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BRIGGS LAW CORPORATION

San Diego Office: Inland Empire Office:


4891 Pacific Highway, Suite 104 99 East “C” Street, Suite 111
San Diego, CA 92110 Upland, CA 91786

Telephone: 619-497-0021 Telephone: 909-949-7115


Facsimile: 909-949-7121 Facsimile: 909-949-7121

Please respond to: Inland Empire Office BLC File(s): 999.05

6 November 2019

Mayor and City Council Via e-mail to EMaland@sandiego.gov


c/o City Clerk Elizabeth Maland
202 “C” Street, 2nd Floor
San Diego, CA 92101

Re: Termination of Surveillance Contract with General Electric

Dear Mayor and City Council:

I am writing to provide you with a legal analysis of the mechanism by which the City
may terminate its surveillance contract with General Electric (“GE”), City Clerk document
no. OO-20784 (the “Contract”), without cause.1

Before turning to the termination mechanism, I want to point out some important
factors you should consider when deciding whether to terminate the Contract. First and
foremost, if anyone asserts a “Claim” against the City or GE based on lack of consent to the
collection or use of what the Contract calls “Source Data,” Section 11.3 of the Contract
requires the City to “defend GE against any such Claim at Customer’s [i.e., City’s] expense”
and “pay all such damages and costs finally and any settlements entered into by Customer.”2
In other words, the City could be required to pay for GE’s lawyers and any judgment entered
against GE along with any settlements that the City makes along the way.

This indemnification language is important because, under Section 7.2(c) of the


Contract, the City “grants to GE a nonexclusive, perpetual, irrevocable, sublicenseable right
and license to collect, use, reproduce, make available, aggregate, modify, display, perform,

1
This analysis is based on information obtained from the City under the California Public Records
Act. It is subject to revision if new information is provided or discovered. If you believe that you
have information different from what I have obtained, please feel free to pass it along so I can make
any appropriate revisions to this analysis.
2
Under Part 1 of the Contract, “Source Data” is defined as “data that is sensed, observed, or
gathered from the individual or collective outputs of the Products, from the Services, and if for the
purpose of providing the Services, from any other technology or services licensed from GE or any
other Customer equipment or services”; and “Claim” is defined as “any actions, demands,
proceedings and other claims or any third party, together with any and all related liabilities, losses,
damages, costs and expenses (including without limitation, reasonably [sic] attorneys’ fees and
costs).”
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store (digitally or otherwise), transmit, make derivative works of and otherwise process the
Source Data, in each case as permitted by Applicable Law.” Even though the City has
consented to the collection of data, the City has not obtained – and nowhere in the Contract
requires GE to obtain – the consent of any private individual who’s the subject of data
collection. Furthermore, the Contract does not require GE to tell the City how GE is using
the Source Data or to identify any sub-licensees or other transferees of the Source Data. The
City therefore has no way of knowing just how substantial its potential financial exposure
is under the Contract.

It has been suggested that members of the public who are subject to electronic
surveillance have no privacy rights because the surveillance is limited to public locations.
The suggestion is superficially appealing, but it is not grounded in any on-point legal
authority.

In fact, California statutes extend privacy protections to activities that occur in public
locations if there is a reasonable expectation of privacy.3 Additionally, the “inalienable
rights” listed in the very first section of the very first article in the California Constitution
include, for every individual, “pursuing and obtaining safety, happiness, and privacy.”4 The
California Supreme Court recognizes a valid claim for the public disclosure of private facts
when there is no legitimate public interest in the disclosure, even when the private facts occur
in public.5 Perhaps most importantly, the United States Supreme Court recently rejected the
notion that there can be no privacy in public places when it invalidated a law-enforcement
agency’s use of a private carrier’s cell-phone GPS data without a warrant, “hold[ing] that an
individual maintains a legitimate expectation of privacy in the record of his physical
movements as captured through [cell-site location information].”6 Thus, while no judicial
precedent precisely addresses how much privacy protection individuals who are subject to

3
See, e.g., CIV. CODE § 1708.8(b) (prohibiting capture of any type of image or recording of person
engaged in “private, personal, or familial activity” if manner of capture is offensive to reasonable
persons); PEN. CODE § 632(a) (prohibiting recording of “confidential communications” occurring
in public except at “public gathering” or in “legislative, judicial, executive, or administrative
proceeding open to the public.”
4
CAL. CONST., art. I, § 1.
5
Shulman v. Group W Productions, Inc., 18 Cal.4th 200 (1998) (in action involving video footage
of victims of car accident on freeway, identifying elements of such claim as “(1) public disclosure
(2) of a private fact (3) which would be offensive and objectionable to the reasonable person and (4)
which is not of legitimate public concern”).
6
Carpenter v. U.S., 585 U.S. ___ (2018). The City’s position is likely less defensible because the
data gathered by the surveillance devices goes for beyond GPS data and includes both audio and
video data. As the majority observed from prior precedents: “A person does not surrender all Fourth
Amendment protection by venturing into the public sphere. To the contrary, ‘what one seeks to
preserve as private, even in an area accessible to the public, may be constitutionally protected.’ *
* * A majority of this Court has already recognized that individuals have a reasonable expectation
of privacy in the whole of their physical movements.”
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City of San Diego Page 3

public electronic surveillance have, the law certainly suggests that a valid claim could be
asserted against the City and GE for privacy violations.

Voluntary termination of the Contract is ultimately a policy decision that only you can
make. There will be factors other than liability considerations that your constituents and
advisors will ask you to weigh, and of course you should fully consider the views and
concerns on all sides of the issue. I am only pointing out some of the obvious liability
considerations that any lawyer would be expected to bring to your attention.

Turning to the primary question: In the absence of evidence of a material breach by


GE, may the City terminate the Contract? Yes, the City may do so without itself breaching
the Contract. Section 13.3 of the Contract, titled “Early Termination,” allows the City to
terminate “any Service”7 provided by GE without cause upon 30 days’ written notice to GE.

There are two conditions that the City must satisfy in order to exercise this termination
right: (a) the City may not be in breach under the Contract (essentially the City must be
paying GE and meeting its other contractual obligations in a timely manner); and (b) the City
must pay an early-termination fee, which is equal to the amount still owed on whatever
products or services the City has purchased from GE plus the amount of any discounts that
the City received on products or services compared to the standard non-discounted price
shown on the Contract’s Price List. After passing the 12-month “no charge” period that
began when the first “Intelligent Fixture” was shipped, the City would face a $1,842,432.00
maximum non-discounted price for all products and services.8

It is important to note that the surveillance equipment is separate from the high-
efficiency streetlight fixtures that the City is leasing from GE and on which the surveillance
equipment has been installed. Consequently, the City would not be legally required to
remove or stop using the new streetlights as illumination devices in order to terminate the
surveillance-related products and services under the Contract.

In sum, the City may terminate the Contract by giving a 30-day notice to GE and
paying any unpaid portion of the full price that GE charges for the products and services
purchased by the City. If you have any questions or desire additional information, please do
not hesitate to let me know.

Sincerely,

BRIGGS LAW CORPORATION

Cory J. Briggs

7
“Services” refers to whatever services the City orders from GE under the Contract, including the
“Intelligent Lighting Solution” services that gather the surveillance data.
8
This is the worst-case scenario. The actual amount will be less if the City has already made
payments toward any of the products or services it has purchased.
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