Former Milpitas city manager loses termination suit against city

A Santa Clara County Superior Court judge ruled against former Milpitas City Manager Steve McHarris in a wrongful termination suit in which he also accused city leadership of unethical behavior, according to a ruling released this week.

The lawsuit, which McHarris brought against the city in December 2023 and was presided over by Judge Shella Deen, claimed the City Council violated a provision in his contract that prevented the elected body from taking action on his employment within six months of an election. McHarris was seeking at least $25,000 in damages.

“After years of litigation, the City is hopeful that Mr. McHarris can move forward, as the City has done, and we wish Mr. McHarris the best,” city spokesperson Charmaine Angelo wrote in a statement to this news organization.

Stephen Jaffe, McHarris’ lawyer, said they plan to appeal the decision.

“We believe the judge is wrong in her ruling,” Jaffe said.

In addition to rejecting McHarris’ claims, the judgment allows the city to seek repayment of its legal fees and other costs from McHarris. In 2023, the City Council had approved spending up to $150,000 to hire an external law firm for a general contract, under which the firm handled the McHarris case for the city.

The law firm, Meyers Nave, also hired another firm, Oppenheimer Investigations Group, to carry out the employment investigation, city Human Resources Director Kelli Parmley previously told the San José Spotlight in 2024. At the time, she said it was unclear how much the investigation would cost, though any spending in addition to the approved $150,000 would have to be approved as well.

Angelo said the city is planning to move forward with a motion to determine legal fees and costs to be paid by McHarris. She said the city cannot comment on litigation spending while a case is pending, but that any information that can be shared will be included in the motion.

McHarris was hired by the city in June 2019 and left the position in February 2023 after the City Council voted not to renew his contract. He was the third city manager to be let go in six years.

During his tenure, McHarris claimed he had observed what he “believed to be unlawful and/or unethical” conduct from city officials, according to the lawsuit.

It began, according to the lawsuit, with an accusation from ex-Mayor Rich Tran; current Mayor Carmen Montano, who was Vice Mayor at the time; and then-Councilmember Evelyn Chua of nepotism by McHarris. They met with McHarris to express concerns about a staff member who was recently hired in the city’s Office of Economic Development.

According to the lawsuit, they claimed the individual was friends with Councilmember Anthony Phan and questioned whether the hiring was influenced by Phan, saying the individual was fired from a previous job “for racial reasons.” Tran and Montano allegedly pressured McHarris to fire the individual — a demand councilmembers legally cannot make.

This alleged conduct included the exchange of political endorsements for favors, with McHarris claiming Councilmember Hon Lien had told him in 2022 that during the previous election cycle, Tran had offered her his campaign endorsement in exchange for the successful candidate’s commitment, if elected, to fire McHarris.

The lawsuit dragged on for nearly 18 months. In September 2024, Milpitas successfully sought a court order to prevent McHarris from leaking information prior to a trial, accusing him of sharing confidential witness deposition testimony with the media. This past January, McHarris sought to penalize the city for Tran’s alleged obstruction of the pretrial process by failing to appear for his deposition and lying about his availability – the court instead approved the sanctions for Tran himself.