St. Paul council approves 2nd outside firm to weigh legal representation for mayor

The St. Paul City Council on Wednesday approved hiring another outside law firm in the lawsuit filed by the police chief against the mayor.

Last week, council members said they were frustrated but legally obligated to appoint outside counsel to Mayor Kaohly Her. The law firm they voted on Wednesday will make a determination about whether they are required to indemnify Her going forward. Indemnification means paying any costs associated with a lawsuit, which includes legal fees, a settlement payment, or a court judgment or verdict.

The approval last Wednesday of the Fisher Phillips firm was at a rate not to exceed $500 per hour. This week’s hiring of Greene Espel is at a rate of up to $325 an hour. It’s a discounted rate for the public sector, according to the council resolution.

The council said they needed to vote last Wednesday on appointing an attorney for Her because there are deadlines for responding to the lawsuit, which names Her and the city: The city has to legally respond by Oct. 14 and Her has until Oct. 16.

The St. Paul city attorney’s office “is charged with the legal counsel and representation of matters involving the City,” but the city attorney’s office “has determined that a potential conflict exists in the City Attorney’s representation of Mayor Her in the lawsuit,” last week’s city council resolution said.

At issue: Police Chief Axel Henry’s lawsuit, alleging sexual harassment and retaliation, identifies St. Paul City Attorney Irene Kao “as a fact witness,” according to a city spokesperson.

The city charter “provides that in any case of special or unusual circumstances, the City Council, upon the request of the City Attorney, may appoint special counsel to assist in providing for the legal business of the City,” this week’s resolution notes.

St. Paul is self-insured

St. Paul is self-insured, meaning no outside insurance company pays legal fees or settlements and they are paid through the city’s budget. The city’s tort liability budget for this year is $719,500.

In more than 100 public comments submitted to the city council about last Wednesday’s vote on hiring an outside law firm for Her, people were critical of taxpayer funds being used for that purpose.

“It’s always the case that we have potential litigation that we just can’t factor in (to the budget),” city council president Rebecca Noecker said after last week’s meeting. “Every year within the budget, there are costs that come in under what we expect, there are costs that come in over, and litigation is one of those costs. But I’m not going to sugarcoat it. If this is an extremely expensive lawsuit, we do not have funds sitting around to cover the cost of that, and that is going to be really difficult for us.”

The city is facing a projected $26 million budget gap for next year.

Regarding the firm hired by the council last week, the rate of up to $500 per hour “is a reasonable rate for lawyers handling this kind of work in this community; it’s even a little bit on the low side,” said Marshall Tanick, a Twin Cities attorney who specializes in employment law.

After Henry raised allegations about Her in the spring, the city spent $43,933 on a St. Cloud law firm to conduct a workplace conduct investigation and complete a report. The full report, which the city released a redacted version of last week, said attorneys did not substantiate the mayor sexually harassed Henry but found she “created an uncomfortable work environment” for him.

Henry retained attorney Chris Madel in bringing forth the allegations in March and Madel is representing him in the lawsuit he filed in September. Henry is responsible for all Madel’s fees and costs, according to the attorney. The “city is not paying a nickel,” Madel said Wednesday.

What state law says

The city council “is operating under some pretty rigorous boundaries set by state law,” Noecker said at last Wednesday’s meeting. “We are statutorily required to indemnify and defend city employees unless certain conditions are met.”

An analysis is required to determine whether those conditions are met and Greene Espel will be making that determination.

State law says “a municipality shall defend and indemnify any of its officers and employees, whether elective or appointive, for damages, including punitive damages, claimed or levied against the officer or employee,” as long as the person “was acting in the performance of the duties of the position” and “was not guilty of malfeasance in office, willful neglect of duty, or bad faith.”

Tanick, who has handled a number of cases involving indemnification of public-sector employees, says the outside law firm will have to determine whether Her was acting within the scope of her office.

“One argument would be that she wasn’t — this wasn’t acting within the scope of her office, this was not part of her duties as mayor,” he said Wednesday.

Furthermore, the law firm could make a finding that “this is malfeasance, this is bad faith,” Tanick said.

But Tanick said: “In my experience, cities almost rarely invoke those clauses. One reason is because if they were to be invoked, the mayor could come back and sue them — and this is not totally uncommon, for an individual who’s turned down for indemnification to then sue the employer.”

If that happened, a judge would have to decide whether the city has to indemnify the employee.

Tanick said he thinks the city council hiring a law firm to make a decision about indemnification for Her “signals that there’s a lot of concern about whether she falls within that statute, the exceptions to that statute.”

“I think there’s some legitimate concerns that need to be addressed and looked at from a legal standpoint, firstly,” he added. “Secondly, there’s a political angle to this too, and I think the city council wants to at least have that determination made to cover some of the political bases.”

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