Nearly five years after former Superintendent Arlene C. Ackerman steered a major no-bid contract for surveillance cameras to a minority firm not approved for emergency work, the Philadelphia School District could be spending at least $3.6 million to defend and make amends for the move.
The cash-strapped district already has paid $1.8 million to outside lawyers to represent it in four lawsuits stemming from the contract, according to information The Inquirer obtained from the district under the state's Right-to-Know Law.
In the first case to go to trial, a federal jury found that Ackerman, her former head of human resources, and the district had wrongfully suspended and recommended firing Francis X. Dougherty, a top administrator, for exposing the contract.
As a result of the verdict, the district faces an additional $1.8 million from a judgment for lost wages and legal fees sought by Dougherty's lawyers.
And there's no end in sight.
The district has appealed the Dougherty decision to the U.S. Court of Appeals for the Third Circuit, and is preparing for trials in the three other state and federal cases.
The $1.8 million the district has paid covers lawyers' bills, court fees, depositions, and trial preparation from December 2010 through April 30.
The sum also includes $276,000 for an internal investigation by lawyers at Pepper Hamilton LLP that district officials have said cleared Ackerman and her former deputy of wrongdoing. The Pepper firm also was paid $67,655 for continuing services tied to the camera project.
Most of the money paid to outside lawyers - $1.26 million - went to the Tucker Law Group, a Center City firm that is defending the district and current and former officials in all four cases.
Michael A. Davis, the district's general counsel, said in a statement Friday that the district cannot settle every case because "doing so would only encourage other lawsuits and create the expectation that even non-meritorious lawsuits brought by parties seeking to reach into the pockets of the school district would generate a payment."
Davis said that the district resolves the majority of complaints and claims "by settlement and amicable resolution."
In the fiscal year that ended June 30, the district's $2.6 billion budget included nearly $8.3 million for outside lawyers.
Davis, who testified for the district in the Dougherty case, is a defendant in another camera case.
The suits were filed in the aftermath of an Inquirer article published Nov. 28, 2010, that reported that Ackerman had pushed aside Security & Data Technologies Inc. (SDT), a Bucks County firm that had begun preliminary work on a rush contract to install surveillance cameras in 19 schools the state had deemed "persistently dangerous."
A district source told the newspaper that Ackerman ordered the $7.5 million contract be given to IBS Communications Inc., a small, minority-owned firm then based in Mount Airy. SDT was on a state-approved list of contractors eligible for emergency contracts; IBS was not.
In depositions and during Dougherty's trial, current and former administrators said they had heard Ackerman say she was tired of the district giving work to white-owned contractors.
Dougherty, who had been the district's deputy chief business officer, was one of six administrators placed on paid leave in December 2010 when the district launched the inquiry to determine who had leaked information about the contract.
The School Reform Commission fired Dougherty four months later, alleging he had violated policies that prohibit disclosing confidential information because he had forwarded district e-mails to an outside account.
In Dougherty's lawsuit, he disclosed that he was a source for the Inquirer article. He said he was fired in retaliation for talking with reporters and contacting state and federal authorities to express concerns about the contract.
After five days of testimony, federal jurors in March found that the district; Ackerman; and Estelle G. Matthews, a former top human resources official, had violated Dougherty's First Amendment right to free speech by placing him on leave and then recommending his firing. The SRC acted in April 2011.
Ackerman, who left the district in August 2011, died in February 2013. When the reports about the contract came out, she repeatedly denied telling staff to make sure IBS got the work.
Although the jury said Dougherty's speech was protected by the Constitution, it found no breach of Pennsylvania's Whistleblower Law, which bars employers from retaliating against those who go to law enforcement to allege wrongdoing.
For the First Amendment violation, the jury awarded Dougherty a nominal $1 from each of the defendants who had wronged him: the district, Ackerman, and Matthews.
Former Deputy Superintendent Leroy D. Nunery II also was a defendant, but the jury found he had not violated Dougherty's rights.
In a separate hearing, Judge Juan R. Sánchez said Dougherty was entitled to $318,520 from the district for lost wages.
Dougherty's attorneys are seeking to recover $1.5 million for his legal expenses. They also have asked the judge to award Dougherty an additional $31,754 to cover interest and the tax consequences of the judgment.
The district is fighting on several fronts: It has appealed the case to the Third Circuit; objected to Dougherty's request for more money; and asked Sánchez to wait until after the appeal to consider Dougherty's legal fees.
Last week, Sánchez ruled that the district could file objections to Dougherty's legal costs but denied the district lawyers' request to put the issue on hold until after the appeal.
And on Friday, Dougherty's attorneys filed a cross-appeal that is limited to Sánchez's order that removed the SRC and its members as defendants.
It's not the first time that Dougherty's suit is at the Third Circuit. Before the case went to trial, the district unsuccessfully challenged several of Sánchez's rulings. The appellate court sided with Sánchez, including his ruling that Ackerman and other administrators were not immune from the suit because they were public officials.
Other Pending Lawsuits
Three other lawsuits have been filed against the Philadelphia School District relating to its $7.5 million no-bid contract with a small minority firm for school surveillance cameras:
Security & Data Technologies Inc. has a civil rights suit in federal court. The firm had been asked by the district to prepare a proposal for the camera project and had begun preliminary work. The company, whose owner - Jerome Paley - is white, contends it was not awarded the contract because of race.
John Byars, a former top procurement official who was placed on leave then fired, has a civil rights, slander, and defamation suit in federal court. Byars, who is African American, alleges he was made a scapegoat for the controversy that erupted over the contract.
Augustine Pescatore, a commander in the Office of School Safety, was put on leave during a probe to find leaks about the contract. When he returned to work, he was reassigned to the patrol division. Pescatore maintains he was defamed, demoted, and also made a scapegoat.
Pescatore's case is back in Common Pleas Court after Commonwealth Court quashed the district's appeal, asserting that former Superintendent Arlene C. Ackerman and other administrators had immunity because they were public officials.
No trial dates have been scheduled for the cases.