SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 1.440 NEW YORK AVENUE, N.W WASHINGTON, D.C. 20005-2111 TEL: (202) 971-7000 os Pax: (202) 999-5780 cooanoeies wav. skadden com ‘On BE'SNER@SKADDEN.coM rasta October 27, 2010 TopoNo VIA U.S. MAIL Ms. Jan Myer Office of the Attorney General 900 East Main Street Richmond, VA 23219 RE: Freedom of Information Act Request ~ Special Counsel in the matter of United States and State of California, et al. ex rel. Hendrix v. J-M Manufacturing Co., et al., No. ED CV 06-0055-GW. (ED. Cal.) Dear Ms. Myer: Pursuant to Va. Code § 2.2-3700, I am requesting all documents related to the appointment and retention, via letter dated August 9, 2010 from Eric A. Gregory to Mary Inman and Stuart Rennert (attached), of Phillips & Cohen LLP and Day Pitney LLP as Special Counsel in the matter of United States and State of California, et al. ex rel. Hendrix v. J-M Manufacturing Co., et al., No. ED CV 06- 0055-GW (E.D. Cal.). am a citizen of the Commonwealth of Virginia. Sincerely, Shion john H. BeisnerCOMMONWEALTH of VIRGINIA Office of the Attorney General 900 Bat Main See Kemeth T, Cucinell, 1 Rihonnd, Vigne 019 ‘oy Gos! soe 7862071 FAX 60486-1001 Ving Rly Seroes 00-628:129| August 9, 2010 Tad Ms, Mary Inman, Esq Phillips & Cohen, LLP 131 Steuart Street, Suite 501 ‘San Francisco, CA 9410S Mr. Stuart Rennert, Esq. Day Pitney LLP 1100 New York Avenue, N.W. Washington, DC 20005 RE: Appointment as Special Counsel in the matter of United States and State of California, et al. ex rel. Hendrix. J-M Manufacturing Co., et al. (US. District Court for the Eastern District of California, Case No. ED CV06-0055-GW) SCA No. 2010-06 Dear Ms. Inman and Mr. Rennert On behalf of Virginia Attorney General Kenneth Cuccinelli, it is my pleasure to appoint your firms to serve as special counsel to the Commonwealth of Virginia (the “Commonwealth”) in the above-referenced matter. This appointment becomes effective as of the date your acceptance is received in this Office, retroactive to February 1, 2010, and will continue through its completion, subject to the right of the Office of the Attomey General to terminate the appointment at any time, with or without cause. Scope of Servi This appointment to serve as special counsel represents the understanding and agreement between the Office of the Attomey General of the Commonwealth of Virginia (“OAG"), Phillips & Cohen LLP (“P&C”), and Day Pitney LLP (“DP”). ‘The OAG hereby appoints P&C and DP to represent the Commonwealth of Virginia in action that has been filed against J-M Manufacturing Company, Inc. and Formosa Pla:Ms, Mary Inman, Esq Phillips & Cohen, LLP Mr. Stuart Rennert, Esq Day Pitney LLP OAG SCA No. 2010-06 August 9, 2010 Page 2 of 8 Comporation, U.S.A. (collectively, “Defendants” regarding fraud committed against Virginia and other governmental entities (the “Lawsuit"). ‘The Lawsuit is pending in the Central District of California, United States and State of California et al, ex rel, Hendrix v. J-M Manufacturing Co. etal., Case No. ED CV06-0055-GW. P&C and DP also represent qui tam plaintiffelator John Hendrix (“Hendrix”) and have a separate retainer agreement with him, P&C and DP currently represent several governmental entities other than the Commonwealth that have intervened in the Lawsuit. P&C and DP have separate retainer agreements with each of those clients, Nothing in this agreement is intended to limit P&C and DP’s ability to represent other governmental entities outside the Commonwealth in this Lawsuit. Current and future P&C and DP clients in the Lawsuit shall be referred to collectively as “Other Clients.” OAG authorizes P&C and DP to associate or consult in this representation with such other counsel as they may deem necessary. Notwithstanding any such association of other counsel, and unless such authority is expressly delegated by P&C and DP to other counsel with the consent of the OAG, P&C and DP shall at all times retain the full authority and responsibility of counsel in any litigation pursuant to this Retainer Agreement. Unless otherwise agreed to by the OAG, P&C end DP in writing, P&C and DP shall be responsible for compensating any counsel with whom P&C and DP associate or consult ‘The OAG understands that P&C and DP will represent it to prosecute claims under the Virginia Fraud Against Taxpayers Act (§ 8.01-216.1 et seg. of the Code of Virginid) and common law claims against the Defendants. Virginia understands that the representation presently undertaken by P&C and DP is limited to matters necessary to bring the Lawsuit to a conclusion before the trial court. ‘The representation currently includes pursuit of claims on behalf of Hendrix, Tennessee, ACWD, CMWD, DSRSD, MNWD, NMWD, LBCWD, Santa Cruz, and Vallejo, and may, in the future, include pursuit of other state or federal False Claims Act Claims and common law claims on behalf of other states, localities and/or their respective public water systems, The OAG has been informed and understands that P&C and DP do not represent the Commonwealth in connection with the negotiation of the terms of this appointment letter. Rather, P&C and DP are each acting on their own behalf. In the absence of a written appointment letter or agreement to the contrary, P&C and DP do not represent the ‘Commonwealth in any legal matter other than as set forth herein,Ms. Mary Inman, Esq, Phillips & Cohen, LLP Mr. Stuart Rennert, Esq Day Pitney LLP OAG SCA No. 2010-06 August 9, 2010 Page 3 of 8 ‘The Commonwealth's Obligations Where appropriate, the OAG, P&C and DP will attempt to consult with one another before discussing the Lawsuit with the media or any other third party, The OAG agrees to provide promptly any and all information requested by P&C and DP and to cooperate fully in the prosecution of the Lawsuit, including but not limited to, attending scheduled hearings and meetings, where necessary, answer truthfully any interrogatories propounded by opposing parties, appearing for the taking of any deposition, and participating cooperatively in any judicial or other proceeding as may arise during the course of the Lawsuit. While P&C and DP will act as special counsel for the Commonwealth in prosecuting its claims in the Lawsuit as provided in this appointment letter, the OAG shall at all times remain Virginia’s general legal advisor. ‘The OAG shall have responsibility for facilitating access of P&C and DP to the Commonwealth’s personnel and records in connection with the Lawsuit. As between P&C, on the one hand, and the OAG on the other, the OAG shall have primary responsibility for informing, advising and consulting with its client agencies with respect to the Lawsuit, including without limitation, issues relating to its settlement. Attorneys’ Fees, Costs and Expenses The OAG understands that, if it elects to intervene in the Lawsuit on behalf of the Commonwealth, it would be required under the Virginia Fraud Against Taxpayers Act to provide to Hendrix — as the qui tam plaintiff ~ at least 15% but not more than 25% of the money recovered by the Commonwealth from Defendants; if the OAG elects not to intervene, it would be required to pay Hendrix at least 25% but not more than 30%, The OAG also understands that it fas no legal obligation to share with Hendrix any of the money it recovers from Defendants under its common law claims. ‘The OAG nevertheless agrees to share any common law recovery with Hendrix in order to minimize the conflicts of interest that might otherwise arise between Hendtix and the Commonwealth. Therefore, the OAG, P&C, DP, and Hendrix understand and agree that the Commonwealth will pay to Hendrix 20% of the full amount of any award or settlement it recovers under any legal theory from Defendants, or any of them, as a result of the Lawsuit (the “Relator’s Share”), ‘To compensate P&C and DP for their services, the OAG, P&C and DP understand and agree that, in addition to paying Hendrix the Relators Share, the Commonwealth will pay to P&C and DP 5%, to be divided among them according to their terms, of the full amount of any award or settlement Virginia recovers from Defendants, or any of them (before payment of the Relator’s share) as a result of the Lawsuit (“the contingent fee”). The ‘OAG understands that the above fees are not preseribed by law but are negotiable between OAGMs. Mary Inman, Esq, Phillips & Cohen, LLP Mr. Stuart Rennert, Esq Day Pitney LLP OAG SCA No. 2610-06 August 9, 2010 Page 4 of 8 and P&C and DP. The OAG also understands that Hendrix has agreed to pay to P&C and DP a percentage share of his portion of any recovery in the Lawsuit For as long as they remain special counsel to the Commonwealth in the Lawsuit, P&C and DP agree that they will advance all funds needed to pay for the following expenses incurred in connection with representing the Commonwealth in the Lawsuit: filing fees, faxing, postage, phone, routine photocopying (other than photocopying performed by the Commonwealth, as described below), transcripts, court reporters and expert witness expenses, as well as the costs involved in taking and defending depositions and preparing for and prosecuting the Commonwealth’s claims at trial. The parties agree that all internal costs and expenses of the Lawsuit including, without limitation, photocopying expenses incurred by or on behalf of the Commonwealth in connection with responding to subpoenas and document requests, shall be advanced by the Commonwealth. To the extent that any costs and expenses advanced or incurred by P&C and DP are later awarded to the Commonwealth by the court or recovered through settlement, the Commonwealth hereby assigns to P&C and DP such award or settlement proceeds. Any reasonable costs and expenses associated with the Lawsuit that are incurred or advanced by P&C and DP or by the Commonwealth, but that are not awarded by the court or recovered through seitlement, shall be reimbursed to the party who incurred or advanced the expenses fom the Commonwealth's recovery, if any, prior to the division and distribution of such recovery refered to above. ‘The Commonwealth shall not be obligated to pay or to guarantee payment of any compensation to P&C and DP for services rendered or costs incurred in the Lawsuit other than as set forth in this appointment letter. If for any reason there is no recovery in the Lawsuit, the Commonwealth shall not be obligated to pay for or reimburse to P&C or DP. any costs incurred in connection with the Lawsuit. The OAG agrees to ‘cooperate fully in the prosecution of any claim by P&C and DP for court awarded expenses, costs, of fees, ‘Termination of Representation The OAG may discharge P&C and/or DP at any time by written notice to P&C and DP. Upon termination (or otherwise), the OAG retains the right to demand return of all of its client files, including confidential communications, provided, however, that P&C and DP may continue to use confidential information in the manner described below in the second paragraph of the section entitled “Conflicts; Confidentiality.”Ms. Mary Inman, Esq Phillips & Cohen, LLP Mr. Stuart Rennett, Esq. Day Pitney LLP OAG SCA No. 2010-06 August 9, 2010 Page 5 of 8 If P&C and/or DP determine at any time that itis no longer feasible or desirable to pursue the Lawsuit on behalf of the Commonwealth, P&C and/or DP may, after providing thirty days written notice tothe OAG, withdraw from further representation, as provided by law. As provided below, in the event P&C and/or DP terminate representation of the Commonwealth, P&C and DP may continue to use confidential information in the manner described below in the second paragraph of the section entitled “Conflicts; Confidentiality.” ‘The OAG understands and agrees that in the event P&C and/or DP is discharged and (i) the Commonwealth proceeds with the Lawsuit with or without substitute counsel; (li) the ‘Commonwealth receives a monetary recovery from Defendants, and (lil) P&C and DP are not entitled to their full 5% contingent fee as provided above, then the Commonwealth shall pay the discharged counsel on a quantum meruit basis. The parties agree that for purposes of this Retainer Agreement, quantum meruit shall be measured as a portion of the 5% contingent fee described above in proportion to the percentage of the hours expended by the discharged counse] compared with the hours expended by substitute counsel, if any (appropriately weighted based upon normal hourly rates). In addition, the OAG understands and agrees that, if P&C and/or DP is discharged, Hendrix's right to share in any recovery obtained from Defendants shall not be affected, ie, Hendrix shall continue to receive 20% of the full amount of any award or settlement the Commonwealth recovers from Defendants as a result of the Lawsuit, including the Virginia Fraud Against Taxpayers Act and common law claims, as provided above. The OAG understands and agrees that it will not object to the discharged counsel's continued representation of the Other Clients. Conflicts; Confidentiality ‘The State and Local Government Conflict of Interests Act (Va. Code § 2.2-3100 et seq.) and the General Assembly Conflict of Interests Act (Va. Code § 30-100 et sea.) apply to this representation. With this in mind, please canvass your firm for anyone who is an “employee,” “officer” or “legislator” as defined in those Acts. This includes anyone appointed, even in an unpaid capacity, to a board or commission, Please contact me by letter if anyone in your firm meets these criteria. By accepting the responsibility of serving as special counsel in this matter, you and your firm agree not to represent parties adverse to the Commonwealth, the Office of the Attomey General, or their respective employees, without prior written approval by OAG, for the duration of this matter.Ms. Mary Inman, Esq Phillips & Cohen, LLP Mr. Stuart Rennert, Esq. Day Pitney LLP OAG SCA No, 2010-06 August 9, 2010 Page 6 of & Except as to information disclosed to Other Clients whom P&C and DP represent in the Lawsuit, the Commonwealth's confidential information obtained in the course of the Lawsuit will remain confidential and will not be disclosed to any other clients of P&C and DP. It is ‘understood that all work product prepared hereunder shall constitute confidential work product of the Office of the Attorney General and shall not be publicly disseminated or otherwise released without the specific, written approval of the Office of the Attomey General. Further, as work product of the Attorney General, files of all matters undertaken pursuant to this appointment are subject to the ownership and control of the Attorney General and shall be surrendered upon request by the Attomney General. ‘The OAG agrees that in the event that P&C and DP terminate their representation oF the Commonwealth, P&C and DP shall be entitled to keep a copy of and use the Commonwealth's confidential information in their continued representation of other clients in the Lawsuit. Further, the OAG agrees that P&C and DP at any time may share such confidential communications with Other Clients in the Lawsuit whom P&C and DP are jointly representing in this matter (even if P&C and DP are no longer representing the Commonwealth) Furthermore, because P&C and DP will be retained jointly by both the OAG and the Other Clients in this Lawsuit, in the event of a dispute between the Commonwealth on the one hand and Other Clients, or any of them, on the other hand, the attorney-client privilege generally will not shield the Commonwealth's communications with P&C and DP from discovery by the Other Clients whom P&C and DP are jointly representing. Miscellaneous ‘The entire agreement between the OAG, P&C and DP relating to the subject matter of this appointment letter is contained herein. No promises, inducements, or considerations have been offered, accepted or given except as herein set forth. This appointment letter supersedes any prior oral or written agreement concerning the subject matter of this appointment letter. ‘The parties expressly agree that no oral modification of this appointment letter shall be effective, notwithstanding any provisions of the governing law that may allow for oral modification. The parties acknowledge that they have read and understand the terms of the foregoing, that they have had the opportunity to consult with independent counsel, and that they agree to the representation on the terms set forth in this appointment letter.Ms, Mary Inman, Esq, Phillips & Cohen, LLP Mr. Stuart Rennert, Esq. Day Pitney LLP OAG SCA No, 2010-06 August 9, 2010 Page 7 of 8 If any provision of this appointment letter is held in whole or in part to be unenforceable for any reason, the remainder of that provision and of the entire appointment letter will be severable and remain in effect. Acceptance; Conclusion If this letter is in accordance with your fitm’s understanding of the terms of this engagement, plecse sign the signature/acceptance page and return a copy of the entire document, with your signatures, 10 me. I welcome you to the group of distinguished attorneys representing the interests of the Commonwealth of Virginia and I thank you for your service on its behalf. With kind regards, I am Very truly yours, c a ee . Z Bric A. Gregory Z Assistant Attomey General Director of Compliance & Special CounselMs, Mary Inman, Esq Phillips & Cohen, LLP Mr. Stuart Rennert, Esq, Day Pitney LLP OAG SCA No. 2010-06 August 9, 2010 Page 8 of 8 PHILLIPS & COHEN, LLP BY: : Mary Yaman| pare__ | [2] [0 DAY PITNEY, LLP or Mit MN haved DATE: $ /j2/ 70 _