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Patrick Springer, Published January 09 2009

Traffic tickets suit could cost Fargo millions

Fargo disputing liability but bracing for possible pay-up

Brace yourselves, Fargo taxpayers, for some sobering math involving excessive traffic fines.

You are the insurance company that must cover a class-action lawsuit involving 53,235 drivers whose traffic fines exceeded limits set by state law.

If damages are awarded – no liability has been determined in the case so far – the city of Fargo estimates the amount of the excessive fines could range from $1.6 million to less than $4.5 million.

“In terms of exposure, those are the numbers you’re looking at,” said city attorney Erik Johnson, who added that the city is disputing liability.

The range of potential damages is wide because it depends, among other factors, on how far back in time the judge determines the excessive traffic tickets should be counted in assessing damages.

One possibility would date back to 2001, when a trial judge first ruled the city’s higher fines illegal, or 2006, when a second judge came to the same conclusion, as others later did, including the North Dakota State Supreme Court.

The longer the time span, the greater the number of tickets with excessive fines – and therefore the higher the potential damages.

Fargo Mayor Dennis Walaker said the city’s financial reserves could cover the liability – but would reduce money available for other uses.

“We do have enough funds that are set aside for tough times,” he said.

Walaker initially estimated the city’s possible damages exposure could be as high as

$8 million, a figure that included the amounts of legal fines.

The mayor said the case remains in the early stages, and the city has not yet been able to appeal U.S. District Judge Rodney Webb’s determination that Stephanie Sauby’s U.S. constitutional rights were violated – the threshold to qualify as a federal case.

That step can’t be taken unless and until the city is found liable for damages.

Meanwhile, Fargo is rare and perhaps unique among cities in the state that have elected to insure themselves against possible general liability claims.

Bismarck, Grand Forks, Minot, West Fargo and the vast majority of municipalities in the state decided they are not large enough to self-insure, said Steve Spilde, chief executive officer of the North Dakota Insurance Reserve Fund, a fund of local units of government.

“The larger you are, the more feasible it becomes to at least do some self-insurance,” Spilde said.

By law, liability for local units of government is capped at $250,000 per individual claim, or $500,000 per occurrence, but Spilde said it wasn’t clear how those limits would apply in a class action, where an award is divided among the group of plaintiffs.

The city carries property insurance and insurance for its motor fleet, but insures itself for general liability claims, said Kent Costin, Fargo’s finance director, who declined to elaborate on the potential fiscal ramifications of a multimillion-dollar award in the fines case.

“Until it’s decided, it’s all speculative,” he said. “Whatever it is, it is. We’ll have to deal with that when it happens.”

Lawyers for the plaintiffs are preparing recommendations for notifying the 53,235 class members.

The proposal will involve notification letters as well as a hot line and Internet site to keep class members informed and to answer questions, said Tim Purdon, a Bismarck lawyer who is representing Sauby and the other plaintiffs.

The plaintiffs have solicited a bid from a consulting firm, and the city also will submit its bid for notifying class members.

In 2007, Sauby of West Fargo brought her suit against the city of Fargo, claiming its excessive traffic fines violated her constitutional rights to due process and equal protection.

Readers can reach Forum reporter Patrick Springer at (701) 241-5522