Confidential settlements spark controversy

In March of 2012, a teenager named Kyle Jones stole a Suburban in north Sioux Falls and led police on a high-speed chase on Cliff Avenue.

It ended when Jones ran a red light at 69th Street North and collided head-on with a van carrying Jade Thie and Derek Guindon home from a weeklong electrician job.

Thie was killed. Guindon was severely injured. Jones is serving a 50-year prison sentence.

Jones’ prosecution and housing were funded by taxpayers, but the chase also carried a hidden cost for the citizens of South Dakota.

Guindon filed a liability claim against the Sioux Falls Police Department for the accident, which the city settled confidentially.

It’s one of at least seven secret settlements paid by the city over the past 10 years through the South Dakota Public Assurance Alliance, which offers taxpayer-funded liability coverage to 400 cities, counties, townships and governmental organizations.

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Guindon’s settlement is unique even among the seven. No lawsuit was filed, and no judge sealed the case, yet every aspect of the claim and its resolution is a mystery.

The city of Sioux Falls won’t offer details on what mistakes the police department allegedly made to give rise to the claim, how much Guindon requested in compensation, how much he was paid, or indeed if he was paid at all.

The existence of the claim and the confidential settlement was made public only through an Argus Leader Media records request, and the details are slim.

Guindon’s name appears as a line item on a list of claims made against the city in 2012, and the confidential settlement is labeled “Thie, Jade, Et. Al” in a separate document from the Assurance Alliance.

The narrative in the first document reads “involved in pursuit, resulting in collision.”

Only one other claim, that of landlord Bonnie Murray, was settled confidentially without a lawsuit. The line item for that claim lists sewer backup damage in three eight-plexes as the action giving rise to the claim.

The litigated claims involved unpaid wages for wildland fire deployment, employment discrimination for age and gender, denied disability benefits and job interference. The amount of money paid in each is unknown.

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Confidential settlements using taxpayer money are frowned upon by open government advocates and many public agencies. Attorney General Marty Jackley says he won’t make confidential settlements in claims against the state.

While Jackley says he doesn’t want to second-guess decisions made by Sioux Falls City Attorney Dave Pfeifle, his position is that public settlements handled on the state level generally require openness.

“When boards are sued, judges are sued, generally, I take the position that settlements are not confidential. It’s a transparency issue,” Jackley said. “There are reasons why local governments wish to have it be a confidential settlement. It may involve other claims, it may involve continuing matters.”

A provision in South Dakota's open records law protects confidential settlements in court cases from becoming public. The law was intended to shield private parties involved in lawsuits, but governments in South Dakota have taken the stance that the law also allows them to make secret settlements, despite the fact they are public entities using taxpayer dollars.

In that regard, South Dakota is unique, according to national experts. Courts in other states have ruled that governments can't negotiate secret settlements because they violate state law. And lawmakers in other states have passed laws forbidding public entities from making confidential settlements out of fears that secret settlements could fuel corruption. Iowa law, for example, requires public entities to prepare a summary of settlements and states, "The settlement agreement and any required summary shall be a public record."

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Dave Bordewyk, head of the South Dakota Newspaper Association, says the notion of settling claims in secret “flies in the face of good government.”

“I would be curious to know how the city can defend making these claims confidential, particularly those that were settled without any litigation,” Bordewyk said. “I don’t think the law allows for that.”

Argus Leader Media took a similar position in a lawsuit against the city over another confidential settlement. That settlement, which did not originate as a claim of damage against the city, involved $1 million in payments over faulty siding installed on the Denny Sanford Premier Center.

Pfeifle told the Argus Leader that a lawsuit was pending, but the settlement came before any lawsuit was filed. When details of the payment were requested, Pfeifle declined, citing the confidentiality clause in the agreement.

Argus Leader Media argued that the state’s open records laws only allow for confidentiality of contracts, claims and payments under a judge’s order, but the city said the language of the law allowed for secrecy in contracts negotiated outside the courtroom.

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Judge John Pekas sided with the city, saying the language of the law allows for confidential contracts. Argus Leader Media is appealing that decision.

The city declined to comment on the details of the Guindon settlement beyond the narratives supplied as part of the records request.

“Everything regarding that claim is confidential,” said risk manager Mike Hall.