Copyright © 2021 Albuquerque Journal
The law firm of House Speaker Brian Egolf, D-Santa Fe, who is co-sponsor of a state Civil Rights Act that would allow people to sue state and local governments for alleged civil rights violations under the state Constitution, has settled 10 legal actions against state agencies over the past five years for more than $2.3 million.
Two of those were civil rights cases and accounted for about $925,000 of the total. Overall, a review of state court actions filed over the past five years shows that more than 30% of lawsuits by Egolf’s firm involved state and local governmental entities as defendants – including personnel actions, cannabis-related matters and property disputes.
In addition to creating a new civil rights cause of action in state court, House Bill 4 would prohibit the use of “qualified immunity” as a defense in those cases – a defense that is available to government employees in civil rights cases filed in federal court cases and considered by plaintiffs’ attorneys to be a major impediment to prevailing.
The proposal has become one of the most intensely debated in this year’s legislative session, drawing support from lawyers and progressives along with opposition and questions from police groups and agencies that insure state and local governments and public schools.
Egolf’s role moved front and center last week when retired state District Judge Sandra Price of Farmington filed complaints with the State Ethics Commission and a legislative ethics committee alleging Egolf failed to disclose a conflict of interest in his support of the bill she argues could lead to a personal benefit to him and his legal practice.
Egolf told the Senate Health and Public Affairs Committee on Friday, “It is not a conflict. That’s all I have to say about that.”
Egolf’s attorney, Andrew Schultz, said the complaint is without merit and moved on Friday to have the Ethics Commission dismiss it because the speaker did not violate the Governmental Conduct Act as Price alleges.
Also on Friday, the Senate Health and Public Affairs Committee voted 5-3 to move HB 4 to the Judiciary Committee without making a recommendation.
New Mexico legislators serve part time and don’t draw a salary. They receive a per diem payment and mileage reimbursement. Many legislators are retired or have careers that allow them to take time off to serve in the Legislature.
Adding to the issue, Egolf as speaker decides what committees legislation is referred to. Despite concerns raised by local governments about the fiscal impact of the bill, he did not refer it to House Appropriations and Finance, the committee that typically analyzes those issues.
The Legislative Finance Committee said in its fiscal impact report that there would certainly be additional costs but that most government entities had not responded to a request for specific financial impact information by the time it did its analysis in early February.
The LFC is expected to revise its fiscal impact report on HB 4 when it is considered by Senate committees.
But the state General Services Department estimates it would cost the state $4.5 million annually in increased legal costs, settlements and judgments. Counties have provided a rough estimate of $13 million in additional expense. Cities, schools and other agencies have cited increased expenses and settlement costs but have not put forward specific numbers, because there are too many unknowns.
Conflict of interest?
Egolf does not appear to have been the lead attorney in any of the 10 settlements, according to records released by the General Services Department in response to an Inspection of Public Records Act request by the Journal. The settlement agreements don’t specify how much money is paid to the attorney and how much is paid to the client.
The complaint filed by Price says Egolf’s law practice creates a conflict for him as a legislator sponsoring the new civil rights bill. “HB-4 would directly benefit his practice and this conflict should have been disclosed,” Price wrote.
Price, who was elected as a Democrat in 2005 and retired from the bench in 2017, claims Egolf violated the state’s Governmental Conduct Act by, among other things, failing to disclose that HB 4 would benefit his legal practice.
She cited a website run by an attorney rating service that says 20% of Egolf’s law practice involves civil rights cases and said Egolf had an ethical and legal obligation to disclose the information during a vote by the House Judiciary Committee, which passed the bill.
But Schultz said one of the sections of the act Price cites in her complaint does not apply because legislators do not fall under the definition of “public officers or employees.” He said Egolf can’t have a conflict of interest with a law that hasn’t been passed and signed by the governor.
“HB 4 creates a new cause of action and he has no cases or clients,” Schultz said. “Former Judge Price can’t identify a single case or single client contemplated under the proposed act because they don’t exist.”
Price responded to that in a telephone interview by saying, “If legislators are not subject to the Governmental Conduct Act, that is frightening. Does that mean they can pass self-serving legislation?”
She said she found the argument against her complaint “disingenuous and disrespectful of the public trust in elected officials.”
Civil rights claims in state court
Backed by progressives, the state Civil Rights Act was proposed on a 5-4 recommendation from a commission appointed by Gov. Michelle Lujan Grisham. The legislation initially would have removed any cap on damages from a lawsuit based on the proposed new state law, although it would not allow punitive damages and makes clear that individual police officers and other state employees are not personally liable.
It has been amended as it moved through the Legislature in response to opposition. Damages are now capped at $2 million including attorney fees. Still, that’s significantly higher than the amount allowed under the state’s tort Claims Act cap of just over $1 million.
The bill also would prohibit public employees from using the law to pursue a claim related to the person’s employment against the agency for which they work and has a three-year statute of limitations.
The goal of supporters is to allow civil rights claims to be brought in state court – rather than in the federal court system. In federal court there is no cap on damages, and punitive damages are allowed as are attorneys’ fees. But qualified immunity is allowed as a defense – meaning plaintiffs must show significant deviation from established policy, the law, or other egregious conduct by the employee.
The Omaree Varela child abuse case is one of those cited by supporters. CYFD and the social workers who didn’t catch the abuse and intercede would be subject to the civil rights claim without the benefit of qualified immunity. So would APD and the officers who investigated reports of abuse. Omaree, who had called 911 to try to seek help, died because of injuries inflicted while in the care of his mother and stepfather. He was 9 years old.
Cost hard to estimate
Representatives of insurers for local governments, public schools and colleges didn’t make specific estimates on the cost of HB 4 like the state’s General Services Department’s $4.5 million price tag. The GSD estimate included $3.6 million for settlements, $1 million in increased legal defense costs and $500,000 in legal fees for plaintiffs’ attorneys.
Those estimates were based on the number of civil rights cases increasing if the bill is passed from 284 cases a year to 384 cases a year.
The Association of Counties estimated $13 million in potential costs but said it could be higher because that estimate did not include the fact the proposed law lowers the legal standard for a civil rights violation to what the organization sees as a negligence standard.
Lowering the standard, they say, would open up a wide range of what essentially are negligence cases – how well an employee did his or her job. It would not, they argue, be limited to use-of-force cases like the death of George Floyd in Minneapolis when an officer kept his knee on the victim’s neck, but would extend to teachers, social workers and others.
The result, they claim, would open a floodgate of litigation and a lucrative new business area for plaintiffs’ lawyers, who would be allowed to recover fees within the overall cap. Under the state Tort Claims Act, attorneys take a portion of the overall settlement.
Proponents disagree with the impact. They say government should be held accountable for misconduct and that litigation is, in fact, a way to push reforms. New Mexicans, they argue, deserve to have recourse in state court.
Local government organizations also say that cost estimates would increase because the bill would set the $2 million for each claim, as opposed to the entire incident. If five people were involved in an incident, each would be able to file a claim capped at $2 million, leading to a potential liability of $10 million.
Those issues, according to opponents, make it difficult to estimate costs under the proposed law.
The LFC fiscal impact report said, “Increased costs to state and local governments may occur” if plaintiffs’ attorneys believe they have a better chance of winning their case in state court because they don’t have to overcome the qualified immunity defense available in federal court even if they have to settle for less money.
A majority of the members of the Civil Rights Commission concluded that the act would fill a “narrow gap” in the law under which state and local governments can be sued.
Civil rights cases
According to court records and settlements released by the state General Services Department, Egolf’s partner Kate Ferlic is the member of the firm who has been lead attorney on the two civil rights claims. Both involved the abuse of children in the Children, Youth and Families Department foster care program, and one settled for $680,000.
That case involved a child who was placed into the care of foster parents and was allegedly sexually abused by the foster father. In a December hearing on the Civil Rights Commission’s report, Egolf said the case was handled by one of his partners and was dismissed because of qualified immunity. The settlement was reached to head off an appeal on behalf of the child placed in foster care.
The foster father is serving a 25-year state prison sentence for several child sexual abuse convictions.
The case hit a major stumbling block when a federal magistrate judge ruled the foster parents were not agents of the government, which means they can’t be sued in a civil rights action.
That ruling led to the dismissal of the case against the state employees.
Egolf said at the hearing that the settlement amount wouldn’t cover cost of the lifelong psychological counseling the child would need because of the abuse he had suffered.
The second case involving CYFD was settled for $272,500 in June 2019.
That case was settled before going to court.