The Privileged Secrets of Ludington's Negotiations with Michigan Power

[XLFD]

At the August 24, 2015 meeting of the Ludington City Council, the council will likely decide to keep public records away from the people illegally and flagrantly using a privilege they do not possess.  They will do this to cover up the negotiations and concessions between the City of Ludington and Michigan Power, which seems to have been an amazing deal for that company, at the expense of all the other people utilizing the city's water and wastewater systems. 

The attorney who is hired by the City of Ludington for coordinating FOIA requests, Carlos Alvarado, stands to make a lot of money if this scheme to withhold records succeeds, for he wants to take hours exempting information from records that were not requested.  To understand this all, we need to look at some background information on the privilege the FOIA Coordinator has claimed makes some of the records need these extensive revisions, and then look at the request and its responses. 

The Attorney Client Privilege

The attorney-client privilege encourages clients to disclose to their attorneys all pertinent information in legal matters by protecting such disclosures from discovery at trial. The privileged information, held strictly between the attorney and the client, may remain private as long as a court does not force disclosure.  The privilege is as old as the Roman Empire, and a standard of common law. 

The privilege defies a strict definition, but one often-cited characterization was set forth in United States v. United Shoe Machinery Corp., 89 F. Supp. 357 (D. Mass. 1950). The Supreme Court articulated five requirements:

1) the person asserting the privilege must be a client, or must have sought to become a client at the time of disclosure;

2) the person connected to the communication must be acting as a lawyer;

3) the communication must be between the lawyer and the client exclusively—no non-clients may be included in the communication;

4)  the communication must have occurred for the purpose of securing a legal opinion, legal services, or assistance in some legal proceeding, and not for the purpose of committing a crime;

5) the privilege may be claimed or waived by the client only (usually, as stated above, through counsel).

Sometimes, even when all five of the United Shoe requirements have been met, courts will compel disclosure of the information sought. They base exceptions to the privilege on Rule 501 of the Federal Rules of Evidence, which states that "the recognition of a privilege based on a confidential relationship … should be determined on a case-by-case basis."

Courts weigh the benefits to be gained by upholding the privilege (that is, preserving the confidence between attorney and client) against the harms that might be caused if they deny it (that is, the loss of information that would be valuable to the opposing party).

The FOIA Request

I am in the midst of fact-finding to further understand the three way deals made between the City, Michigan Power, and Pere Marquette Township.  This deal was presented to the public just earlier this year for the first time, but it has been a long time in the making, and in Impure Ludington government style, it has been kept secret from the general public for a long time, with corporate lawyers and administrators negotiating the terms irrespective of the underlying implications to the public. 

Most information I have currently amassed will be kept 'privileged' until I get enough data to connect the abundance of dots.  But I desired to learn a bit when I made this FOIA Request on July 21st, with the usual parameters for the following records:

"For the period between September 1, 2014 and March 7, 2015 E-mails (including attachments), letters, proposals and other similar writings (such as meeting notes, counterproposals, etc.) between certain officials in Ludington [the City Manager, Asst. City Manager, City Water/Wastewater Supervisors, the City Attorneys (be specific if invoking the Attorney/Client privilege for this public attorney position), Mayor, City Councilors] and the entity of Michigan Power, including its executive board, or specific executives."

I specifically highlighted that the writings/communications be limited to those between the two bargaining parties, not writings of city officials to other city officials, where a legitimate attorney-client privilege could be invoked if one of those officials were one of our 57 attorneys.  The time period was also limited to a half-year's time where what I was looking for would be at. 

The FOIA Response

I received an extension from Carlos Alvarado, FOIA Coordinator (pictured above), which was reasonable considering there may have been many communications, but then I received the answer on August 12:

"... Upon completing a review of the record I determined that a release of the electronic files containing the records is not possible as it is necessary to redact a substantial part of the documents, thus copying the files in hard copy is the only choice available to perform such task. The documents identified as responsive to your request amounts to 630 pages. An estimation of the hours required to redact said documents is 9 hours. Since the task involves separation of exempt from nonexempt information, I would have to complete said task. Outside Legal Counsel Fees are contained in the attached Worksheet. The costs of separation of exempt from nonexempt information amounts to $440.10. See attached FOIA Cost Estimate Worksheet. Thus, the City requires that you please deposit 1/2 of said estimated cost ($220.05) before proceeding to process your request."

I also received this Cost Worksheet.pdf and FOIA Response_285.pdf where it explains that the Attorney Client Privilege (ACP) is the only exemption.  Whereas, I asked in the request to be specific in the ACP application, there is nothing in the request telling me who claimed the privilege and why they did so.  Or for that matter how they could, since the ACP should not have even applied under the limited nature of records sought.

The Soft Appeal

I replied in an August 13 E-mail:  "You are unethically trying to pad your salary. You are trying to say there is an attorney-client privilege in the records I seek, in fact, this is the only exemption you note, but there is no chance for it in the records requested.

To have communications between Ludington's city attorney and officers of Michigan Power be declared A/C-privileged it must satisfy four factors-- you should be aware of these:

1.The information is a communication;
2.The communication is made in confidence by a client to his or her attorney (or by the attorney to his client);
3.In the communication, the attorney is acting as legal advisor;
4.The communication must be for the purpose of obtaining legal advice on some right or obligation.

E-mails, letters, etc. between the city attorney(s) and Michigan Power officials are communications, but the MP officials are not our city attorney(s) client, the City of Ludington is their client.

If you claim the attorney-client privilege is active here, it would be for those communications between our city attorney(s) and city officials-- but that is not part of my request.

Either that, or your reply indicates our city attorney(s) were in the highly unethical act of representing both Michigan Power and the City of Ludington at the same time.

If that is the case, I hope you have the autonomy to inform the Attorney Grievance Commission, for that will be who I contact if you do not make these E-mails and communications available-- the one's requested-- without exemption. Thanks, and consider it an appeal if you continue to blockade these records unlawfully, since their is nothing for you to exempt now."

The Soft Appeal Answer

The next day's response:  "I am in receipt of your email and before I process the appeal as you requested, I would like to clarify that the requested record is encompassed by e-mails from the City to Michigan Power (non-exempt) but also many of these emails contain communications from the City to its attorneys (exempt) on the same page. Thus, on that single page printout, the e-mail to a city attorney would be redacted but the e-mail from the City to Michigan Power would not be redacted. Please let me know if this explanation clarifies the issue and whether you would like to continue with the appeal. Thank you."

The Hard Appeal

Believing that if someone from the city, be it an attorney or an official, sent an E-mail to Michigan Power that included information the city wanted privileged, would waive any such privilege, I fired back to the six legitimate councilors and the FOIA Coordinator:  "Carlos, No, it doesn't at all. If a city attorney for Ludington sends an E-mail to Michigan Power, and that contains an 'E-mail string' where city officials have been talking with city attorney(s), then the privileged nature of that communication has already been waived. Check your precedents and your professionalism, and send the requested documents without charging the taxpayers and me for your expensive time doing nothing legal. Failing that, have this put as an appeal at the next city council meeting.

Councilors,

Please, look at this 'E-mail string' and encourage your employee to not bilk me and the taxpayers many hundreds of dollars in needless maneuvers to keep your dealings secret and send me these non-exempt records. Ask some of your other 66 attorneys whether this is a matter of attorney-client privilege. Thanks."

This was followed shortly by City Manager Shay apprising me that the issue was to be put on the August 24 agenda, and was the only issue which the COLDNews avoided saying would be addressed at the meeting in this weekend's paper.  Our local newspaper has no problems with the misapplication of the Freedom of Information Act, apparently.

The Dispute Analyzed

Beginning on page 144 of the 8-24-2015 Council Packet.pdf is the actual documents and E-mails above with the city's FOIA Coordinator's reasoning that they believe their point is valid.  Carlos' reasoning (beginning on p. 145) is summed up by his Exhibit 4, which is predicated by:

Here is what Exhibit Four (p. 154-155) consists of:  1) an E-mail originally sent from Kenneth Tomaski of MP to John Shay.  2) John Shay then forwarded this E-mail to a city attorney (James White, you probably never heard of him), and Mark Beauchamp who is a consultant for Utilities Financial Solutions, who received tens of thousands of dollars from our city attorney Richard Wilson (pictured below), via an illegal scheme, while Beauchamp figured out how much the city should raise their water/sewer rates.  3)  Then these two E-mails were sent from Attorney White back to Shay and Beauchamp, with his edited response. 

Now the first is obviously compliant with the FOIA request, but the latter two are definitely not (even when they have couched the first within them), and need not even be looked at.  They are communications from/to city officials to a city attorney and fall outside the request. 

But even if they were part of the request, they would not be privileged, because of the inclusion of Mark Beauchamp, who wasn't even working for the city at that time, but only for our city attorneys as a non-attorney contractor.  Recall part three of the legal definition of ACP:  "the communication must be between the lawyer and the client exclusively—no non-clients may be included in the communication."  Beauchamp was not a member of the city or even a legitimate contractor thereof.  Hence the communication in Exhibit Four has exemptions take out unlawfully. 

And even if such copies were not sent to Beauchamp or anyone else for that matter, there is still a major factor in play that makes the redaction in Exhibit Four and all other inter-city communications they may add illegal and unwarranted-- if those records had actually been requested in this case, which they weren't. 

Simply put, the fifth stipulation for ACP is not met, at least not yet:  "the privilege may be claimed or waived by the client only." 

Who is the client of our city attorneys?  The public corporation known as the City of Ludington.  Who can make the decision to claim a privilege exists here?   Only the client, whose decision-making authority comes only from the city council, according to our charter Section 3.1. 

"The Council ... shall have power and authority... to exercise all powers conferred upon or possessed by the City..."

Our contracted city attorneys and city manager have no such power to claim the material as falling within the ACP, they can only recommend to the council that such a privilege should be extended to the records, at which point the council can vote in an open meeting to claim privilege.  Mr. Shay's recommendation on p. 144, and Mr. Alvarado's legal analysis beginning on p. 145 states that ACP has been claimed, but the city council has never made such a declaration of privilege at any meeting.  Can we mark this down as yet one more violation of the Open Meetings Act by this corrupted and non-transparent group?

Even before then, you have to ask yourself, now that the deal has been done and the contract ink is dry, why would they want to invoke privilege over such documents, unless our city leaders are hiding shady bargaining and decision-making?  Or more likely, how bad they screwed the Ludington taxpayer in getting this deal that makes officials at Michigan Power and PM Township ecstatic over it, while our water and sewer rates rise dramatically in four rate hikes over the next two years to pay off $28 million in bonds, leaving those of us who are paying attention to wonder just what our city leaders got in their secretive process. 

[XLFD]

The administrative appeal was turned down unanimously earlier tonight, but what was refreshing is that City Attorney Richard Wilson tried to explain the dynamics of the issues involved and fumbled the ball. 

[shinblind]

X, will you have an expanded explanation of City Attorney Wilson fumble?

$8 million dollars out of the pockets of Ludington ratepayers and pissed away by John Shay to supply water to Michigan Power is serious business.

The City of Ludington handling of this situation looks like a cover-up, sounds like a cover-up and is starting to smell like a cover-up.

Where the hell are the City Councilors in all this? Are they too busy inking up their City Manager's rubber stamp to pay attention? 

[XLFD]

 Yes, definitely, Shinblind.  And eventually the records will become public, and the methods used throughout will be totally discredited as contrary to law and the public interest. 

As I pointed out at several times, beginning last year, was that the City unlawfully funneled money through the Mika Meyer's law firm, specifically through serial-overbill-specialist Richard Wilson, to pay for cost-of-service consulting by Utility Financial Solutions, a firm that they hired directly this summer with council approval (finally). 

The city's leaders believe apparently that Shay carrying on secret negotiations and hiring expensive contractors and getting attorney's advice secretly was in the city's best interests.  I believe it's not only extremely unethical and against the public interest, but also illegal in many ways, and by the records insofar and by the reactions of our deal's partners (PM Township and Michigan Power), I believe we were summarily taken due to Shay's incompetence/self-interests. 

John Shay, the man who crafted the deal to paint two water towers for $1.2 million, when in the year 2000 then City Manager Jim Miller had them repaired and painted for under $300,000.   Yes of course there was no competitive bids sought by Shay, because the towers didn't need painting at that time, they could have safely made it past the year 2020. 

John Shay the man who sold a plot of land valued at $50,000 in the downtown area to his daughter's soccer coach for $5000, just under a year after buying two lots vacated from a city overtaxing scheme near the Danaher Tower with city privilege, which mandated having to use the land with a public purpose, then selling off one lot to a private party, and keeping the other lot purposeless since.

These are a matter of public record, and few people seem to give a flying fudgepot.  Thanks to all who are paying attention

[Willy]

I'm sure glad you have the smarts to keep track of all the shady dealings that are going on at City Hall. To me it all resembles a maze. I to wonder where the hell are the representatives that were elected by voters to act as Councilors. What is the matter with these people, especially when they are presented with information that you have discovered. It's as if the Councilors are put into a trance when they sit down to do Council business. The Stepford Council would be a good name for them. Another excellent article X.

[XLFD]

I doubt I have the smarts to cover all the shady dealings at city hall, but I'm at least smart enough to catch them at their game sometimes.  I just ask myself "What Would John Shay Do?" given the known factors, and assume the worst scenarios, then confirm or dispel them with investigations.  Thanks for considering my product praiseworthy.

[AQUAMAN]

Yes, it IS nice that someone cares enough and takes the time to uncover some of the foibles of city hall. There's more smoke to their fires than we all could ever imagine, and they certainly don't take kind to the exposure. The tangled web the COL has now weaved is so big, and so complex, it's a wonder anyone would be steadfast in their pursuit of this much trouble. Meanwhile, some taxpayers are finally coming forward to also vent their frustrations and questions about so many changes to our city charter and new ordinances, and that's a good thing. Stepford Council Willy? That is a pretty accurate observation, and I totally agree!