State payments to settle lawsuits against Dunleavy near $1 million

The state has paid $350,000 to settle a four-year-old lawsuit that found Gov. Mike Dunleavy and his former chief of staff personally liable for illegally firing a state attorney.

The settlement with Elizabeth Bakalar, of Juneau, ends a series of state and federal lawsuits triggered when Dunleavy and then-chief of staff Tuckerman Babcock asked state employees to submit resignation letters during the transition from the administration of Gov. Bill Walker in December 2018.

In 2021, a federal judge concluded that the process was “an unconstitutional patronage practice” and issued an order prohibiting the state from repeating it in the future. The judge wrote, “It is clear that Babcock’s decision to terminate plaintiff (Bakalar) was motivated by reasons connected to her First Amendment rights” to voice her opinions in a political blog.

Though U.S. District Court Judge John Sedwick found the actions of Dunleavy and Babcock were so egregious that they should be held personally liable to pay damages, the state treasury has now paid almost $1 million in settlements on their behalf in four similar cases.

That figure does not include what the state has paid private attorneys to defend the two men and the state in the court cases.

“Although we felt that the district court’s analysis on the underlying issue was incorrect and were prepared to appeal, we think it is better to get this case behind us and move forward,” said Attorney General Treg Taylor in an emailed statement. “This was a reasonable settlement to avoid further long, drawn out and expensive litigation.”

The state paid $495,000 to two Alaska Psychiatric Institute doctors in 2022, and $75,000 was paid in 2021 to settle a suit filed in state court by a public advocate, all related to their dismissal as Dunleavy took office.

In the doctors’ case, the two won their lawsuit against Dunleavy and Babcock after they were let go when they refused to submit resignation letters. They objected to signing what they called a statement of “political allegiance” to the new governor. Sedwick ruled that the doctors were wrongfully fired after “political” demands that violated their First Amendment rights.

The settlement in Bakalar’s case was not formally disclosed before Aug. 1, when it appeared in federal court filings, but Bakalar previewed it in a mid-July blog post. The post said more than half of the proceeds will go toward taxes and attorney fees, with the remainder split between Bakalar and her ex-husband.

“In the end I will net approximately $75,000. I plan to use this money to re-roof my 1963 house that has no useful life left in the roof, paint the outside of the house, and do some overdue renovations. I also just paid off the remainder of my car loan today,” Bakalar wrote.

Her comments appeared on the same blog that formed much of the basis for her firing. The state argued in filings with the District Court that her critical comments regarding Dunleavy and former President Donald Trump cast doubt on her ability to work as a neutral attorney for the Alaska Division of Elections.

Sedwick partially disagreed with that conclusion and ruled in Bakalar’s favor, setting the stage for a repeatedly delayed trial over damages that was set to go to court later this year — before it was settled.

Rather than risk a decision that could have overturned Sedwick’s initial decision, Bakalar elected to settle, she said by phone on Aug. 1. “I may have had a bigger award, a smaller award; it doesn’t matter,” she said. “The thing I cared most about was preserving that order. If there’s a federal court order in place, then at least under the facts of my case, the government shouldn’t be conducting itself in this way.”

The Alaska Beacon is an independent, donor-funded news organization.


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