Former Milpitas city manager sues city

Former Milpitas City Manager Steve McHarris is suing the city for wrongful termination and breach of contract.

The lawsuit, filed Tuesday, calls for a jury trial and builds on past accusations of intimidation from various members of city government, including Mayor Carmen Montano, Vice Mayor Evelyn Chua, City Attorney Michael Mutalipassi and former Mayor Rich Tran. McHarris served as city manager from May 2020 to June 2023, when the Milpitas City Council voted to not renew his contract.

He is suing on four grounds: wrongful termination, breach of contract, constructive termination—which is when an employer’s conduct pushes an employee to resign—and for violating a labor code that bars employers from retaliating against employees for not breaking laws on their behalf.

McHarris declined to comment, due to pending litigation. He is being represented by lawyer Stephen Jaffe. Jaffe said McHarris has been unemployed since his termination and is actively looking for similar work, but has so far been unsuccessful.

McHarris is asking for more than $25,000 in relief and attorney fees. Jaffe added that the $25,000 figure is to denote the case’s jurisdiction, and the actual amount of money being asked for is difficult to identify.

“There has not been a dollar demand made on the city yet, so I don’t have a number, but if anything I would tell you it is substantially above $25,000,” Jaffe told San José Spotlight.

The city has 30 days to respond to the lawsuit. Montano and City Manager Ned Thomas, who was appointed this October, declined to comment on pending litigation, citing city policy.

Earlier this year, McHarris filed a claim against the city for creating a hostile work environment for him, and detailed instances of intimidation against himself and other city employees. He is the third permanent city manager to be let go since 2017, and the lawsuit said his effective firing violated his contract because the council cannot terminate him within six months of an election.

When the claim was initially filed, Montano and Chua denied the allegations. Councilmembers Anthony Phan and Hon Lien raised concerns at the time about how the situation would be handled internally.

Phan, who voted against letting McHarris’ contract expire, said this lawsuit reaffirms the city’s low morale, citing several high-level employees who have recently left the city. He told San José Spotlight this is the first news he’s received about McHarris’ claims in months.

“It’s a failure of our leadership to have let things go this far,” Phan told San José Spotlight.

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X, formerly known as Twitter.