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Sore winners in CityNorth subsidy fight

November 8, 2014

The City of Phoenix and a developer are asking that the Goldwater Institute be whacked with $687,000 in attorneys’ fees and court costs for challenging the city’s $97 million subsidy to the CityNorth shopping center.

The institute lost at the trial court and is now appealing.

The outsized fees request should alarm everyone, irrespective of how you feel about the Goldwater Institute or retail subsidies.

The claims of the developer would actually be amusing if the potential consequences weren’t so dangerous.

The developer’s lead lawyer, Lisa Hauser of Gammage and Burnham, apparently, like Hillary Clinton, believes in vast right-wing conspiracies.

Attorneys’ fees should be awarded, according to Hauser, because the Goldwater Institute litigated in bad faith. It actually believes that the precedent governing the state constitution’s anti-subsidy clause, under which the challenge was primarily brought, stinks and should be overturned. In court, however, it didn’t challenge the precedent. Instead, the institute argued that it applied and that the CityNorth subsidy violated it.

To support this conspiracy theory, Hauser cites all sorts of stuff that happened outside the courtroom: books and articles that Goldwater lead litigator Clint Bolick has written, various things other Goldwater staffers have written and said in various contexts.

Now, it is not at all unusual for lawyers to try to win their cases on the narrowest grounds possible. If you think it is possible to win your case under existing precedent, it makes sense to try to win it on that basis, even if you think the precedent stinks.

Moreover, precedents are often subtly changed in the course of their application. That’s what happened in the Bailey’s brake shop case.

Before it, courts largely looked the other way when cities condemned private property to turn it over to other private parties, even though the state constitution also prohibits that. The Court of Appeals in the Bailey’s case didn’t explicitly overturn those look-the-other-way precedents. However, everyone knew the game had changed. Cities no longer had carte blanche to condemn private property to give to private developers based upon vague claims of generalized public benefits.

There is certainly reason to believe that the same thing might happen with the anti-subsidy clause. The prevailing precedent provides a two-pronged test: Is there a public benefit? And is what the government paid proportionate to what it got?

The precedent Wistuber involved a school district paying for part of the salary of a local union president to do things other than teaching. The district claimed that the other things were beneficial to it, but the plaintiffs said it was an illegal subsidy of the union.

Now, paying a union chief $19,200 to engage in district-related activities is obviously quite different than paying a developer $97 million to provide free parking spaces at a mall. So, it is quite plausible that a higher court, where these things get changed, might decide that the definitions of public benefits and just consideration might need to be tightened without directly overturning Wistuber.

Of all the outside stuff Hauser cites, only one is actually directly on point. And that is an analysis of the anti-subsidy clause by former Goldwater staffer Benjamin Barr, which indeed concluded that Wistuber was irredeemably stinky. One possibility is that perhaps Barr and Bolick simply disagree about how stinky Wistuber is.

I know that not only to be possible, but in fact to be the case. After Barr’s paper appeared, I asked Bolick, who was one of Bailey’s lawyers, whether he intended to challenge the CityNorth subsidy under the existing precedent or try to use the case to change the precedent. He told me that he didn’t share Barr’s bleak assessment of Wistuber and intended to challenge the CityNorth subsidy under it.

Of course, you may not want to believe me. I’m apparently a full-fledged member of the conspiracy.

In her request for attorneys’ fees, Hauser writes, “the institute complained that this court’s sophistry’ had rewritten the constitution.” Actually, the institute didn’t make that complaint. I did, right here in my column for the Arizona Republic. The institute did distribute my comments to its email list, but they were clearly identified as mine as published by the newspaper.

Now, I certainly believe that the world would be a better place if judges paid more attention to what I wrote. But assessing attorneys’ fees against the Goldwater Institute in part for something I wrote is beyond ludicrous.

To check my instincts, I asked Tim Hogan, public interest litigator extraordinaire for the left, about all this. He said that the court’s response to what Bolick and others wrote or said outside the context of the litigation should be: “So what?”

Believe it or not, Phoenix’s request for attorneys’ fees is even more of a stretch. It’s based upon a statute governing attorneys’ fees in contract disputes. In Wistuber, the court rejected a comparable request because of the chilling effect it would have on the willingness to challenge unlawful governmental action.

Chilling such challenges is clearly what these attorneys’ fees requests are intended to do.

Developers and their lawyers might be expected to act like bullies. The City of Phoenix, however, should be ashamed of itself.



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