Deep Pockets in the Public Sector

By Miriam Schulman

1. Mrs. Morton is skateboarding along the sidewalk in her hometown of Worthington, trying to keep up with her five-year-old, who is just learning to ride his bike. She hits a crack, falls, and sprains her ankle. She then brings suit against the city of Worthington, charging negligence and asking for $50,000 in lost wages, pain and suffering, and loss of consortium. The city attorney of Worthington, Marian Lowe, is unclear how Mrs. Morton's injury resulted in lost wages, as she is a secretary whose work does not require the use of her ankle; and Lowe is really not sure what the injury has to do with consortium. At the same time, she knows that litigating the case will cost the city at $10,000 to $20,000, and if the city loses, that money will come on top of the $50,000 award. How important is it for the city of Worthington to defend against this claim?

2. Citizens for a Green Laforge have organized to protest the city of Laforge's decision to develop a parcel of farmland as a new condo village. Laforge has required the developer to submit an environmental impact report (EIR), which has been duly completed to the satisfaction of the City Planning Department and the state Natural Resources Agency. But the citizens' group is not happy with this outcome and sues the city in an effort to delay the planned project. The city can commission a new EIR at a cost of $250,000 or fight the suit at a cost of $180,000-and possibly still have to order a new EIR or ditch the project all together. Should the city go to court?

3. Officers Jim Greer and Eric Manning of the Anytown Police Department are called to the scene of a fight. They identify themselves to the combatants and order them to stop. One man does as they request, but the other, Alan Comden, continues to advance on his now-unresisting adversary. Officer Manning fires his Taser at Comden, and Comden falls forward, his face hitting the asphalt. Comden loses four teeth, lacerates his lip, and sues the Anytown Police Department for excessive use of force. The city councilmembers believe that Manning followed Taser protocol correctly, but they also know that it will cost them more to defend against the suit than to come to a settlement with Comden.

All three of these cases are variations on the same theme: deep pockets. Cities and other public entities are sometimes tempting targets for lawsuits because they can pay out big settlements. Cities facing such suits have to confront two ethical issues:

1. When is it okay for a public entity to settle a lawsuit even if justice is not achieved?
2. When is it okay for the public entity to keep spending money even when it is cheaper to settle?

At a May 2010 meeting of the Public Sector Roundtable, city attorneys, public officials, and staff members from the Markkula Center for Applied Ethics talked through the deep pockets issue and how to approach these questions. Presenters included three attorneys with extensive experience representing municipalities: Gregory Call, Julia Damasco, and Jeffrey Hare.

Hare put the issue in political context. "The earliest settlement is almost always the best [from a financial point of view]," he said, but public officials must confront the political realities, and constituents may expect them to fight for the principle even when that course is not the most financially advantageous.

Damasco argued that it may seem legitimate to balance the cost of settlement versus the cost of litigation, but that such an approach is a false paradigm because "some goals are not economic." Ethical issues for a public agency may include fairness, justice, and the common good. To honor these values, cities may make decisions based on factors other than money:

Sending a message: A city may want to fight a nuisance lawsuit to deter more plaintiffs from filing other such cases with little merit. As one participant put it, "We take a hard line. We want the word to go out, 'If you're going to sue us, bring your lunch.'" Another cautioned, however, that council "may have an inflated idea of sending a message." While such an approach may work with overreaching personal injury attorneys, it is less effective with a one-time challenge to a development plan based on the California Environmental Quality Act.

Protecting a precedent or principle: City councilmembers may decide to litigate to protect practices they deem fundamental to the way they operate, Call added. For example, a city may decide to fight a suit over police use of Tasers in order to establish the legitimacy of this practice.

Ensuring the efficient administration of public safety: Several participants indicated that their cities generally fought lawsuits brought against police officers in order to show support for law enforcement. These cases, however, may show gaps in training that council needs to address, whether or not the suit is successful.

All three attorneys counseled against protracted litigation for the sole purpose of protecting the city's honor or making a statement. Cities need to be clear about their goals, strategy, and the risks they incur in going to court, Call emphasized.

"The litigation system doesn't usually achieve justice," said Damasco. "I love the law, so I don't mean this in a pejorative sense. Litigation is a way to avoid solving disputes through combat. In the process, all of the litigants usually lose something."

Miriam Schulman is the communications director of the Markkula Center for Applied Ethics.

June 2010