Port of San Diego offers few details on costly CEO investigation, exit

The Port of San Diego spent as much as $741,000 in legal costs and a severance payout to get rid of its top executive last year — and has never publicly explained why the agency ushered him out the door.

Records that inewsource obtained show port officials authorized payment of up to $330,000 to a San Diego law firm as part of an internal investigation into former President and CEO Joe Stuyvesant.

It was not the only outside legal expense the port incurred in the last half of 2023. The records show an additional $155,000 was spent on a controversial investigation into Commissioner Sandy Naranjo, which ended with her formal censure by her colleagues on the board. 

The Naranjo censure, Stuyvesant’s departure and a San Diego County Grand Jury report in June that criticized oversight of the powerful agency made for a year of controversy for the port. They also prompted both proposed state legislation that would bring significant changes to how the district operates, and a move by another agency asserting it had oversight of some port operations. Both are strongly opposed by the port. 

Stuyvesant had been hired for the port’s top post in 2021, but was suddenly placed on leave in July for what officials only said was an internal investigation. Stuyvesant remained on the payroll as the investigation went on.

In January the port announced that it had reached a mutual separation agreement with Stuyvesant. Under the terms of the deal the port paid him one year salary of $351,000, plus another $20,000.

Further, as part of the settlement agreement, the port agreed to pay $40,000 in legal fees to Stuyvesant’s lawyer.

But that public accounting was only a portion of the total amount expended on Stuyvesant, the records show. 

In response to a records request, the port provided contracts showing it hired the law firm Dunn DeSantis Walt & Kendrick, which was eventually under contract for a not-to-exceed amount of $330,000.

But lawyers for the port declined to say precisely how much the firm was paid on the Stuyvesant matter. They said provisions under the Public Records Act covering personnel information and attorney-client privilege allowed the information to be withheld. 

In total, the port could have expended up to $741,000 for the Stuyvesant investigation: $371,000 in legal fees, and another $370,000 in severance.

Port lawyers declined to release any findings or report from the investigation, again citing the attorney-client privilege exemptions under the state Public Records Act.

Stuyvesant did not want to comment on his departure. At the time the settlement was announced he said he was proud of his work at the port, which his attorney Dick Smerdjian echoed in a statement to inewsource. 

“My client, Joe Stuyvesant, feels fully vindicated,” Smerdjian said. “He takes great pride in his time as CEO of the Port, and has huge appreciation for the Port Staff professionals. He is now focused forward and is excited to pursue new opportunities.”

Port officials declined to respond to specific questions about expending that amount of money with no public explanation, instead issuing a statement referencing both the legal privilege and privacy rights.

“The Port recognizes and understands the importance of transparency and is committed to public disclosure, which is balanced by factors including employee privacy rights and privilege issues,” the statement said. “It should be noted that the Port did release several documents, including the Employment Agreement and Separation Agreement with Mr. Stuyvesant, upon receiving requests.”

Naranjo censure

The Stuyvesant payments were not the only outside legal costs the port incurred in 2023. 

Records show the port paid $155,185 to two law firms hired to investigate Naranjo last year.

She was investigated for comments she made in a closed session performance review for the port’s top lawyer and chief ethics officer. The lawyer, Thomas Russell, had raised questions about possible conflicts of interest she had stemming from outside business dealings. The report that was ultimately issued said the probe was aimed at determining if Naranjo had violated Russell’s rights as well as state open meetings laws. 

Naranjo represents National City, and as an environmental justice advocate has worked to address air quality and other issues caused by maritime activities. The extraordinary censure stripped her of her role as vice chair, a position that put her in line to be the chair of the commission this year, and barred her from committee assignments. 

The port paid the San Francisco firm HR Law Consultants $97,459 to investigate and write a report on Naranjo. That firm actually was the second that worked on the Naranjo matter: In January 2023 the port had hired the firm Meyers Nave and attorney Janice Brown to conduct the probe.

The records show the port paid Meyers Nave $57,726 last year. 

Unlike the situation with Stuyvesant, the port released a lightly redacted portion of the final report by HR Law Consultants into Naranjo. The port in a statement said the two matters were different, and noted that initially no report on Naranjo was released.

“However,” the statement said, “after considering all the factors and carefully weighing the balance between public disclosure and the factors in favor of confidentiality and privilege, the Board of Port Commissioners made the unusual decision of a limited waiver of privilege on that investigation document and made a public disclosure, except for certain redacted portions.”

The agency cited the same limited waiver as the reason it could specify how much it paid lawyers for the Naranjo censure. 

The limited insight into both matters played a role in Assemblymember David Alvarez introducing a bill in February that would revamp port governance. In an interview after the bill was introduced, Alvarez referenced both the Stuyvesant and Naranjo matters. 

“All these irregularities certainly have to lead someone to look at what’s happening,” he said. “Do we have the mechanisms in place to achieve  full accountability, transparency, oversight of a public agency that was created, what is it now, 60 years ago?”

LAFCO asserts oversight

Alvarez’s bill is not the only effort aimed at asserting some oversight into the Port District, which was launched as a state-chartered agency in 1962.

On March 4, the San Diego Local Agency Formation Commission, known as LAFCO, decided that it could exert some oversight of the port. The 7-0 vote of LAFCO commissioners ended a monthslong process that began in the wake of a 2023 San Diego County Grand Jury report that called for more oversight of the district.

With the vote LAFCO would now have some say in issues like port district boundaries, its service area, and periodical studies on whether the port is providing services in line with the needs of the member cities, and other accountability issues. 

The port strongly asserted that LAFCO has no say over its operations. It contends that it is answerable to the State Lands Commission, another state agency which in a March 1 letter to LAFCO staff asserted that it is the sole oversight authority for the post district under state law.

The port sharply criticized Alvarez’s proposed bill when it was unveiled. And in a statement Port Chairman Frank Urtasun did the same to LAFCO’s move — sharply criticizing the agency of trying to insert itself into the management of state lands.

“LAFCO’s power grab wouldn’t provide any benefit to local residents, enhance protection of San Diego Bay, or improve the regional economy — but it would create new layers of bureaucracy, delaying critical projects and services,” he said.

One potential outcome: The matter may end up in court. At the March 4 meeting Randa Coniglio, the acting president and CEO of the port, warned that the two agencies were “rapidly headed to a legal impasse with no clear direction on how it might be resolved.”