City Settles Yellow Cab Suit for $12.75 Million : Transit: Amount is nearly triple the damages awarded by a jury. Extra money covers interest and attorney fees.

In an unusual settlement ending nearly 11 years of litigation, the city of Los Angeles has agreed to pay $12.75 million to the owners of Yellow Cab, once the city’s largest taxicab company.

The settlement, filed in U.S. District Court, is nearly triple the $4.5 million in damages awarded by a jury to Yellow Cab’s owner, Golden State Transit Corp. in a civil rights action that began in 1981. The company filed suit after the Los Angeles City Council refused to allow it to operate unless it settled a strike called by Teamsters Union drivers.

Since the July jury award, U.S. District Judge A. Andrew Hauk added $6.4 million in interest payments and could have awarded the cab company an additional $3.5 million in attorneys’ fees--all of which would have boosted the total to more than $14 million.

“Considering all these factors, we thought this was a good settlement,” Assistant City Atty. John Haggerty said, adding that he could not recall a larger city payment to a company in a civil rights action. “It’s seldom we get sued by a corporation in this kind of case.”

Reached at his Las Vegas office, Golden State owner Eugene Maday said, “I’m glad it’s over. . . . I’m getting congratulations more about my staying power than for winning.”

The settlement comes on top of a bruising budget crisis for the city, which faces more than $14 million in payments for a variety of cases last year that involved alleged misconduct by the Los Angeles Police Department.

“It is another in a series of blows we have suffered on the financial front,” said Councilman Zev Yaroslavsky, who added: “This one is probably more self-inflicted.”

The case, which was twice heard by the U.S. Supreme Court, turned directly on actions taken by the City Council.

After the council voted in 1981 not to renew Golden State’s franchise to operate unless the company’s labor dispute was resolved, the cab company went out of business and sued, claiming that the city had violated its civil rights.

The U.S. Supreme Court ruled in 1989 that the cab company was entitled to damages under the Civil Rights Act of 1871, a law that allows damage suits against officials who deprive others of “any rights, privileges or immunities secured by the Constitution and laws.”

The high court said the council, by interfering in the collective bargaining process, had violated the company’s federally protected rights under the National Labor Relations Act.

“We are certainly pleased with the outcome of this,” said Norman Dupont, one of the lawyers for Golden State. “I think it indicates that the City Council has got to exercise more care in the way they make decisions for vital things such as business licenses and franchise rights.”

Yaroslavsky described the settlement as “a lesson that labor-management relations are the business of labor and management.”

Council members and city officials recalled that the council’s vote against the cab company was nearly unanimous, triggered by the appeals of Teamsters and other union officials at a time when the company’s franchise was up for renewal.

Yaroslavsky, on the council at the time, said he could not remember how he voted. Council President John Ferraro, also a member then, said he voted against the company out of concern for the striking drivers, who were battling Maday over their commissions and proposed reductions in benefits.

“At the time we felt we were doing the right thing,” Ferraro said. “We were trying to make sure the drivers, who were not the most highly paid people, were protected.”

The city attorney’s office at the time did not advise the council that its actions might be judged a violation of federal law. Said Haggerty: “At that time we did not feel the actions were illegal.” The city’s defense fees, paid to the law firm Latham & Watkins, totaled $1.6 million.

The city is making the $12.75 million payment in stages. The company already has received $4 million, but will get another $5 million in July, 1992, and $3.75 million in July, 1993. “Splitting it over three fiscal years will make it more manageable,” Yaroslavsky said.

The settlement also says that Golden State has regained its franchise, which it may sell or use to operate up to 400 taxicabs in the city for five years, beginning in January, 1994. Although he had not yet made up his mind, Maday said, “We’ll probably end up operating.”