George Rebane
After many months of legal wrangling, internal investigations, external investigation, lawsuit, and God knows what else went on behind closed doors, it appears the AtPac lawsuit (background here) has been settled in favor of AtPac. This was reported to the Board of Supervisors by County CEO Rick Haffey (here).
The bottom line of the out-of-court settlement indicates that the county screwed up badly in the process, but was able to duck the heavy financial hit because its insurance company did step in to pay the $2.75M total bill while getting its $100K deductible, the only out-of-pocket cost to our local government (and us taxpayers). RR readers will recall that early on I predicted the cost to be way north of $2M while the Maidu Mavens were still dismissing this as a nuisance suit.
I received notification of this from a correspondent whose analysis of the settlement is, in my opinion, on the mark – it is reproduced below.
It appears that the County settled with AtPac in the amount of $1.9 million on the eve of the hearing on the motion for summary judgment. The insurance for the County will be paying AtPac the settlement amount. The insurance will be reimbursing the county for its attorney fees in the amount of $845,000. The County pays a $100,000 deductible.
Insurance companies are the stingiest companies on the planet. They do not pay out unless there is significant risk…especially with an attorney fees clause. If the County was successful at trial, AtPac would have had to pay the County's attorney fees and the insurance company would have been off the hook. For the insurance to pay $1.9 million in settlement means that the County was exposed to far greater damages than $1.9 million and AtPac's attorney fees.
This settlement is a win for the County in only $100,000 of exposure (except for increased rates) and the case goes away. The settlment amount alone shows that the County screwed up and the case was by no means frivolous. AtPac was willing to settle for a million. While the County avoids a determination of liability by the court, it is clear by the amount alone that they had a ton of liability.
But no one should walk away from this with the feeling that the county has been vindicated – far from it. The only thing that has occurred is that a $15,000 expense turned into a year-plus saga that cost the county $100K out-of-pocket and untold staff hours responding to litigation requirements, finding out what happened, and keeping a lid on the whole thing. And what really transpired subsequent to the mismanagement of this software vendor changeover, we now will never know.
[19jul2011 update] ‘Be there or be square’, that was the message from our Supes about when they were going make their AtPac settlement announcement at today’s special meeting. They told The Union that it would be at the end of their meeting which usually goes into the afternoon. Not today, the announcement was made in the morning before the special meeting ended, and the chambers were dark this afternoon. Well OK, next time check the agenda schedule.
The announcement itself was delivered by soon-to-retire County Counsel Michael Jamison and is transcribed on The Union’s website here.
Bottom line – for what are now obvious reasons, the county did not want the judge to render a verdict on the summary judgment sought by plaintiff AtPac. Instead, after due consideration of the strength of the county’s defense and who actually knew what when, it was decided to capitulate and give AtPac what it sought from the start – $1M damages and its legal fees paid, totaling $1.9M. The insurance company would pay that plus the county’s legal fees for a total distribution of $2,745,000.
In return the county got AtPac to agree to the settlement wording “The Parties acknowledge and agree that there has not been any finding of liability for or against any party.” (For the lexicographically curious, given that the case didn't go to trial, this is known as a tautology.)
Nevertheless, this little piece of literary legerdemain is supposed to mollify the mindless on what really went down in the back rooms of the Rood Center. Commenters Chuck Whitten, Barry Pruett, and Russ Steele have some observations (see below) that make me think this thing has a lot more settling to do before Nevada County voters can go to bed without having nightmares of loose million dollar cannons rolling around on Maidu.
[20jul2011 update] After posting my somewhat cautionary assessment (see 938AM comment below) on what The Union may or not do next, I received an email from publisher Jeff Ackerman who stated that the newspaper will file a Freedom of Information Act (FOIA) with the county to get it to release the records on this case. I'm sure that other FOIAs would also contribute to pulling back the shades. We recall that the law says only that the county 'may' but not 'must' keep certain records confidential whose release it considers may harm the county. Now that the suit is settled in favor of AtPac, the only harm that could possibly come out of making the records public is not to the county, but to the electeds and staff who managed to make a mountain out of a very small molehill.
[Coverage of this embarrassing saga continues on RR in 'Listen up you idiots …' .]
rebanesruminations.com 
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