Top New Orleans officials will be called before a judge this summer to explain why they shouldn’t be held in contempt of court for failing to pay $75 million in back pay to firefighters in a decades-old lawsuit — a move that challenges the city’s claim that the courts cannot force it to abide by such judgments.
The firefighters and the city have been fighting over the case, which has become known as the “longevity judgment,” since Dutch Morial was mayor. But the latest legal move could significantly raise the stakes, as attorneys representing the firefighters and their pension fund hope to hold Mayor Mitch Landrieu and members of the City Council personally responsible for paying the judgment.
That could potentially result in Civil District Court Judge Kern Reese issuing fines against the officials. It also could allow the Orleans Parish Sheriff’s Office to seize city assets to pay off the judgments and, in theory, see the mayor and council members jailed if they refuse to comply.
The fight over the longevity judgment is playing out as tensions between the city and firefighters are at a new peak after months of negotiations over how to fix the all-but-insolvent Firefighters Pension and Relief Fund broke down earlier this month.
The city had hoped to resolve both the pay issue and another case dealing with the Landrieu administration’s failure to properly fund the pension system as part of a global deal — a move that provoked anger from firefighters and prompted their leadership to seek the contempt hearing.
Firefighters Union President Nick Felton said the June 11 contempt hearing is aimed at ensuring his members or their estates — about 100 of those who allegedly did not receive proper pay have already died — get the money they are owed. And with Reese on the record as saying it is time to conclude a case that has been going on since 1979, Felton said he is confident of his prospects.
“I wouldn’t want to be on the city side of this,” he said.
For their part, city officials have said it would be impossible for the city to come up with the money needed to pay the $75 million judgment, which amounts to 15 percent of the city’s annual budget. The contempt hearing represents “scorched-earth” tactics by the firefighters and would threaten other city services, Chief Administrative Officer Andy Kopplin said Friday.
Firefighters have been fighting the city for years to get payment after the courts found they had not received legally required raises over a number of years. Both sides agreed to the $75 million sum in court last year, although firefighters say they are owed additional money — perhaps as much as the judgment itself — to make up for the lower pension payments awarded to firefighters who had not been properly paid while on the job.
The mayor and council will have to appear before Reese on June 11 and explain why the $75 million judgment was not paid.
The administration has long held that while state courts can render judgments against the city, they can’t actually force payment in most cases. As a result, there are more than $30 million in judgments against the city dating back to the 1990s that plaintiffs are essentially unable to collect.
The contempt hearing could test the boundaries of that argument.
Louis Robein, an attorney for the pension system who filed the contempt motion, said the firefighters’ suit is different in that it deals with payroll issues and the judgments call on specific officials, rather than the city itself, to take action. That means the mayor and council can be held personally accountable for flouting the courts’ wishes, he said.
But there is essentially no precedent for holding city officials in contempt in this kind of case. While the firefighters started down that road during former Mayor Ray Nagin’s administration, both sides were able to agree to terms before a contempt hearing was held.
There are signs that Reese might be willing to take some kind of action against city officials. In a hearing earlier this week, he said, “We have been kicking this can down the road for a long time. And maybe it’s time to kick a can, but not down the road.”
“Tell everybody y’all need to get to talking if you’re going to talk. If not, I’ll do whatever I have to do, make no mistake,” Reese said, according to a transcript of the hearing.
Paying off the firefighters’ claims now would allow them to “cut in line” ahead of the other claims against the city, Kopplin said.
City officials have tried to tie the back pay issue to the woes besetting the pension system, and Kopplin focused on his claim that the hundreds of millions of dollars the pension fund is lacking can be traced almost entirely to poor investment decisions by its board and to overly generous benefits.
He noted that firefighters rejected two compromise options that emerged from negotiations in recent months, both of which would have required they give up some or all of their claims in the longevity suit. In exchange, the city would have increased its contributions to the pension fund above current levels, which were already boosted in the aftermath of another case brought by the firefighters after the city stopped paying into the fund for several years.
The administration is expected to launch its own legal challenges over the way the pension fund has been calculating benefits and could seek legislative changes to reduce benefits and increase costs for firefighters.
But Felton said tying the two issues together is disingenuous.
“This has nothing to do with the pension,” he said.
As for the city’s claims that it cannot pay the amount owed, Felton said he is willing to work with the administration.
“If they want to come up with a plan, let’s hear it,” he said.
Follow Jeff Adelson on Twitter, @jadelson.