Calpers Seeks to Bar Firm From San Bernardino Bankruptcy

California Public Employees’ Retirement System, the biggest U.S. public pension fund, is trying to ban a law firm from representing a creditor in the bankruptcy of the city of San Bernardino.

CalPers, as it’s known, accused the law firm of Winston & Strawn LLP of being “deceptive” by hiring several key lawyers who had been working for the pension fund in the bankruptcies of the cities of San Bernardino and Stockton, California.

Winston & Strawn represents creditor National Public Finance Guarantee Corp., which opposes Calpers in the two bankruptcies, the pension fund said in court papers filed today in U.S. Bankruptcy Court in Riverside, California. The Winston & Strawn attorneys had been employed in the Charlotte, North Carolina, office of K&L Gates, the law firm representing Calpers in the bankruptcies.

National and other creditors have complained that Stockton city officials were trying to force them, but not Calpers, to take less than they are owed. The same disputes CalPers is engaged in over Stockton also will have to be resolved in the San Bernardino case, the pension fund said.

“By hiring from K&L Gates’ Charlotte office, Winston has knowingly obtained lawyers who were at the heart of the K&L Gates litigation team representing Calpers, taking a partner who was a key lieutenant,” the pension fund said in the filing.

Budget Shortfall

San Bernardino was the third California city to file for bankruptcy last year. The city of about 209,000 people lies about 60 miles (100 kilometers) east of Los Angeles. A fiscal emergency, brought on by a $46 million budget shortfall, forced it to stop paying some creditors and seek court protection, the city said.

Lawrence A. Larose, a lawyer at Winston & Strawn who is representing National, didn’t immediately return a phone call seeking comment on the CalPers filing.

The case is In re San Bernardino, 12-bk-28006, U.S. Bankruptcy Court, Central District of California (Riverside).

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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