THE PACIFIC LEGAL FOUNDATION VERSUS BCPUD

Introduction

On the evening of November 10,1982. as a large crowd of local residents was settling into place for a public hearing on the Bolinas water hookup moratorium, a balding, bespectacled San Francisco detective named Ralph Fink unobtrusively entered the Bolinas Community Public Utility Districts (“BCPUD”) meeting hall, slipped unnoticed through the gathering, and, moments before the start of the public hearing, quietly served the president of the governing board with a summons and a 40 page, $33,000,000+ Federal civil complaint.

The lawsuit was organized and financed by the Pacific Legal Foundation ("PLF"), a Sacramento-based non-profit group of attorneys with average annual income from deductible contributions at 2.5 million dollars. Dedicated to the right of business interests to seek short-term profits unimpeded by government regulations, it has successfully opposed increased protection from agribusiness pesticides for farm workers, wheel chair access to public transportation and the rights of individuals to freely enjoy the California coastline.  Robert Best, one of the PLF’s lawyers involved in the suits against BCPUD, was quoted in the California Lawyer in 1981 as saying "Once it enters a case, PLF stays no matter how costly. We won’t back off. We go an eye for an eye – it’s part of our reputation.”

The massive lawsuit, Lockary, et. al. vs. Kayfetz, et. al., alleging numerous constitutional violations, deprivations of civil rights, monopolization, attempts to monopolize and other antitrust violations, named as defendants 21 individuals, 2 government agencies and a private non-profit organization. There were five plaintiffs, all of whom owned property within the boundaries of the utility district.  They asked for "extraordinary and equitable relief, and for damages and declaratory relief."

What they wanted was an end to the moratorium on water connections and over $33,000,000 in "damages". plus attorneys' fees, for their trouble. What they each got nine years and four lawsuits later were $15,000 cash settlements and no water hookups.  The money was provided by the individual defendants' insurance carriers for agreeing to dismissal of the case because it was cheaper for them to pay these nominal amounts rather than incur the cost of going to trial, regardless of the outcome.  BCPUD did not contribute to the settlement.  In addition, the PLF was hit with $136,000 in sanctions for its behavior in handling the case.

After 11 years and more than 1.6 million dollars in costs to BCPUD, all lawsuits filed by the PLF ended in BCPUD’s favor and the state court concluded that the moratorium was justified.

From the beginning, the defendants, as well as observers, understood the political implications of the lawsuits. It was a volatile mix: A district with an antiquated and undercapitalized rural water system, unable to guarantee delivery to its existing customers; a backlog of 250 persons waiting in the wings to apply for water service, and a likely barrage of new applications if BCPUD lost in court.  The future of the community hung in the balance

The most obvious consequence of the lawsuit has been a significant increase in water rates to cover defense costs. Although painful, it could have been worse.   Any number of events, including going to trial, could have driven BCPUD into bankruptcy.  If, for example, formal demands had been made on BCPUD to provide a separate defense for each of the present and former directors, voluntarily filing for bankruptcy would have been a natural consideration (although filing for bankruptcy would have left the lawsuit in the hands of counsel other than BCPUD's).  The complaint appears to have been designed to generate and magnify potential conflicts among the individual defendants and BCPUD and to have been designed to prompt demands upon BCPUD by individual defendants for separate defense counsel paid for by BCPUD. BCPUD would have been hard pressed to deal with such demands.  The total bill for legal services might easily have been doubled were it not for the early development of a comprehensive strategy to control the course and nature of the litigation, remarkable restraint on the part of individual defendants, and an oral agreement for legal services which allowed BCPUD to make fixed installment payments on a semi-annual basis, without interest.
    
Background

In 1925, the Bolinas Public Utility District was incorporated "in accordance with Section 24 of an act of the legislature of the State of California…”. Before that time, some 60 homes and businesses, which comprised the historic village of Bolinas, depended on a privately-owned water company for their municipal supply.  Among the first acts of the fledgling district was the filing of an application with the Division of Water Rights of the Board of  Public Works of the State of California “to appropriate all water flowing at any time in … Arroyo Honda [sic].”  They proceeded to acquire the necessary easements and to lay a 4.5 mile water line into town. Portions of that line are in service today.

Around this same time, an ambitious Manhattan developer, Arthur Smadbeck,  hatched a scheme to turn several hundred acres of wind-swept grass land into an ocean side enclave of 6,000 individual lots, each measuring 20 by 100 feet. He subdivided the property and entered into a promotional venture with the now defunct San Francisco Call-Bulletin newspaper to sell the lots for $69 each.  At $9 down and payments of $6 a month there were plenty of takers. The Bolinas Property Owners Association was created to manage Bolinas Beach, as it was officially named, and they contracted with the new public utility district for water until 1937, when they formed a separate district, Bolinas Beach Public Utility District. They laid parallel lines to the Arroyo Hondo and built a new catchment dam. The two districts coexisted until 1967, when the Marin County Board of Supervisors consolidated them to form the BCPUD.

In the summer of 1967, the new board of directors, led by Fire Chief Jose Silva, faced a bewildering array of problems: to say the existing transmission and distribution pipelines were inadequate doesn’t fully convey the true condition of the water system. Miles of pipe were above ground, exposed to the elements, leaking at the fittings. Many more miles of pipe had been San Francisco brewery boiler pipe in a previous life. It had an unusual outside diameter, making it difficult to repair. Still more miles of pipe ran through pasture land, where major leaks might go undetected for weeks.  The unaccounted-for water may have been as high as 45% of the water produced and there were only 3 or 4 small, leaky wooden tanks in which to store what was left.

On the other hand, it was only 1967. Arthur Smadbeck’s crazy-quilt dream of summer beach cabins covering the empty fields had faded to a dim memory, surreal in its evocation of a bygone day of unlimited opportunities and infinite expansion.  In the real world, Bolinas was isolated, and frequently foggy, with no real local economy. From the 1930's to the late 1960's the Gridded Mesa grew slowly. Land and housing prices were reasonable. Water meters ware readily available. Early residents, comfortably ensconced in their substantial homes on Wharf Road and Brighton and Terrace Avenues, sheltered from the cutting winds, were incredulous that anybody would be foolish enough to want to live up on the old Garzoli Ranch (today’s Gridded or Big Mesa).

The ink was barely dry on President Silva's signature at the bottom of BCPUD Resolution No. 1 before that all began to change.  A confluence of events increased sharply the number of building permit applications in Bolinas.

BCPUD inherited from its predecessor a violated Cease and Desist Order issued by the Pollution Control Board (forerunner of today’s Regional Water Quality Control Board). The Order required that Bolinas Lagoon no longer be used as the downtown sewer outfall. The effluent from the gravity collection system built in 1908 would have to be treated. The BCPUD formed a Joint Powers Agreement with Stinson Beach County Water District.  The new authority would construct a sewer system to collect waste water from all developed properties in Stinson Beach and Bolinas, with a design capacity for 25,000 people. "Treatment" would consist only of a bar screen, and disposal through a Pacific Ocean outfall, a mere 250 feet offshore.

A lawsuit filed by local residents delayed this grandiose scheme long enough for simultaneous recall elections to be held in Stinson Beach and Bolinas.

The recall election succeeded in part because of another event seemingly unrelated to the sewer project - the 1970 oil spill off the coast of Bolinas. Many new people came to Bolinas during this time as volunteers in the cleanup effort. They liked what they saw and they stayed. Educated, activist, oriented toward the counter-cultural, they understood the political process. They gained a board majority in the election

Concerned about the lack of water storage capacity and the poor condition of the system, alarmed by the 100+ building permits issued by the County of Marin in the two previous years (and by the demands on the system that such building activity would generate), the new board declared a Water Shortage Emergency Condition and enacted a moratorium on new connections to the water system.  Despite complaints from frustrated property owners prevented from building by the new moratorium, it survived unchallenged until 1976, when the Bolinas Property Owners Association ("BPOA") filed suit [Bolinas Property Owners Association vs. BCPUD] in Marin Superior Count to overturn the moratorium.  After 3 years of depositions, interrogatories and other trial preparations, the BPOA was forced to dismiss its suit in BCPUD's favor, following reexamination and reenactment of a moratorium on new hookups.

The 1970's was a decade of unprecedented activity for the BCPUD. In 1975, BCPUD built a new sewage treatment facility, pump station and force main to comply with the 12 year old Cease and Desist Order. The project took almost 3 years to complete, and, at 1.8 million dollars, is still the largest single project undertaken by the BCPUD in its history. The treatment facility is a model design which waste management professionals and others have visited and studied for years. Soon after its completion, work began on several major water projects, including construction of two earthen reservoirs with a combined capacity of 56 acre feet; replacement of several large distribution mains; construction of two new water treatment plants; construction of a second steel storage tank, a potential doubling of the treated water storage capacity to 860,000 gallons; replacement of the main Arroyo Hondo catchment dam and its outlet line.

Not all the action was in the trenches.  Dr. William Oswald, a University of California at Berkeley engineering professor, completed a landmark study on the potential water supply available to Bolinas which remains central to the BCPUD's long range facilities planning. Dr. Peter Warshall completed a survey and study of the onsite waste water disposal systems on the Bolinas Mesa, including soils and drainage, which serves today as the foundation for a new initiative to address Bolinas' septic problems.  In 1977, following lively public hearings, the Board of directors adopted Resolution No. 173, upholding the moratorium.  Active elections in 1977 and 1979 added to the intensity. The Board majority stayed firmly pro-moratorium.  1977 was also the year BCPUD initiated lengthy condemnation proceedings against the Trust for Public Land to secure title to the site for the second of the two new reservoirs.

As the BCPUD looked to the new decade, problems remained with the water system, despite the improvements of the 70s, Major sections of the distribution system ware subject to frequent and repeated failure and seasonal high turbidity showed the treatment facilities to be inadequate to meet State standards. The State Department of Health Services began an investigation of the system, as a part of the routine process of issuing its permit to purvey municipal water. The investigation culminated in a 1982 report which recommended that BCPUD's moratorium on new water connections be continued “until such time as new water sources are developed and/or an adequate supply is demonstrated to the Department of Health Services."

The November 1981 election was hotly contested, with full slates of both pro and anti-moratorium candidates vying for the 3 majority seats on the Board. The pro-moratorium candidates won by a 2-1 margin.  No subsequent election has generated such interest, and several have been completely uncontested. This may be because the community tacitly continues to express agreement with the victors in the landslide '81 election, or it maybe the chilling effect of the blockbuster lawsuit.

On January 4, 1982, there was a devastating tropical storm with high winds and 13 inches of rain in 48 hours. The resulting flood washed out the Arroyo Hondo maintenance road in 16 places and completely destroyed the pipeline transmission system. Thanks to the new reservoirs, the community enjoyed uninterrupted service while nearby communities suffered much greater deprivation but it took over 2 years and nearly $500,000 to complete repairs.  As much as the January, 1992 storm threatened to paralyze and bankrupt the BCPUD, its effects were simple and its solution straightforward compared to the legal deluge which would swamp Bolinas a few months later.




The Lawsuits…

The Federal Case

Detective Fink carried serious weight with him that Wednesday night in November, 1982. The complaint, on behalf of property owners Matthew Lockary, Phyllis Gilbert, Charles Gilbert, James Macey and Anton Holter, citing no less than 8 claims to relief, was 40 pages long and concluded by demanding a jury trial. At his first opportunity, the federal judge, Spencer Williams, sent an unmistakable message to the plaintiffs, and their law firm, the PLF, by dismissing the complaint in its entirety. He gave leave to the plaintiffs to amend their complaint. Expressly critical of the vagueness of the original filing, he ordered that the amended complaint be more specific.

Specificity was about the only thing the PLF left out of the amended complaint. It had ballooned to 60 pages, and the claims for relief jumped to 16.  PLF President Ronald Zumbrun, intimate of supreme court justices and big-time politicians, publicly identified the Bolinas case as an important one for the PLF, noting the substantial nature and burdens of the claims made, and proudly observing that the combination should make for "interesting" proceedings. Attorney Tom Thorner, who had successfully defended BCPUD against the BPOA suit 7 years earlier, urged BCPUD to seek counsel thoroughly experienced in defending public agencies against anti-trust and civil rights cases. Thorner believed the PLF had deliberately structured the case to require many lawyers and huge expenditures. He recommended the attorneys BCPUD ultimately hired.

Enter Orrick, Herrington and Sutcliffe, and a soft-spoken and scholarly attorney, Richard Harris. The firm had made a reputation for successfully defending government agencies in anti-trust actions.  Harris, one of the rising stars in the firm, was able to persuade key government leaders to consider laws to limit the exposure of public agencies to harassment from individuals and groups who seek in court what they fail to win at the ballot box (or through other established governmental processes).

The PLF's complaint was an intimidating document. It cast a pall over the community, damping enthusiasm for public service. Individuals were named as defendants whose only connection was volunteer service on a community planning council which helped the County of Marin comply with the Coastal Act of 1976. The PLF and its clients threatened these individuals with economic devastation, including loss of their property in a suit seeking over $33,000,000 in damages.  The total compensation sought by the plaintiffs was ludicrous but frightening. It was ludicrous because such an award would be more then 100 times the BCPUD's annual budget; it was frightening nonetheless in its material implications for the BCPUD and the other defendants.

The complexity of the case and its immediate economic impacts were of the greatest concern to the board of directors and to attorney Harris.  Harris recognized at once that the primary impact could come from a rapid escalation of legal activity.  At the first informal discovery meeting during the spring of 1984, the PLF attorneys threatened to take roughly eighty days of depositions of the defendants and other witnesses that year. The eighty-day estimate was for the PLF examination only and excluded examination by other parties. Additional time would obviously have been required for witness preparation and the discovery disputes that inevitably would have arisen in connection with the depositions. In practical terms, the additional burdens which just the work associated with these threatened depositions would have imposed on the defendants could easily have exceeded $1 million in 1984 alone. The burdens on the other defendants were also a concern for BCPUD because each of the present and former directors might have demanded that BCPUD provide them with a defense, a potential additional burden on BCPUD -which might have been triggered at any time. (After considerable behind the scenes activity, including lawsuits against directors Paul Kayfetz and Jack McClellan by their own insurance companies, the directors’ personal insurance carriers did provide lawyers for all but three directors.  The three, Jack McClellan, Dottie LeMieux and Diana Farnsworth represented themselves for 6 months, until the San Francisco firm of Howard, Nemerovski, Canady and Robertson agreed to represent them pro bono. The BCPUD agreed to pay the firm’s out-of-pocket expenses which, to date, have totaled $3,198.)

Harris argued from the outset that there was no hope for an easy victory. He urged the BCPUD to pursue a course of action which promised minimal activity, to avoid any tactic or legal response which night allow the PLF to further escalate the legal effort. The strategy worked. After the initial threat to depose everyone who had the slightest connection to the defendants, the level of activity dropped to a somnolent hum for the better part of three years.

The major activity during this period was the filing of an additional lawsuit in Marin County Superior Court. Wolfe vs. BCPUD. While purportedly separate from Lockary, Wolfe was central to the PLF’s strategy, a strategy which backfired badly. No other incident in the last 11 years of litigation better illustrates the PLF’s abuse of the judicial process.

Wolfe vs. BCPUD began with an application by the PLF to examine BCPUD records. The categories of documents sought were so vague and broad, the request so voluminous, that virtually every document in the BCPUD’s possession was subject to search. Although the request appeared to be a PLF effort to circumvent the federal court’s control of the discovery process, BCPUD concluded that providing the documents in response to the request was preferable given the additional expense that would have been involved in going to court to resist the request. Harris advised that certain records, such as customer accounts, must be kept confidential. Ultimately, the BCPUD separated the confidential records and permitted the PLF free access to all other records. In 3 weeks the PLF copied over 10,000 documents.

Due to the complexity of the request, and the time needed by counsel to review it, BCPUD used the full time allowed by law to comply. The PLF took the position that BCPUD had violated the Public Records Act and, despite having obtained every non-exempt document requested, filed a petition for a writ of mandate in Mann County Superior Court. Judge Beverly Savitt denied the PLF’s petition and awarded court and attorney’s costs to BCPUD. In her decision, Judge Savitt found that the action was brought to harass defendant BCPUD, that it was brought for an improper motive and that it was “clearly frivolous.” The PLF filed a motion for a new trial. That motion was denied. Then they appealed. The State Appeals Court affirmed Judge Savitt’s decision and upheld the award of costs, awarding further costs for a frivolous appeal. This unsuccessful foray cost the PLF $4,708 in BCPUD attorney and court fees, which they eventually paid.

In 1985, the PLF apparently realized it had a serious procedural problem. Here it was in Federal Court, seeking damages for alleged acts of taking without compensation, when State Court would have been the more appropriate forum in which to begin pursuing such a claim. However, no state court would hear such a case if the plaintiffs were found not to have exhausted their administrative remedy. The PLF was in Federal Court with its bloated and vague complaint, when the plaintiffs had never formally demanded BCPUD render a final decision on their applications for water service.

The PLF asked the Federal Court to abstain from ruling on Lockary until it could go before the state court and seek an immediate end to the moratorium through a peremptory writ of mandate. Abstention would have preserved the federal case for reactivation if, for any reason, the PLF or the plaintiffs were dissatisfied with whatever the state court litigation yielded. The Federal Court encouraged the PLF to work out its procedural problems, but after lengthy deliberation, simultaneously denied the PLF motion for abstention and granted a summary judgment. The judge’s order went beyond what BCPUD had asked for and ended the case without a trial (which was later appealed).

The State Case...

In the spring of 1986, BCPUD held administrative hearings to consider the applications for water service filed by the plaintiffs. The PLF submitted exhaustive documentation, over 1,000 pages, in support of the applications. The BCPUD Board concluded the hearings by adopting BCPUD Resolution No. 282, denying connections to Lockary, Gilbert and Macey, and adopting detailed findings to support the denial. The way was now clear for the PLF to sue BCPUD in State Court

Because the California Department of Health Services (“DOHS”) had required BCPUD to continue the moratorium on new service connections as a condition of its approval of BCPUD’s permit to purvey municipal water, the suit named the DOHS, and its director, Kenneth Kizer, as co-defendants with BCPUD. The PLF sought, again through a peremptory writ of mandate, an immediate end to the moratorium and 500,000 dollars in damages. The lawsuit was filed in Sacramento County Superior Court, a tactic designed to make defending it very expensive. BCPUD asked for and received a change of venue to Alameda County. After several preliminary legal skirmishes, Judge Richard Hodge was assigned to preside.

Judge Hodge’s first action was to appoint an independent, court-selected expert to investigate BCPUD’s water system to determine if there were indeed a Water Shortage Emergency Condition. He appointed a former State Water Resources Control Board Engineer, Walter Bourez, to conduct the investigation. Bourez concluded his 20-page report by stating “I do not believe it would be advisable to lift the moratorium on water hook-ups at this time.”

On November 22, 1991, Judge Hodge issued a 53-page decision. On page 14 he stated “...the Court finds that there is a solid factual basis for declaring a water shortage emergency and, thus, for imposing a moratorium which precludes potential water users from tapping into the water supply which is both fragile and limited. The Court cannot conclude that BCPUD acted in an arbitrary and capricious manner...”.

At the June, 1992 BCPUD meeting, the Board announced that the PLF had waived its right to appeal. Judge Hodges decision became final.


Meanwhile, Back In Federal Court..

While the state case was pending, the PLF appealed The Federal Courts decision granting BCPUD’s motion for summary judgment; BCPUD simultaneously moved for sanctions against the PLF for its improper conduct. Judge Williams appointed United States Magistrate Wayne D. Brazil as Special Master to investigate the case and make a recommendation regarding sanctions. On September 8,1989, Brazil concluded a detailed investigation, and, in a recommendation to the trial court, stated “On the findings herein made, the court would be abdicating an essential responsibility if it did not impose sanctions on PLF... The principal purpose of these sanctions is deterrence. The fact that PLF... has resorted to the courts so many times in a similar spirit makes the need for deterrence especially acute. The fact that PLF has used this and similar suits to raise millions of dollars that it uses to fund litigation means that the usual costs incident to litigation of this length and size do not wear as heavily on PLF, if at all as they do on many other litigants. In fact, publicizing its participation in this case may have boosted PLF’s contributions. The significance of this for these proceedings is two-fold: it shows the unusual and extensive involvement of the law firm in the case. It also leads the court to conclude that the size of the sanction must be substantial if it is to have a meaningful deterrent effect”

Based on the Special Master’s recommendation, Judge Williams imposed $136,000 in sanctions on tie PLF. The PLF appealed. As part of BCPUD’s Statement Of The Case in support of the trial court’s order, BCPUD asserted that “...These sanctions arose out of litigation filed by the PLF in 1982 against BCPUD, a small semi-rural district, and against numerous present and former directors and private citizens who had participated in civic affairs. The complaint included a plethora of purported antitrust and constitutional claims, which the Court quickly recognized were supported by little more than overbroad, legally conclusory allegations that fail[ed] to adequately identify their legal or factual bases. The District Court directed that certain information be provided in an amended complaint. Instead, the amended complaint expanded the number of vague claims and added still more parties...After reviewing the circumstances of this case, the Special Master concluded during the sanctions proceedings, as did the District Court Judge, that this refusal to comply with the Courts order had been in bad faith. It was but one of several specific situations involving bad faith litigation conduct where the PLF had attempted to contort what could have been a relatively straightforward case into a massive, complex, conceptually dense, expensive litigation, and, along the way, persisted in pursuing theories… “for which there was no credible factual support.” The Ninth Circuit upheld the imposition of sanctions directly upon the PLF but remanded the case to the trial court for recalculation of costs.

In acting on the PLF’s appeal of the summary judgment dismissal, The Ninth Circuit Court of Appeals partially affirmed the Trial Courts order granting summary judgment and partially reversed it. The court reversed the issues addressed by Judge Williams which went beyond what BCPUD had asked for. It took the position that there may have been triable issues of fact in the federal case but did not rule on the merits of the case. By this action, the Ninth Circuit essentially told the District Court Judge to let part of the case proceed to trial. Under the pressure of the sanctions, the plaintiffs began for the first time to talk seriously of settlement.

Accepting a settlement posed a problem for some members of the BCPUD’s board who felt that anything less than complete vindication might lead to a misinterpretation. However, the potential expense of trial on the remaining issues had prompted some interest on the part of the insurance companies representing the individual defendants. The court had ordered settlement conferences, and some settlements were likely regardless of BCPUD’s position. BCPU D’s counsel was able to structure a resolution that included numerous benefits for BCPUD, as well as the other defendants, with no BCPUD contribution to the settlement. They included (i) dismissal of all remaining federal issues (sparing BCPUD and the uninsured individuals the expense of trial) (ii) elimination of a potential for appeal of damage claims in the separate state litigation, (iii) restriction of the state court litigation to two claims (thus eliminating the potential for expansion of the state court litigation through addition of new theories or new parties for the “doe” defendants sued by fictitious name). Because of the substantial benefit to BCPUD the initial concerns were overcome. The BCPUD Board of directors allowed the settlement to proceed. In June, 1991, Judge Williams signed his order dismissing the 9 year old case in BCPUD’s favor.

The Insurance Case...

Early in the litigation, when the law appeared to favor the BCPUD position the board sought coverage from its general liability carrier, Insurance Company of North America (INA). INA offered an inadequate settlement, which BCPUD rejected. With that rejection, a number of legal battles with the giant insurer began, none of which have been resolved in BCPUD’s favor. After the state trial and appellate court upheld INA in its contention that claims arising from a “failure to supply” were excluded from coverage in the policy in force at the time of the original complaints filing in Federal Court, BCPUD asked INA to provide copies of policies covering earlier policy years beginning with the 1971 inception of the moratorium. INA resisted, forcing BCPUD to obtain an order from the State Insurance Commissioner that INA provide the policies. When INA finally complied, BCPUD discovered that earlier policies did not contain the “failure to supply” exclusion. Meanwhile, PLF had amended its complaints in the underlying federal and state court cases against BCPUD to include additional claims unrelated to the water moratorium.


These developments encouraged BCPUD to bring a new coverage action against INA in federal court. This time INA relied primarily on a contention that coverage was unavailable because BCPUD’s enactment of the moratorium was intentional rather than “accidental.” The District Court agreed and dismissed BCPU D’s case. On appeal, the Ninth Circuit rendered a split decision. It agreed with the District Court that INA did not have a duty to defend BCPUD against the PLF suits, but it sent the case back to the District Court for a determination whether INA’s delays in investigating and responding to BCPU D’s claims and in providing copies of policies constituted bad faith.

Conclusion

Beginning eleven years ago, BCPUD was subjected to a massive legal assault by the PLF to set legal precedent against the environmental movement. The PLF strategy was to cripple BCPUD financially, forcing it to fold before the case could be tried on its merits. Losing the suit would have been disastrous to the community and would have had negative ramifications nationally as a precedent threatening public resource management. The PLF strategy did not succeed. BCPUD, through the extraordinary effort of its attorneys, directors and staff, came through the initial onslaught, kept the legal activity under control and won the case on each and every point of fact. It was a dear victory for the community and for sensitive resource management.  In spite of cost containment efforts, it was a victory achieved at enormous expense to the community.

To date, BCPUD has paid out $821,493 for legal services in connection with the various PLF-related lawsuits. Approximately $831,000 is still outstanding. Assuming the remaining legal work needed to close the book on all PLF-generated litigation is negligible, and that BCPUD continues to assess each of its customers $240 per year for legal expenses, it will take another 6 years to pay all accrued legal bills.

As shocking as these numbers are, the payoff period could have extended to as much as 12 years if all defendants who were eligible to do so had tendered their defense to BCPUD. If BCPUD had been forced to provide a defense for the individual director defendants, the workload for the attorney would have increased exponentially, and individual defendants’ insurance carriers would not have participated in the eventual settlement of the federal case. Also, had there not been a no-interest agreement negotiated with the attorneys, the total legal costs could have doubled.

Finally, in evaluating the cost-effectiveness of the steps BCPUD has taken over the years to fight these various suits, the deterrent effects of the Federal and State decisions cannot be underestimated. Both Lockary in Federal Court and Gilbert in State Court are landmark cases which have been decided in favor of BCPUD.

The PLF case has been judged in large measure to have been an abuse of the legal process for political ends. It is unfortunate, however, that the potential recovery to BCPUD from these judgments will not significantly reduce our legal expenditures. Such is the state of the American legal system at this time.