City OKs Paying $3.75 Million to Ex-LAPD Staffer

Los Angeles officials agreed Tuesday to pay $3.75 million in an alleged police retaliation case after an outside review found that the city stood little chance of winning an appeal, in part because its attorneys made irreversible errors during trial.

The City Council voted 10 to 1 to settle the case with plaintiff Theresa Schell, a longtime Los Angeles Police Department fiscal services specialist who alleged that she was fired after giving key testimony against the city in a costly police overtime case.

A federal court jury in June ordered the city to pay $3.6 million--plus attorney fees--to Schell. After more than four hours of deliberation, the jury also found Police Chief Bernard C. Parks and Cmdr. Daniel Watson, the department’s ombudsman, personally liable for $500,000 and $250,000, respectively, in punitive damages.

Under an agreement reached between the city and Schell on Tuesday, however, the punitive damages will be dropped.

According to a report prepared for the council by an outside attorney, the city attorney’s office made a variety of mistakes--including failing to make objections and call helpful witnesses--that may have contributed to the jury’s findings of liability against Parks and Watson.

“Without problems caused by defendants’ counsels’ trial presentation, we question whether any punitive damages would have been awarded,” attorneys Gregory M. Bergman and Gregory A. Wedner wrote in their review. “For a variety of reasons, however, it is our view that reversal of the underlying compensatory damage award against the city would be highly unlikely on appeal.”

Schell, who worked for the city 29 years, contended that the LAPD fired her for her role in a lawsuit that the city settled for $40 million, the largest settlement in Los Angeles history.

In that class-action case, attorneys representing hundreds of LAPD officers argued that the department improperly delayed paying overtime stemming from the officers’ work during the 1992 riots. Schell testified that the data needed to support the officers’ claims could be retrieved from the department’s payroll records--a revelation that contradicted earlier testimony from other LAPD personnel.

Schell was later fired amid an internal investigation over whether she gained access to confidential Police Commission documents on a departmental computer.

“We are pleased that Ms. Schell’s case will finally be put to rest and that Ms. Schell can finally begin moving forward with her life,” said her lawyer, Dan Stormer.

Councilman Nick Pacheco said he wants to make sure the commission follows up on the matter to find out who was at fault.

Others said they wanted further review of the city attorney’s handling of the case. The outside analysis found “numerous instances in which damaging evidence was presented to the jury without any objection being made, although grounds for objection existed.” Also, the jury got instructions that some believed were slanted in favor of Schell.

“It seems that this case was badly compromised,” said one official. “Because of that, our options were severely limited.”

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Times staff writer Greg Krikorian contributed to this story.