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11/7/2012 12:32:00 PM Email this articlePrint this article 
PUD settles Jarvis, Smith lawsuit for $985,000

By Michelle Lovato

It cost the PUD nearly $1 million to settle two wrongful termination suits but officials say it was the least expensive way to move forward.

More than 18 months after Chelan PUD General Manager John Janney fired two high-level administrators for mishandling the PUDs financially beleaguered fiber optics program, former Executive Manager of Operations Joe Jarvis, and former Managing Director of Engineering John Smith took their awards and walked away.

"The settlement approved by PUD commissioners in a special meeting (Oct. 30) resolves all claims by the plaintiffs against the District," said PUD spokesman Steve Lachowicz. The district will pay a total of $985,000: $689,500 to Jarvis including about $219,000 in attorney's fees and $295,500, to Smith, including about $94,560 for attorney's fees. Chelan County PUD Commissioners voted 5-0 to settle the suit.

"It was a business decision," said Commissioner Ann Congdon. "I don't like settling because I believe we collectively did the right thing in terms of the fiber program, but we did get an adverse ruling by the first judge in terms of our process. It just didn't make sense to take it to trial."

At their termination, Jarvis, a 31-year PUD employee, and Smith, a 10-year employee, each demanded a severance package. Jarvis asked for $950,000. Smith asked for $750,000. When the PUD denied their severance packages, the men sued the PUD in Chelan County Court asking the court to determine a "damages" award for lost pay and other costs incurred since the incident.

At the time of their terminations, Jarvis made $201,210 annually and Smith made $169,680 a year.

East Wenatchee Mayor and attorney Steve Lacy filed the two lawsuits that were folded into one lawsuit worth $1.7 million on behalf of Jarvis and Smith in February 2011.

Among the items alleged against the PUD and Janney in their lawsuit was that Janney violated Jarvis and Smith's right to due process at their termination. On June 24, U.S. District Court Judge Thomas Rice ruled that Jarvis and Smith were fired Feb. 7, 2011 without the due process that is guaranteed to them under the U.S. Constitution. In addition, Rice ruled that a jury must decide if the men were fired without cause.

In July, Chelan County PUD General Council, Carol A. Wardell said the PUD appealed the Chelan County Court decision to a federal court July 6 because the due process issue is a federal, constitutional matter. In October, Wardell recommended PUD commissioners should settle the lawsuit to avoid further risk of a jury trial.

"This settlement completely resolves the litigation and removes the risk of a potential jury verdict and ongoing legal and litigation fees," said Carol Wardell, District general counsel in a press release. "While we remain confident that the actions taken were the right ones for the right reasons, the case presented legal issues that made settlement the right decision at this time."

In the settlement, reached Oct. 30, the PUD admitted to no wrongdoing.

"In April 2012, the PUD adopted a new strategic plan for the fiber system after extensive public input and a thorough business review by an independent expert. The PUD recently hired a 23-year veteran of the telecommunications business, Mike Coleman, to manage the fiber program going forward," Lachowicz said.

Smith now works for NoaNet. PUD commissioners voted unanimously to withdraw its membership in NoaNet July 2. The commission made its decision after realizing that the PUD would be obligated to "back" debt of NoaNet if it can't cover its expenses.

Jarvis is the former Board Chairman for the Town Toyota Center. Jarvis was overlooked by the Port of Douglas County commissioners who chose East Wenatchee Consultant Lisa Parks instead of Jarvis for a position as Port Executive Director in March 2011.

Kacie Thrift may be reached at 782-3781 or

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