Fired Vallejo employees who alleged retaliation receive $1.85M settlement

VALLEJO – Two former high ranking city of Vallejo employees who alleged they were fired for reporting wrongdoing by former City Manager Greg Nyhoff settled a retaliation lawsuit against the city for $1.85 million, according to a copy of the settlement obtained through a public records request. 

City special advisor Slater Matzke and assistant to the city manager for economic development Will Morat were fired in April 2020 along with former assistant to the city manager for communications and special projects Joanna Altman. 

The three filed a lawsuit alleging wrongful termination, harassment, retaliation and defamation in 2021. Altman settled in March for $1 million while Morat and Matzke’s claims were scheduled to go to trial this month. Matzke and Morat will recieve a total of $1.85 million, the settlement does not specify how they will divide it between them.

The settlement avoids a trial and ends the lawsuit weeks before November’s election as Matzke’s wife, Surveillance Advisory Board Chair Andrea Sorce, is running for mayor.

"Vallejo is my home, and it was my duty and responsibility as a public official to protect the best interests of my community from those who would seek to do it harm," Matzke said in a statement. "To this day, our allegations of illegal misconduct have still not been independently investigated, and none of the perpetrators, including the individuals who plotted to retaliate against whistleblowers, have been held accountable and a number continue to work inside City Hall to this day."

Morat blamed the city attorney's office for failing to investigate Nyhoff. "Not only did they fail to investigate any of our claims that Nyhoff was illegally watering down development deals in favor of private developers, they then helped Nyhoff retaliate against us for speaking out," he said. "These attorneys are still with the city, despite directly helping to silence whistleblowers and enabling a corrupt city administration to continue operating against the best interest of the public and costing the City nearly $3 million in legal settlements.”

The lawsuit alleged that Nyhoff, who was hired by the city after a national search in 2018 and resigned in 2021, created a culture of discrimination, harassment, and retaliation in Vallejo that was so deeply embedded that other employees felt free to do the same. The three fired employees alleged that they witnessed such incidents but the city rarely, if ever, investigated them.

The lawsuit also alleged that Nyhoff himself had “blatantly engaged in graft and corruption” and fired any employee who “threatened his corrupt activities.”

It accuses Nyhoff of undermining the city’s position in a controversial land deal to develop 157 acres of North Mare Island. Morat and Matzke were a part of the negotiating team for the project, but claimed that Nyhoff met with potential developers and then unilaterally weakened the term sheet by removing benchmarks, public infrastructure requirements, and eliminating conditions of sale that would have ensured development.

In the lawsuit, Morat claimed that Nyhoff ordered him to change the language in the term sheet and said if he didn’t, he’d be fired.

The City Council approved the revised term sheet and later sold the land to the developers with the Nimitz Group and the Southern Land Company for $3 million in 2022. The Nimitz Group and Southern Land Company have since created a new company, the Mare Island Company, to manage the development. 

The lawsuit outlines several other instances where Nyhoff allegedly acted against the city’s interests in backroom negotiations. But it alleges that Nyhoff “expected all employees to fall in line, obeying his every command, regardless of the command’s correctness, ethics, or impact.”

It alleges that Altman, Morat and Matzke all attempted to intervene on behalf of a city employee who was being harassed by the then-head of the city’s housing division, Judy Shepard-Hall. But Nyhoff instead scrutinized the three of them and Morat was placed on leave. 

Meanwhile, Nyhoff’s performance evaluations with the City Council had not gone well, and Nyhoff blamed his staff, according to the lawsuit.

By March 2020, the City Council ordered an investigation of Nyhoff. Each of the three employees were interviewed by the outside investigators, and, according to the lawsuit, alleged that Nyhoff had not worked in the best interests of the city by favoring certain developers and threatened and bullied subordinates.

The City Council concluded the investigation on April 22, 2020, according to the lawsuit. The next day, Altman, Morat and Matzke were all fired. The lawsuit also alleges that former Vallejo human resources director Heather Ruiz falsely told city staff that they had been fired for “doing something illegal” and “embezzlement.”

Christopher Boucher, the outside counsel who conducted the investigation, later told ABC7 News that based on facts he learned throughout the investigation process he advised Nyhoff to fire Morat, Altman and Matzke. "There was bona fide independent reasons for their terminations that were unrelated," he said.

Randall Strauss, an attorney for Morat and Matzke, said the settlement was an acknowledgement that his clients did the right thing.

"In response, they were fired, forced to endure years of litigation, and the dragging of their good names through the mud publicly," Strauss said.  "Hopefully, the people charged with running Vallejo for the public good will learn from this experience and take whistleblowers seriously in the future."

Editor's note: This story has been updated to include comments from Morat, Matzke and Strauss.