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MUNICIPAL ATTORNEYS NEWSLETTER
Missouri Municipal Attorneys Association
1727 Southridge Drive, Jefferson City, MO 65109 Editor Howard C. Wright
573-635-9134, Fax: 573-635-9009 Asst. Editor Ragan Wright
October 08, Issue #10-08
CASE OUTLINES (MISSOURI)
UE CANNOT HAVE IT BOTH WAYS. Union Electric (UE) entered into a contract to construct a number of substations necessary to provide power to its customers. UE is an investor-owned utility deriving its authority to provide utility services to Missouri residents from the laws of the state of Missouri and the regulations of the Missouri Public Service Commission – an agency of the state of Missouri. The contractor, TM2 Construction Company, did not pay its subcontractors who filed liens on UE property. UE filed a motion to dismiss that was successful based on the grounds that UE was a “quasi public regulated utility” making UE property exempt from materialmen and laborers liens. The subcontractors amended their petition alleging that UE was subject to Section 107.170 that requires every “public entity” to furnish a bond on all “public works” projects in order to protect materialmen and laborers. The case was submitted on stipulated facts and the trial court ruled for the subcontractor. UE appealed to the Eastern District which affirmed the trial court’s decision holding that UE was a “public entity” and it was constructing a “public works” project under Section 107.170 thereby requiring UE to furnish a bond. Collins & Hermann, Inc. v.TM2 & Union Electric Company, (ED90087, 09-16-08).
Comment Howard: This decision seems like a real stretch but it does illustrate how far the courts are willing to go to provide a remedy when subcontractors cannot get a lien on public property. One of the absolutes in local government law is that you cannot get a lien on public property. Correspondingly, the courts have gone a long way as they did in this case in interpreting Section 107.170 to require bonds in order to protect persons who cannot assert a lien on public property.
INTERNET USAGE POLICY. Most local governmental agencies have an Internet usage policy that limits the right of employees to use the network and the property of the local government. These policies may also contain a statement that the employee has no expectation of privacy when using the Internet or other property of the local government agency at any time. Summer Group, Inc., v. Ernest and Division of Employment Security, (ED90939, 09-23-08), provides the back drop for analyzing such a policy in the context of use by the employee in violation of the employer’s policy. Summer Group (Employer) hired Ernest (Employee) as a full-time account manager. The Employer has a written policy that provides that all computer, e-mails, hardware, software, telephones, and related technology are company property which is monitored seven days a week, 24 hours a day. The policy further states, “The employee has no expectation of privacy at any time when using company property.” The Employee was determined to have used the Employer’s property for his own personal use by sending e-mails with graphic sexual depictions and racially derogatory comments in violation of the company’s policy for which he was terminated. Employee sought unemployment compensation benefits and the Employer defended on the grounds that the Employee was terminated for cause. The appeals referee found for the Employer determining that the Employee was properly dismissed for misconduct at work. This decision was reversed by the appeals tribunal and the Employer appealed to the Western District. The Western District reversed holding that as a matter of law the Employee’s actions constituted misconduct under the statute. The policy was clear and there was no dispute about the facts. The court noted that if the Employer did not stop the activity the Employer could be sued for discrimination. Summer Group, Inc., v. Ernest and Division of Employment Security, (ED90939, 09-23-08).
Comment Howard: This case merits further examination since it is one of the few Missouri cases that discusses an Internet policy. There is no suggestion in the opinion that there may be a right of privacy under different circumstances. The opinion supports having a broad policy statement with no expectation for privacy.
WHAT CONSTITUTES DIRECT EVIDENCE OF DISCRIMINATION? Stanley was employed as a meat department manager for Thriftway for 28 years before Thriftway was taken over by Jerden Foods (Employer). As part of the takeover, Jerden decided to close the store and interviewed and hired Stanley in 2003. Stanley was hired as a meat cutter but was told that when a new store opened he would be promoted to the manager of the meat department in the new store. In 2004, the manager of the new store asked Stanley about his retirement plans and when Stanley told him that he was not able to retire he was asked to talk to his wife about retirement. Stanley was then terminated. In the meantime, a 34-year-old was hired as the manager of the meat department at the new store. Stanley sued and the jury returned a verdict for Stanley against the Employer for discrimination. Employer appealed to the Western District asserting there was no “direct evidence” of discrimination. The court found that there was no dispute, that on several occasions the manager asked Stanley about his plans for retirement – which when combined with other disputed evidence, was sufficient to make a case for the jury of “direct evidence” of discrimination. Stanley v. Jerden Foods, Inc., (WD68803, 09-23-08).
NO SECOND CHANCE TO TAKE BLOOD ALCOHOL TEST AFTER REFUSAL. In Smith v. Director of Revenue, (28837, 08-27-08), the Southern District reviewed the procedures followed by the officer after the officer determined that the driver was deliberately refusing to properly blow into the breathalyzer. After giving the driver several chances and instructing the driver on how to blow into the breathalyzer, the results showed that there was an invalid reading and at that time the officer declared that the test was finished due to the driver’s failure to cooperate. The officer told the driver that he would take the driver to the hospital where a blood test would be administered. The driver refused but after being informed he would lose his license the driver reconsidered and stated he would take the blood test. The officer told the driver that after having once refused the test, the statute did not provide for a second chance. The driver’s license was revoked by the trial court and the driver appealed to the Southern District which affirmed based on a basic reading of the statute.
DOUBLE JEOPARDY. If you are interested in an analysis of how to apply the double jeopardy provisions of the United States and Missouri Constitutions, State of Missouri v. Clark, (WD67827, 07-17-08), provides a framework for examining the law of double jeopardy. In this case, the driver of a motor vehicle was charged in municipal court and in state court for careless and imprudent (C&I) driving involving a police chase. Since the C&I in the municipal court was a separate incident from the C&I charge filed in state court, there was no double jeopardy even though there was a single chase.
CODE INSPECTION BY CITY IS PROTECTED BY SOVEREIGN IMMUNITY. A city employee for the city of Nevada (City) inspected a new electric meter pedestal to determine if the work performed by a private contractor complied with the city electrical code. The contractor failed to ground the pedestal as required by the city code. The inspector approved the work and within a few days after moving into the mobile home Paul Scott, the owner of the home, was electrocuted due to failure to properly ground the pedestal. The wife of Paul Scott sued the City and others. The City moved for summary judgment based on the grounds of sovereign immunity and was denied. The City filed a writ of prohibition in the Western District which was granted and made permanent. The plaintiff alleged that the payment of the $12.50 inspection fee to the City made the actions of the City proprietary since it received a monetary benefit. Evidence further showed that the city inspector was negligent in performing the inspection since the inspector was not aware of the city code requirement that the pedestal was to be grounded. The Western District held that the purpose of the inspection was to protect the public and while the City may have failed to properly inspect, the actions of the City were protected under the doctrine of sovereign immunity even if the City was paid for this service no matter how negligent the City was in carrying out the inspection under the city code. State ex rel. City of Nevada v The Honorable James Bickeli, (WD69491, 09-30-08).
TERMS OF CONTRACT MUST BE SPECIFIC AND AUTHORIZED AT MEETING WHERE A RECORD IS MADE OF THE ACTION. Periodically the city attorney becomes the lead player in delicate negotiations between the city council and a key employee like a manger administrator involving termination of an employment relationship. Moynihan v. City of Manchester et al., (ED90886, 09-30-08), is a case that illustrates some of the pitfalls in carrying out these negotiations. In September 2000, the board of alderman (Board) for the city of Manchester (City) appointed Mathews. In December of 2003, the Board met in closed session to discuss Mathews’ continued employment. The Board voted by 4 to 2 to seek the resignation of the city administrator immediately and if her resignation was not secured they would terminate her employment. No minutes were taken although the city attorney did draft a memorandum documenting the actions taken at the closed session. The city attorney met with the city administrator and informed her of the Board’s decision, at that time she informed him that she had already retained an attorney to pursue a gender-biased, discrimination claim in connection with her termination. On December 4, 2003, the Board convened an official work session in which no minutes were taken although affidavits were filed by the board members disclosing that the city attorney met with each member individually to advise them of the potential gender-biased claim by the administrator. The affidavits did not disclose that five of the six board members had approved the proposed settlement although no vote was taken or recorded nor were any minutes taken. Nevertheless, the mayor executed a separation and release agreement (Settlement) in which the administrator received eight months severance pay and additional benefits. Moyhiham, as a taxpayer, filed a lawsuit challenging the action of the mayor in executing the Settlement. The City filed a motion for summary judgment that was sustained, then was appealed to the Western District. On appeal, the sole question was whether or not the City was entitled to summary judgment based on the claim that the Settlement complied with Section 432.070, that requires that contracts must be authorized and such contracts and authorization shall be in writing and duly executed. In order to create a valid contract, the records of the municipality must disclose authorization and sufficiently identify the subject matter with reasonable exactitude and specificity. The motion at the closed meeting simply authorized that the resignation be sought immediately and if not successful that the administrator be terminated. This record did not show that the mayor was authorized to enter into the Settlement that granted the administrator eight months of severance pay and other benefits. The affidavits filed in support of the motion for summary judgment showed that individual members supported the action but were simply unofficial actions of individual members and not the Board. Moynihan v. City of Manchester et al., (ED90886, 09-30-08)
Comment Howard: Consensus may need to be first reached through an informal process but ultimately the actual agreement or its terms must be approved by the Board at a duly called session of the city council.
CASE OUTLINES (FEDERAL)
CITING OF CELL PHONE TOWERS. Citing of cell phone towers is a major issue that continues to percolate in the courts and Congress. Recently, the 9th Circuit reversed an earlier decision which held that a local ordinance or state law that might have the effect of prohibiting the provision of telecommunications service was preempted by Section 253(a) of the Telecommunications Act of 1996. The 9th Circuit’s opinion reversed its earlier decision by relying heavily on the 8th Circuit’s decision in Level 3 Commc’nsn L.L.C. v. City of St. Louis that held that a plaintiff suing under Section 253(a) must show “actual or effective prohibition rather than the mere possibility of prohibition.” Sprint Telephony PSC, L. P. & Pacific Bell Wireless v. County of San Diego, (9th Cir. Nos. 05-56076, 05-56435 & D. C. No CV-03-2898-BTM, 09-11-09).
Comment Howard: While the law was already favorable on this issue in the 8th Circuit, the opinion by the 9th Circuit should reduce the likelihood of the Supreme Court resolving this question based on a split in the circuits. Of course, none of this is lost on the telephone companies who have now shifted their emphasis to FCC rule making in an effort to beat the clock that is running out on the Bush Administration. John Pestle of Varnumlaw.com continues to provide updates on the status of the FCC proceeding at: http://www.varnumlaw.com/serviceGroups/cableTV/cellularwireless/ .
Legislation and Other Matters
MAYOR OF FOURTH CLASS CITY CANNOT BE PAID FOR DUTIES OF CITY ADMINISTRATOR. The Attorney General in Opinion Number: 2008.09.CL.008 answers a series of questions pertaining to the mayor of a fourth class city who was considering applying for a position of city administrator. The Attorney General opines that a fourth class city cannot pay the mayor any consideration for his/her work as a city administrator while holding both offices. If the mayor resigns he/she cannot be paid for any service for a period of one year as city administrator after his/her resignation. Even if no consideration is paid, the opinion questions but does not answer, whether the duties of the two offices conflict making them incompatible. A copy of the opinion may be obtained from the Attorney General’s office.
SPENCER FAIN UPDATE ON 2008 LEGISLATIVE CHANGES. Spencer Fain has provided a very good analysis of important legislative employment law changes in 2008. They note that a few of these changes in H.B. 1549, the Immigration bill, relate more directly to “public works” projects than immigration. Contractors working on public works projects must have an education program for employees relating to OSHA. In addition, contractors are prohibited from “knowingly” misclassifying individuals as independent contractors. They also provide a summary of the portions of the bill that pertain directly to immigration as related to government. Finally, they note that another bill, H.B. 1883, restores overtime exemptions that were available under the FLSA prior to the passage of Proposition B. This information is a must read for local government lawyers. Thank you Spencer Fain. The summary can be found at: http://www.spencerfane.com/Publication/Publication.asp?Ref=legislative&~=
ADA CHANGES. Congress recently passed legislation to amend the ADA in order to overrule recent Supreme Court decisions that had the impact of severely limiting the impact of the ADA on employers. You can get a copy of the “Act” (Microsoft Word) at: ADARevisions092908 (0011614).Doc. Of interest is an extensive statement of findings and purpose that provides a very good road map in understanding the impact of these changes. Thank you Ivan Schraeder for calling this to our attention.
HOW TO OBTAIN OPINIONS
The material contained in this Newsletter is summarized as a service to MMAA members. Almost everything cited in the Newsletter can be found on the Internet. There are a variety of places to search for cases on the Internet. Below are several sites that I use for searches. If you have questions or comments please feel free to e-mail me at howardcwright@mchsi.com or call us at 417-569-0386.
Missouri: http://www.courts.mo.gov/courts/pubopinions.nsf.,
Federal: http://www.ca8.uscourts.gov/onestop.html.
Supreme Court: http://www.supremecourtus.gov/
Other sources: www.findlaw.com and http://www.molawyersweekly.com/.
The opinions cited in this Newsletter may be subject to revision or withdrawal prior to publication.
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