Supreme Court rules Danville violated Open Meetings Act in 2012
Published 1:14 pm Thursday, September 28, 2017
Five years to the day after the Attorney General first ruled that Danville violated the Open Meetings Act when it authorized purchase of a building behind closed doors, the Kentucky Supreme Court has delivered the final word on the matter, affirming multiple lower court rulings that the city broke the law.
In a unanimous ruling, the Supreme Court said the city’s actions were a clear violation of the Open Meetings Act. The court reversed a lower decision awarding attorneys fees to The Advocate-Messenger, the newspaper that filed an open meetings complaint against the city in the summer of 2012.
The Supreme Court ruled Danville took action illegally in closed session because it feared publicity could change the price of the building it wanted to buy, and because officials had a “misconception of the law applicable to bidding at public auction without reserve.”
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“This was a victory. It’s a victory for the newspaper and it’s a victory for the people of Danville,” said Jon Fleischaker, attorney for The Advocate-Messenger throughout the five-year case. “This was, to me, a fairly obvious effort by the (Danville) City Commission to avoid the requirements of the law.”
“The court has spoken on this issue and they have hinged their analysis on the fact that what was unique about this situation was that the city was desiring to purchase property at an absolute auction,” said Stephen Dexter, Danville city attorney. “The fact it was an absolute auction I think tipped their ruling in favor of the newspaper.”
The case involved the former Boyle Industrial Storage Company (BISCO) building, which the City of Danville purchased for about $1.23 million at an auction in the summer of 2012. At the time of the auction, the city had not publicly taken action to authorize purchase of the building. It came out later that at a July 23, 2012, city commission meeting prior to the auction, commissioners agreed in an executive session to bid up to $1.5 million on the building and to authorize City Manager Ron Scott to hire a bidding agent to conceal the city’s identity during the auction.
State open-meetings law states that “no final action may be taken at a closed session.” Believing the city had taken final action in closed session, The Advocate-Messenger filed an open meetings complaint with the city on Aug. 30, 2012. State law gives public agencies three days to respond to open meetings complaints, but Danville did not respond to the newspaper’s complaint. On Sept. 10, 2012, The Advocate-Messenger filed an appeal with the Kentucky Attorney General’s Office.
The attorney general ruled Sept. 28, 2012, that Danville had violated the law by taking formal action during a closed session.
“The public was entitled to know each Commission member’s position on the purchase of the BISCO building at the time the agreement was reached to extend a bid and not after the purchase was consummated,” the attorney general’s ruling reads.
Danville then filed suit against the newspaper in Boyle Circuit Court in order to appeal the attorney general’s ruling. The Boyle court eventually ruled that the city did violate the law, but that the violation was not willful and Danville would not have to cover the newspaper’s legal fees. Danville appealed the ruling that it had violated the law and The Advocate-Messenger appealed the ruling denying coverage of its legal fees.
Last year, the Court of Appeals ruled on the appeals, affirming that Danville violated the Open Meetings Act and reversing the lower court on the severity of the violation — it ruled the city should be required to pay the newspaper’s legal fees.
“The board was acutely aware that discussing its bid in a public meeting would automatically create a disadvantage for it as a bidder in an auction. Nonetheless, the requirements of the Open Meetings Act are clear on their face,” the Court of Appeals ruling reads. “The board went into a closed meeting to discuss a matter of public business. Its closed meeting did not satisfy any of the exceptions to the open meetings mandate.
“The board deliberately elected to ignore the requirements of the Open Meetings Act when it proceeded to discuss public business in private. It later declined to respond to the open meetings request by The Advocate-Messenger. Its conduct with respect to the clear requirements of the statute was unquestionably willful.”
The city appealed the Court of Appeals ruling and the Supreme Court agreed to hear oral arguments on Aug. 16 of this year.
Supreme Court ruling
On Thursday, the Supreme Court issued its ruling.
“Under the facts of this case, we hold that no exception permitted the (city commission’s) action and affirm that portion of the Court of Appeals’ opinion,” the Supreme Court ruling reads. “But because the (city commission’s) action was not willful, we vacate that portion … remanding to the Boyle Circuit Court for an assessment of fees and costs.”
As of this month, The Advocate-Messenger had paid $113,910.45 in attorneys fees to defend itself in the case, according to a financial document provided by the newspaper.
City Attorney Dexter said the city paid “a lot less than the Advocate” for its attorney fees. In May, documents obtained through an open records request showed the city had paid $66,840.40 to Dexter’s office for representing it on the case. Dexter said Thursday there have since been some “additional charges” but they are “not significant.”
The Supreme Court agreed with prior rulings that the Open Meetings Act allows public agencies to hold “deliberations” on property acquisitions in private, but explicitly prohibits taking action on those deliberations in closed session.
“The city’s interest in bidding on the property could have been discussed in open session, giving all citizens an opportunity to discuss the idea without affecting the value of the property,” the ruling reads. “… The closed portion of the meeting, we believe, could have been used to discuss bidding strategy and the maximum price …”
The Supreme Court rejected the city’s argument that it satisfied the law by taking action in public session to OK the purchase after the purchase had been made.
“(The city commission’s) post-auction approvals, albeit conducted in public, were window-dressing, because irrespective of the (city commission’s) arguments to the contrary, the city was already compelled to complete the purchase,” the ruling reads.
The Supreme Court said a “misconception” contributed to the city’s violation and it agreed with the Boyle Circuit Court that the violation wasn’t “willful.”
“We find that the violation stemmed more from (the city’s) effort to avoid the publicity adversely affecting the value of the property and its misconception of the law applicable to bidding at public auction without reserve, than from a willful attempt to violate the law,” the ruling reads.”… As we have noted, this case is unique since the real property subject to acquisition was suddenly and without forewarning being offered at absolute auction. Under these facts and circumstances, we do not believe the trial court abused its discretion in denying the newspaper’s motion for costs and fees.”
John Nelson, who served as executive editor of The Advocate-Messenger when the case began, said the case has shown that state law is “abundantly clear on this issue of meeting behind closed doors.” The lengthy court case wouldn’t have been necessary if Danville would have admitted its mistake early on, he said.
“The city had an easy way out. All they had to do was go back and do it right, but they were too proud to admit that they were wrong,” Nelson said. “… They unfortunately were willing to spend a lot of money and force their oldest local business to spend a lot of money just because they disagreed with an attorney general’s ruling. And I think that’s unfortunate, but I’m glad that the paper won. Maybe next time it won’t be so hard for them to listen.”
Fleischaker said the newspaper attempted to talk with the city over the years the case was active, but “we never could get anyone to talk to us.”
“It never should have gotten this far,” he said. “There was never any interest on the part of the newspaper in overturning the decision to buy the building. This was just a matter of trying to get straight the responsibility of the city commissioners to adhere to open meetings law.”
Dexter said the newspaper never offered a settlement to the case that the city could accept.
“If one side says, ‘just say we’re right and go away,’ that’s not a settlement,” Dexter said. “That’s what we were offered by the paper.”
Dexter said he tries to be clear with the city commission on when they can and cannot go into executive sessions and if they “are on an avenue that’s not defensible” he will tell them. But in this case, “there was nothing that would have given the impression that there was anything improper,” he said.
Dexter said the city pursued appeals in the case because rulings against Danville were “extremely broad” and would have made it difficult for cities to know when they would be able to go into executive session to discuss property acquisition.
Dexter said the Supreme Court’s ruling is “a very narrow decision” that does improve clarity for cities so they won’t be left doubting whether or not they can go into closed session.
“I don’t know of another time the city has bid on property at absolute auction,” Dexter said. “I think the city would certainly be reluctant to bid on property at absolute auction again in the future because of this ruling.”
Dexter said the ruling means prior to bidding on any future absolute auctions, cities in Kentucky would need to give “some amount of, I guess, public scrutiny of the mere desire to bid.”
Dexter said he thinks the ruling shows the case was a “close call” for the Supreme Court. The Supreme Court saw that the city was “doing its best to comply with the law — even though now it’s been decided differently,” he said.
Nelson and Fleischaker said they weren’t surprised the Supreme Court didn’t require the city to cover the newspaper’s attorney fees.
Fleischaker said Boyle County Circuit Court made the initial ruling that Danville’s violation was not “willful,” and “under the law, that is very hard to get reversed.”
“I wasn’t very surprised,” he said. “Disappointed, yes — but not surprised.”
Dexter said it would have been “egregious” if the city had been required to pay the newspaper’s attorneys fees when many facts of the case had not previously been argued in court.
Nelson said there’s “always an argument” that Kentucky’s open meetings and open records laws should “have more teeth.”
“I think in terms of open meetings and open records, there needs to be a stronger consequence for violators than there is,” he said. “After all, we never did ask that the sale of the building be voided, but we could have and we were asked by the higher courts why we didn’t. I think the answer to that was we weren’t out to hurt the city, we just want them to abide by the law.
“In this case now, the only consequence they have is what money they spent on legal fees and the publicity that they violated the law and lost a case in court at many levels.”
Legislative change proposed
Dexter said the Supreme Court ruling has clarified the process cities must follow if they want to buy property at absolute auction, but that process is different from if they wish to purchase property through a normal contract.
He said “it wouldn’t shock me” if the Kentucky League of Cities now pushes the state legislature to pass a new law “clarifying” open meetings exemptions so that cities could in the future participate in absolute auctions without announcing their intentions.
“The General Assembly may be asked to weigh in and say, ‘should that be a requirement? Or should there be a clarification of the exemption under open meetings law to allow cities to bid at absolute auction without notification?'” Dexter said, adding that Danville “has every intention of abiding” by the law as currently decided by the Supreme Court.
Dexter said such a “clarification” would mean that cities could decide to bid at an absolute auction behind closed doors as Danville did, and then vote in public session after the auction to authorize the purchase. Asked if that would mean cities could commit themselves to buy property at an auction, then vote against the purchase and renege on the purchase later, Dexter said yes. Asked if that could cause people selling property at absolute auction to be wary of allowing public agencies to bid at all, Dexter said “it could.”
Fighting for open meetings
Nelson said the battle to keep meetings of public agencies open is one that newspapers across Kentucky fight “on an almost weekly basis.”
“Most of them don’t go this far. Most cities and counties who get a ruling from the attorney general are good with that and abide by it, because that really has the force of law,” Nelson said. “… Most editors in Kentucky know the law and are confident in their complaints about the law … I think it says a lot about the newspaper companies (that have owned The Advocate-Messenger during this case), both Schurz (Communications Inc.) and Boone (Newspapers Inc.), that they were willing to fight this to the end.”
Fleischaker said he’s glad the case is “concluded in a way that says we were right and they were wrong.”
“I know the city is going to be pleased they don’t have to pay attorneys fees,” he said. “But the appropriate people at the city need to take a look at why this happened and why it dragged on for so long.”
This story was updated with additional information from Danville City Attorney Stephen Dexter on Sept. 29.