Santa Fe schools pays $1.6 million to settle whistleblower case

Apr. 14—Santa Fe Public Schools has done an about-face in its response to a whistleblower case in which a jury awarded a former assistant principal nearly $800,000 after finding district officials retaliated against her for pushing an investigation into allegations of sexual misconduct by student athletes.

After appealing the jury's ruling to the state Court of Appeals in November, the school district dropped its challenge Monday and paid Kelly Rinaldi and her attorneys $1.6 million to settle the case. Of that, $612,000 will go to Rinaldi and $987,500 to her attorneys, according to the March 29 settlement agreement.

Rinaldi, a former assistant principal at Santa Fe High, filed a lawsuit in 2020 under the New Mexico Whistleblower Protection Act alleging she had drawn officials' ire in 2017 by insisting they investigate members of the school's basketball team who had been accused of engaging in sexual activity with a teen girl and creating photos and video of the incident.

Jurors in late August agreed district officials had created a hostile working environment for Rinaldi and declined to renew her contract for the 2019-20 school year in retaliation for her efforts to initiate an investigation.

Martin Esquivel, general counsel for the school district's insurer, wrote in an email the New Mexico Public Schools Insurance Authority felt the school district had acted appropriately.

"The case was contested and, unfortunately, a jury saw it differently than we hoped. ... After weighing the costs, risks and time involved with an appeal, both sides went to mediation to compromise on an outcome," he wrote.

The final settlement includes attorney's fees, the amount of which would have been decided by a court if the parties had not agreed to the mediated settlement.

The agreement represents a compromise in which Rinaldi's attorneys "accepted substantially less" than the $1.4 million they had asked the court to award them in the case, Esquivel wrote.

The insurance authority spent $789,113 litigating the case before agreeing to the settlement, according to Esquivel, bringing the combined legal costs associated with the lawsuit to nearly $2.4 million.

Rinaldi attempted to settle the case out of court in June 2019, less than two months after she was fired, according to a motion her attorney, Linda Hemphill, filed in September, but the district refused to offer her any money to resolve her claims, instead insisting Rinaldi would get a reference only if she agreed to drop her allegations.

"Over the course of the next two and a half years of litigation, [Santa Fe Public Schools] vigorously and relentlessly contested Ms. Rinaldi's claims, adopting a scorched earth litigation strategy," the motion says.

The schools offered to settle the case for $12,000 during a mediation but refused to entertain a counteroffer, the motion says. Rinaldi asked the court to schedule a second mediation, but because the schools objected, the court indicated it would not require a second mediation.

Rinaldi offered in February 2022 to settle her case for $100,000 plus attorney's fees. The motion says the district ignored that offer.

"Instead of offering Ms. Rinaldi a reasonable sum to resolve her claims, SFPS engaged in an aggressive and unrelenting campaign of spending public funds to defeat Ms. Rinaldi's whistleblower lawsuit, presumably, with the intention of sending a message to any and all other potential whistleblowers that it would leave no stone unturned in opposing their claims, no matter how meritorious," the motion says.

After securing an award of $784,865 for Rinaldi at the jury trial, Hemphill was entitled to attorney's fees under state law as determined by the court.

She asked for attorney's fees of $843,785 plus tax.

Hemphill also asked the court to apply a 1.5% "lodestar" enhancement, based on law that allows judges to increase legal feels beyond calculations of time spent and cost per hour "after the court considers the risk factor and results obtained."

Hemphill argued enhanced fees were warranted since her firm had achieved "exceptional results" by securing a jury award that was "an astonishing 65 times the amount offered by SFPS" and the risk she and co-counsel Jack Hardwick took by devoting considerable time to the case on a contingency basis.

The school's attorneys opposed the multiplier, writing in a response Rinaldi was attempting to penalize the schools for having taken the case to trial and that settlement discussions took place before they had enough discovery to begin making liability assessments in the case.

The parties settled the case before the court ruled on the issue, according to online court records.

Santa Fe Public Schools referred questions to attorney Jason Burnette, who deferred to Esquivel.

The New Mexico Public Schools Insurance Authority stands behind Santa Fe Public Schools' administration "for its continued professionalism and hard work," Esquivel wrote in an email. "While the outcome and final settlement came through a jury process that is wildly unpredictable, it should not be interpreted as knock against the district's operation and administrative personnel."

In a statement provided by her attorney, Rinaldi said she filed the lawsuit to take a stand against the "cronyism" she said is standard operating procedure in the district.

"We can't continue to allow school leaders to create a culture in which those with integrity are bullied and treated as outcast, while allowing others to not be held accountable for unethical, and in some situations criminal actions," she said. "I only hope that now, even though the district still refuses to admit any wrongdoing and those persons that retaliated against me remain in positions of leadership, that the school board will do a proper investigation and demand accountability."