City Attorney loses appeal against sewer whistleblower in $5 million case

Joanne Hoeper (Mike Koozmin/S.F. Examiner)

A whistleblower prevailed against City Attorney Dennis Herrera in the California Court of Appeals Thursday, which upheld an earlier jury decision that awarded her $2.4 million in attorneys fees in 2017, in addition to $2.6 million in damages.

Joanne Hoeper, the whistleblower in question, was a chief trial deputy in the City Attorney’s Office who began digging into an alleged scheme to game sewer repair contacts with The City. Her investigation extended all the way into the City Attorney’s Office itself, which she alleged approved thousands of meritless claims, prompting a dispute between Hoeper and Herrera that ultimately led him to fire her in 2014.

That $5 million decision may also rise with interest, according to Hoeper’s attorneys.

But this isn’t over yet: Herrera’s office has the option to appeal this latest decision to the California Supreme Court or seek another form of review.

Still, Hoeper’s attorneys, Karl Olson and Therese Cannata, celebrated the win.

“It’s tremendous vindication for Jo. It takes a lot of courage to be a whistleblower,” Olson told me. “The City did everything it could to destroy her reputation in public statements,” Cannata said. “The jury rejected all of that.”

The City Attorney’s Office said it is reviewing the appeals court decision and is evaluating its next steps.

City Attorney’s Office spokesperson John Cote pushed back on Hoeper’s status as a whistleblower.

“This case is about an employment dispute. That’s at the heart of the issues that were before the court,” Cote said in a statement. “Sometimes juries get it wrong, and that’s what happened here.”

The case stretches back nearly a decade. In 2011, Hoeper was tipped by the FBI to a possible scheme concerning fraudulent claims for sewers that property owners said were damaged by the roots of City-owned trees. Hoeper’s investigation found claims for The City to pay contractors to repair those sewers for amounts nearing $10,000 each, which she alleged were improperly signed-off on by repair contractors themselves, instead of homeowners who were legally required to sign releases to authorize the work.

Those repairs are normally handled by Public Works crews and paid out of a San Francisco Public Utilities Commission budget, according to court documents. Hoeper alleged The City’s annual tree maintenance claims ballooned from $141,000 annually to more than $4 million annually between 2002 and 2010 due to flimsy claims made by plumbers and other private contractors.

Hoeper has claimed the scheme cost The City roughly $10 million.

Eventually, Hoeper’s investigation extended into the City Attorney’s Office itself, focusing on Claims Unit Assistant Chief Michael Haase, who investigated and approved claims against The City for the damaged sewers, and his supervisor, attorney Matthew Rothschild. Haase stated the plumbers and other contractors aggressively soliciting homeowners for repairs, among other activities, were “unethical but not illegal,” according to court documents.

Hoeper and Herrera’s disagreement stemmed from the investigation of his own attorneys, with Hoeper suspecting Haase engaged in possible wrongdoing. After learning of the investigation, Rothschild confronted Hoeper and other attorneys working on the case, presenting himself as “loud” and “accusatory” and allegedly threatening the investigation team.

‘You’ll be sorry. I won’t stand for this. You don’t know what you’re doing. You’re wrong. I’m going to go on a hunger strike. You can’t—this can’t go on,” Rothschild allegedly told the attorneys, those attorneys said in court documents.

In a 2014 filing with the Labor Commissioner, The City Attorney’s Office criticized Hoeper’s investigation at length, alleging that she recommended firing Haase “straight away,” and instead was told by Herrera to gather facts and no to “jump to conclusions without evidence.” She was given access to Haase’s hard drive, email history, phone records, and finances, but found “no evidence” of a kickback scheme, The City Attorney’s Office wrote at the time.

The City Attorney’s Office continued, in a statement, “[a]lthough Ms. Hoeper was not fired because of the sewer investigation, her exercise of poor judgment in dealing with the investigation, and her predilection to take a scorched-earth path based on instinct and without all the facts, were emblematic of problems that she had demonstrated for years.”

After Thursday’s appeal win, however, Cannata, Hoeper’s attorney, said that the jury by its findings found the investigation, in effect, “to be a well-reasoned investigation.”

Cote, the City Attorney’s Office spokesperson, disagreed and said, “This case was never about corruption, and no court has found or suggested any City corruption in connection with Ms. Hoeper’s claims.” He added that winning an appeal in an employment case like Hoeper’s is “challenging.”

Cannata said that Hoeper takes on pro-bono cases and continues to do other “good works” after her termination from work with The City. To her understanding, the issues with sewer repair contracts have stopped, but Hoeper is disappointed the City Attorney’s Office staffers she investigated were never disciplined.

“She is a woman of impeccable integrity, she’s a hard-working person. and she had the best interests of San Francisco at heart at all times,” Olson said.

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