REPORT TO MAYOR AND COUNCIL NO. 98-8 CA

DATE: August 18, 1998

SUBJECT: SETTLEMENT IN PRATER AND PELL, ET AL. v. CITY OF SUNNYVALE, ET AL. (Santa Clara County Superior Court No. CV 772326)

On March 2, 1998 a lawsuit was filed against the City concerning its application of Vehicle Code provisions on towing and impoundment of vehicles. The lawsuit was filed by the Public Interest Law Firm with assistance from the Palo Alto office of Heller Ehrman White & McAuliffe and presented as a class action for all those "similarly situated" to the named plaintiffs. Upon review of the allegations and the statutory provisions, it was discovered that certain changes to the law which went into effect January 1, 1997 had not been fully understood by Public Safety personnel dealing with impounded vehicles. As a result, after being legally towed, some vehicles were inadvertently kept longer than they should have been. Thus, settlement negotiations have been conducted and a settlement agreement reached which is now being presented for City Council approval.

The specific incident giving rise to the lawsuit was a vehicle stop in May 1997. The DMV report indicated the driver was driving with a suspended license. His driver’s license was confiscated and the vehicle was towed by Sunnyvale Towing, pursuant to the City's towing rotation list. The driver, who was also the registered owner of record, refused to sign for the certified letter sent by Public Safety detailing the procedures to be followed for retrieving the car, and after a period of time Sunnyvale Towing sold the car under state lien provisions. Plaintiff Pell was the driver and Plaintiff Prater claims to be the legal owner.

At issue in the case is the City's compliance with Vehicle Code ' 14602.6, which was initially added to the law effective January 1996. Plaintiffs alleged that the City improperly and routinely held some vehicles towed under ' 14602.6 for thirty days even though the owners of the vehicles may have been entitled to return of their vehicles earlier under express statutory exceptions provided certain conditions were met. The City's procedures were in full compliance with the law as it was originally enacted. Unfortunately, there were several changes to the law the following year which provided for the earlier return of some vehicles, and not all Public Safety personnel dealing with impounded vehicles were aware of the changes.

Some of the individuals who were eligible to retrieve their vehicles early never claimed the certified letters the City is required by law to send them and many never contacted the City once they received their letters to inquire about retrieving the vehicles or to ask for a tow hearing. However, because there were instances where vehicles were not returned at the earliest opportunity permitted by law, a settlement has been negotiated. Public Safety has revised its procedures and now is in full compliance with the Vehicle Code provisions.

The provisions of the settlement agreement consist largely of paperwork, training and processing revisions, and potential monetary payouts to aggrieved members of the class, plus the payment of some attorneys fees. The class consists of those people whose vehicles were improperly kept for more than the minimum period of time and is calculated to be a class of 82 out of 769 total tows between January 1, 1997 and May 31, 1998. Of the 82, it appears that 27 actually were released fairly promptly and that 8 never claimed the certified letters. Only 15 of the 55 cars held for over 30 days were retrieved by their owners.

In addition to updating procedures and providing training for personnel involved with tows and impounds, the City has agreed to post certain notices and to request that tow operators post certain notices. Members of the class will receive letters advising them that they may be eligible for reimbursement payments, depending upon how long the vehicle was kept and whether or not they claimed the certified letters advising them of the procedures for retrieving their vehicles. The maximum any claimant can obtain by simply filing paper work is $575 (storage charges are $25/day). Claimants who did not pick up their certified letters or who believe there are other special issues in their particular situation are required to use an alternative dispute resolution (ADR) procedure. The ADR procedure calls for a maximum one hour hearing before a retired judge, who can award any amount between $0 and $2,500.

The settlement calls for a combined attorneys' fees and costs payment by the City of $35,000. Plaintiffs' attorneys represent they have incurred attorneys' fees and costs in excess of $200,000.

The precise fiscal impact will not be known until the notices are sent to potential claimants and those individuals respond. However, staff calculates that the maximum cost to the City for the full settlement will not exceed $67,000.

Posting of the Council agenda. The attorneys for the plaintiffs were advised this matter would be presented to Council at the August 18, 1998 meeting. Once the settlement is agreed to, potential claimants will receive formal notice of the opportunity to file a claim.

1. Approve the settlement.

2. Do not approve the settlement and continue to litigate.

1. Alternative 1, approve the settlement.

Valerie J. Armento
City Attorney

RTC\Prater/Pell Towing Case