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City-bar settlement about mitigating risks, city says

City-bar settlement about mitigating risks, city says

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RACINE — The day after aldermen approved a $1.35 million settlement in the city bars lawsuit, the city’s attorney and a defendant said the deal was about mitigating risks.

The former bar owners, all of them minorities, first sued the city in February 2014 in the Federal District Court for the Eastern District of Wisconsin in Milwaukee, accusing Mayor John Dickert and more than 15 other defendants of engaging in an elaborate plot to drive minority bar owners out of the city.

Throughout the 18-month legal battle, the city staunchly denied those allegations, as well as others, including claims of civil rights violations and racketeering.

Those efforts eventually resulted in the case shrinking both in scope and the number of defendants being sued.

While the city believed it would prevail at trial, the decision to settle was a matter of mitigating risks, said the city’s attorney in the case, Michael J. Cohen of Milwaukee law firm Meissner Tierney Fisher & Nichols S.C.

Although the city believed the plaintiffs would have a hard time proving damages, if a jury awarded the plaintiffs even $1 each, it would trigger their attorneys’ ability to collect fees and costs, Cohen said.

With the plaintiffs’ attorney fees and costs at $7.2 million, and the city’s insurance companies taking the position that those cost might not be covered, the decision to settle was done to keep the city from the potential of having to pay such enormous costs.

“Does this set a precedent? We don’t think that it does at all, because they are getting such nominal amounts,” Cohen said, referring to the $15,000 most of the plaintiffs will be receiving in the settlement. “It was essential for the city, in the negotiations to make sure that the plaintiffs only got nominal amounts, because we didn’t want to incentivize anyone to file suit against the city in the future.”

Calls made Tuesday and Wednesday to the firm of Kohler & Hart, S.C. to verify its legal costs were not returned, but Cohen said Wednesday that the $7.2 million figure was confirmed by the mediator in the case.

Asked about the decision to settle, defendant and former aldermen Greg Helding took the same position as Cohen.

“The bottom line is the city would have been exposed to a lot more liability potentially,” had it gone to trial, Helding said.

“One of my law professors told me that even the most rock solid legal argument has only an 80 percent chance of winning in court,” the lawyer and former Public Safety and Licensing Committee member said.

City’s legal costs

All told, the city’s legal costs in the case, including attorney fees and money for experts, amounted to about $2.7 million, City Attorney Scott Letteney said Wednesday.

The city paid a total of $175,000 of that amount in order to satisfy deductibles. The remaining fees were paid by Cities and Villages Municipal Insurance Company or CVMIC, which is funding the settlement.

The city had originally thought it might only have to satisfy a $100,000 deductible, Letteney said, but as the legal costs mounted, reaching beyond $1 million, its insurer required an additional $75,000 deductible.

The agreement

The agreement — approved by the City Council on Tuesday night — calls for CVMIC, to issue five $15,000 payments to the seven plaintiffs. Three of the former bar owners will each receive $15,000. Two couples who had run bars together will each share $15,000.

The remaining $1,275,000 must be paid to the plaintiffs’ attorneys in the case to compensate them for their legal costs and fees, city officials said.

The deal allows the city to continue to deny wrongdoing, and requires the plaintiffs to dismiss all claims against the city and other remaining defendants whether they were alleged in the lawsuit or not.

It also bars any of the defendants in the case or current aldermen from assisting anyone seeking to take action against the plaintiffs for any income tax violations.

Asked Wednesday why he agreed to settle with city, plaintiff and former alderman Keith Fair said that while he still believes the city violated his civil rights it was time to move on with his life.

“There is no doubt in my mind that they discriminate and the evidence is strong,” Fair said of the city. “They can spin it anyway they want.”

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