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Dallas to settle for nearly $62M in police, fire back pay lawsuits

The city will vote to settle four of six back pay lawsuits from police officers and firefighters — lawsuits that the mayor says could help bankrupt Dallas if allowed to proceed


By Tristan Hallman
The Dallas Morning News

DALLAS — The Dallas City Council will vote next week to pay $61 million to settle four of six back pay lawsuits from police officers and firefighters — lawsuits that the mayor says could help bankrupt Dallas if allowed to proceed.

City Attorney Larry Casto said the settlement will be paid using the city's current bonding capacity and will not require voter approval. Some of the financial details still have to be ironed out, but financing it will not require a tax increase. 

This file photo made Tuesday, Aug. 9, 2016, Dallas police and firefighters fill the gallery for a city council budget meeting at Dallas City Hall in Dallas. (AP Photo/LM Otero)
This file photo made Tuesday, Aug. 9, 2016, Dallas police and firefighters fill the gallery for a city council budget meeting at Dallas City Hall in Dallas. (AP Photo/LM Otero)

If approved, the settlement will avert a trial scheduled for Dec. 4 in Collin County. While the remaining two cases risk that the city could still be on the hook for hundreds of millions or more in claims, interest and legal fees, Casto said settling these four significantly reduces the peril.

"It's a wise, prudent fiscal move to remove what could be catastrophic results if we ever did have a jury that sees it the plaintiffs' way," Casto said.

Attempts to reach the plaintiffs' representatives in the cases were not successful Friday. 

The cases, initially filed in the 1990s, centered on a 1979 voter referendum that gave police and firefighters raises. The city maintained that the ambiguously worded referendum was meant to be a one-time raise in 1979. Police and firefighters believed the voters had bound the city to maintaining a consistent pay differential between ranks that wasn't paid.

The lawsuits have hung around through years and through numerous mayors and councils. Joe Bob Betzel, a former firefighter who helped kick off the lawsuit, said last month that he was done negotiating with the city until they had a serious offer. The city, he said in an email, had never made any "good faith effort" to negotiate a settlement and could've been done with it years ago, under previous city management, for much less money.

The current group of city leaders recently tried to get out from under the lawsuit by using the state Legislature. First, they hoped to add language to a bill — meant to save the failing Dallas Police and Fire Pension — that would have made the city immune to the lawsuit. But they didn't find support among legislators and largely dropped the issue.

Then, during the last-minute negotiations on the final details of the pension bill in the Senate, city leaders discussed a small increase in the city's sales tax to help pay off a settlement. But that, too, fell flat with lawmakers.

Mayor Mike Rawlings said he doesn't plan to go down the sales-tax route again.

"I don't think we need it. I don't think the Legislature would support it. I don't think it's the right thing to do for the citizens of Dallas," Rawlings said.

But as he continues to bask in this week's voter approval of a $1.05 billion bond package that will help repair some of the city's crumbling streets and buildings and add new parks, Rawlings said the "dark fiscal cloud" that loomed over the city appears to be clearing.

"Now that we've got the pension fund in a place where we can start to turn healthy again and we've taken care of these four cases and the bond election has been passed, I believe the city of Dallas has never been on firmer financial ground," Rawlings said.

But a threat still lurks in Rockwall County, where the other two cases were filed. Rawlings said that if all six cases had been settled at the same rate, taxpayers would be out about $235 million.

Ted Lyon, an attorney in the Rockwall case, said he was aware of the settlement and commended the attorneys. But he hasn't had a chance to talk to his own clients about it yet.

"We haven't really talked to them about it," Lyon said. "Until we do, we won't know where they are in terms of how far we're going to go forward with the city."

Casto and Rawlings said the city will discuss settlements with the lawyers in the Rockwall case, too. But the two said they're confident the city would win in court.

Casto expects that the courts will combine the two class-action claims, leaving the city with one more case to handle. Lyon said the cases probably should be combined. Casto said the trouble with trying multiple cases is that the city only has to lose one of them to be liable for, potentially, billions in back pay. And, he said, the city would give away its game plan in the first trial to the attorneys in the other cases.

Council member Scott Griggs said he's relieved that the case won't be in the hands of a Collin County jury.

"It's a great opportunity," he said. "It's a case that we need to settle."

The settlement is the latest in a series of troublesome issues that Casto has disposed of since he was named City Hall's top lawyer last year. Casto's imprimatur was on the pension deal, the new entity tasked with building a park between the Trinity River levees and a settlement of a multi-million-dollar water rate case against the Sabine River Authority.

Rawlings, who was deposed in the case, said the looming trial and Casto's relationship with the trial attorneys helped them reach a resolution. The case nearly went to trial in August 2016 and again in May.

Casto credited the mayor and the council, saying they have "a mind-set that the sun comes up tomorrow if you tackle these hard issues."

"A lot has happened in this past year," he said. "Once you figure out, hey, you survive tackling hard issues, let's go do another one."

Sam Friar, a retired firefighter who is one of dozens of plaintiffs in the cases, was surprised to hear about the settlement. Friar was the pension board chairman during the negotiations in Austin. Although his focus was on the pension, he saw how far apart the sides had seemed on the issue.

"I never thought this would happen," he said.

Casto, who started with the city as a lobbyist in 1992, said the referendum settlement was "an excellent deal for both sides" and helps the plaintiffs get money within a few months and avoid an uncertain outcome and years of appeals.

"I really don't remember a time when the city was not struggling with this issue," Casto said. "It's nice to feel we're on a path to find a resolution."

©2017 The Dallas Morning News

McClatchy-Tribune News Service

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