Memorandum INQUIRY BACKGROUND INFORMATION

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Nancy Lyons
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1 Memorandum ATTORNEY-CLIENT PRIVILEGE TO: Mayor and City Council CLIENT-MATTER NO.: FROM: City Attorney DATE: January 26, 2009 RE: Mayor Leon Investigation INQUIRY You have inquired what efforts were made by the City of Ontario ( the City ) to look into Mayor Paul Leon s alleged extramarital affair which was called formally to the City s attention by letter dated June 3, 2008 from the Law offices of Loredana Nesci. BACKGROUND INFORMATION On June 3, 2008 attorney Loredana Nesci, briefly introducing herself as the lawyer for unidentified clients, appeared before the City Council of the City of Ontario and tendered a letter to the City Council regarding Mayor Paul Leon. Mayor Leon was not present at that City Council Meeting. Her letter alleged that the Mayor was having an extramarital affair with a female employed by the private firm operating the City s Ontario Convention Center under contract with the City. Ms. Nesci, along with two private investigators, apparently in her employ or in the employ of her clients, presented photographic and other evidence which they alleged showed the Mayor and a female companion fraternizing with one another, checking into a hotel in the City, entering a room in the hotel and closing the door to the room in the hotel. They also presented related evidence in the form of a trash bag allegedly removed from the hotel which contained empty bottles of alcohol, an airline ticket stub and a room key holder bearing the name Paul Santos. Ms. Nesci s letter demanded that an immediate and thorough investigation be conducted to determine the City s civil liability in any potential sexual harassment lawsuit. The letter also demanded that the City investigate the Mayor s alleged criminal conduct in misreporting and non-reporting campaign spending and money allegedly raised for charitable contributions. After receiving her letter, some members of the City Council expressed concerns about the Mayor s behavior and the City s potential liability. The City Council subsequently met in Closed Session to discuss the possibility of investigating the allegations in order to protect the

2 City. The City Council then authorized and directed the City Attorney s office to research the extent of the City s legal liability for the conduct alleged. Subsequently, after reviewing the findings and determinations of the City Attorney s office in Closed Session, including the City s possible legal liability, the City Council determined that the allegations did not merit further investigation of Mayor Leon by the City itself and that the City generally lacked jurisdiction to civilly or criminally prosecute the Mayor with respect to the alleged conduct. These conclusions were subsequently announced to the public orally and in later communications in writing to inquiring citizens. The Statement released to the public read as follows: The City Council met this afternoon in Closed Session to be briefed by the City Attorney on recent allegations made to the City regarding the personal conduct of Mayor Paul Leon. The City Attorney has concluded, based on the information currently available, that the Mayor s conduct would not appear to create any legal liability for the City of Ontario because the conduct complained of does not involve a City Employee. We have been advised by the City Attorney that the City has no legal jurisdiction with regard to the campaign finances of its elected officials. Although the State Fair Political Practices Commission may choose to investigate campaign finance expenditures the City would not be liable for any FPPC enforcement action. By letter dated September 30, 2008 several individual citizens contacted the Ontario Police Department outlining some of their concerns about the Mayor s conduct and asking the Police Department who we should contact because the Ontario City Manager informed us that our concerns about the Mayor were not a city matter and for advice generally on who is going to investigate this case. They expressed concerns that the Mayor may have registered at the hotel using a false name and perhaps used false identification, that he may have conducted an alleged extramarital affair on City time, and that he may have received unreported gifts of free rooms from the hotel. On October 14, 2008, Ontario s Chief of Police responded with a letter, stating that the concerns regarding the alleged conduct of the Mayor were not a police matter and that he considered the subject closed. In response, on January 20, 2009, three individuals sent a letter to the Ontario City Council, again raising concerns about the Mayor s alleged conduct as well as questioning why the City Council provided the Mayor with a special salary that was clearly not warranted. Their letter also indicated If the suspicions of Mr. Leon s conduct are not true, an investigation will correct the public concern. QUESTIONS PRESENTED 1. When the allegations of the Mayor s misconduct first surfaced, what legal advice did the City Attorney s Office provide to the City Council as part of its investigation and what steps did the City Council take in response to that advice? 2. What additional actions may the City Council undertake if it wishes to do so, in response to the additional concerns about the Mayor s conduct raised by several citizens? - 2 -

3 SHORT ANSWER On June 3, 2008, immediately upon learning of the allegations concerning the Mayor, some members of the City Council asked the City Attorney to assess not only the City s potential liability for the Mayor s actions but to potentially, independently investigate the matter as well. The City Attorney met that same evening with Ms. Nesci, the attorney making the allegations, and made it clear that the City Council took such allegations very seriously. All of the allegations were carefully reviewed (in all instances presuming they were true). The conduct complained of, and the City s potential legal liabilities were fully researched. We concluded that the City itself was not liable for any of the Mayor s alleged conduct. Even presuming all of the allegations against the Mayor were true, the City did not appear to have any legal authority to take further action, civilly or criminally, because the alleged conduct was outside the City s jurisdiction. In response to its review of the legal advice provided by the City Attorney, the City Council decided not to continue any further legal investigation by the City into the allegations. As the City s Police Chief said in his letter of October 14, 2008, these concerns are not a police matter. This decision was announced to the public and later communicated in writing to at least some inquiring individual citizens. Since the concerns recently raised by a group of citizens revolve around the same set of allegations previously made against the Mayor, we continue to believe the City has no civil or criminal jurisdiction over these matters, except as noted below, and as we understand it the City has historically elected not to initiate complaints or inquiries regarding campaign spending and reporting violations by City officials. If the City Council now wishes to pursue these matters further, additional alternatives are set forth at the conclusion of this memorandum. ANALYSIS City Council s Request for Legal Advice In her June 3, 2008 letter, Ms. Nesci, on behalf of her clients, demanded that the City Council conduct an immediate and thorough investigation of the City s civil liability and the Mayor s criminal conduct. She asked the Council to, first, conduct a thorough investigation to determine the City s liability in any potential sexual harassment and hostile workplace lawsuit and, secondly, investigate the Mayor s alleged criminal conduct concerning his campaign spending, non-reporting and money he allegedly raised for charitable contributions. We were unable to locate any supporting documentation for the allegedly raised charitable contributions, although Ms. Nesci s letter does include reference to a campaign consultation payment to Giselle Hoehn Consulting. The City Council asked the City Attorney for legal advice on both of these matters. City s Liability in Potential Sexual Harassment Lawsuit After hearing and reviewing these allegations of potential sexual harassment and hostile work place claims against the City, the City Council authorized the City Attorney to begin an examination of the City s potential liability. We assumed for purposes of our legal analysis that the allegations regarding the Mayor s conduct were true. We undertook no - 3 -

4 independent factual investigation of these matters. It was assumed for purposes of this investigation that a lawsuit would or could be filed. It was first determined that the City itself was not liable for a potential harassment claim because it was not likely that the City knew or should have known about the Mayor s conduct. Furthermore, even if it was assumed the City did know about the Mayor s conduct, his identified female companion was not an employee of the City. Therefore, since there was no indication whatsoever that the City had knowledge of the conduct alleged or that the City exercised any legal control over employees employed by the company managing the City s Ontario Convention Center, the City Attorney s office determined that the City itself would not be liable for any potential harassment claim. Sexual harassment is unlawful under both Title VII of the Civil Rights Act of 1964 and a section of the California Government Code entitled the Fair Employment and Housing Act. Both sections prohibit quid pro quo and hostile work environment sexual harassment by employers toward employees. (Gov. Code, 12940, subd. (a).) The Fair Employment and Housing Act also prohibits an employer from allowing an employee to harass a person providing services pursuant to a contract. (Gov. Code, 12940, subd. (j)(5).) The alleged harasser s employer would only be liable for the harasser s conduct under the Fair Employment and Housing Act if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action. (Gov. Code, 12940, subd. (j)(1).) Therefore, the City could generally only be liable for the Mayor s conduct if the City was aware of the alleged conduct. We are unaware of any evidence that any City official or employee knew about or had direct information of the Mayor s alleged conduct. Furthermore, for the City to be liable under a sexual harassment claim, the harassing conduct must have involved either an employee of the City or a person providing services pursuant to a contract with the City. It was determined that the identified female did not fit either of those categories because she was not under the professional direction and control of the City. The City did not employ her. Instead, the City contracted with her employer, the corporation contracted to run the Convention Center. The City did not pay her wages and did not determine either her work hours or the scope of her work. The corporation contracted to run the Convention Center made all personnel decisions independent of the City and the City did not exercise any independent discretion concerning her employment. Therefore, it was determined that the City would most likely not be liable for any sexual harassment claims brought by the identified female because the City did not know about the alleged misconduct and she was not a City employee. City s Liability in Potential Hostile Work Environment Suit The attorney making the allegations also raised the possibility that the City might be liable for a potential hostile work environment claim because of the Mayor s alleged conduct. California courts have held that a single consensual affair could create a hostile work environment claim pursuable by a third party if the affair resulted in favoritism that conveyed a widespread workplace message that sexual conduct with supervisors or management could lead to professional advancement. (Miller v. Department of Corrections, (2005) 36 Cal.4th 446, ) However, for such an action to be successful, the employer of the involved parties would have to know or should have known about the harassing conduct and fail to take corrective action. (Doe v. Capital Cities, (1996) 50 Cal.App.4th 1038, 1046.) - 4 -

5 We are unaware of any evidence that shows either required factor for a hostile work environment was present. We are unaware of any professional advancement or favoritism garnered by the identified female because of her alleged relationship with the Mayor. It was determined that it would have been especially difficult for her to accrue these advantages because she was not an employee of the City. Furthermore, as previously stated, we are unaware of any evidence that any City official or employee knew of the Mayor s alleged conduct and, as such, the City could not be held liable for failing to take corrective action. Therefore, the City would also not be liable under any potential hostile work environment claim. Mayor s Alleged Use of Campaign Funds to Hire a Personal Trainer In addition to authorizing the City Attorney to begin an examination of the Mayor s alleged personal conduct, the City Council also requested that the City Attorney consider the legal consequences of the Mayor s alleged use of campaign funds to pay for the services of a personal trainer. It is my understanding that the City has not historically reviewed for legal sufficiency, campaign reporting forms for electors to City municipal office. I am not aware of any referral by the City to the District Attorney of any such matter for criminal or civil complaint given the State of California s pre-emptions of campaign reform and finance reporting as regulated under the terms and conditions of the Political Reform Act. We should note that according to California Government Code section [c]ampaign funds shall not be used to pay health related expenses for a candidate[] [or] elected officer (Gov. Code, 89513, subd. (b)(3).) Specifically, [h]ealth related expenses includes, but is not limited to health club dues (Ibid.) The Political Reform Act provides that, any person who makes or receives an honorarium, gift, or expenditure in violation of this chapter is liable in a civil action brought by the commission for an amount of up to three times the amount of the unlawful honorarium, gift, or expenditure. (Gov. Code ) Therefore, since the alleged conduct involves the Mayor s misuse of campaign funds, it could potentially violate the Political Reform Act. For alleged violations of the Political Reform Act by City officials, the district attorney of the county in which the violation occurred acts as both civil and criminal prosecutor, which, in this case, would be the District Attorney of San Bernardino County. (Gov. Code ) As a matter of policy, the San Bernardino County District Attorney refers all complaints concerning campaign contributions to the Fair Political Practices Commission ( FPPC ) for an initial review and investigation. If the FPPC concludes that a criminal review is justified, they apparently forward the matter back to the San Bernardino County District Attorney. Alleged Affair s Occurrence on City Time As we understand it, three individual citizens in a letter to the City, dated January 20, 2009, have now raised additional concerns about further allegations of misconduct by the Mayor. They have expressed concerns that the Mayor had engaged in non-professional activities during business hours, thus wasting what they refer to as City time. The City employs both hourly and salaried employees. Under the Personnel Rules and Regulations of the City, rule XXVI, section 1, all bargaining unit employees are required to have regular start/stop times. These regulations do not apply to non-bargaining unit employees and the Mayor, as an elected official, is not a bargaining unit employee. To the best - 5 -

6 of our knowledge, regular start/stop times have never been applied to the Mayor and other members of the City Council nor are these individuals required to account for their time. The Mayor and the City Council members have been allowed to perform the functions of their jobs at various times throughout the day and night without account as to whether or not business was being conducted on City or personal time. City elected officials are not required to, nor do they work a regular hourly schedule. Therefore, it is not legally possible to delineate between their time as City time as opposed to personal time. It did not appear appropriate for the City Attorney to make any further determinations regarding whether or not the alleged extramarital affair occurred on City time as this appears to be a matter of fair comment. Even assuming, however, it does, there does not appear to be any historical precedent for any civil or criminal violation of law. Mayor s Alleged Unreported Receipt of Free Hotel Rooms and Room Service Citizens have also raised questions about the Mayor s relationship with the hotel where he and the identified female were photographed and the possibility that the Mayor may have received free or reduced goods and services from this hotel. Although it was alleged to be public record that the Mayor failed to pay for hotel rooms and received free room service, we were presented with no evidence one way or another as to whether or not he paid for the hotel room or received free room service. If these allegations are true, and the Mayor did receive as gifts free hotel stays and did not report them, he could potentially be in violation of the Political Reform Act. As previously noted, the District Attorney of San Bernardino County is charged with investigating and punishing violations of the Political Reform Act by officers and employees of the City. Therefore, we concluded, and recommended to the City Council, that it was legally up to the San Bernardino County District Attorney to determine whether or not to initiate further investigation based upon the numerous published reports of these allegations regarding possible gifts of hotel stays to the Mayor. Mayor s Alleged Use of False Name at Hotel It has also been suggested that the Mayor may have used a false name when checking into the hotel. Ontario Municipal Code Section (Regulation of Public Lodging Facilities) requires all hotel operators to keep a register of hotel guests in which they are required to have all guests, roomers, or lodgers print and sign their names upon procurement of a room. The Code does not mention any further requirements placed on the hotel operator to ensure that the name given is legally true and correct nor is there any requirement that hotel operators request proof of identification or that guests provide identification. The Code only requires that the hotel operator have the guest sign their name. Furthermore, there is nothing in the Ontario Municipal Code that makes it illegal to provide a false or incomplete name upon checking into a hotel. Although California Penal Code Section makes it a crime to give a false or incomplete name to a peace officer, a hotel operator is not a peace officer for purposes of the Penal Code. We are not aware of any civil or criminal prosecution in the City of either a guest or hotel operator for using a false name to register at a hotel within the City. The illegality of using a false name to check into a hotel was separately investigated by the Ontario Police Department

7 CONCLUSION Upon learning of these allegations about Mayor Leon in June of 2008, the City Council immediately directed the City Attorney s Office to research the extent of the City s legal liability for the Mayor s alleged conduct. After receiving the findings and determinations of the City Attorney s Office in Closed Session, the City Council concluded the City s investigation of the alleged conduct of the Mayor because the City Attorney s Office advised that the City was unlikely to be liable for any potential sexual harassment or hostile workplace suits. No subsequent formal complaints or lawsuits, other than the following inquiries from individual citizens, were filed to our knowledge. The remaining allegations did not appear to be civilly or criminally actionable except for the alleged violations of the Political Reform Act. Although there are a variety of civil and criminal penalties and civil remedies for violations of the Political Reform Act, the City generally lacks the ability to enforce those penalties. Finally, the City could furnish FPPC and District Attorney contact information to the individual citizens who continue to express their concerns in the event they wish to pursue these matters further. The FPPC requires that all complaints regarding campaign finances be formally filed by filling out the form located at the following web address: Fair Political Practices Commission Further contact information for the Fair Political Practices Commission is as follows: Enforcement Division Fair Political Practices Commission 428 J Street, Suite 620 Sacramento, CA The contact information for the District Attorney of San Bernardino County is as follows: District Attorney's office Michael A. Ramos Public Integrity Unit San Bernardino County District Attorney's Office 316 N. Mt. View Ave. San Bernardino, CA da@da.sbcounty.gov JOHN E. BROWN - 7 -

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