Open-meetings act requires state agencies to decide on lawsuit settlements publicly
By William R. Kiendl

State agencies must decide in public meetings, not in private, whether to approve settlements of litigation to which they are parties, the Ninth Circuit Court of Appeals recently held.

In Feature Realty, Inc. v. City of Spokane, et al., 331 F.3d 1082 (9th Cir. 2003), Feature Realty sued the City of Spokane in state court, alleging that the city wrongfully refused to issue a grading permit in connection with a property development. In fall 1998, Feature Realty conducted settlement negotiations with the city attorney’s office and reached a tentative agreement. The city attorney circulated a confidential memorandum to the Spokane City Council, which discussed settlement in executive session. The city attorney asked council members if they approved the settlement. Although no formal vote was taken, the council members indicated their approval. The council held no open meeting regarding the settlement agreement. Feature Realty and the City of Spokane signed the settlement agreement in October 1998.

In 2000, a dispute arose over the extent of the city’s obligations under the settlement agreement. Feature Realty sued in state court, seeking the appointment of an arbitrator. The City of Spokane removed the action to federal court. For the first time, the city alleged that it realized that the 1998 settlement was null and void because the City Council did not approve the settlement in an open public meeting. The federal district court dismissed the action on summary judgment, and Feature Realty appealed.