Wood Law Firm, P.A. of Russellville is pleased to announce on April 24, 2019, the Circuit Court of Faulkner County issued preliminary approval of the settlement in the matter of Shumate v. City of Conway, et. al., in the amount of $1.15 million for back pay owed to Conway Police and Fire employees.

Background

The City of Conway was failing to attract new Police and Fire candidates and was losing veteran employees to other departments due to low salaries. In 2001, the City of Conway commissioned a study of comparably sized Arkansas cities to determine competitive salaries. The study indicated that the City of Conway’s Police Officers and Fire Fighters were significantly underpaid compared to Arkansas cities of the same size and tax base.  The Mayor of Conway issued a Resolution on July 24, 2001, proposing a quarter cent (1/4%) Sales and Use Tax and declaring “the intent of the City Council of Conway to use the voluntary tax exclusively to improve the salary of [police officers]. Section 1 of the Resolution stated that the proposed quarter cent (1/4%) sales tax would be voted on by the citizens of Conway and that the tax “shall be expended exclusively to improve the salaries of those employees of the City whose current salaries are determined by the City Council to be under the “market pay scales” for similar positions in similar cities in Arkansas. Section 2 of the Resolution stated that the proceeds of the sales tax “shall not be used to supplant any budgetary resources currently used for the compensation of the employees, but rather shall supplement the salaries of those determined to be deserving.” The language of the Resolution was a result of a meeting between the Mayor and the Conway Police and Fire Department representatives when the Mayor was soliciting their support to pass the quarter cent (1/4%) sales tax. The Police and Fire representatives were concerned that the City would use the sales tax money for other matters besides law enforcement salaries. As a result, the very concise and specific language outlined in the Resolution was agreed upon. Once  the  Mayor   agreed to the language in the Resolution, in the  Conway Police and Fire employees publically supported and promoted the quarter cent (1/4 cent) sales and use tax. On August 23, 2001, the City of Conway conducted a Special Election regarding the levy of a quarter cent (1/4%) Sales and Use Tax dedicated to improving the salaries of Conway Police and Fire employees and that tax passed.  As a result of the passage of the Sales and Use Tax bythe citizens of Conway, the City of Conway enacted Pay Grids for Police and Fire employees.The Pay Grids reflected guarantee pay increases for the first seven (7) years a person was at each rank. These Pay Grids provided the incremental increases in the income for Conway Police and Fire employees necessary to meet “market pay scales” of similar positions in similar cities in Arkansas. The City of Conway Pay Grids also included the Cost of Living Adjustment of one percent (1%) approved by the City Council.  From 2001 through 2008, the City of Conway used the quarter cent (1/4 cent) Sales and Use Tax as required by the Pay Grids. As a result of the pay increase and guaranteed pay increases, veteran employees stayed with the Conway Police and Fire Departments. The City of Conway also provided potentialpolice applicants with packages outlining the hiring requirements, benefits, pay, and the term of employment. The City of Conway provided all new candidates with the Employment Pay Grid reflecting what the employees would be paid for the first seven (7) years of service at each rank. The City of Conway provided the Pay Grids to potential applicants to demonstrate that the City of Conway paid a salary on par with similar larger cities. In 2009, the City of Conway stopped paying the guaranteed step increases in salary each year. The City diverted the revenue from the quarter cent (1/4 cent) Use and Sales Tax to othergeneral fund activities such as construction of softball fields and escalating maintenance costs ofother facilities built by the City.  Despite not paying the Step increases starting in 2009, the City continued to include the salary Pay Grids in their new applicant packets. The City of Conway used the Police and Fire Pay Grids to lure new police candidates away from other police departments by representing that the candidates would receive guaranteed, structured and competitive pay for their services. The City of Conway knew this was false and knew that it had not been paying its’ police and fire employees   according to the pay scales. Despite this information, the City of Conway continued to promote the Pay Grids as guaranteed terms of employment to the Police and Fire candidates.In 2012, Southern States Police Benevolent Association (PBA) member Richard Shumate brought this matter to the attention of the PBA.  After reviewing this case, it was determined that the City of Conway made an offer of employment to  the police officers that consisted of a guaranteed and structured pay scale. The police officers accepted these offers of employment and provided their time and labor in performance of the agreement. The City of Conway’s failure to comply with the Pay Grids was an alleged breach of contract.  Russell Wood of the Wood Law Firm filed a class action lawsuit for breach of contract against the City of Conway in 2012. (To read the full  complaint, click the following link https://russellwoodlawfirm.com.)

The City of  Conway denied the allegations of the lawsuit and litigation ensued.Essentially, the City of Conway argued that Resolution R-01-18 is not binding on the City and that once the quarter cent (1/4 cent) Sales and Use Tax was passed, the money was placed in thegeneral fund and available to the City for  any  expenditure at the discretion of the City. (See Resolution R-01-18 at https://russellwoodlawfirm.com and click on the City of Conway Pay Scales tabs at the bottom). The City of Conway argued that Arkansas case law states that no matter what the Mayor or City Council states on behalf of the City of Conway in a Resolution to entice tax payers to vote for and approve a Sales Tax, the City can ultimately use the funds however it determines to be reasonable. The City of Conway also argued that the Pay Grid was never meant to be considered a guaranteed yearly increase in pay, but merely at the discretion of the City. The PBA and Russell Wood disagreed.After prolonged litigation during the discovery phase, with repeated efforts to delay and obstruct the discovery process by the City of Conway, Mr. Wood was provided with approximately 5,000 pages of discovery materials.

In April 2015, Plaintiffs filed a one 122 page Motion for Class Certification outlining the Plaintiffs’ argument for certifying this lawsuit as a class action. On December 12, 2015, the Court entered its Order Granting the Plaintiffs’ Motion for Class Certification and Certifying the Class. The Court also issued its Findings of Facts and Conclusions of Law to Support the Court’s Order Granting  Class Certification. (See Order and Findings of Fact and Conclusions of Law at https://russellwoodlawfirm.com and click the City of Conway pay scales tabs at the bottom).The City of Conway appealed the Court’s Order Certifying the Class Action to the Arkansas Supreme Court. (In Arkansas, an appeal of a class certification is a direct appeal to the Arkansas Supreme Court).After approximately a year of litigating the Class Certification Order in the Arkansas Supreme Court and waiting for a decision, the Arkansas Supreme Court issued its Opinion onFebruary 16, 2017. (See Opinion at https://russellwoodlawfirm.com and click the City of Conway pay scales  tabs at  the bottom).

The  Arkansas Supreme  Court affirmed the Circuit Court’s Class Certification Order and the matter was remanded back to the Faulkner County Circuit Clerk to continue litigation. Since that time, Mr. Wood has continued the extensive litigation process, depositions, and numerous requirements that are necessary in class actions. Two weeks before trial, the case was settled for $1.15 million and preliminary approval of the settlement was issued by the Court on April 24, 2019.