Both Sides Claim Victory As Supremes Send City's "Billion-Dollar Case" Back to Trial Court

Damn it. We got so caught up in the state Supremes' pole tax ruling at the end of last week we missed the far bigger one staring at us from the top of Friday's Opinions on Orders page: City of Dallas v. Keneth E. Albert et al., otherwise known as The Billion-Dollar Case.

It's not a simple case to recap; when it comes to this particular legal matter, which went before the Supreme Court of Texas in December 2009, there is no such thing as "long story short." And then there's this: Both sides are claiming victory.

This is a case that dates all the way back to a 1979 referendum: City of Dallas voters agreed to 15-percent pay raises for firefighters, police officers and rescue workers, but only with the caveat that "the current percentage pay differential between grades in the sworn ranks of [the Officers] shall be maintained." As Justice Phil Johnson so neatly summed it up last week:

A dispute arose between the City and the Officers over whether the ordinance provided for a one-time pay raise or whether it provided for a one-time pay raise and also required the percentage pay differential to be maintained indefinitely so that if higher-ranking Officers received raises, lower-ranking Officers also received raises in order to maintain the differential.

It got decidedly nasty in the late 1980s: Deputy chiefs began noticing that the pay differential between themselves and those lower down the ladder began shrinking. Then-Assistant City Manager Jan Hart issued a memo, which she later disowned, giving back pay to some top cops. Then, as The Dallas Morning News noted five years ago:

Again, in 1991, Police Chief Bill Rathburn ordered that nine police executives receive raises based on the clause.

In an interview, Mr. Rathburn said, "Mary Suhm was my senior administrative person, and anything like that that I would have signed would have come from Mary Suhm." She was then a top civilian manager in the Police Department and is now city manager.

Three years later, officers who didn't get pay bumps sued the city -- and the city fought back with its own claim, insisting that "if the Officers had not been paid correctly," again according to Johnson, "they had been overpaid instead of underpaid and the City was entitled to reimbursement for the overpayments. The City eventually sought dismissal of the Officers' claims on the basis of governmental immunity, then later dismissed its counterclaim."

Except the trial court said, no, the city doesn't get to claim immunity when it's countersuing for monetary damages. But the city protested: When it ditched its counterclaim, that right there should have been enough to reinstate immunity -- it is possible to get your virginity back. The officers suing the city said: Not so much. And a majority of the Supremes agreed, which is why they're sending it back to trial court -- to further argue issues of immunity.

Writes Johnson for the majority:

Under established principles and rules, the end result of the City's nonsuit is the same regardless of whether the nonsuit results in the Officers' claims being disposed of by a plea to the jurisdiction or another proceeding such as by motion for summary judgment. Summary judgment might take a little longer to obtain and result in more attorney's fees 12 and effort by the City than would a plea to the jurisdiction, but the City made the choice to expend time and assets on litigation when it filed its counterclaim. And a governmental entity in the City's position will effectively continue to have the option of having its immunity from suit determined by interlocutory appeal. The entity still has immunity from suit as to claims in the second category outlined above.

Once the entity asserts that it has such immunity, the trial court's ruling on the question will ordinarily remain subject to interlocutory appeal. The dissent's proposed course would create uncertainty and litigation over whether, and if so, when and how an entity's conduct in some manner resulted in a change in its immunity -- regardless of whether the change is labeled as being the result of waiver or a change in the character of one of the claims against it.

For now, the city's declaring this a victory. When I asked First Assistant City Attorney Chris Bowers for his thoughts, he sent the following statement from the City Attorney's Office:

The Texas Supreme Court ruled for the City of Dallas today in the so-called pay referendum lawsuits. These cases arose out of a referendum and ordinance that were passed in 1979. Beginning in 1994, Dallas fire fighters and police officers filed a total of seven lawsuits in three counties, alleging that the City was not complying with the ordinance and underpaying them. Those lawsuits seek more than $1 billion in back pay for the City's alleged violation of the ordinance, which they claim to be an implied term of their alleged employment contracts with the City. The City strongly believes that it has complied with the ordinance and referendum.

The Court confirmed today that the plaintiffs have not yet asserted a claim for which they can recover damages. The Court held that the plaintiffs cannot obtain a money judgment against the City merely because the City had filed a counterclaim which it has since dismissed. In addition, the Court ruled that the plaintiffs were not entitled to a declaration of their rights under the ordinance. The Court also held that the ordinance did not waive the City's governmental immunity because it was adopted by a referendum.

In a previous ruling on these cases, the Dallas Court of Appeals had held that the plaintiffs were not entitled to relief based on other laws. Thus, after 17 years of litigation, Texas appellate courts have yet to find that the plaintiffs are entitled to sue the City under any theory.

As expected, the Supreme Court remanded these cases to the trial courts. The trial courts were requested to determine whether they have jurisdiction to consider the plaintiffs' claim to back pay under a recently-enacted law that waives governmental immunity for certain written contracts. Since these cases have been on appeal, the plaintiffs have amended their lawsuits to claim that they are entitled to back pay under this law and a civil rights law. Before any trial can be held, there first must be a determination that the trial courts have jurisdiction to consider the claims. The City believes that the plaintiffs are not entitled to relief under these laws and will urge the trial courts to dismiss those claims.

Then again: Attorneys for the officers are delighted this is going back to trial court. Jay Stewart tells Unfair Park this evening that "after 17 years it's hard to put this in a soundbite." So he won't even try. Instead, here's the statement from Stewart, Terry Scarborough and Lee Parsley:

Scarborough, lead trial attorney representing the Dallas First Responders, said, "We are encouraged that the Texas Supreme Court has finally ruled on the endless appeals filed by the City of Dallas. The case was argued before the Court a year and a half ago, and has been on appeal for well over a decade. In March 2011, the Court ruled in another First Responder pay case out of Houston that the Texas Legislature, by statute, has already granted a clear and unambiguous waiver of immunity in these cases. We've had the green light to go back to the trial court since then, and we are excited with today's ruling that we can actually make real progress in this case."

Dallas police officers and fire fighters initially filed suit against the City of Dallas in 1994 when the City failed to honor a 1979 voter-approved referendum involving pay for the First Responders. The City has refused to comply with the ordinance. In this case, the City has filed endless appeals, and even counter-sued its own First Responders, to avoid the responsibility to comply with its own municipal law.

"We hope our elected officials would see this latest development as an opportunity to honor the loyal service of First Responders to the City and its citizens by helping bring this case to an amicable resolution once and for all," said James Wallace, a retired Dallas police sergeant who served on the force for 40 years. "Unfortunately, the City has already threatened more appeals in its filings with the Texas Supreme Court, so we''ll have to wait and see if they will do the honorable thing, or just more legal wrangling."

The City of Dallas has fought our efforts to let a judge or jury decides this case by using the delays of the appellate process to their advantage,continued Scarborough. Tragically, in some cases we now represent the heirs of First Responders who were alive when this case was filed, and have since passed away. As a 40 year lawyer, I understand that delayed justice is often seen by clients and the public as no justice. I look forward to aggressively representing my clients at trial at the first available date.

In March 2011, the Texas Supreme Court ruled in City of Houston v. Williams that a city's ordinance is a contract subject to Texas Local Government Code Chapter 271. The Court ruled that The language is a clear and unambiguous waiver of governmental immunity for certain breach of contract. The First Responders here will be likewise seeking enforcement of the City of Dallas obligations set out in its voter-approved City ordinance regarding First Responder pay.

Confused? The justices would not disagree with you, given the fact that as this case has snaked its way through the legal system, the legal definition of sovereign immunity has changed about half a dozen times. In his separately filed opinion, which dissents with one of the majority's points, Justice Nathan Hecht writes:

Let the litigation and confusion begin. Appellate courts running out of something to do will regard today's ruling as good news.

And Justice Don Willett, who disagrees with his colleagues, writes, "The myriad governmental-immunity issues in this case provoke varied views."

No kidding. And, look, this isn't over by a long shot.

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