Copyright 2006 THE DALLAS MORNING NEWS
By TANYA EISERER
The Dallas Morning News (Texas)
A pay dispute between Dallas and its public safety workers over a referendum passed when Jimmy Carter was president could cost the city more than a billion dollars.
The city has lost almost every major court ruling in the dispute. Lawsuits on the matter are on appeal while the Texas Supreme Court weighs sovereign immunity issues, but legal experts say the cases could be a ticking financial time bomb for Dallas.
“I think the city is in definite danger,” said Ken Molberg, an attorney who helped police and firefighters draft the original language in the referendum but who is not involved in the lawsuits.
“The city has a big old target on it,” he said. “If they’re wrong, that means that you and me are on the hook for a whole lot of money.”
In 1979, police and firefighters contend, Dallas voters promised that the percentage differences in their pay would stay the same every time the City Council doled out more money. In other words, the salary gap between ranks would remain the same when a raise was approved; for example, if a recently recruited patrol officer got a 5 percent raise, then so should a lieutenant.
In the mid-'90s, a group of firefighters filed suit after they claimed the ordinance had not been properly followed and their pay raises had not kept pace with those of higher-ranking personnel. Other lawsuits followed.
At issue is whether the referendum promised the pay differential for one year or forever.
“What truly counts is, what did the voters intend?” said City Attorney Tom Perkins. “This referendum was about a one-time 15 percent raise for police officers and firefighters.”
Were the pay differential honored, attorneys suing the city estimate that Dallas could owe back pay and interest of $1 billion or more to public safety workers. City officials dispute that projection but have provided none of their own.
“The city is hoping that the courts will rescue them,” said Robert Lyon, a Rowlett attorney representing police and firefighters in two class-action suits. “They’re down on bended knee saying please save us from our own stupidity.”
On the ballot
In 1978, frustrated public safety workers took their fight for better pay to voters after the City Council rejected a request for a $40 a month emergency raise for police and firefighters.
At the time, federal labor statistics showed a Dallas family of four needed to make $15,300 - $400 more than the annual salary for a veteran police officer or firefighter - to avoid living in poverty.
“We qualified for food stamps,” said Bobby Joe Dale, a former Dallas Police Association president.
Police and firefighters gathered 80,000 petition signatures and forced a begrudging City Council to call a special election.
The pay referendum was the “strong mayor” issue of its time. The debate focused on the 15 percent pay raise voters were being asked to approve - not the differential provision and any potential long-term consequences. The business establishment overwhelmingly opposed putting the pay increase to a popular vote. Newspapers editorialized against it. Politicos warned it would bring financial calamity and “spell the end of manager-council form of government.”
“They went up against the power structure of the city,” said Jim Ewell, a former Dallas Morning News reporter and retired Sheriff’s Department spokesman. “Nobody gave them a chance in hell to win.”
The city commissioned a respected accounting firm to analyze the proposal’s impact. The study recommended that the city hire independent legal counsel to interpret the “differential” clause before the election. It does not appear that the city did so.
On Jan. 20, 1979, voters decisively approved the referendum. As it required, the City Council soon passed an ordinance to implement the raises - at least 15 percent for all public safety workers - and authorize the differential provision.
Whether through intent or happenstance, the city largely maintained the differentials for the first few years - the percentage gap between the salaries of all the ranks remained about the same.
But in 1988, police and fire deputy chiefs became angry because the gap between their pay and that of the next lower rank had narrowed. “We wanted them to make it right,” said Bobby Moore, a retired deputy fire chief.
City management “basically said that’s too bad” in a meeting with police deputies, said police Capt. Troy McClain, a deputy chief at the time. “But shortly after that, we got a memo from Jan Hart, stating that they had decided that the differential would be maintained.”
The city capitulated.
An Aug. 1, 1988, memo from Ms. Hart, who was then first assistant city manager and later city manager, stated that the city would fix the pay scale. The city quietly disbursed back pay to some of them.
In a deposition years later, Ms. Hart disavowed the 1988 memo, saying that it did not reflect her opinion and claiming it might not have been signed by her.
So why did the city pay the deputy chiefs and give them raises? “It’s quite possible it was simply to make some employees happy who were unhappy,” she said in the deposition.
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.
These were not the only times that city officials acted to correct imbalances citing the 1979 pay referendum as a justification. Mr. Perkins, the current city attorney, said city officials “were mistaken” in those earlier interpretations.
In March 1993, firefighter Joe Betzel filed a grievance on behalf of about 250 firefighters who said their raises had not been comparable to those of firefighters with similar ranks.
Assistant City Manager Ted Benavides, who later became city manager, denied the grievance, saying there was no significant problem with the pay structure. But records show the city did order small raises for some firefighters and police officers after it determined that the pay referendum required it.
On June 30, 1994, the firefighters sued, saying Dallas had not abided by the 1979 referendum. It soon spawned related lawsuits covering virtually every police officer and firefighter.
“They called our bluff, and they lost,” Mr. Betzel said.
Early on in court filings, the city did not contest the idea that the differential clause had lasting implications. Instead, Dallas officials contended that the referendum prohibited the city from decreasing the pay gap but not from increasing it.
The city also countersued in 1995, claiming that if the plaintiffs’ argument was correct - that the city had failed to follow the terms of the referendum - then no raises since the referendum were valid. Therefore, they argued, the city had overpaid firefighters and should be repaid.
In 1997, a state district judge found the ordinance did require the city to maintain the percentage pay differentials. He ordered the city to “bring itself into compliance.”
The following year, the City Council approved a resolution to retroactively fix the pay scales for police and firefighters for each fiscal year back to 1990 to meet the referendum’s requirements.
“The purpose of this action is to adjust salary schedules for those employees to ensure compliance with the referendum,” Ms. Suhm, who was then an assistant city manager, wrote in a memo to the City Council.
State District Judge Robert Dry threw out the retroactive parts of the pay scales, saying the city’s action violated the Texas Constitution.
In 1999, he ruled the city had been given enough time to fix the problem but had failed to do so.
The judge also ordered that the city pay 16 firefighters, including Mr. Betzel, a total of about $2 million in back pay and interest. Those 16 firefighters had been separated from the original lawsuit, although the original suit was also winding its way through court.
After the judge’s ruling, city officials requested a new trial. In their motion, they contended that the referendum was a one-time pay raise and, in any case, didn’t apply to the salaries of deputy chiefs and above because they are executives, a turnabout from earlier practice.
In June 2002, a Dallas state appeals court reversed Judge Dry’s order to pay those firefighters. The court ruled that the ordinance was ambiguous and ordered a trial to determine what it meant.
Legal limbo
That case and the others remain in legal limbo, awaiting long-anticipated rulings from the Texas Supreme Court that could determine whether the city can use sovereign immunity to get the cases dismissed.
“The city is basically saying that the police and firefighters didn’t have its permission to sue,” said Bill Boyd, an attorney representing police and firefighters in several of the lawsuits.
Both sides are awaiting a ruling on a case involving a water main break in 2000 that flooded the downtown Santa Fe Terminal Lofts. In the aftermath, Reata Construction sued Dallas, contending the city gave them faulty information about the main’s location, leading it to accidentally puncture the main.
At question in the Reata case - and in the pay lawsuits - is whether the city waived its right to sovereign immunity when it countersued.
“When you take your little happy rear-end to the courthouse and say, ‘Hey, Judge, I want you to help me,’ it seems patently unfair” to ask for help, and then claim that the city can’t be sued, said Michael Shaunessy, an Austin lawyer who is an expert on sovereign immunity issues.
The Texas Supreme Court ruled against the city in the Reata case in April 2004. The city asked the court to reconsider but also dropped its counterclaims in the pay lawsuits that contended that public safety workers owed the city money. “We were trying to take it back,” said James Pinson, an assistant city attorney handling the pay lawsuits.
The court has yet to rule in the rehearing of the Reata case.
Attorneys for the public safety workers say it is only a matter of time before the courts rule in their favor. City officials are also confident of victory.
Meanwhile, the pay lawsuits have created a kind of organizational inertia. City officials say the legal complications mean that while they await the final outcome they must be cautious about how salaries are raised. It has been 18 months since public safety officers received raises.
“There’s a problem with the way the pay is structured across the board and that needs to be dealt with, but it can’t be dealt with in the context of the legal environment,” Ms. Suhm said.
The manpower-strapped Police Department has a tough time filling its vacancies, in part, because its low pay can’t compete with better-paying suburbs.
“They’re talking out of both sides of their mouth,” Mr. Boyd said. “If they really believed the referendum was a one-time deal, they’d go ahead and give the entry-level people a raise.”