State Supreme Court Upholds Disqualification of S.F. City Attorney’s Office in Public Integrity Case

Ruling Comes at High Cost to Taxpayers and May Discourage Public Law Offices from Aggressively Pursuing Litigation for Fear of Disqualification

SAN FRANCISCO (June 5, 2006)- With a 5-2 decision the California Supreme Court today upheld a state Superior Court ruling that disqualifies the entire San Francisco City Attorney’s Office from a case because one of the companies implicated in the office’s investigation was a former client of City Attorney Dennis Herrera’s. The case presented a question never before addressed in California case law as to whether an entire government law office should face disqualification when the head of the office is personally disqualified, even in circumstances where a timely and effective ethical screen was established to assure fair treatment for the defendant. The majority ruled that a public law office is disqualified in that situation. Chief Justice George and Justice Corrigan dissented from that ruling.

“We are disappointed with the ruling and believe it is an unfortunate result for the public, though we will certainly abide by it,” said Chief Assistant City Attorney Jesse C. Smith. “In particular the people of San Francisco, are being doubly harmed in this case; first by being defrauded, and second by having to pay a premium for representation by outside attorneys when there are knowledgeable and experienced career deputies available who are dedicated to serving the public interest and have no confidential information in this case.”

Today’s ruling included a dissent written by Justice Corrigan and joined by the Chief Justice arguing that an automatic disqualification rule should be rejected for sound reasons of public policy, which are reflected in the American Bar Association rule that allows for screens for public law offices. When City Attorney Herrera was elected into office and took over this case from former City Attorney Louise Renne, such screens were immediately implemented for all City matters involving any former client of Herrera or his former law firm.

“We agree with Justice Corrigan and the Chief Justice who point out that the public has exhibited confidence in screening procedures in other areas of law,” said Smith. “In the criminal context and in the case of financial conflicts of interest the rule allows public law offices to screen off individual lawyers with conflicts, including heads of law offices. We have been concerned all along that an automatic rule of disqualification could substantially increase the public’s cost of legal representation, chill government agencies from bringing otherwise meritorious litigation, promote the strategic use of disqualification motions in litigation with public entities, and provide a disincentive for private attorneys to seek public legal office.”

About a year before Herrera took office in January 2002, the City Attorney’s Office began investigating a company called GCSI, which was under contract with the City’s computer store to provide technology equipment for City departments. When City Attorney investigators discovered criminal conduct consisting of an elaborate kickback scheme orchestrated by a City employee named Marcus Armstrong, the case was referred to the United States Attorney’s Office, which later indicted Armstrong on felony charges of mail fraud, wire fraud and obstruction of justice. Armstrong has since pled guilty to and served prison time for those charges.

The City Attorney’s Office continued its investigation of GCSI, and filed a civil action against the company for fraud and false claims in 2003. In the course of the ongoing inquiry, investigators learned that among the companies that had paid money to Armstrong through fictitious business accounts was Cobra Solutions, which had been a former client of Herrera and his former law firm. Immediately upon discovery of Cobra’s role, the Office screened Herrera off from further involvement in the investigation and all matters related to it in accordance with a stringent ethical screening policy Herrera established when he took office. Although one of Herrera’s former partners had performed almost all of the legal work for Cobra, and neither Herrera nor any former partner or associate at his firm had ever advised Cobra about the subject of the investigation-the payment of kickbacks to a City employee-his policy required screening him from any matter involving a former client of his former firm. Shortly after the office filed its First Amended Complaint naming Cobra, the company successfully moved to disqualify the entire office from the case in San Francisco Superior Court. The ruling was appealed to the California Court of Appeal, which upheld the lower court’s decision in a 2-1 ruling in June 2004. The California Supreme Court agreed to take the case in August 2004.

The case is City and County of San Francisco v. Cobra Solutions, Inc., Supreme Court of the State of California, Case No. S126397 (after a decision by the Court of Appeal, First Appellate District, Division Five, Case No. A103479).