Supreme Court 11.19.09

While there’s been exciting city-related news elsewhere, things have been a bit slow on the municipal law court opinion beat.  Today’s no different.  The Supreme Court grants review of what’s really an insurance-coverage case involving the City of Grant.  The question is whether a partial settlement with an employee retaining the ability to claim on “excess liability” coverage eliminates vicarious liability for the employer if it turns out that the “excess liability” coverage doesn’t apply.  The Court of Appeals answered no, reasoning: a) in past cases, these Drake releases have not served to dismiss the employee/driver from the suit, even if the excess carrier disputes coverage; b) thus, the City remains responsible for the claims made against the driver in excess of $50,000, either by vicarious liability or its stautory duty to indemnify the firefighter; and c) the release limits recovery from the firefighter to the “excess liability” coverage (actually held by the City), but is silent about recovery from the City.  If you’re of the mind that writers resort to italics to dress up weak arguments, then you’re not going to like this opinion.  Points (b) and (c) are supported by little more than font-enhanced parsing of the release document, and are probably the areas of focus for the Supreme Court in its review.

Insurance coverage – so boring, yet so powerful.

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1 + 1 = 0

No Court of Appeals opinions in our area today, but via the Star Tribune we learn of a Third Circuit decision striking down a Pittsburgh clinic-protest ordinance.  What makes this opinion stand out is that Pittsburgh really wasn’t breaking new ground, just combining two restrictions (a 15-foot entrance buffer and a 100-foot area with an 8-foot “bubble” zone around people entering a facility) both previously upheld by the U.S. Supreme Court.  The Third Circuit re-affirms the constitutionality of each restriction, standing alone.    The Court found the combination to be too much, though.

How?  First, the Court decided that either zone would do on its own, which seems like a failure of persuasion on the City’s part.  Key to making any speech restriction is defining exactly why the restriciton is necessary.   Saying that two “approved” restrictions are complementary apparently isn’t enough – the whole scheme must be justified.  The other issue with the combination is just how complementary the zones are.  The Court found that, despite being content-neutral and individually valid, the combination left certain kinds of speech – leafletting in particular – almost impossible to practice.  Good choice by the challenging groups in picking a leafletter as their representative plaintiff.  The existence of other “channels” of speech is often the saving grace of any speech or protest regulation.  It just so happens in this area that the Supreme Court has positioned these particular “channels” opposite each other in past opinions: the ability to pass out literature by a clinic door saved the “bubble” regulations in Colorado; both “buffer” restriction precedents (arising from court injunctions, not legislation) had “bubble” provisions that were struck down.  Maybe the thought here was that deference to legislation might allow the combination; at this point the answer is no, at least not with a lot more work put into justifying the combination.  

As the story notes, the City heads back to district court, where it can still avoid an injunction by picking one of the zones and scrapping the other.  Even so, the plaintiff has probably secured a place as a “prevailing party,” which is sure to keep the lawyers happy.

How do you budget for a blood feud?

This morning’s Star Tribune brings word that the League of Minnesota Cities is debating whether to keep insuring the City of Greenfield.  Greenfield is mired in what can only be called a feud, along what is sadly becoming a familiar pattern: existing leadership does something uncouth (throws weight around, supports unpopular project, approves major capital project, gets city sued, all of above); opposition gels around idea that incumbent mayor/council not just wrong, but evil; opposition candidate wins, makes “cleaning house” overriding priority; city staff quits/is fired, meetings descend into chaos, nothing gets done, city gets sued some more.   There is no method for recalling local officials under state stautes, and episodes like this emphasize why that is great policy (and also explain why statutory cities headed for the ninth circle like Greenfield often develop charter commissions).

Sometimes these things settle down on their own.  Other times, they don’t, which is when the League begins to lean on a city by threatening to pull insurance coverage.  Most of the time, this gambit works – no matter how bitter the conflict, almost everyone grasps the significance of having to cover $200,000 or $500,000 in legal expenses to settle scores.  The deductible applies to the costs of defense as well as any final outcome, so even “successful” cases (like the one linked above) end up blowing a hole in the city’s budget.    

Greenfield is getting interesting because it seems that it may be the first place where losing insurance doesn’t knock some sense into people.  As with all truly great feuds, nobody seems ready to take responsibility for anything (having comments shut down on a regular news story is another leading indicator of a great feud).  Maybe talk of deductibles and insurance coverage is too abstract.  Right now, municipal liability caps are $500,000 per claimant, and $1.5 million per incident.  Judgments against cities must be paid quickly out of existing funds or new taxes – not subject to levy limits – must be levied to pay the judgment.  If the city won’t do it, the County Auditor is required to levy the tax.  Passing a charter has no effect on these laws.  This is bad enough in any city, but one with about 1,0o0 households and around a $1 million annual levy?   At some point, any valid claim – car accident on a snowy city street, injury to a public works employee, storm sewer failure, etc. – could require Greenfield to double its property taxes.  It’s not hard to see why most cities get the hint.

UPDATE (11/13): The League has pulled coverage for acts or omissions of elected officials, but will maintain Greenfield’s basic property and liability coverage.  So the scenario in the last couple of sentences above thankfully won’t play out.   Still, the city should pray for land developers to stay away until the coverage issue is fixed.