regarding the PLF and

its operations is provided below. Most of the information

comes directly from the PLF’s own publications; that

information is provided first.

a According to its annual reports, the PLF

claims a very close relationship to the litigation process and

the courts. The annual reports indicate that the PLF is not

merely a law firm but that it is a litigation law firm. At least

one report says that the PLF regards "the courtroom" as its

Q-5

"forum." Another says that the PLF’s “main function is

litigation."

6. Excerpts from some annual reports and other

PLF publications are identified and highlighted below. (The

emphasis in qzota%ions below has been supplied unless

otherwise indicated.) True and accurate copies of the

referenced pages from those annual reports are attached

hereto as Exhibits C through JZ.

rs The PLF’s first annual report, "Pacific Legal

Foundation, The First Report: A Record of Achievement,

Winter 1973-74" began with a "Message From the

Chairman" on the inside cover which said:

The Pacific Legal Foundation, a

non-profit public interest law firm, was

established to cerrect an imbalance in the

presentation of issues in litigation that involves

major public policy.

Although it has been operating less

than one year, the Foundation has won several

important victori d is involved in s of

legal _cases.... It is protecting your

interests, assisting the courts, and performing

a vital public service by presenting "the other

side" on issues of major public interest.

. 8. The chairman’s message in that same annual

report was followed with a "Statement of Purpose" which

said, among other things:

Q-6

The Foundation has received wide

support.... The legal activities of the

Foundation will be guided by these principal

policies, adopted by the Board of Trustees:

: : The Foundation shall represent

California citizens, individual or corporate,

and citizens of the United States, on matters of

public interest at all levels of the

administrative and judicial process.

z: The Foundation shall insure that

all interests are fully and properly represented

in_court on issues affecting the public and

private sectors.

4. The Foundation shall not derive

any financial benefit from the legal services it

provides.

10. A Board of Trustees shall be

appointed, consisting of not less than 16 nor

more than 19 members, of which a majority

shall be members in good standing of the State

Bar of California.

9. The "Report of the Executive Vice President-

Administrator" in the PLF "Third Annual Report, 1975"

expressly identified the central nature of litigation:

Because we recognize that the Foundation’s

main function is litigation, the vast majority of

our funds are directed to legal activities.

Q-7

10. The PLF’s "Fourth Annual Report begins by

asserting on page one that "the courtroom" is the PLF’s

forum:

Pacific Legal Foundation

Our client: The taxpayer

Our Forum: The courtroom

* *K

Reason and responsibility are our arguments.

The courtroom is our forum.

x *

Our purpose is to present to the courts...

x Kk

Since its founding in 1973, the Foundation has

been actively involved in more than 100 legal

proceedings....

Pacific Legal Foundation is governed by a

board of prominent citizens, the majority

attomeys....

Ronald Zumbrun’s “President Message" on the third page

continues the theme, stating among other things:

During the past fiscal year, the

Foundation handled more litigation than the

total for its first three years combined.

Q-8

x Ke

The Foundation will continue to be

highly selective in choosing litigation in which

to enter.

11. The PLF’s "Fifth Annual Report" continued

the litigation theme, introducing the PLF on page one with

such comments as:

Since its founding, [PLF] has been

actively involved in more than 150 legal

proceedings, winning 80 percent of those

which have reached final decision.

x me om

It... has litigating offices in Sacramento,

California, and Washington, D.C., a liaison

office in Seattle, Washington, and a project

office in San Diego, California.

The PLF record of legal victories is

impressive by any standard -- proof of the

impact possible when aggressive, independent

and dedicated professionals speak rationally

for the broad public interest.

Ronald Zumbrun’s "President’s Message" on page three

continues the litigation law firm theme:

... for Pacific Legal Foundation

handled and won more cases than in any past

year.

Q-9

As the pioneer of law firms advocating the

broad public interest of working men and

women in business, agriculture and industry,

PLF remains the model to be followed in this

field.

PLF’s winning team of attorneys is supported

by an exceptional legal and administrative

staff . . . backed by an outstanding Board of

Trustees.

We select cases which deal with key

precedent-setting issues. Every case is a test

case.

The same annual report describes PLF activities using such

phrases as "PLF successfully defended a lawsuit . . . [p. 9],

"Pacific Legal Foundation successfully represented individual

employees... . " [. 11], "[rlepresenting various builders and

contractors, PLF challenged a federal law... . " [id.], and

"Pacific Legal Foundation is involved in numerous suits

challenging... ." [id.].

12. The PLF’s "Sixth Annual Report, 1978-1979"

introduces the PLF on page one with such comments as:

PLE brings the viewpoint of this segment of

the public before the courts.

In the beginning, PLF’s litigation

focused on issues that surfaced in the Pacific

region.

Q-10

Today, PLF litigates from coast to coast... .

x x

PLF litigates in all areas of the public

mien ....

"A Message from the President and Chairman of the Board"

on page three of the same annual report continues with

references to "a PLF suit," "[t]he Foundation is litigating,"

"(t]hree PLF actions,” "in two cases before the Ninth Circuit

Court of Appeals, PLF argued," "PLF has filed suit," and

"PLF has an ambitious litigation program for the coming

year." The same annual report contains such references to

PLF activities as "PLF represented the supervisors suing

HEW... " [p. 7] and "PLF is assisting the plaintiff to

obtain a rehearing and has been asked to act as

co-counsel ... " [p. 9].

13. The PLF’s "Seventh Annual _ Report,

1979-1980" introduces the PLF on page one by quoting from

the "policy concept" adopted by the first Buard of Trustees

and referring to itself as a "law firm." On page three,

"Looking Ahead," signed by Ronald Zumbrun begins: "PLF

is a public interest law firm..." In the annual report,

descriptions of PLF’s activities include "[rlepresenting the

city of Chula Vista, PLF is also challenging the commission’s

authority... " [p. 8].

14. The PLF’s "Eighth Annual Report, 1980-1981"

has a "Year in Review" on page one which begins:

Q-11

In its eighth year of litigating in the public

interest, [PLF] participated in more than 100

cases from coast to coast.

In New York, PLF represented construction workers .

Other references to PLF activities in the annual report

included "{i]n Alaska PLF brought suit... ." [p. 1], “[iJn

an unrelated action, PLF helped defend... ." [id.], "PLF

represented San Francisco’s controller, who was sued by the

city... " [id.], a list limited to "only litigation in which

PLF actively participated," [p. 4], "PLF has litigated case

after case... " [p. 8], "PLE agreed to represent them . . .

" fid.], "Jacobs . . . asked PLF to represent iim" [p. 10],

and “PLF represented him and his office in the successful

suit argued before the court of appeal" [p. 12].

15. The PLF’s "Ninth Annual Report, 1981-1982"

contains a list on page three of “litigation in which PLF

actively participated in 1981-82" identifying eighty cases.

Elsewhere descriptions of the PLF’s activities include "[iJ]n

a similar case, PLF represented 13 farmworkers who were

fired. . . " [p. 6], "Justice Kaufman asked PLF to represent

him" [id.], "{iJn San Francisco, PLF is defending the city

controller who is being sued . . . " [id.], and "[rlepresenting

the California Grange and individual owners of small farms,

PLF has intervened in the case... . " [id.].

16. These foregoing excerpts reflect the

self-described role of the PLF and its relationship to litigation

and the to courts during the nine years of PLF activities

immediately prior to the filing of this action. The PLF’s

"Tenth Annual Report", issued during the year in which this

action was filed, was reviewed in an earlier declaration,

which appears at Tab 8, Exhibit I, Appendix With Selected

Materials. On page one, under the heading "The First 10

Q-12

Years," that PLF annual report contains the already noted,

succinct summary statement: "PLF participates in cases

nationwide, as plaintiff, as_ counsel and as ‘friend of the

court.*"

17. | The PLF’s annual reports are but one of the

PLF publications describing the PLF’s litigation activities in

this manner. Similar descriptions have continued right

through the pendency of BCPUD’s sanctions/fees motion.

The Autumn 1989 issue of the PLF’s In Perspective, page

two, contained a "President’s Message" by Ronald A.

Zumbrun which began as follows:

There are a number of different ways

that the PLF pursues its litigation efforts. We

can file a legal action on behalf of a private

individual. . ., we can represent a party by

intervening in an ongoing lawsuit. .., or

. we can file an amicus curiae or "friend

of the court" brief.

The President’s message, which was entitled "Why Amicus

Curiae Briefs are Important," also included the following

comments:

When you think of the many thousands

of lawsuits filed each day, ... you realize

that the PLF could not possibly represent

parties in ali but a small fraction of the cases

that could impact on you legal nghts.

x KK mK

We will continue to represent parties in

bringing, defending, and intervening in

lawsuits.

Q-13

A true and accurate copy of page two of the Autumn 1989

issue of the PLF’s In Perspective is attached as Exhibit K.

18. Both prior to and during the course of the

Lockary action, the PLF has also suggested that it has a role

in training attorneys. For example, in its “Sixth Annual

Report" in "A Message from the President and Chairman of

the Board" on page three, the report refers to a fellowship

program where law school graduates "will be given training

and experience in public interest litigation by PLF staff

attorneys.” On page eleven of the same report, there is

another reference to "education and training under the direct

supervision of PLF senior trial attorneys." The report

continues: "The purpose of the program is to train the future

leaders of the legal profession in the new and expanding field

of public interest law." See ExhibitG.

19. Inthe November 1981 issue of the California

Lawyer, roughly one year before this action was filed, the

description of the PLF’s activities included the following

attributed to Robert Best, one of the PLF attorneys in this

action:

Once it enters a case, PLF stays no

matter how costly, says Best. "While we

rarely get into a war of attrition, government

opponents have tried to play that with us. But

they’ve never won. We won’t back off. We

go an eye for an eye -- it’s part of our

reputation,” he says.

A true and accurate copy of the article from the November

1981 California Lawyer is attached hereto as Exhibit L.

Executed this __ day of July, 1990, in the City and

County of San Francisco.

Q-14

I declare under penalty of perjury that the foregoing

is true and correct.

Richard E. V. Harris

R-]

APPENDIX R

ENDORSED

FILE

Nov 22 1991

RENE C. DAVIDSON, County Clerk

By: _/s/ Lilian C. Don

Lillian C. Don, Deputy

SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF ALAMEDA

CHARLES GILBERT;

PHYLLIS GILBERT;

MATTHEW LOCKARY;

SUSAN IRLAND

LOCKARY; and

JAMES MACEY,

No. 636481-0

Petitioners and

Plaintiffs, ) STATEMENT

VS. ) OF

) DECISION

R-2

STATE OF CALIFORNIA; )

DEPARTMENT OF )

HEALTH SERVICES; )

KENNETH KIZER, in )

his official capacity as )

Director )

of the Department of )

Health Services; )

BOLINAS COMMUNITY _ )

PUBLIC UTILITY )

DISTRICT; and )

DOES I through XxX, )

)

)

)

)

Respondents and

Defendants.

™ baad ™

Essentially, petitioners attack the validity of the Bolinas

moratorium on _ additional water hookups and_ the

administrative process by which petitioners were denied those

hookups.

For the reasons set forth below, the Court is

determined to deny both petitions.

me Saad ™

MI. IS THERE A WATER SHORTAGE EMERGENCY?

Accordingly, the threshold issue in this case is

whether there is, in fact, a water shortage emergency. The

resolution of this issue will determine not only the validity of

the moratorium itself, but also will facilitate the resolution of

petitioners’ many other claims which are premised on the

R-3

assumption that the water emergency is a sham.

me - cai

By way of expert testimony which challenges the

factual predicates for the moratorium, petitioners rely almost

exclusively on the testimony and declaration of Dietrich

Stroeh. Stroeh’s analysis is directed at the 1982 engineering

report of the Department of Health Services which was

prepared by Robert Hultquist. Although the DOHS report

was not relied on by the District in determining the propriety

of the moratorium, it does shed some light on the continuing

validity of the water shortage emergency and, thus, on the

continuing validity of the moratorium.

As the District points out, Stroeh’s disagreement with

the DOHS report is largely philosophical.

- ~ baad

Even to the untutored eye, problems with Stroeh’s

analysis are apparent. First, as the District points out, Stroeh

"ignores the fact that [the District’s] summer time use is not

limited to water taken from Arroyo Honda. [The District]

also takes water from its supply of stored water." Thus,

"demand" is substantially understated.

™ ™ -

Second, there is no evidence whatsoever that the years

from 1982 to 1986 represent a fair sampling for determining

long-range water policy. In fact, several of those years were

exceptionally "wet".

Third, the assertion that 39 acre-feet annually is

available from Arroyo Honda is without demonstrable

R-4

foundation.

In sum, the District had substantial expert evidence

available to them upon which to make a reasoned decision to

declare a water shortage emergency and to enact and

maintain a water hookup moratorium.

baal Saal -

In order to obtain the added benefit of objectivity and

the additional confidence that the Court has not been misled

by the testimony of an expert possibly more persuasive than

correct, the Court appointed a special master in accord with

Evidence Code section 730. The task of this court-appointed

expert was to evaluate the current conditions of the District’s

water system and to advise the Court as to whether the

current and projected water supply conditions in Bolinas

constitute a valid water shortage and, thus, justify the

continuance of the moratorium.

In light of this evidence, the Court finds that there is

a solid factual basis for declaring a water shortage emergency

and, thus, for imposing a moratorium which precludes

potential water users from tapping into the water supply

which is both fragile and limited. The Court cannot conclude

that the District acted in an arbitrary or capricious manner or

that their actions were entirely lacking in evidentiary support.

baad mm ~

In this case, the bottom line is whether there is valid water

shortage emergency which justifies the moratorium.

Based upon the Administrative record, it seems

R-5

apparent that the moratorium has been justified from its

inception to the present based upon realistic concerns about

the capacity of the district's water system to meet

conservative demands in times of continuing drought,

particularly given the marginal capacity not only of the

storage system, but the delivery system, as well.

™ ie -

I. WERE PETITIONERS AFFORDED A _ FAIR

HEARING?

The Administrative Record reflects the comprehensive

presentation permitted petitioners in the pursuit of their

petitions before the Board. There are numerous appearances,

the submission of hundreds of pages of evidence, the

opportunity to respond to the District’s evidence, and full

unencumbered representation by counsel. Apart from the

allegations of "inherent" and “personal” biases, petitioners

are bereft of any realistic argument that the hearings were

deficient in any way. As noted, petitioners’ assertions of

bias are without foundation in the record.

~ me ~

The petitions for peremptory and administrative writs

are denied.

Dated: November 22, 1991

/s/

Richard A. Hodge,

Judge of the Superior Court

APPENDIX §

FILED

Apr 2 - 1990

RICHARD W. WIEKING

CLERK, U.S. DISTRICT

COURT

NORTHERN DISTRICT

OF CALIFORNIA

SAN JOSE

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MATTHEW LOCKARY, )

et al., )

)

) C-82-6191(SW)

Plaintiffs, )

) ORDER ADOPTING

v. ) FINDINGS OF

MAGISTRATE BRAZIL

)

PAUL KAYFETZ, et al., )

Defendants. )

)

I have carefully reviewed the Report and

Recommendations by Magistrate Brazil acting as Special

master and filed on January 11, 1990, with respect to the

liability of plaintiffs’ attorneys for sanctions. I have also

read and considered the comments on that Report submitted

by the parties. I HEREBY ADOPT THE FINDINGS OF

S-2

FACT AND CONCLUSIONS OF LAW AND ACCEPT

THE RECOMMENDATIONS CONTAINED THE REPORT

BY MAGISTRATE BRAZIL. I find that the circumstances

of this case clearly support the imposition of substantial

monetary sanctions on the Pacific Legal Foundation. In

addition, the Magistrate’s findings of fact and conclusions of

law clearly justify his issuing an order requiring attorneys

Darlene Ruiz, Ronald Zumbrun, Harold Hughes, Orrin

Finch, and Robert Best, to show cause why they should not

be sanctioned in their individual capacities. However, I

concur with the comment made by Pacific Legal Foundation

in the objection filed January 29, 1990, that Ms. Ruiz may

not be held liable for attorneys’ fees under Rule 11 for

signing the Motion to Strike referred to on page 100 of the

Report, because that motion had been signed several months

before the effective date of amended Rule 11, and an award

of attorneys’ fees is not provided for the old Rule 11.

I hereby ORDER Magistrate Brazil to commence

further proceedings on the issue of the amount of the

sanctions to be imposed on the Pacific Legal Foundation, and

on the issue of the liability for the sanctions of the individual

attorneys noted in the Report. If the Magistrate concludes

that any attorney or attorneys should be sanctioned in their

individual capacities, he should also make findings and

recommendations with respect to the nature and degree of

those sanctions.

IT IS SO ORDERED.

Dated: April 2, 1990 /s/Spencer Williams

UNITED STATES

DISTRICT COURT JUDGE