August 2017 Volume 17, Issue 6
Oakland City Attorney Barbara J. Parker 
News from the Oakland City Attorney's Office
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At the end of last year, just a few weeks before the end of his second term, President Obama issued a proclamation declaring January 2017 "National Slavery and Human Trafficking Prevention Month."

"From factories and brothels to farms and mines, millions of men, women, and children in the United States and around the world are exploited for their bodies and their labor," President Obama declared. "As leaders in the global undertaking to end the exploitation of human beings for profit, we must always remember that our freedom is bound to the freedom of others."

President Obama's proclamation is worth remembering right now, not just because his characteristic eloquence and his moral leadership on this grave issue stand in such stark contrast to the muddled and morally bankrupt drivel that we hear from the current holder of the office regarding slavery and exploitation in America.

President Obama's words also struck a deep chord because Oakland sadly is one of the human trafficking capitals of our country.

As City Attorney, disrupting and shutting down this industry continues to be a top priority of my Office. The City Attorney's Neighborhood Law Corps has been working with Oakland police to investigate and prosecute businesses that cater to or profit from the sexual exploitation of women and girls in our community, and we are using our authority under state law to file lawsuits to shut those businesses down. Below is a report about a recent positive result in one of those cases.

Also in this newsletter: a major settlement in the City's fraud lawsuit against bond insurance companies, and updates on other major cases including Oakland's lawsuit against lead paint companies.

As always, I look forward to your questions and comments about the work we are doing on behalf of the people of Oakland.

  Barbara J. Parker
 Oakland City Attorney
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Neighborhood Law Corps Shuts Down Human Trafficking at East Oakland Massage Parlor 

The City Attorney's Neighborhood Law Corps (NLC) has shut down a business that operated as a front for what appears to be a large scale human trafficking organization that has been operating in a number of California cities.
In 2016, the NLC filed a lawsuit against the owners and operators of the 888 Massage Spa on 98th Avenue after Oakland police conducted undercover investigations and made a number of arrests. 
Despite the arrests, and despite notice to the owners of the building in which the spa operated, the business continued to operate more or less openly as a brothel.

The "spa" immediately closed its doors after the NLC sued the owners of the property and the operators of the business.

The owners of the limited liability company that owned the property recently agreed to settle the lawsuit. Under the settlement approved July 27 by Alameda County Superior Court Judge Victoria Kolakowski, the owners of Waterhouse Properties, LLC will pay the City $75,000, and are permanently enjoined from owning, operating or leasing any building to a massage parlor, bathhouse, gym, sauna or any business that involves partial or full nudity.

The settlement requires that a portion of the settlement funds be used exclusively for future affirmative litigation and civil law enforcement.

The NLC's lawsuit continues against the other defendants, Hiroshi Odashima and Sun Cha Kim, two Southern California residents who operated the "spa" are connected to other trafficking/prostitution businesses in the state.
Both are named as defendants in a pending NLC lawsuit against a massage parlor/brothel on Edgewater Drive in East Oakland. Defendant Odashima also is a named defendant in a third NLC lawsuit against a separate prostitution business on Telegraph Avenue in North Oakland.
Odashima, an Orange County resident in his 70s, apparently acts as a "front man" for multiple prostitution operations in Oakland and elsewhere. He was the official owner of the spa on 98th Avenue and filed paperwork for the business, which operated despite the fact that the City of Oakland never issued a massage establishment permit to Odashima, and despite the fact no one ever applied for or received a permit to work as a massage therapist at the spa.

Oakland police arrested defendant Kim in 2015 for supervising and soliciting prostitution at 888 Massage Spa. The District Attorney charged her with engaging and agreeing to engage in prostitution. The case is pending.

Police say the female workers at these businesses appear to be victims of human trafficking. They speak little or no English. Many come from China or Korea on travel or work visas, and then remain in the U.S. as "employees" of brothels after their visas lapse. Many of the women enter the trade to pay debts in their home countries. They often do not have access to their own passports, and some have no passports or any other form of identification. They often are moved from location to location in Oakland and across the state and refuse to act as witnesses.

The Neighborhood Law Corps is a unit in the Affirmative Litigation, Innovation and Enforcement Division of the City Attorney's Office that uses lawsuits and other actions to fight for social, economic and environmental justice in Oakland. The unit has shut down several illicit massage parlors, closed two motels that were operating as hubs of prostitution and human trafficking in Oakland, and reached settlement agreements with a number of other motels to stop trafficking at their properties.

We are committed to continuing to do everything we can to disrupt this criminal industry which depends on the abuse of women and girls, destroying their lives.

I applaud Neighborhood Law Corps Attorney Patrick Bears for his excellent and thorough work on this case.

City Attorney Secures Major Settlement in Fraud Lawsuit against Bond Insurance Companies 

Holding big banks and financial institutions accountable for discrimination and conspiring to defraud and/or otherwise rip off Oakland residents and taxpayers is one of my top priorities. 

We filed a lawsuit against Wells Fargo for its racially discriminatory and predatory mortgage lending practices in Oakland which violate the federal Fair Housing Act. We have recovered more than $1 million from financial institutions like the former Wachovia Bank in an antitrust case involving bid rigging in the municipal derivatives industry.   And I am proud to report that my Office has secured a major settlement with Ambac Assurance Corporation, one of the defendants in a lawsuit against bond insurance companies that conspired to defrauded Oakland taxpayers.
Ambac Assurance Corporation recently paid $754,888 to settle the lawsuit with Oakland.

In 2008, the City Attorney filed the lawsuit against major bond insurance companies. Those companies charged California cities and other public agencies millions of dollars to guarantee their debts, while at the same time concealing financial shenanigans that made it impossible for the firms to provide the services they were paid to provide.

Oakland and other local governments often use bonds to fund bridges, schools, parks, public safety and other critical services.

Public agencies are forced to pay excessive bond insurance because of an inherently unfair dual credit rating system that rates public entities lower than private corporations, even when public entities are more financially stable.

Unjustified lower credit ratings have forced California cities and public agencies to purchase bond insurance, pay excessively high interest rates on municipal bonds and spend millions of dollars on unnecessary payments to bond insurance companies. Ironically, public entities have proven to be less of a default risk than the insurance companies they pay to guarantee their debts.

The lawsuit alleged that Ambac and other defendants failed to disclose their exposure to risky subprime debt and other financial instruments. The bond insurers had excellent AAA credit ratings, which they "sold" to the City at exorbitant premiums to enhance the credit rating of the City's bond issuances, thus allowing the City to pay less interest to bond holders. But when the financial crisis hit in 2007, Ambac's top credit rating was downgraded, which caused the City's interest payments on its variable rate bonds to spike and forced the City to engage in costly refundings of those issuances.

In 2014, the City also settled with defendant Syncora Guarantee for $25,830, and settled with defendant Financial Security Assurance, Inc. for $1,000.

Although the total amount of settlements so far in this case ($781,718.77) is not large compared to the millions of dollars the City paid to Ambac and other defendants, these cases are important because they send a message to powerful financial companies that Oakland will not abide predatory and fraudulent schemes, and we will use all available legal remedies to hold these institutions accountable.

The lawsuit is ongoing against other defendants including the MBIA Insurance Corporation .

Court Hears Appeal of Decision Requiring Defendant Lead Paint Companies to Clean Up Toxic Lead Paint in the Homes of Oakland Residents 

On August 24, the City of Oakland's fight against childhood lead poisoning moved forward another step with a hearing before the California Court of Appeal (Court of Appeal Case No. H040880).

Oakland and nine other local government agencies joined in a 2001 lawsuit against major companies that either produced lead paint or purchased companies who had formerly engaged in that business.

Lead paint, when allowed to peel, exposed to friction, or disturbed during construction, can be ingested by young children or pregnant women. When this happens, lead acts as a cumulative neurotoxin and may result in irreversible brain damage. Despite widespread industry knowledge of the hazard, the defendant companies aggressively marketed lead paint for residential use until it became unlawful to do so. As a result, nearly every home built before 1978 contains lead paint hazards.

In 2013, more than a decade after the case was filed, the lawsuit finally resulted in a multi-week bench trial in Santa Clara County Superior Court. Oakland, along with the other plaintiffs, participated actively at trial and presented local witnesses and expert testimony. The defendants, including Atlantic Richfield (ARCO), ConAgra Grocery Products, DuPont, NL Industries (formerly National Lead Industries) and Sherwin-Williams, hired nationally prominent law firms and strongly contested the case, arguing that they were not responsible for harm caused by the products they manufactured, marketed and sold, all while knowing those products would certainly cause harm. 
In 2014, Santa Clara County Superior Court Judge James Kleinberg rejected these arguments and issued a decision holding several defendant companies liable for creating a widespread public nuisance. The judge held that the nuisance existed in the plaintiffs' jurisdictions and continued to endanger vulnerable residents, including children and pregnant women in low-income communities, and ordered the companies to create a $1.15 billion abatement fund to pay for clean-up of the lead paint nuisance.  In fact, lead poisoning disproportionally affects communities of color and low-income communities.

Of the total abatement fund, the trial court's statement of decision allotted $103,500,000 to Alameda County, to include Oakland residents; that sum will be jointly disbursed by the City Council of Oakland and the Alameda County Board of Supervisors.

Defendants appealed Judge Kleinberg's ruling in 2014. We expect a ruling from the Court of Appeal within 90 days. As Oakland's City Attorney I am committed to preventing future childhood lead exposures in Oakland and to holding companies that created these hazards accountable.

Other Major Case Updates
Brown v. City of Oakland Alameda County Superior Court Case No. RG09455950

The California Court of Appeal recently ruled in favor of the City in a dispute over a contract awarded more than 10 years ago for general contracting services. In 2006, the plaintiff, Mr. Brown, was a general contractor who received a one-year contract to perform various "as needed" construction projects for the City. Mr. Brown sued the City in 2009, claiming that the City failed to pay all he was owed. He also sued a former City employee, alleging that the employee made deceptive statements that caused Mr. Brown to underestimate costs of the construction projects and eventually led to the loss of his construction business. The trial court jury rejected Mr. Brown's claim. Mr. Brown appealed, and on July 27 the Court rejected Mr. Brown's appeal in its entirety.

Kavanagh v. City of Oakland Alameda County Superior Court Case No. RG16808127

Mr. Kavanagh alleged that he was riding his motorcycle when he hit a pothole on the off-ramp of Highway 24 at the Broadway exit. As a result of the accident, Mr. Kavanagh suffered major injuries. He filed a lawsuit against the City and the State of California (CalTrans) seeking compensatory and general damages. The City moved for summary judgment on Mr. Kavanagh's claims asserting that the City could not be held liable because the pothole was not located on the City's property. CalTrans acknowledged that it owned the property where the accident occurred. But CalTrans attempted to persuade the court that the City "controlled" the off-ramp and therefore was liable for his injuries. After briefing and oral argument, the Court ultimately ruled in the City's favor and dismissed the case against the City. CalTrans remains in the lawsuit. This was the right decision as CalTrans owns and is responsible for the maintenance of the property where the pothole existed.

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