Wednesday, February 20, 2008
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Brown Questions Settlement of Councilman’s Suit Against City
By KENNETH OFGANG, Staff Writer
A state conflict-of-interest law could be construed as precluding settlement of a council member’s suit for damages against the city he serves, Attorney General Jerry Brown has opined.
In a formal opinion issued last week, the attorney general said that while “the issue is not entirely free from doubt,” such a settlement could be declared void under Government Code Sec. 1090. The statute provides that public officials or employees “shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.”
The purpose of the law, the attorney explained, is to protect not only against impropriety by public employees and officials, but also against any appearance that a contract was granted for an official’s or employee’s personal benefit.
Robert Owen, who was city attorney for Rialto, in San Bernardino County, before his termination last month, asked for the opinion. While no names were mentioned, the request appears to relate to the potential settlement of a suit by Ed Scott against the city and several of its employees.
Scott served on the City Council from 1996 until 2000, when he unsuccessfully challenged then-county Supervisor Gerald Eaves. He subsequently became an informant for a county/federal task force investigating local government corruption, and in 2002 filed a civil rights suit alleging that the defendant officials tried to destroy his business and reputation.
In 2004, Scott won another term on the Rialto City Council. He has settled his claims against the county, and the judge hearing the case against the remaining defendants has ordered the parties to exchange settlement proposals.
But while the federal court has that authority, Brown said, the parties cannot be forced to settle, and any settlement could be voided by the state courts on conflict-of-interest grounds. The attorney general cited a New Jersey case where that occurred, as well as an Illinois Supreme Court ruling that upheld criminal conflict-of-interest charges arising from the settlement of a federal class action.
Brown did acknowledge, however, a ruling by an intermediate appeals court in Pennsylvania, which held that state courts lacked jurisdiction to void a settlement on conflict-of-interest grounds as lack as the federal court retained jurisdiction over the case.
The central issue, Brown explained, is whether a monetary litigation settlement is a “contract” for purposes of Sec. 1090. There is some precedent suggesting that it is, the attorney general wrote, although “no California court has squarely addressed the question,” nor is there direct authority on the related issue of “whether settlement of litigation amounts to a ‘financial interest’ within the meaning of that statute.”
A court might conclude, Brown acknowledged, that the public policies favoring settlement in general, and expeditious resolution of civil rights claims in particular, support an interpretation of Sec. 1090 that would permit the city to settle the claims at issue. “But under the current state of the law, we cannot conclude that a compromise settlement of this litigation would survive collateral attack.”
The opinion does, however, suggest a possible path for the city. The plaintiff could settle with individual defendants, who in turn could seek indemnification without implicating Sec. 1090, the attorney general wrote.
The opinion, No. 07-104, was prepared by Supervising Deputy Attorney General Susan Duncan Lee on Brown’s behalf.
Copyright 2008, Metropolitan News Company