Not all of the jackpots in Atlantic City are at the casinos: Lawsuits against the city government have yielded millions for both the people filing them and the attorneys defending the claims.
Atlantic City spent more than $39 million from 2000 through 2009 in legal defense costs, settlements and judgments, according to records analyzed by The Press of Atlantic City. During that period, litigants collected more than $25 million from the city through general liability lawsuit settlements and judgments.
That amount dwarfs what area municipalities and larger cities including Camden and Trenton have paid, and nearly equals payouts in Newark, where the population is eight times larger than Atlantic City.
The legal costs don’t stop there. Atlantic City spent an additional $14 million on contracts with law firms, many of them connected to city politicians.
“Those numbers are enormous,” said Paul J. Miola, director of the Atlantic County Municipal Joint Insurance Fund, or JIF. The JIF represents several local municipalities, but not the self-insured Atlantic City. “I think it’s an outrage that the city has not taken steps to control this problem. It’s a combination of poor management and political law firms dragging out litigation.”
Atlantic City’s settlement and judgment payouts are more than double the combined $10.4 million total of Camden and Trenton from 2000 through 2009. Newark exceeds Atlantic City’s total lawsuit payouts by only $3.8 million.
And other large Atlantic County municipalities are not even close. Egg Harbor Township, Galloway.
Township and Hamilton Township, three municipalities with populations similar to Atlantic City’s 35,000, combined to pay out less than $1.6 million in settlements and judgments from 2000 through 2009. Atlantic City’s costs were 16 times higher.
Newark’s legal defense fees exceed Atlantic City’s over that period by about $7.5 million. However, Atlantic City spent about $11.3 million from 2002 through 2009, about $9.5 million more than Camden, which has a population of 72,000, over the same period. The state controlled Camden city government and finances for most of the last decade. Camden could provide numbers back to only 2002. In Trenton, where liability attorney costs were available from only 2005 to 2009, officials spent about $4.5 million, nearly $3 million less than Atlantic City over the same period.
The city had rung up nearly $900,000 in 2010 legal fees through July.
The Press initially requested a decade’s worth of legal records under the Open Public Records Act in December 2008. The city responded with delays and submissions of incomplete or inaccurate information, including lists of settlements that excluded significant payouts. The Press eventually obtained the complete information earlier this year.
State Sen. Jim Whelan, D-Atlantic, Atlantic City’s mayor from 1990 to 2001, said the costs are part of a widespread perception that Atlantic City has “deep pockets.” Officials have also been quick to settle to avoid costly trials, he said.
“In Atlantic City, one person sues and wins, and then other people see that and it catches on,” Whelan said.
Many of the larger settlements and judgments resulted from lawsuits filed by city employees. One sexual-harassment lawsuit filed in 2006 illustrates how an employment conflict in Atlantic City can develop into steep litigation costs.
Police Officer Michelle Zanes accused 23 fellow officers of sexually harassing her over a six-year period. Once she filed suit, costs to taxpayers began to skyrocket.
The city hired six separate law firms to defend different aspects of the case, which included two years of legal briefs, motions and counter motions; more than 106 city officials interviewed or deposed, and individual defendants added and dropped from the case.
In the end, city officials opted to settle the case in 2008 for $750,000. But not before the law firms billed the city for an additional $1.2 million, exceeding the settlement cost by $450,000. City officials never acknowledged any wrongdoing in the case.
When attorney Todd Gelfand, of the Linwood-based firm Barker, Scott and Gelfand, learned a judge had dismissed individual charges against two city officials he represented, it marked the end of a stretch of billable hours that totaled $103,254 for his firm. Things got emotional for Gelfand.
“We spent an awful lot of time together on this case,” the attorney wrote in a memo to the city. “I am starting to feel the void in my life already.”
“Who’s managing the litigation process?” asked Miola, of the Atlantic County Municipal Joint Insurance Fund. “These firms live to drag out litigation. … It’s got to start at the top with a commitment to run like a business, instead of running like a political firm.”
There have been 368 lawsuit settlements and judgments in Atlantic City from 2000 through 2009, with payouts ranging from hundreds of dollars to millions. Fifty-four of those payouts each cost the city $100,000 or more.
The largest payouts went to city employees. Mayors Bob Levy and Lorenzo Langford both received settlements while in office. Each of the last three emergency management coordinators have won lawsuits or settled. One former police chief settled two complaints over four years, with settlements totaling more than $700,000, and recently retired Police Chief John J. Mooney III has litigation pending.
The legal department saw one of its worst years in 2001, Whelan’s final year as mayor. His administration paid more than $5.5 million in settlements and judgments, more than any other year in the last decade.
“It’s an outrageous number,” Whelan acknowledged. “Are there things that maybe we could have done better? Yeah. We can always do things better. Maybe it was an issue where we tried to wrap up the cases when we were leaving.”
Litigation in 2001 included a whistleblower lawsuit filed by Gary Sutley, a police officer who reported drug dealing and abuse in the department. After admitting to using cocaine, Sutley was fired. He sued and ultimately settled for $2.8 million.
“There’s an extreme sense of entitlement in regards to employee lawsuits,” Whelan said.
Former Police Chief Arthur Snellbaker claimed he was entitled to damages from the city — twice.
In 1998, Snellbaker, then a police inspector, filed a complaint about staff shortages. Snellbaker later claimed that Whelan and Police Department heads conspired to retaliate against him and hinder his career. At the time of his $233,000 settlement in 2001, Snellbaker had already become chief under the same mayor who allegedly had conspired against him.
Snellbaker sued again a few years after his first settlement when Mayor Lorenzo Langford appointed a subordinate officer as public safety director. After the chief refused to comply with the director’s orders, the city suspended him. He sued and later collected a $500,000 settlement.
Richard Press, a Pleasantville attorney who has represented several city employees, said the hefty settlements are a product of Atlantic City’s poor management and culture in which politics plays out in city government. Officials allow discrimination and unfair labor practices to occur, then simply throw taxpayer money at the cases to make them go away, he said.
“Until they make changes to the way they do business over there, the lawsuits will keep pouring in,” he said.
Contributions for contracts
The payouts account for only part of what drives legal costs. Atlantic City spent more money in 2009 on outside liability law firms than in any other year in the last decade. Scibal Associates, the city’s liability claims adjuster, lists legal fees at more than $1.9 million in 2009.
G. Bruce Ward, who took over the law division in January, said the office had not been efficiently organized, resulting in payments to 28 different law firms throughout 2009.
“We’ve been working to minimize that number,” said Ward, whose department has cut the contracts to 15 firms this year. “We can do better quality control with a smaller number of firms. And they’re easier to keep an eye on.”
However, the city had still paid out $898,626 this year through July 2010. The city’s annual legal fees averaged $1.4 million from 2000 to 2009.
Millions of dollars in liability legal fees since 2000 have been billed by firms with political connections to elected city officials.
Some rival council members raised the pay-to-play issue in 2009 when Langford proposed legal contracts for a handful of firms. Two of them — DeCotiis, Fitzpatrick, Cole & Wisler and Stradley, Ronon, Stevens & Young — had donated nearly $80,000 to political action committees aligned with Langford. Langford’s sister, Cheryl Banks, ran one of those committees, Citizens First. After the Stradley firm began contributing, control of the PAC was transferred to Rita Weber, wife of Andrew Weber, a political adviser to the mayor and a Stradley attorney at the time.
Weber secured $375,000 in city legal contracts for his firm before leaving Stradley and joining the law offices of Riley and Riley, based in Burlington County. When Weber left the firm, the city money followed him. City Council agreed in January to give Weber’s new firm a $150,000 contract, which has grown to $450,000 through amendments to the contract.
The DeCotiis firm is known as one of the most politically connected in the state, led by partner Michael DeCotiis, former chief counsel to Gov. James E. McGreevey and once chairman of the Casino Reinvestment Development Authority.
The firm began donating to political action committees aligned with Langford soon after he took office in January 2002. By March, the city hired the firm to defend the approval of an $850,000 settlement for Langford and now-City Council President William “Speedy” Marsh.
The pair had sued, alleging then-Mayor Whelan illegally retaliated against them when City Council cut Marsh's $79,000-per-year facilities coordinator job and Langford's $30,000-per-year liaison officer position after voters defeated the budget. The state later nullified the settlement, citing “inherent conflicts.”
In April 2002, Decotiis secured a $250,000 contract and went on to earn more than $500,000 before Langford left office at the end of 2005. The firm has either collected or has been approved to receive more than $1.7 million total, including contracts awarded during Langford’s current administration.
All together, the firms of Decotiis, Stradley and Riley have been paid or have entered into contracts worth nearly $2.7 million while Langford has been in the mayor’s seat.
Ward, who spoke on behalf of the administration, defended the payments to the firms, saying the transactions are all legal and were done to further efficiency by limiting legal work to only a few legal firms.
Langford is not the only mayor who has awarded large contracts to his lawyer friends and supporters.
Handing over the keys
Internal e-mails obtained by The Press show former Mayor Scott Evans allowed his personal attorney, Phil George, to shape his own contract in a deal that would have brought the city’s legal department under the control of George’s private firm.
Shortly after taking office in late 2007, Evans hoped to install George as the head of the law department. But George balked at the position’s salary of $75,000.
“The firm can not afford a ‘loan’ for the salary range of $75,000 per year and that’s a loss of over $30,000 for me personally — I love ya but not $30,000 worth!” George wrote in an e-mail to Evans and another city official in November 2007.
George proposed an alternative in the same e-mail that would have made him acting solicitor for $210,000 over 11 months, or $120,000 more than the current solicitor is paid annually.
George acknowledged in his e-mail that the proposal “sounds outrageous,” but insisted it was a bargain for his services and help from four other attorneys from the firm.
“You can sell it by saying it’s only for 11 months,” George wrote.
Less than a month later, George e-mailed a contract with the mayor’s approval to the administration to have it placed before City Council. The new proposal boosted the contract to $250,000.
City Council rejected George’s proposal before it could be made public. However, the firm that employs him, Eric M. Bernstein & Associates, received a contract soon after for general litigation services and continued to be paid by the city through 2010 for about $32,000.
Evans initially said he could not recall the discussions, admitting only to seeking to fill a vacant solicitor seat. However, once confronted with copies of the e-mails, he argued that the deal would have saved taxpayers money.
“City Council wouldn’t even entertain it,” he said. “They tied my hands behind my back every chance they got.”
Evans claimed the deal would have replaced the eight staff attorneys the city employed with the law firm’s legal team, freeing up medical and pension costs. But George’s e-mail suggests the law firm would have supplemented the work already being done in the department and added to the office’s attorney count.
“Remember, by ordinance you can’t have more than 10 lawyers,” George noted in his e-mail. “This way you get around that.”
Heather Taylor, a spokeswoman for the New Jersey Citizens Campaign, said Atlantic City would benefit from adopting pay-to-play legislation to prohibit contracts from going to political contributors. Taylor said New Jersey law is strong on the state level but weak on the local front.
“Under the state law, a citizen can file a complaint with (the Election Law Enforcement Commission), which could take months or years to hand out a slap on the wrist,” she said. “Under a strong (local) pay-to-play ordinance, the fine is a breach of contract, which could add up to hundreds of thousands of dollars” in penalties.
Ward, a former councilman, introduced a pay-to-play bill in 2006, which targeted professional service companies, including law firms. Contracts would not have gone to companies that contributed within a year prior to award or negotiation of a contract. Afterward, annual contribution limits would have been set at $300 for individuals and $2,500 for businesses or political committees. Companies that violated the law would have been banned from city contracts for eight years.
But council shot down the proposal, arguing the restrictions would unfairly limit how much money members could raise in an election year. The four council members who voted against the measure were up for re-election that year.
Ward said he had planned to reintroduce the measure last year, but then he opted to give up his seat to join the Langford administration — as head of the city’s legal department. He said he has no plans to suggest policy changes be followed up by any other council members.
“I’ve changed lanes,” he said of his new position. “I need to put that aside.”
No contract, no problem
Although political connections can help law firms get contracts, The Press found that the city paid some law firms without any formal agreement at all. Without contracts, the law firms are free to bill without any limitations, and the absence of an agreement reduces the opportunity for oversight from city officials.
The Jasinski law firm, with offices in Newark and Atlantic City, had a formal contract, but continued to work for five years after it expired on Dec. 31, 2004. The city never renewed the agreement, which requires City Council approval, but the firm went on to make more than $1.9 million in legal fees through 2009.
Attorney David Jasinski, whose firm was previously known as Jasinski and Williams, said the city verbally authorized his firm to continue working after the 2004 contract expired.
“You have to look at it this way: We didn’t just pick these cases up and do it on our own,” Jasinski said. “We were asked by the city of Atlantic City to represent them and defend them in lawsuits. The city took those decisions; some very successful decisions. They never said, ‘Oh, no, we weren’t represented by those guys.’”
Jasinski refused to say whether he has operated through verbal agreements with any other municipalities.
“Generally speaking, a contract should be in place before services are rendered because the contract also gives the authorization to pay,” said Lisa Ryan, a spokeswoman for the state’s Department of Community Affairs.
Other firms never had a contract with the city, but still worked and received payment.
Robert L. Tarver Jr., Langford’s head solicitor in 2009, intended to tackle city contract issues shortly after being appointed. In February 2009, he publicly denounced sloppy practices regarding contracts.
However, The Press found Tarver repeated the same practices he condemned. City records show he assigned 13 cases to two attorneys he knew. Both are based in Toms River, where Tarver’s private law firm is based. Both have worked on civil cases with Tarver in the past and neither ever held a contract with the city.
Tarver assigned the law office of David A. Semanchik to 11 cases, mostly involving personal injury lawsuits. The law office of Steven W. Hernandez handled two additional personal injury cases. Semanchik earned at least $19,770 without a contract and Hernandez collected $2,574.
“I’m not from Atlantic City. I’m not even from Atlantic County,” Tarver said in his defense while still working as the city’s solicitor. “I’m not familiar with the Atlantic County attorneys or the Atlantic County setup.”
Tarver said he hired the lawyers after Langford fired every in-house attorney in November 2008, just three days after he was sworn in to office.
“I walked into an office with no attorneys at all,” said Tarver, who said he had nothing to do with the decision to terminate the legal staff. “The work that those attorneys had was still continuing. ... We had to make some decisions about getting that stuff taken care of.”
Asked why he did not try to arrange an emergency measure to properly hire the attorneys, Tarver said he was simply following the office’s “prior practice.” He eventually acknowledged his failure to live up to public promises to change that practice.
“Were we slow in doing that? Yeah,” he said. “It probably should have been a priority.”
Tarver has since stepped down as solicitor, citing personal issues. But he didn’t stray far from the Langford administration. In March, the administration arranged a $75,000 city contract for Tarver to return as the mayor’s personal attorney, a contracted position that was the first of its kind in Atlantic City.
Since The Press began questioning the city’s contract issues, Semanchik and Hernandez have been removed from all city cases. The Langford administration also found other firms it claimed did not have contracts and removed them from their assigned cases. The administration is also withholding some payments from those firms, including money owed to the Jasinski firm. The total amount being withheld exceeds $500,000, city documents show.
After the administration’s refusal to pay, the Jasinski law firm, like so many in Atlantic City, decided to sue.
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