Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

The Haines Borough Assembly voted 5-1 Tuesday for a $55,000 settlement with former manager Bill Seward.

Seward threatened a wrongful termination lawsuit against the borough and accused assembly members of character defamation, racial discrimination and violating his constitutional rights.

“Regardless of the validity of these claims, there are always significant costs and risks associated with resolving employment disputes in a trial. I evaluated those risks using my professional judgment, talked to the assembly about the risks and costs of a lawsuit and proceeded to negotiate a settlement as authorized by the assembly,” Haines Borough attorney Brooks Chandler said. “I firmly believe this settlement is in the best interests of borough residents.”

Tom Morphet voted against the settlement, and in a written statement said the assembly made an expensive misstep by not consulting with its attorney last December before they fired Seward with cause.

Morphet provided local media outlets a copy of his statement which cited an overlooked clause on page 14 of the borough’s insurance policy he said was the reason behind the settlement.

An “attorney consultation requirement” in the borough’s Alaska Public Entity Insurance liability contract states that coverage for wrongful termination-related legal fees is “contingent on the member conferring with an attorney of the member’s choice before terminating an employee and then utilizing the services of an attorney to handle any pre-termination procedures.”

Morphet said it was on that basis Chandler recommended the borough settle with Seward for $55,000. Morphet said it was an “expensive oversight” that the borough needs to fix either in code or in the language of future manager contracts.

Morphet attempted to make a public statement during Tuesday’s borough assembly meeting, but assembly member Margaret Friedenauer interjected and said it would be “out of line” to discuss the matter in public, and that Chandler advised them not to.

“I would normally agree that we should more thoroughly explain our reasoning for decisions but in this case I really think that the community’s interests and taxpayers’ interests are better served by remaining discreet on these details,” Friedenauer said.

Morphet said he didn’t think the information would jeopardize the borough’s financial interests and felt he owed the taxpayers an explanation. He said he voted against the settlement because it didn’t include an explanation.

“I don’t think you can spend $55,000 and not tell people why you’re doing it,” Morphet said after the meeting.

Chandler said he wouldn’t comment on whether or not the borough would be affected by Morphet’s comments.

He described the assembly’s oversight as a “chicken and egg” scenario.

“In order for the assembly to be informed about the requirement for consulting with an attorney, they would have to let the attorney know that they were considering terminating the manager,” Chandler said.

Besides paying Seward $55,000 to drop his claims, the settlement agreement includes the borough’s denial that any of Seward’s claims were valid.

The assembly voted to fire Seward after some members heard from borough staff who said he responded poorly to criticism, perpetuated an ‘us versus them’ attitude, was disrespectful and displayed a lack of understanding on how municipal government works.

Assembly member Morphet also said Seward exceeded his authority as manager and made constant missteps. Some assembly members were concerned Seward would open the borough to a lawsuit after the CEO of an engineering company that employs local resident Gershon Cohen alleged Seward threatened his business.

Despite those claims, Seward’s attorney, Isaac Zorea, maintains that Seward was a capable employee based on a performance evaluation completed by the assembly, which he said gave him an “acceptable score.”

Seward’s performance evaluation included a ranking system from 1 through 5 ranging from unacceptable to outstanding. Seward received an overall score of 2.3 out of 5. Zorea said he didn’t know about the attorney consultation requirement but said he would have learned about it if the case went to trial. He said it wouldn’t have changed the way they pursued the case, but said he was surprised the assembly fired his client with cause.

“I didn’t think that was the type of advice Mr. Chandler would have given them to terminate him the way they did,” Zorea said.

Zorea said had the assembly terminated Seward without cause, a term allowed in his contract, he would have received around $24,000 in severance pay and that Seward “probably would have walked away.” According to his contract, Seward also would have received four months of benefits, worth an estimated $30,000.

Seward, who is of Tlingit descent, never told his attorney he felt racially discriminated against. Zorea said he identified that as a possibility after hearing Morphet’s comments about Seward’s “innate” and “inherent” flaws in judgment and diligence. “It was clear (Seward) did not have an innate inability to learn tasks,” Zorea said. “It really struck me as something that was racially indicative…the courts don’t require you to prove it absolute. This would be circumstantial evidence of a racial animus.”

Morphet dismissed the attorney’s allegation “To say much on that is to dignify a preposterous claim,” he said.

After he was fired, Seward requested a number of public records, including emails between borough officials, many of which were redacted in some areas. Zorea said many of the emails indicated some assembly members didn’t like Seward based on his personality and “that this termination seems to be as much political as anything else.”

Zorea said the case was best resolved by a settlement because it would be hard to argue that all four members who fired Seward did so because of ill will rather than for a legitimate cause.

Zorea said Seward might pursue litigation against another Haines citizen outside the borough governnment who, according to email evidence, played a role in him being fired.

“We are still looking at the evidence we were given to see if there were outside parties that may be responsible, but we haven’t come to any conclusions,” Zorea said. He said they might be making a second public records request to get evidence with fewer redactions.