Sometimes the Settlement Is Only the Beginning

Posted 4:38 PM by Michael Fox

What no doubt seemed like a relatively straight forward racial discrimination lawsuit filed by a terminated police officer in 1991 was settled in 1993 for $81,000 and reinstatement, providing certain conditions were met. Now almost a dozen years later, a separate controversy over the settlement is wending its way through the courts. The most recent stop, Powell v. Alexander (1st Cir. 11/24/04) is the affirmation of an award of $10,000 in punitive damages against the lawyer who represented the City in the original lawsuit. According to the district court's determination, Kathleen Alexander, as City Solicitor for Pittsfield, Massachusetts, set about a "course of conduct in delaying Powell's reinstatement [that] was, taken as a whole, "both outrageous and reprehensible," citing from the 87 page opinion from the district court. Powell, 221 F. Supp. 2d at 152.

Although the settlement agreement contemplated reinstatement, it was more than three years before the officer was back on the job. The dispute focused on his physical condition. Alexander was the central person overseeing the details of the reinstatement process for the City, and her failure to disclose a report from a City physician was what appeared to upset the courts the most. Quoting from the letter:

"The consensus was, given [Powell's] current state of health, that there would be currently no reason to limit his physical activity." Dr. Bird's letter concluded: "Now that the exact nature and stage of Mr. Powell's chronic liver disease is known, I feel that he does not have a condition which would disqualify him from returning to the police force." Dr. Bird's copy of the letter, which he kept in his business files, was accompanied by a sticky note that read, "Confidential per request [of] K. Alexander." Powell remained unaware of the letter's existence until it surfaced during discovery in the instant lawsuit.

Neither court accepted Alexander's explanation for why the report had not been disclosed while the issue of Powell's physical ability to return to work was the primary issue.

The Court had to weave its way through rather tangled law under §§1981, 1982 and 1988 as well as deciding whether or not Alexander was on notice that she was being sued in her individual as opposed to her official capacity. Rather than adopt some sort of bright line test as urged by Alexander, the Court aligned itself with a majority of other courts in using a "course of proceedings" standard. Here, the court found it sufficient to hold she had knowledge.

If Alexander had hoped for professional exoneration by appealing, she would have been better off paying the $10,000. To make matters even worse, the appellate court found Powell entitled to his attorneys fees and costs and remanded to the district court for the determination of the amount.

Having been involved in a three week jury trial where the primary dispute was on post-settlement conduct, I can vouch for the efficacy of settlement agreements where all obligations of the employer are complete upon the signing of the agreement and payment of the agreed amount. Sometime, as perhaps here, it is impossible to do that. But before concluding that the price for such a settlement is too high, one should contemplate what the cost has been of this now nearly 15 year controversy.

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