The cost of doing business: Del Mar’s defense against former superintendent

By Marsha Sutton
Senior education reporter

Although I had no intention of ever writing another column about the Sharon McClain vs. Del Mar Union School District lawsuit, my curiosity about how much money the district was spending to defend itself against her charges got the better of me.

Marsha Sutton

After revealing documents were made public in March, some parents encouraged the district to settle with McClain to save the district money. But others insisted that the district has a solid case and the suit should not be settled because any settlement would not just cost money but might also imply some measure of guilt.

We’ve all heard about lawsuits settled behind closed doors, with defendants paying out an undisclosed amount of money just to be rid of the case. Although the tendency is to regard many of these settlements as a shakedown of corporations or agencies with deep pockets, there is often some lingering doubt that perhaps those deep pockets conceded some responsibility after all.

As we reported in a March 10 story, DMUSD superintendent Jim Peabody said the district spent $12,762 on legal fees on the McClain case in 2010: $9,036 through March 31 when she was released, and $3,726 from April 1 through Oct. 1.

When the suit was filed in early October, the district’s litigation insurance took over and all legal fees were covered, less a $1,000 deductible and the district’s annual premium of $21,808, he said.

Because of insurance, the district isn’t out much money directly. But it’s costing money for someone. And it’s not unusual for insurance companies to settle a case based not its merits but simply on how much they are willing to spend to defend the case. At some point, they tend to want to cut their losses.

So the question is: How much is the DMUSD’s insurance carrier, the San Diego County Schools Risk Management Joint Powers Authority, paying to defend this suit? And would the JPA, which operates a consortium through the San Diego County Office of Education (SDCOE), be inclined to settle — and thus unintentionally transmit the impression of guilt — if the cost of defending is too high?

No matter how solid its case, Peabody affirmed that there is an incentive to settle when he told me that risk management has to weigh its cases carefully. “The people in the JPA are rooting for you to do something positive because [otherwise it can] deplete the entire fund,” he said. “Just like in health insurance, if there’s a lot of action within the group, the premium goes up.”

I asked Diane Crosier, SDCOE’s executive director of the San Diego and Imperial County schools JPA, how much had been spent on the case so far. She replied in an email that she would only release that information through a formal Public Records Act request.

I had other questions as well, which mostly had to do with the wording of the insurance policy, but she refused to answer any of them, referring me to the school district’s legal counsel.
Having someone deny a journalist a simple request for public information that’s readily available is like waving a red flag at a bull. Following her icy instructions, I reluctantly submitted my formal PRA request for expenses to date on the case, along with a few other questions:
1. Does the JPA’s litigation insurance cover the costs of damages should the case proceed to trial and the district lose? (Why else would anyone have insurance except to cover potential losses, but the question needed to be asked.)
2. When did the JPA take over the case?
3. What does your group consider to determine whether a settlement is advisable?
4. Can the district recover attorneys’ fees spent before the JPA took over, if the district wins the case?
5. What is the specific language of the district’s coverage through the JPA?
6. What is the current status of the case?

Contempt for transparency
Knowing that some of these questions were beyond the scope of what SDCOE’s JPA would reveal, I also knew that others were within the realm of possibility, especially those asking for neutral specifics like dates, dollar amounts and policy wording.

Yet, in a letter dated April 1 from Pam Gilles, senior director of internal business services for SDCOE, I was told that a one-page document listing expenses to date was available but that “there are no other records available that are responsive to your request as this case is in litigation.”

SDCOE would not even reveal the date the JPA took over the case or the specific language in the policy. As for the one-page document showing expenses, I either needed to appear in person to review it or pay a fee to have it mailed.

This is their right to ask for payment for documents requested through a PRA. I was told the cost for duplication was $1.00 per page, $.10 per additional page, plus sales tax and postage. For the one-page document, the total came to a whopping $1.53 ($1.00 for the copied page, $.09 tax and $.44 postage).

I repeated my request for answers to the objective facts – like the policy language and the dates – and then suggested that, since the document I was seeking was only one page and the cost so minimal, could they not fax it or email it? After all, public agencies do have discretion in these matters. Both requests were denied by Gilles.

SDCOE public information officer Jim Esterbrooks offered sympathy but said SDCOE policy dictates that all documents requested through a PRA request are charged a set fee. I responded that I didn’t start with a formal PRA request. Rather, it was Crosier who insisted on it.

All she had to do, since she had the information readily available, was just tell me the amount — or send it by fax which would require less handling time than processing my puny check or counting out my pennies at the front desk (I was inclined at first to go there and give them all my loose change, a photographer in tow).

If we’re talking about efficiency and conserving public resources, then copying the document, stuffing it in an envelope, addressing it and mailing it require more time than faxing it. Simply telling me over the phone or by email is even more efficient.

But this is a government agency, and procedures must be followed, no matter how senseless or hostile toward the public.

Since I’ve yet to bend to their rules and drag myself down there to pay for my document, I am unable to report on the costs to date for the McClain litigation. But I can say that SDCOE’s uncooperative attitude toward the people’s right to access public information in a reasonable manner is a shameful example of the tendency of public agencies to be fortresses of information that regard with contempt the imperative for more open government and transparency.

Costs running high
Taking Crosier’s advice, I contacted the district’s legal counsel on the case, Daniel Shinoff of Stutz Artiano Shinoff & Holtz, and asked him to shed some light on the questions SDCOE refused to answer.

He said the language in the coverage states that JPA litigation insurance covers the costs should the district lose. And if the district wins, attorneys’ fees expended before the JPA took over the case cannot be recovered.

“Each side bears their own attorneys’ fees, absent a contract or a statute,” Shinoff said, in an interview in April. “This contract didn’t have an attorneys’ fees provision in it.”

If there is a settlement, Shinoff said the terms will become public. “When it involves a public institution and public money, you cannot have a secret settlement agreement,” he said. “People may not want to talk about it, but the terms of the settlement agreement become a public record.”

And the odds of settlement? He said the JPA won’t apply pressure either way but does have “professional responsibilities and ethical obligations to tell their perspective.” He said the JPA wants to have a voice in the resolution of cases, but the final decision “will be in the hands of the school board.”

Shinoff thinks the DMUSD has a winning case and that it will go to trial without a settlement. “I don’t believe they’re going to walk away from it, but ultimately it’s going to be up to the board of trustees of the school district to decide that,” he said.

On the other hand, Shinoff echoed Peabody’s concern that there might be incentive to settle to avoid rising premiums, should the case become too costly or its odds of prevailing diminish. “That is something that the board may want to take a look at, you bet,” he said.

Regarding my single-page document with expenses to date, Shinoff did not know the answer but, reflecting bias in favor of his client’s position, suggested that costs are running high.

“I do know that Dr. McClain’s lawyer is trying to make it as expensive as possible,” he said. “He sends out interrogatories and then he sends meet-and-confirm letters because he doesn’t like our responses. So that becomes expensive because you have to respond to all that.”

If I don’t bow to the almighty bureaucracy’s inflexible and unreasonable demands, the costs may remain hidden. And the longer I wait, the greater the chances that my one-page document will stretch to two, thus increasing my copying cost by ten cents. I just don’t know if my pocketbook can handle it.

Marsha Sutton can be reached at:

Related posts:

  1. Insurance company to pay city $5.5 million
  2. Former superintendent files suit against Del Mar school district
  3. Del Mar seeks superintendent of business services — again
  4. Del Mar school district appoints new assistant superintendent, business services
  5. Solana Beach water district board asks staff to research cost savings

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Posted by Staff on May 26, 2011. Filed under Columns, Editorial Columns, Education Matters. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

2 Comments for “The cost of doing business: Del Mar’s defense against former superintendent”

  1. mac

    How much did it cost DMUSD to pay the lawyer to answer Marsha Sutton's questions? Every time she asks questions of a lawyer, that lawyer sends a bill to DMUSD for the time spent on providing Sutton with material for her column. Enough!

  2. Kelly

    what will be the cost when the parents sue the district for mis use of public funds if they pay out a person who broke the law – as she shows in the documents she released.

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