City Council faces tough legal decisions in pollution case

As the clock continues to tick in Lodi's pollution case, the City Council has two options: To keep litigating or to settle.

Each option has its benefits, but there are drawbacks the city must also consider.

Some worry that the city could be left with multimillion-dollar bills if it gives up the legal fight in favor of settling. They also worry that the taxpayers could bear the brunt of the cost.

"The city is still committed to, number one, getting the pollution cleaned up," said Mayor Larry Hansen. "We are the purveyor of water, and we take that very seriously. Our number one priority is what it always has been, and that's to get it cleaned up."

	Mediator would play key role if city decides to settle contamination lawsuit On the night the Lodi City Council voted to fire its attorneys, a federal judge was talking to Lester Levy, the man trying to bring resolution to an ongoing pollution case. Levy, a nationally recognized dispute resolution expert, is the official "settlement master" in the case, appointed by U.S. District Judge Frank C. Damrell. If a settlement occurs in the case, it will likely be coordinated by Levy. Damrell has encouraged the city to work with Levy to settle a complex groundwater contamination lawsuit that has been in litigation for more than three years. The suit names numerous local businesses, including the News-Sentinel, and is the city's attempt to force their insurance companies to clean up groundwater contamination. Levy received his bachelor's degree in classical guitar performance and composition from the San Francisco Conservatory of Music in 1981, then received his law degree four years later from Benjamin N. Cardoza School of Law. He clerked for the 2nd Circuit U.S. Court of Appeals for two years, then became a trial lawyer in San Francisco and Los Angeles. Now a mediator with Judicial Arbitration and Mediation Services, Inc., Levy has worked on a number of large cases, including asbestos, mold and water contamination lawsuits, according to his employer's Web site. He is now working with the city, and Mayor Larry Hansen said Friday that the city will likely meet again with Levy next week. Damrell has urged the city to settle the case, and Hansen is not opposed to the idea. -- News-Sentinel Staff

The pollutants, commonly known as TCE and PCE, were first discovered in Lodi's groundwater in 1989. Eleven years later, the city filed a federal lawsuit against 15 local businesses, including the News-Sentinel, in an effort to force their insurance companies to clean up the contamination.

Over the past year, U.S. District Judge Frank C. Damrell Jr. has grown increasingly critical of the city, and higher courts have also ruled against the city.

On Monday, Damrell told the city it should abandon its legal strategy. On Tuesday, the City Council fired City Attorney Randy Hays and outside law firm Envision Law Group. And on Wednesday, Damrell gave the city a one-month extension before a lengthy trial is set to begin.

During a special closed-door meeting Friday afternoon, the City Council approved a contract with Sacramento-based

Kronick, Moskovitz, Tidemann and Girard.

Also with a 3-0 vote, the City Council voted to have attorneys from the Barger and Wolen law firm in San Francisco assist the Sacramento attorneys and Deputy City Attorney Stephen Schwabauer in preparing a report due Feb. 12 to Damrell.

That law firm is also helping the city audit the bills from Envision Law Group.

Council members Keith Land and Emily Howard were unable to attend due to prior commitments. The meeting was called by Hansen on Thursday afternoon.

With the help of its new attorneys, and any others who might come aboard later, the council must decide which legal avenue to take.

"One of the questions they have to ask themselves is, do they want to be in the business of litigation anymore?" said Aaron Bowers, a local attorney representing one of the businesses being sued by the city.

While Hansen said he feels the council may be leaning more toward settlement, Land expressed concern that the city's strategy, which has been in the works for years, could be compromised.

"The strategy has always been to get this to court and to find out who's responsible for the contamination, and to what extent the parties are responsible," he said.

Once that is determined, Land said, the insurance companies will come into play -- whether it comes down to the insurers of the city or the businesses.

If the city tries to settle rather than litigate, the question still remains: Who will pay for the cleanup that has been estimated at anywhere between $20 and $100 million?

If the city decides not to go forward with the scheduled Feb. 17 federal trial, it could face more troubles, Councilman John Beckman pointed out.

The businesses have argued that the city was partially responsible for the contamination because its sewers leaked, while the city has said it had no way of knowing harmful chemicals were being dumped.

That defense, which falls under Congressional environmental law, is the reason for the trial that could last up to two months.

Damrell encouraged the city to abandon that defense and vacate the trial. But Beckman expressed concern that USF&G, the city's insurance company that has currently paid $3.1 million for the city's defense, might not approve.

"Is USF&G willing to accept us waiving our defense, or do they want to pay for us to go into court?" Beckman asked.

While Hansen remains optimistic, he also said the case involving more than 100 parties is far from over.

"We are hoping that we can move more toward settlement and cleanup than litigation, if at all possible," he said. "But we may still have some battles in court in order to force insurance companies to clean up the pollution."

News-Sentinel staff writer Jennifer Pearson Bonnett contributed to this report.

Contact reporter Layla Bohm at layla@lodinews.com.
Contact reporter Jennifer Pearson Bonnett at jenniferb@lodinews.com.