Legal battles cost Modesto millions

The expensive part is almost over.

Modesto is wrapping up four complicated lawsuits filed against the city in 2004 and 2005, collectively costing millions of dollars in legal fees, settlements and judgments.

Some of the bills have not arrived, including an expected $1 million for the plaintiffs' legal fees from a voting rights lawsuit.

The latest ruling came Thursday, when a jury sided with two female Finance Department employees who sued the city claiming they were underpaid compared with a male counterpart.

That verdict could cost the city $189,100 for the judgment and at least twice as much in legal fees, depending on the outcome of Modesto's appeal.

It follows a year in which Modesto settled a gender discrimination lawsuit for $3.25 million, beat a lawsuit claiming it provided substandard services in unincorporated county pockets and lost an attempt to overturn a state voting law.

Those cases were filed from June 2004 to July 2005. Unlike most claims against Modesto, they required the city to seek outside attorneys and experts for its defense.

The charges were $1.7 million in the voting case and nearly $390,000 in the wage bias trial that ended this week.

"There's no reason for anyone to expect that we're going to be hit by those megabucks issues again," City Councilman Bob Dunbar said, calling the confluence of those cases unusual.

At the same time, the city attorney's office advanced a lawsuit against companies that produced dry-cleaning solvents polluting Modesto's groundwater and soil.

Other cases in the courts

One of the companies last month agreed to pay Modesto $20 million to settle its share of the case; another component of the lawsuit is headed to trial in January. That money is ear- marked for an environmental cleanup and can't be spent in other city departments.

"We're just doing this magnificent job on this case," City Attorney Susana Alcala Wood said. "We actually have a shot now of having money to clean the groundwater."

Wood stopped short of calling the mix of expensive cases exceptional, saying they reflect cyclical trends for a growing city.

Modesto has a number of high-profile cases working through courts, but the city can handle those lawsuits with its attorneys. They include a claim from a woman whose son drowned while playing on a defunct dam in March and three lawsuits that allege police misconduct.

But the gender settlement and the two judgments against Modesto strain its budget during a time of looming cutbacks because of lower tax revenues.

Budget reports show the city spent $1 million on outside attorneys' fees last year. It expects a similar sum this budget year, before dropping to $250,000 annually after the current cases are resolved.

Modesto pays its own claims up to $1 million. It's part of a California city liability pool for charges up to $5 million and has a third layer for more expensive cases.

March's $3.25 million settlement wiped out the city's excess liability fund. Modesto is awaiting negotiations between its two insurance carriers over whether they will repay the city for that case.

The voting case, known as Sanchez v. Modesto, has an unknown price tag.

Modesto likely will receive a bill soon for more than $1 million in legal fees from the Lawyers Committee for Civil Rights for the San Francisco Bay Area, which defeated Modesto's effort to strike down the California Voting Rights Act.

Modesto could be liable for the plaintiffs' attorneys fees because it lost; a judge would determine the amount.

The group, on behalf of three Latino residents, sued Modesto in June 2004, arguing the city's at-large council elections disenfranchise minority voters.

In August 2004, the nonprofit lawyers' group sued Modesto and Stanislaus County seeking improvements to county islands in south and west Modesto. A federal judge in Fresno this summer backed the city and county, but the lawyers' committee has taken the case to the U.S. Court of Appeals for the 9th Circuit in San Francisco. Its briefs are due in January.

Better personnel practices?

Dunbar and Councilman Garrad Marsh said Modesto improved its personnel practices after the gender discrimination and wage bias lawsuits. They view the two cases as a result of the city's management in the late 1990s, when the grievances began that led to the lawsuits.

"It really comes out of a growth spurt where we didn't have the right people in place to handle personnel properly," Marsh said.

Susan Kirkgaard, the Sacramento attorney who negotiated the $3.25 million gender discrimination settlement, said she continues to hear complaints from women at City Hall.

"I would hope they would be exceptional situations, they would learn from each of them and change their behaviors," she said. "Unfortunately, I haven't seen the city is making the changes it needs to make."

Bee staff writer Adam Ashton can be reached at aashton@modbee.com or 578-2366.

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