Recent Development by B. Eric Crooker
The City of New Orleans (City) operated the Morris F.X. Jeff Municipal Auditorium and the Mahalia Jackson Theater of Performing Arts at a deficit of $915,000 in 1999. The facilities employed nineteen classified civil servants. To help reduce the annual deficit, the City issued a request for proposals, seeking bids from outside management companies to operate the facilities. SMG Crystal LLC (SMG) was ultimately awarded the contract, offering ten of the nineteen civil servants continued employment at the facilities. The nine remaining employees were transferred to new positions within the City.
After SMG began operating the facilities, the New Orleans Civil Service Commission filed suit in Civil District Court seeking “a permanent injunction, declaring the Agreement void ab initio and prohibiting its implementation until such time as the Agreement had been submitted to and approved by the Commission.” In ruling, the district court enjoined the City from transferring the nine employees not hired by SMG and from executing any additional contracts relevant to the facilities prior to the Commission's approval of the agreement. In addition, SMG was enjoined from discharging any former City employees prior to that approval. The Louisiana Fourth Circuit Court of Appeals affirmed the judgment in a two-to-one decision, and the Louisiana Supreme Court subsequently granted writ applications. The Louisiana Supreme Court held that while the Commission lacked constitutional authority to block privatization contracts entered into by the City, it did have the constitutional right to investigate, approve, and judicially challenge the contracts, finding that the City must establish by a preponderance of the evidence that the contracts were entered into in good faith and not for politically motivated reasons. Civil Service Commission v. City of New Orleans, 854 So. 2d 322 (La. 2003).
About the Author
B. Eric Crooker.
Citation
78 Tul. L. Rev. 2293 (2004)