INTRADEPARTMENTAL CORRESPONDENCE

June 27, 2013
1.0

BPC #13-0235

TO:

The Honorable Board of Police Commissioners

FROM:

Inspector General, Police Commission

SUBJECT:

EMPLOYMENT LITIGATION AUDIT

RECOMMENDED ACTION
REVIEW and APPROVE the Office of the Inspector General’s Employment Litigation Audit.
DISCUSSION
As part of its focus on issues of risk management, the Office of the Inspector General (OIG)
conducted an audit of the Department’s responsibilities with regard to employment-related
litigation. This is an area of concern because from 2006 to 2012, Department employmentrelated litigation cost the City approximately $31 million. To evaluate Department actions, the
audit examined 27 lawsuits which were settled or adjudicated between 2007 and 2012.
As a result of the audit, the OIG developed seven recommendations intended to reduce the
number of lawsuits, to better track those lawsuits that do arise, and to better learn from closed
lawsuits. These actions collectively should improve the Department’s ability to reduce
employment litigation risks and costs.
I am available to provide any information the Board may require.

E-Copy – Original Signature on File with the Police Commission
ALEXANDER A. BUSTAMANTE
Inspector General
Police Commission
Attachment
c: Executive Director Richard M. Tefank
Chief of Police Charles L. Beck
Special Assistant for Constitutional Policing Gerald L. Chaleff
Department Risk Manager Beth D. Corriea
Captain Roseira C. Moreno, Commanding Officer of Legal Affairs Division

LOS ANGELES POLICE COMMISSION

EMPLOYMENT
LITIGATION AUDIT

Conducted by the

Conducted by the

OFFICE OF THE INSPECTOR GENERAL
ALEXANDER A. BUSTAMANTE
Inspector General

June 27, 2013

EMPLOYMENT
T LITIGAT
TION AUDIIT

PURPOS
SE
The Emp
ployment Littigation Aud
dit (Audit) was
w conductedd to review L
LAPD’s respponsibilitiess with
regard to
o employmen
nt-related litiigation and evaluate
e
the Departmentt’s compliannce with
applicablle policies, electronic
e
daatabase track
king systems,, costs assocciated with ddefending
lawsuits, post-lawsuiit analysis, trraining, and prevention ppractices.
GROUND
BACKG
Between July 1, 2006
6, and June 30,
3 2012, thee City of Los Angeles paaid approxim
mately
$110,000
0,000 for law
wsuits involv
ving Departm
ment employyees. As the chart below
w demonstrattes,
the Depaartment’s acttions that ressulted in thatt liability falll into one off four categoories: 1) police
professio
onal liability (e.g., claimss of excessiv
ve use of forrce, such as iin an officer involved
shooting)), 2) automo
obile liability
y (e.g., trafficc collisions) , 3) employm
ment practicces liability ((e.g.,
1
discrimin
nation, harasssment, and retaliation),
r
and 4) generral liability.

Total Awards
A
FY
Y2006/07
7 Ͳ 2011/12
$44,000,0
000

$31,0
000,000

$11 0,000,000

$31
1,000,000
$44,000,000

Police
Professional
Liability

Auto Liabillity

Employm
ment
Practicces
Liability

Gen eral
Liabbility

Total

A successsful risk management sy
ystem should
d address eacch of these ffour categoriies in an effoort to
reduce th
he Department’s overall liability. Fo
or the purposses of auditinng, howeverr, the OIG
focused on
o a single category,
c
em
mployment-reelated litigatiion, and expplored the Deepartment’s
practices in evaluatin
ng existing employment
e
lawsuits as w
well as deveeloping protoocols in
preventin
ng future onees.
On Januaary 10, 2007, the Mayor published Executive
E
Diirective No. 99, titled “Littigation Riskk
Managem
ment,” which
h set forth hiis requiremeents for manaaging all Citty-related litiigation. In tthe
executivee directive, the
t Mayor ex
xpects each City
C departm
ment to impllement speciific steps to
minimizee litigation costs. “Every
y Departmen
nt Head has a responsibiility to proviide leadershiip in
litigation
n risk management to con
ntinue to red
duce City payyouts and too reduce the nnumber of
claims filled. This responsibility includes asssigning, trainning, and suppervising higgh-level

1

For the pu
urposes of the Audit, the OIG
G did not consiider workers’ ccompensation aas a liability. W
Workers’
compensattion law is regu
ulated under the California Laabor Code andd is a form of innsurance.

Employment Litigation Audit
Page 2 of 10

managers to engage directly on these tasks. Department Heads will be held accountable for the
performance of these tasks and for progress in reducing the City's litigation risk and expense.”
The OIG consulted Executive Directive No. 9 for guidance in structuring this audit. The OIG
first examined the Department’s compliance with the tasks identified in the Mayor’s directive.
To perform this analysis, the OIG reviewed, among other things, the costs associated with
employment-related litigation, the manner of tracking specific lawsuits, and the training or other
actions that the Department implemented as a result of employee-related litigation.
METHODOLOGY
The Audit selected lawsuits that were completed and closed from January 1, 2007, to June 30,
2012, as its population. The five and one-half year period was chosen to provide a broad
spectrum of lawsuits. During that period, 99 employment-related lawsuits were closed.2 The
Audit judgmentally selected 27 of these lawsuits to review.3 Each case was selected based on
either a high initial demand amount by the plaintiff or a large payout by the City. Due to the
selection methodology, the audit results are not meant to be representative of the entire
population of closed employment-related lawsuits and focus instead on those cases that pose the
highest risk of exposure for the City.
The OIG conducted the Audit in accordance with generally accepted government auditing
standards. These standards require that the Audit is adequately planned, performed, and
supervised, and that sufficient, competent, relevant evidence is examined to provide a reasonable
basis for the results and conclusion.
OBJECTIVES
Objective 1: Determine if the Department has complied with Mayor’s Executive
Directive No. 9.
The OIG evaluated the Department’s practices in reviewing employment litigation and other
claims for compliance with the Mayor’s Executive Directive No. 9 (“Executive Directive”). The
Executive Directive sets forth a series of protocols that the Department must develop to evaluate
and review litigation and claims. The OIG designed the following tests to measure the
Department’s compliance with this Directive:

2

3

The Audit relied on the City Attorney-maintained database to identify those lawsuits closed in the scope period.

The Audit did not reinvestigate cases, but rather, reviewed those documents supplied by the Department and/or
City Attorney’s Office.

Employment Litigation Audit
Page 3 of 10

1) Determine if the Department received notice, and a copy, of any claim or lawsuit, within
10 days of the City’s receipt or acceptance of the claim/lawsuit service;
2) Determine if the Department discussed and determined with the City Attorney whether
early mediation or other settlement would be appropriate within 90 days of the City’s
receipt of claim or lawsuit;
3) Determine if the Department discussed and determined with the City Attorney whether a
statutory offer of settlement should be recommended to the charter-designated decisionmaking body at least six months before any scheduled trial date;
4) Determine if the Department discussed with the City Attorney whether an appeal should
be filed within two weeks before any deadline to file an appeal;
5) Determine if the Department thoroughly investigated the facts underlying any claim or
lawsuit within 90 days of the notice of the claim or lawsuit; and,
6) Determine if the Department evaluated whether the allegations in the claim/lawsuit and
the facts suggest a policy or practice change, the need for new or renewed training,
discipline, or reassignment within 105 days of the Department’s notice of the claim or
lawsuit and within 30 days following the conclusion of the lawsuit through settlement or
judgment.
The City Attorney’s Office is responsible for all employment-related litigation and currently has
approximately 20 attorneys and staff assigned to litigating these issues. The Department has
approximately 19 employees from its Legal Affairs Division assigned to the City Attorney’s
Office to assist with this litigation. These two sets of employees regularly interact on
employment litigation issues. The OIG therefore attempted to audit the Department’s case files
to determine, among other things, whether notations of these communications and any resulting
work were captured in the case file.
The OIG selected 27 of the 99 closed lawsuits for its Audit sample. The Department informed
the OIG that these files were not available for review.4 According to the Legal Affairs Division,
the investigating officer is responsible for maintaining and updating these files until the case is
closed, when these files are dismantled and/or destroyed.5 Because these historical files were
unavailable, the OIG requested two active lawsuit files to perform the testing. These two active
files, however, did not contain any of the information necessary for the OIG to perform the
required tests. Legal Affairs Division confirmed that the review of additional open cases would
yield similar results. Based on the lack of available evidence, the Audit was unable to determine
the Department’s compliance with the requirements tested.
Objective 2: Determine if Department’s Claim/Lawsuit Information System is accurate.
The Department’s Legal Affairs Division has an electronic database, the Claim/Lawsuit
Information System (CLIS), that is used for tracking claims and lawsuits. This database was
specifically designed to collect necessary information related to claims and lawsuit so that the
4

Legal Affairs Division files are referred to as Case Book Files. The Division provides written guidelines on the
structure and content of the files.
5

Conclusion of a lawsuit occurs at dismissal, settlement, or verdict without regard to appeal.

Employment Litigation Audit
Page 4 of 10

Department’s management would have the necessary information to make informed litigation
and risk management decisions.
The Audit’s second objective was to determine whether CLIS included complete and accurate
information. CLIS contains 49 separate data fields that capture a variety of information,
including general descriptions of a specific case, the involved parties in a claim/lawsuit, trial
status, status of related complaint investigations, and the financial outcome of a claim/lawsuit.
The OIG attempted to audit 30 of these data fields for accuracy and completeness against source
documents found in Legal Affairs Division’s case files. Because these historical files do not
exist, the OIG was unable to evaluate the accuracy and completeness of these data fields.
Although the Audit could not test the Department’s database for accuracy, the Audit did test the
30 data fields for completeness. The OIG attempted to gauge the completeness of the
Department’s data fields by comparing them to the City Attorney’s Office’s litigation database.
The City Attorney’s Office maintains a litigation database similar to that of Legal Affairs
Division and both systems share similar data fields. The OIG reviewed the database entries for
specific cases and learned that the two databases often contained inconsistent information. For
example, in several cases, the databases for Department and the City Attorney’s Office had
different entries for the claim/litigation status, key dates, and payout amounts for the same cases.
In other cases, the Department’s data fields were empty, while the City Attorney’s database had
an entry.
The results revealed that the 30 CLIS data fields tested had a completion rate ranging from 0% to
100%. Approximately half of the fields yielded completion rates of 90-100%, while about a third
had completion rates of less than 50%. Included in the latter group were fields designed to
collect substantive data such as area of occurrence, verdict status, and which party the verdict
was for. 6
Objective 3: Determine costs for employment-related lawsuits, regardless of their outcome.
The Audit set out to determine the cost for each lawsuit in its sample. These costs are generally
broken into two distinct categories. The first category of costs involves cases where the City
settles a particular lawsuit or a jury awards the plaintiff damages. This is generally a concrete
figure. The second category involves the costs to the City that are inherent in defending a case,
regardless of outcome. The most recognizable costs to the City are the salaries of those
individuals involved in defending the lawsuits. The City Controller’s Office has determined that
the internal costs to the City can be calculated by determining the salaries for the individuals
involved in defending the lawsuits and then adding the employee benefits (e.g., medical
insurance and life insurance) and overhead costs (e.g., building and utility expense, shared City
Administration & Support, and Central expenses).

6

See Exhibit A.

Employment Litigation Audit
Page 5 of 10

With the City Controller’s information related to internal costs, the OIG was able to calculate the
annual internal costs for the City Attorney and Department’s litigation staff for all employmentrelated litigation from 2006 to 2012.7 Based on the available information, the City’s internal
costs to defend employment-related lawsuits for Fiscal Year 2011/12 were $7.8 million. The
cost breakdown revealed expenses of $4.2 million for the Department and $3.6 million for the
City Attorney’s Office. The total internal costs for the following six-year period were about $42
million.
Employment Litigation Liability
Fiscal Year
FY2006/07
FY2007/08
FY2008/09
FY2009/10
FY2010/11
FY2011/12
Total

Lawsuits
Closed8
12
17
18
15
19
18
99

Awards or Settlement
Paid by City
$ 2,611,127
$ 1,318,463
$ 3,652,622
$ 4,992,655
$ 8,358,144
$10,445,146
$ 31,378,157

Litigation Costs
$ 6,803,374
$ 7,179,249
$ 7,331,331
$ 7,164,643
$ 6,442,758
$7,764,903
$ 42,686,258

When the OIG attempted to determine the litigation costs for each lawsuit, it learned that neither
the Department nor the City Attorney’s Office track the number of hours an individual worked
on a particular case. Although the OIG can calculate the amount the City paid in a particular
case to satisfy a jury award or settlement, without knowing the number of individuals working on
a particular case or the hours devoted to that case, the OIG is unable to calculate the litigation
costs for any of the cases within its sample and therefore is unable to determine the total costs to
the City related to a specific case.9
Overall, the 27 cases included in the OIG’s Audit sample resulted in a total of nearly $25.5
million in payouts, 81 percent of the total employment-related litigation payouts during that
period. The OIG first analyzed lawsuits that the City Attorney’s Office settled. Of the 27 cases
in the Audit sample, 11 (41%) were settled in lieu of trial. The length of time it took to reach a
settlement for these cases varied widely but averaged 2.2 years. Settlement agreement awards
averaged $500,000, but ranged from $75,000 to $2,250,000. The following table details the
nature of the lawsuits and costs associated with the settlement of the cases.

7

Salaries and staffing were adjusted annually to reflect accurate expenses for each fiscal year in the Audit sample.

8

The closed case data was furnished by Legal Affairs Division.

9

The amount of annual expense to defend employment lawsuits is not an estimate. Regardless of how costs are
allocated for individual cases, the City’s defense costs for fiscal year 2011/12 were close to 8 million dollars. For
the 6 years encompassed by the Audit, those costs totaled over 42 million dollars.

Employment Litigation Audit
Page 6 of 10

Lawsuits Settled in Lieu of Trial
Case No.

Days

Litigation Category

Settlement Costs

BC34646
CV11-0039
BC433073
BC340767
BC326467
BC457299
BC426816
BC435392
BC392939
BC346672
BC383678
Totals
Averages

1,246
262
646
487
1,374
1,680
810
347
1,293
313
294
8,752
796

Sexual Harassment
Retaliation
Employment
Gender Discrimination
Medical Discrimination
Retaliation
Race Discrimination
Sexual Harassment
Retaliation
Medical Discrimination
Medical Discrimination

$2,250,000
$750,000
$650,000
$600,000
$290,000
$285,000
$275,000
$175,000
$90,000
$75,000
$75,000
$5,515,000
$501,364

The OIG then analyzed lawsuits where there were verdicts. In the Audit sample, 13 lawsuits
received a trial verdict. In this group, the plaintiffs received verdicts in their favor in 10 of these
13 lawsuits. The length of time it took to conclude these cases averaged three years. Plaintiff
awards ranged from $85,000 to $4.3 million and averaged about $2 million dollars. The chart
below details the nature of the lawsuits and costs associated with trial of each case.
Lawsuits with Favorable Outcome for Plaintiff
Case No.

Days

Litigation Category

Jury Awards

11-44137
BC3650
BC361139
BC383784

918
1,246
896
1,302

Retaliation
Retaliation
Retaliation
Medical Discrimination

$4,314,765
$4,014,846
$3,602,000
$3,159,596

BC406133

370

Sexual Harassment

$2,701,327

BC365114
BC341480
S167682

1,625
1,341
1,370

Retaliation
Race Discrimination
Sexual Harassment

$825,000
$635,798
$344,489

BC398970

610

Gender Discrimination

$281,850

BC394475
Totals
Averages

1,346
11,024
1,102

Gender Discrimination

$85,000
$19,964,670
$1,996,467

Employment Litigation Audit
Page 7 of 10

The OIG lastly analyzed lawsuits where the City Attorney’s Office was successful. Six lawsuits
in the Audit sample had favorable outcomes for the City. As previously discussed, the Audit
sample was not selected at random and is not intended to reflect an accurate proportion of the 99
lawsuits with favorable outcomes for plaintiffs verses favorable outcomes for the City.10 As
noted above, three cases resulted in a verdict for the City. Although one of these was lost at first
appeal, the City prevailed in an appeal of its own that accounted for the final favorable outcome.
The remaining three favorable outcomes for the City were as a result of dismissal by the trial
judge.
The length of time it took to conclude these cases averaged 2.3 years. Although the City did not
pay any awards for these lawsuits, it did incur external and internal defense costs. As previously
indicated, the OIG was unable to calculate these costs without additional information from the
Department and the City Attorney’s Office. The chart below details the nature of the lawsuits
and costs associated with each case.
Lawsuit with Favorable Outcome for City
Case No.

Days

Litigation Category

Award

B226685

1,806

Sexual Orientation

$0

CV09-5536

1,127

Sexual Harassment

$0

B218932
BC460149
BC413590

889
377
356

Race Discrimination
Sexual Harassment
Race Discrimination

$0
$0
$0

BC385444

456

Retaliation

$0

Totals
Averages

5,011
835

$0
$0

Objective 4: Determine if the Department initiated a complaint, as required, for each
employee-related lawsuit.
The Department requires that a personnel complaint is filed any time misconduct is alleged
against an employee. This policy extends to the workplace when one employee alleges
misconduct against another. Therefore, every employment lawsuit requires that a personnel
complaint be filed and, as a matter of course, thoroughly investigated. To help ensure that this
requirement is met, a copy of each employment lawsuit is forwarded to Internal Affairs Group
(IAG). In turn, IAG is responsible for initiating a complaint, if a complaint is not already on file.
The Audit tested to determine if this requirement was met. The results of the test revealed that
all but one lawsuit had a corresponding complaint, for a compliance rate of 96 percent.

10

The Audit sample was selected judgmentally based on the highest amount of award and the highest initial
demand.

Employment Litigation Audit
Page 8 of 10

In the OIG’s sample of employment-related lawsuits, the most common allegation of misconduct
was retaliation. Retaliation is defined by the Department as an adverse employment action11
taken against an employee for engaging in protected activity.12
Objective 5: Compare the results of each lawsuit to the results of the related complaint
investigation(s).
The OIG examined both employment-related complaints and lawsuits to determine whether the
Department examines the specific facts and circumstances surrounding each case to determine
what specific training it can provide its management on employment-related matters to improve
its operations and minimize the likelihood that similar complaints or lawsuits would occur in the
future.
The OIG reviewed 26 personnel complaint investigations and their related employment lawsuits.
During this review, the OIG determined that 20 of the 26 the lawsuits resulted in settlements for
the plaintiff or verdicts against the City. The OIG evaluated each of these complaints and
lawsuits to determine what actions the Department undertook to minimize the reoccurrence of
similar lawsuits in the future.
Although the Department regularly provides managers with training on broad employmentrelated issues, the OIG did not find evidence that the Department provides training to its
managers on lessons learned from these cases or specific guidance on how to handle particular
employment-related issues. Furthermore, the Department does not have a system to identify and
analyze the at-risk behavior responsible for the adverse outcomes of these cases and then
compare these findings with current Department policies and practices.

11

An adverse employment action includes an action that would cause a reasonable employee to be deterred from
engaging in a protected activity or an action in direct response to an employee engaging in a protected activity.

12

Protected activities include opposing, reporting, or participating in any claim, lawsuit, or investigation concerning
unlawful discrimination or sexual harassment, filing a grievance or participation in any unfair labor complaint,
taking advantage of any labor right or benefit, reporting misconduct of another Department employee and
supporting, assisting, or cooperating in a misconduct investigation.

Employment Litigation Audit
Page 9 of 10

RECOMMENDATIONS
Below is a summary of the OIG’s recommendations. The Department generally agrees with each
recommendation.
1. The OIG recommends that the Department review Executive Directive No. 9 for all sections
applicable to LAPD and implement policies and procedures designed to bring the
Department into compliance with the Mayor’s directive.
2. The OIG recommends that the Department implement the Employee Mediation Program to
reduce the number of employee-related lawsuits proceeding to settlement or trial. The
program, developed by the OIG in consultation with the Department, the City Attorney’s
Office and the Los Angeles Police Protective League, will provide a mechanism for the
development of internal remedies for employee grievances, where appropriate.
3. The OIG recommends that the Department and the City Attorney’s Office conduct formal
case reviews whenever a case has a scheduled settlement conference or trial approaching. In
order to quickly identify those cases suitable for settlement, the formal review should require
the parties to discuss the facts of the case, all claims and defenses, the City’s potential
financial exposure and the attorney’s valuation of the case for settlement.
4. The OIG recommends that the Department create a document retention plan specifically for
the litigation files and related notes for each employment-related case.
5. The OIG recommends that the Department implement a system to ensure that the significant
information for each lawsuit is timely and accurately entered into the appropriate fields
within the Claim/Lawsuit Information System or a comparable database.
6. The OIG recommends that the Department evaluate all employment-related complaints,
regardless of outcome, to identify possible areas for improvement and then provide managers
the targeted training necessary to implement those improvements.
7. The OIG recommends that the Department review with the City Attorney’s Office the facts
and circumstances for each lawsuit where there is a settlement or verdict adverse to the City
to determine the specific issues that created the liability or litigation risk. Furthermore, the
OIG recommends that training is developed to address the “lessons learned” in each case and
that such training is disseminated to Department staff members in a relevant manner with a
goal of preventing similar future behavior.

Employment Litigation Audit
Page 10 of 10

EXHIBIT A
Data Completion Rates of 30 CLIS Data Fields Tested
(sorted from lowest to highest completion rate)
Data Field
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Incident Time
Date Claim Concluded
Final Cause of Action
Incident Date
Claim No.
Date Claim Filed
Location of Occurrence
Area of Occurrence
Verdict Status
Verdict for:
Trial Date
Appeal
Supervisor Review
Complaint No.
Date Lawsuit Concluded
Payouts Completed
LAD Investigator
City Attorney
Case Status
Date IAG Response
Date of Report
Claim/Case Name
Type of Case
Jurisdiction Court
Case No.
Date Lawsuit Filed
Plaintiff Attorney
Initial Cause of Action
Involved Persons Listed
Complaint to IAG

%
Complete
0
7
15
19
26
30
33
37
37
41
44
60
63
70
74
85
93
93
96
96
100
100
100
100
100
100
100
100
100
100