MAY 21, 2003
A telephonic meeting of the Maricopa County Community College District Governing Board was scheduled to be held at 10:30 a.m. at the District Support Services Center, 2411 West 14th Street, Tempe, Arizona, pursuant to A.R.S. §38-431.02, notice having been duly given.
Ed Contreras, President
Linda Rosenthal, Secretary
Don Campbell, Member
Nancy Stein, Member
Gene Eastin, Member
Rufus Glasper, Acting Chancellor
CALL TO ORDER
The meeting was called to order at 10:30 a.m. by President Ed Contreras.
No executive session was held.
(I.A) Board Authorization to Join Litigation Against National Century Financial Enterprises
Dr. Rufus Glasper, Acting Chancellor, thanked everyone for their presence at this special board meeting called for the purpose of acquiring Board authorization to enter into litigation, along with other government entities as deemed necessary against National Century Financial Enterprises for the recovery of pooled investment funds through participation in the Local Government Invest Pool, specifically due diligence to position MCCCD to recover $7 million in losses. It was further recommended that the Board authorize entry into an inter-governmental agreement with various other government entities in the state of Arizona to retain the firm of Gibbs and Bruns, L.L.P., to represent MCCCD in litigation against National Century Financial Enterprises and other defendants as deemed necessary.
Pete Kushibab commented that the Attorney General's Office had originally undertaken the responsibility of working on behalf of the entities that had invested in this pool, however, after a series of meetings among the growing number of entities concerns had been voiced about the A/G's Office ability to represent all of these entities. It was also felt that a conflict of interest existed because of the possibility of fraud and violations of federal and state laws. After considerable discussion, the entities made the decision to enter into contract with the legal firm of Gibbs and Bruns, L.L.P., based in Texas. The purpose of the action to be taken through this special meeting is to obtain consent to join the pool of entities to retain Gibbs and Bruns as the firm of choice. Gibbs and Bruns disclosed this week that a lawsuit must be filed no later than Friday.
Dr. Glasper further commented that MCCCD is one of the major entities to lose resources and that we must agree to provide $80,000 in legal costs as the initial increment, payable over the course of an estimated two-year litigation.
Board Members posed the following questions and comments:
Linda Rosenthal asked if the amount was a flat fee and should it have a top price. Mr. Kushibab responded that the $80,000 will be the top amount for up-front costs. Additional fees would be recovered from the recovery amount.
Mrs. Rosenthal requested that the motion contain mention of the cost, i.e., "cost not to exceed $80,000." Dr. Glasper stated that if the cost increased, the Board would be approached again for approval.
Mrs. Stein asked if this was considered to be a class action suit and it was responded that it was not because multiple plaintiffs had incurred a loss.
Mrs. Stein also asked if by virtue of the entities banding together, would the results be greater than by acting independently, and also if the costs are greater because the firm is from Texas. The response to these two questions was that by banding together, the opportunity for recovery would be greater and that legal costs were not affected because the attorneys were out of state. The legal firm plans to have a local law firm lead the lawsuit. Since the firm's income is also dependent on the total amount recovered, it is in their best interest to get a maximum recovery. Legal fees are 18% of first $100 million, 15% of next $400 million, and 10% of $500 million. They are representing clients who lost $1.2 billion.
Mr. Eastin asked if they could put a limitation on the fees paid and it was responded that the amount could not be changed. Mr. Contreras reminded everyone that the Attorney General's Office had proposed charging 35%. Mr. Eastin asked if the $80,000 was in addition to attorney fees and the response was no, the $80,000 included attorney fees.
MOTION NO. 9165
Linda Rosenthal moved for approval to join in litigation against National Century Financial Enterprises with an authorized limit for legal expenses in an amount not to exceed $80,000.00.
There being no further discussion, President Contreras called for the vote on the motion. Motion carried 5-0.
The meeting adjourned at 10:50 a.m.
Governing Board Secretary