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December 19, 2013

City, mayor settle whistleblower case

Sources say deal bars parties from commenting about reported $175,000 settlement

By Brian Louwers
C & G Staff Writer

WARREN — It’s over. Warren and Mayor Jim Fouts have settled a federal whistleblower lawsuit with a former appointee for $175,000, City Attorney David Griem confirmed Dec. 18.

The settlement — reportedly facilitated months ago, agreed to by both sides in U.S. District Court this week and endorsed by a unanimous-but-murky vote of the Warren City Council Dec. 17 — seemingly ends a legal nightmare for Fouts that began in July when former CitiStat Coordinator Jim Hartley filed a lawsuit alleging his rights under the state and federal constitutions were violated and that he was the target of “constructive termination.”

Hartley, a former mayoral appointee who led efficiency programs at City Hall, alleged he was relegated to a Department of Public Works garage and ordered to count auto parts by hand with a pencil and scraps of paper after he secretly recorded phone conversations with Fouts. The recorded rants, which Hartley later turned over to police, included a litany of bombastic, profane and violent statements directed at two former city employees.

Fouts later issued a public apology for the profane remarks, and Macomb County Prosecutor Eric Smith declined to authorize criminal charges in response to Fouts’ alleged threats after Hartley gave copies of the recordings to the Michigan State Police, which concluded its investigation in May. Hartley later alleged he was stripped of his official city duties and banished to the DPW garage, where he was tasked with inventorying auto parts in retaliation.

The office of labor attorney Deborah Gordon filed a whistleblower lawsuit in U.S. District Court July 19 on Hartley’s behalf against both the city and Fouts individually. Attorneys representing the city and the mayor never officially answered the original complaint that alleged Hartley’s rights under the U.S. Constitution and the Michigan Whistleblowers’ Protection Act were trampled. Rather, attorneys sought a series of extensions — at the agreement of Hartley’s attorneys — that pushed the response deadline into late fall, as the mayor and the city assembled a legal team and, eventually, began the facilitation process that brought about a settlement in the case.

In response to a Freedom of Information Act request, Warren City Attorney David Griem said the case was settled for $175,000.

He declined to comment about the specifics of the settlement, citing a stipulation of the agreement, and referred instead to documents presented to members of the Warren City Council who met in a closed session and voted 7-0 to approve the deal Dec. 17.

“I was against settlement in this case. When my co-counsel pointed out to me the tremendous risk in not settling the case, she brought me around,” Griem said. “She convinced me that the smart thing to do for the taxpayers of the city of Warren was to settle the case.”

Documents presented to Warren City Council members, also obtained under a FOIA request, outlined the potential costs of a prolonged legal battle in the case.

The documents, prepared by attorney Sheryl Laughren of the Berry Moorman PC law firm, included a settlement analysis and cited costs in a similar whistleblower case brought by Deborah Gordon’s firm — a matter involving Wayne County and its executive, Bob Ficano — that ballooned to include more than $230,000 in legal fees and more than $221,000 in pretrial discovery and motion costs.

“It is reasonable to conclude that the fees in defending the Hartley litigation would be substantially similar,” Laughren wrote.

In summary, she concluded, “This litigation will be very expensive to defend, and although we are hopeful of the correct decision, and that we will prevail on our anticipated motions for summary judgment, there can be no guaranteed result.”

Reached for comment on the settlement, Fouts cited the terms of the agreement and said only, “I have strong feelings about it. I’m prohibited from saying anything.”

Hartley declined to comment on the settlement, also citing the language of the agreement. His attorney, Sarah Prescott with the Deborah Gordon law firm, could not be immediately reached for comment.

While he refused to divulge additional terms of the deal beyond the $175,000 settlement payout, Griem said labor law is undoubtedly tilted in favor of the plaintiff in such cases.

“If, hypothetically, a plaintiff sues, for example, a half-million dollars and a jury returns a verdict of $5,000 against a defendant, you would think that would be a victory for the defendant,” Griem said. “In a normal case, it’d be a victory, but not in a case brought under the state and federal statutes. If the plaintiffs collect a dollar, the court is going to award attorney fees to the plaintiff.”

Given the high-dollar fees commanded by expert attorneys and the costs of protracted litigation that could have lasted two years in this case, Griem said a decision not to settle would have been financially risky.

“We could be in a situation where we win the battle and we lose the war,” Griem said.

You can reach C & G Staff Writer Brian Louwers at brianlouwers@candgnews.com or at (586)498-1089.