The recent settlement of the RTA's dispute with ousted contractor Glenn Haydel is an example of the latter in action. The result -- a $650,000 settlement to Haydel -- is good for both sides. It hasn't been portrayed that way in some quarters, but lawyers don't get to write the stories.
As a lawyer, I was not involved in this case in any manner, but I was fascinated with it because of the personalities as well as the issues involved. There was some great lawyering on both sides, but in the end this case needed to settle. Both sides had too much to lose.
Some have suggested that the RTA never should have paid such a handsome settlement to Haydel, the uncle of former Mayor Marc Morial who held a lucrative consulting contract with the RTA during his nephew's tenure at City Hall. That contract was extended and fattened near the end of Morial's last term by then-RTA chair Robert Tucker, himself a veteran Morial insider and a noted practitioner of the political arts and sciences (read: patronage hog).
Haydel's firm, Metro New Orleans Transit Inc., had a history of being peddled from one mayoral crony to another each time there has been regime change at City Hall. It almost happened again after Mayor Ray Nagin took office -- his brother-in-law agreed to buy it from Haydel -- but hizzoner put the kibosh on the deal. Shortly thereafter, new RTA chair Jimmy Reiss unilaterally canceled Metro's contract and effectively called Haydel a crook. Litigation ensued, with Haydel claiming defamation and breach of contract, and the RTA alleging the civil equivalent of racketeering.
On top of all that, the feds are investigating RTA contracts and other goings-on from the Morial Era. The settlement of the RTA-Haydel lawsuits has no effect on that investigation.
So, what's so good about paying Uncle Glenn $650,000 if he was indeed ripping off the RTA (and, by extension, the taxpayers)?
Consider first what the RTA gains by settling. The single best thing about any settlement is certainty. Once settlement documents are signed and lawsuits are dismissed "with prejudice," it's over. For good. No appeals.
Equally important, there's no more risk. Each party may feel it could have done better at trial, but going to trial is always a crapshoot. You never know what 12 New Orleanians will decide behind closed doors. Put another way, consider what RTA had to lose. Metro's enhanced contract was valued at $3.7 million over five years -- plus a $500,000 termination fee. Haydel claimed he was owed $900,000 in unpaid fees, plus the termination fee, plus defamation damages. Reiss' allegation of skullduggery notwithstanding, the Haydel and Morial names are still golden in the African-American community, and it's a safe bet the jury included at least 10 people (if not 12) who voted for somebody named Morial several times.
The RTA's exposure was probably $2 million or more -- plus attorneys' fees that already reached $400,000. The settlement is a pricey compromise, but it's certain, it's well below the potential exposure, and it eliminates risk.
As for Haydel, he gets to walk away with some money and some dignity. Bear in mind, he also had high-priced attorneys to pay -- and he'll likely incur more attorneys' fees in light of the federal investigation. The allegations in the RTA's suit against Haydel read like a criminal indictment. It's not likely he'll plop that $650,000 down on a new boat or condo. That money probably is already committed to, if not spent on, more urgent matters. Ultimately, both sides can now move on -- and that's always a good thing after parties have been crossing swords for several years. Sooner or later, everybody's arms get tired. When that happens, as it obviously did here, it's time to put away the swords, cut the losses and move on.