Philly schools seek to settle whistle-blower suit

Five years after revelations surfaced about a massive no-bid contract - and after nearly $2 million in legal fees - the Philadelphia School District is poised to settle a federal lawsuit with the man who blew the whistle.

The School Reform Commission is expected to vote this month on ending a lawsuit by a former top administrator who federal jurors found had been wrongfully suspended and fired for telling The Inquirer about a $7.5 million no-bid contract for security cameras.

The district's law department will ask the SRC to pay Francis X. Dougherty, a former acting chief of operations, $725,000 to settle his federal claims and cover part of his lost wages and legal bills, according to a draft resolution obtained by The Inquirer.

As part of the settlement, the district would no longer pursue the matter in the U.S. Court of Appeals for the Third Circuit. Dougherty's is one of four suits to stem from the 2010 camera contract.

Records the newspaper obtained through Right-to-Know requests show the district already has spent more than $960,000 on outside lawyers for the Dougherty case and nearly $1 million more on the other lawsuits.

Most of the money - $1.4 million - went to the Tucker Law Group, a Center City firm that has been defending the district and current and former officials in all four cases.

Alice Ballard, an attorney who represents Dougherty, declined to comment on whether a settlement had been reached.

District spokesman Fernando Gallard said the SRC does not comment on ongoing legal matters. He said the document The Inquirer obtained is "a draft of a proposed resolution that describes a proposed settlement. That settlement is still under negotiation by both parties and is not final."

When the terms are set, Gallard said, the SRC will make them public by posting the resolution on the district website, approximately two weeks before the SRC votes.

The amount of the proposed settlement is about 40 percent of the $1.8 million in damages and lawyers' fees that the district is facing in the Dougherty case.

In March, federal jurors found that the district, former Superintendent Arlene C. Ackerman, and a former head of human relations had violated Dougherty's right to free speech by placing him on leave in December 2010 during an investigation into leaks about the camera contract - and then recommending that the SRC fire him.

A federal judge ruled that Dougherty was entitled to $318,520 in lost wages. His attorneys had been seeking $1.6 million for his legal expenses.

The district had appealed many of the judge's rulings to the Third Circuit.

But now, the district's law department is poised to recommend the SRC approve settling the case, according to the draft resolution for the commission's Jan 21 meeting.

The document, obtained by The Inquirer from a source not connected with the Dougherty suit, said outside attorneys and the chief mediator in the Appellate Mediation Program for the Third Circuit had concluded that the proposed settlement was "an appropriate resolution of contested litigation which, if it were to proceed on appeals" could result in much higher costs for the district, including the award of additional fees to Dougherty's lawyers.

Under the proposed terms, the cash-strapped district would pay Dougherty in three installments over three years, concluding with a check of $215,000 by Aug. 31, 2017.

Dougherty's suit was among four filed in the aftermath of an Inquirer article published Nov. 28, 2010, that reported that Ackerman pushed aside Security & Data Technologies Inc. (SDT), a Bucks County firm that had begun preliminary work on an emergency 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.

Dougherty was one of six administrators placed on paid leave in December 2010 when the district began an inquiry into the leaking of the contract information.

The SRC later fired Dougherty, alleging he had violated policies that bar disclosing confidential information by forwarding district emails to an outside account.

In his lawsuit, Dougherty 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.

Ackerman, who left the district in August 2011, died in February 2013. When the reports about the camera contract came out, she repeatedly denied telling staff to make sure IBS got the work.

Three other suits remain pending:

SDT, which had begun preliminary work on the contract, filed a civil rights suit in federal court. The company, whose owner - Jerome Paley - is white, contends it was not awarded the contract for racial reasons. The case is scheduled for trial on June 13.

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 camera contract. His trial is scheduled to begin May 3.

Augustine Pescatore, a commander in the Office of School Safety, was put on leave during the 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. His suit is scheduled for trial in the Court of Common Pleas on March 7.

The district's legal bills also contain $343,655 paid to attorneys at Pepper Hamilton LLP for services related to the camera project, including an investigation that cleared Ackerman of wrongdoing.

martha.woodall@phillynews.com

215-854-2789 @marwooda