San Diego Rejoice, fans. The Padres are one dollar richer. The team's long-running malicious-prosecution suit against former councilmember Bruce Henderson was settled last month for a buck. Henderson pays that sum to the Padres.
But it's dwarfed by the $134,000 in legal fees that the Padres paid Henderson's lawyers, as ordered by one superior court judge.
Most of that dollar will go to John Moores, majority owner of the team. Since he raked in $600 million selling off Peregrine Systems stock before the company collapsed in fraud and ignominy, Moores really doesn't need the dollar, unless it massages his ego.
It shouldn't. When the suit was filed on January 8, 2002, the team sought punitive damages "in an amount sufficient to punish Henderson for his improper conduct and to deter him from engaging in similar acts in the future."
A dollar isn't much of a deterrent, but Henderson had legal bills beyond the $134,000 the Padres paid his lawyers. Other civic-minded people are expected to cover the rest of his bills. "It would have been extremely costly for Bruce to continue," says his attorney, Roy Cannon. "Both sides would have had to pay substantial legal fees."
The Padres asked for settlement talks, and Henderson agreed, he says. (The lawyer for the Padres did not return phone calls.) As a condition of the settlement, neither side admits to any wrongdoing. Decisions made at both the superior and appellate court levels along the tortuous route do not become legal precedents.
The original suit charged that Henderson, who on behalf of clients had filed 6 of the 14 suits against the ballpark project, improperly used the legal system to stall construction of the $450 million city-subsidized project. The Padres charged that Henderson had cost the team hundreds of thousands in litigation costs and attorneys' fees and had wasted greater amounts of taxpayer money.
He had filed the suits with malicious intent, claimed the Padres. To win its suit, the team would have to show that no reasonable attorney would find any merit to the underlying claims.
Henderson had "attempted to use the lawsuits to decide the pace, timing and feasibility of the ballpark project," thus thwarting the will of voters who had approved it in 1998, according to the suit.
Henderson replied that he had often asked for expedited hearings -- hence was not trying to use the lawsuits to stall. He said that the delays in the project were not a result of his suits but were essentially caused by a faulty environmental impact review as well as the long federal investigation of Moores's showering gifts on Valerie Stallings, the former councilmember who was the project's most enthusiastic supporter in city council chambers. Stallings was eventually forced to resign after pleading guilty to two misdemeanors that were later erased. Although he had shoveled gifts to her -- including cutting her in on a hot stock and telling her to sell right before it peaked -- Moores was not charged. (No one was surprised, this being San Diego.)
Henderson's clients had sued on various grounds: faulty environmental impact report, inadequate public disclosure, dubious legality of the 1998 ballpark ballot initiative and the city council's decision to budget money for the ballpark, and most significantly, the inherent conflict of interest in Moores's bestowing valuable gifts and favors on a councilmember who was critical to the ballpark decision. In that last matter, the City and the team had argued that there was no conflict of interest in Stallings's accepting manna from a near-billionaire wanting to build a stadium with taxpayer money. The superior court had blessed that argument, but the appellate court had knocked it down, saying the no-conflict argument was "disingenuous." However, by that time the case itself was moot.
The malicious prosecution case bounced between superior and appellate courts, and the Padres actually sued Henderson twice, launching a second malicious prosecution suit with another superior court judge. In the end, all the team's causes of action were dismissed, but the appellate court upheld one charge by the Padres: the court said that a responsible attorney should understand that the team had a constitutional right to use its powers to persuade government to grant it favors -- that the cozy Stallings/Moores financial relationship was A-OK.
"Essentially, the appellate court was saying that the Padres have a constitutional right to corrupt government," says Henderson. If the malicious prosecution suit had gone to trial, it would have been over this issue. Henderson doubts the Padres would have wanted to argue in court that giving gifts and getting hundreds of millions of dollars in favors were legitimate practices.
The adventure cost the Padres money, but it permitted them to get what they wanted. The malicious prosecution suit was just one part of an establishment campaign to get the ballpark financed, even at the expense of legal principles, fiscal responsibility, and honest government. In late 2001, city council had permitted the Padres to alter drastically the mix of commercial projects that were supposed to go into the ballpark district. In the original Memorandum of Understanding, any major change was to require a new vote. A retired law professor, Robert Simmons, challenged the decision, saying the matter would have to be voted on again.
Henderson had planned to join Simmons's suit on behalf of a client. Upon being hit with the Padres' suit, which could have wiped him out financially, Henderson backed away.
Thence followed a hate/hysteria campaign. The former city attorney, Casey Gwinn, declared that a "Henderson tax" had cost the City $20 million. With typical logic, Gwinn blamed the delays caused by the Moores/Stalling scandal on Henderson's lawsuits. The Union-Tribune -- official protector of corporate welfare, particularly for itself -- wrote editorials lauding the Padres' lawsuit, blaming Henderson for any delays, and never mentioning the Moores/Stallings scandal. Ditto for those who wrote purported "think" pieces on the topic for the U-T.
The City said it must have a judgment in its favor on the Simmons suit by the end of January 2002 or Major League Baseball would depart. The judge gave the team and the City all they wanted and then some. Simmons was not given time to prepare his suit. The judge slapped Simmons and his lawyer with sanctions for challenging a judge. They were later reduced by more than 90 percent by the appellate court. The court quickly dismissed the Simmons suit. "The City and the Padres were sending a signal that anybody who had any ideas about using the court system to review the hidden details of this project better think twice because the City and the team have the legal system locked up," says attorney Stan Zubel, who represented Simmons. "They had it wired."
They sure did -- up to the appellate level. By getting a dollar from Henderson, "the Padres save face," says Zubel. Four years later, the City is broke and the ballpark is a $20 million annual drain. Was saving face really worth it?