An Elected Official's Desire to Exercise First Amendment Rights Can Prove Costly

August 8, 2012

By: Richard S. Finkel

One would think that an elected official would be free, if not obligated, to express his/her opinions on a matter of public interest without fear of financial repercussion.  Sometimes, though, as the decision in Matter of Lancaster v. Incorporated Village of Freeport teaches us, the exercise of such freedom may come with a cost.

The case arose when a municipality’s statutory obligation to defend and indemnify its elected and appointed officials clashed with the desire of a minority of those officials to voice opinions critical of a settlement made on their behalf and on behalf of the municipality that they represented.

The municipality’s duty, which arises under the Public Officers Law, is analogous to an insurance company’s contractual obligation to defend its insured.  The duty is conditioned upon an official’s cooperation in the defense of the claim, and a failure to cooperate could result in a disclaimer of coverage.  Like the insurance company, the municipality seeking to disclaim coverage would have to demonstrate that it:  (1) acted diligently in seeking to bring about the official’s cooperation; (2) its efforts were reasonably calculated to bring about the official’s cooperation; and (3) the attitude of the official, after cooperation was sought, was one of willful and avowed obstruction.

That brings us to Lancaster, where a majority of the Village Board wished to resolve a costly and controversial claim, but a potentially vocal minority did not.  Not surprisingly, the approval vote was split along political lines.  When it came time to execute the stipulation of settlement, however, that voting minority chafed at the requirement that they consent to a non-disparagement clause which served to prevent public criticism of the resolution.  Their refusal jeopardized the entire settlement.

The majority of the Board responded by voting to terminate the dissenting officials’ defense and indemnification.  How does that action hold up against existing precedent?

In Bond v. Floyd, 385 U.S. 116 (1966), the United States Supreme Court explained that:

Legislators have an obligation to take positions on controversial political questions so that their constituents can be fully informed by them, and be better able to assess their qualifications for office; also so they may be represented in governmental debates by the person they have elected to represent them.  We therefore hold that the disqualification of Bond from membership in the Georgia House because of his statements violated Bond’s right of free expression under the First Amendment.

The Supreme Court also recently made clear in Nevada Commission on Ethics v. Carrigan, 131 S.Ct. 2343 (2011), however, that an elected official’s First Amendment rights are not unfettered.  At issue there was an ethics law requiring public officials to recuse themselves from voting on or advocating for the passage or failure of a matter in which he/she had a conflict.  The Court gave the law its blessing.  The act of voting was not protected speech, and the advocacy preclusion was deemed a reasonable time, place, and manner restriction.

So how much protection did the First Amendment provide to the dissenting officials in Lancaster?  Not much.  The Village resolution was upheld, both at the trial court level and on appeal.

The lower court upheld the resolution after employing a balancing test.  It found that consent to a non-disparagement clause was a reasonable concession when considered against the “benefits achieved by the petitioners from the settlement.”

The Second Department made no reference to a balancing test or to any risk-benefit analysis.  It simply held that the refusal to execute the non-disparagement clause constituted willful and avowed obstruction and justified the disclaimer, and that the clause, in and of itself, did not constitute a prior restraint on speech.

Lancaster was limited to the circumstances of the case, thus leaving open the question as to whether a non-disparagement clause within the context of a municipal settlement can ever constitute an unlawful prior restraint of an elected official's speech.  However, Lancaster serves as a cautionary flag for elected officials, who if confronted with such a clause (for example, in an agreement to settle an employment discrimination case or an employee discipline case), must seriously consider if rejecting it to voice a dissenting opinion is worth the risk of personal financial exposure.