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The costly dispute centered in City Hall, includes a combination of personality conflicts, threats of job loss, anger about increasing city taxes and utility fees, questions about how city employees, left, joined a labor union without the knowledge of the full City Council and a general mistrust between elected officials, employees and citizens. Tribune photo by Gary Miller

Lawsuit displays rift among Grove City, Minn., council, employees and residents

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Lawsuit displays rift among Grove City, Minn., council, employees and residents
Willmar Minnesota 2208 Trott Ave. SW / P.O. Box 839 56201

GROVE CITY -- A civil lawsuit that questioned the legality of Grove City municipal employees joining a labor union has pitted residents, elected officials and staff against each other -- costing the small Meeker County community dearly.


After spending thousands of dollars in legal fees, the city and the citizens' group that sued reached a settlement last fall.

But the financial and emotional costs continue to mount and threaten to rip the small town apart at the seams.

Last month, a city councilwoman threatened to resign if calm isn't restored.

On Tuesday a councilman did resign, in dramatic fashion, while alleging that the current council has "hidden agendas," has conducted illegal meetings and has taken actions that are not serving the taxpayers and could ultimately lead to additional lawsuits.

Clearly frustrated, Councilman Bill Houselog said Tuesday that he would have included a roll of duct tape with his letter of resignation, "but duct tape can't fix stupid."

The drama at the council table is also being played out in the community.

"People that have been friends for years are not friends anymore and that is sad," said Grove City Councilwoman Gwen Cram, reading from a prepared statement during a Dec. 22 City Council meeting. "The town is divided."

The costly dispute centered in City Hall includes a combination of personality conflicts, threats of job loss, anger about increasing city taxes and utility fees, questions about how city employees joined a labor union without the knowledge of the full City Council and a general mistrust between elected officials, employees and citizens.

Defending the lawsuit cost the town about $50,000 in legal fees in 2011, which does not include the estimated $35,000 the city's insurance company paid to defend city officials. Another $25,000 is budgeted for 2012.

That's a lot of money to spend on attorneys for a town of 600 with a general fund budget of $513,000, especially considering the town typically spends just $2,500 a year on legal fees.

There are also a lot of rumors and misinformation flying across town.

"There are way too many stories out there and I am shocked at what I hear," read Cram from her prepared statement. Cram, who's lived in Grove City for nearly 47 years and has served on the City Council for 13 years, warned she would resign if improvements aren't made.

The festering issue peaked in 2010 when there was talk on the street that some candidates running for City Council would, if elected, fire one, and possibly two, municipal employees.

Fearing their jobs were being threatened, the city's three full-time employees -- the city administrator and two maintenance workers -- took action to join a union to protect their jobs.

Representatives from Local Union 160 of the International Brotherhood of Electrical Workers sent notices to then-Mayor Gerald Rueckert in the fall of 2010 about the city employees' intentions.

Rueckert said he followed the law and posted the notice in the city hall and then assigned the personnel committee -- made up of then-Councilmen David Olson and Bill Houselog -- to negotiate a contract with the union.

He acknowledges he did not tell the other two council members at the time -- Cram and Daniel Pehle -- about the union and the issue was not discussed during a City Council meeting until the finalized union contract was approved on a 3-2 vote on Nov. 16, 2010. That was after the election in which Rueckert and Olson were defeated but before a new councilman and new mayor took office.

Rueckert said the City Council had no legal right to vote on whether employees join a union or not and furthermore could not legally ask employees any questions about joining a union. And there was no action to take except to approve the union contract.

With considerable animosity already brewing in town, word of the union was too much for some.

"They just rammed it down everybody's throat," said longtime Grove City resident Allen Knutson, about the union contract. He claims the contract was negotiated in an illegally closed meeting without any direction from the city attorney or input from the rest of the council.

Knutson said Rueckert, Olson and Houselog deliberately withheld information from the rest of the council about the employees' action to join a union.

In a letter dated Dec. 14, 2010, Councilwoman Cram said the union was kept a "secret" from the full council until they were asked to vote on a final contract.

Rueckert said there were no illegal meetings held and it was common knowledge in town that employees were joining a union.

City Administrator Janell Johnson said "everything was done legally and to the point of law" to establish the union and negotiate a contract.

In attempt to invalidate the union contract and prevent it from being carried out, Knutson filed a civil lawsuit shortly after the contract was approved, claiming city officials acted improperly when they negotiated and approved the contract.

Saying he had the support of at least 25 residents that formed a citizens' group to oppose the city's actions, Knutson filed a civil lawsuit in Meeker County against the city of Grove City, Johnson, the union and Rueckert, Olson and Houselog -- the three elected officials who had voted to approve the union contract.

The union eventually had the case moved to Ramsey County.

The city's new mayor, Melissa Drange, and newly elected councilman Bill Peterka had attended at least one of those citizens' group meetings before they were elected in 2010 and for the last year have found themselves in the odd position of defending the city against the lawsuit.

Drange said she did not make financial contributions for the litigation but she did support the citizens' lawsuit and supported the group's actions.

Meanwhile, fellow councilman Houselog had been in the position of defending the city and himself against litigation.

According to City Council meeting minutes, Drange, Peterka and Houselog have recused themselves from some discussions and votes regarding the lawsuit because of their intimate involvement with the case, but they've voted on a majority of the issues, including the agreement to settle the lawsuit.

The lawsuit was settled in September when Knutson agreed to dismiss the case and the city and the union agreed to make some changes without admitting any wrongdoing.

Those changes include amending the union contract language, negotiating a different union contract for Johnson and hiring an attorney to negotiate new union contracts in 2013.

Resolving those issues will continue to rack up legal fees for the city, which has hired a labor attorney, Amy Mace from Ratwik Roszak and Maloney of Minneapolis, to handle union issues.

On top of that, the union filed a grievance last year against Peterka for his treatment of Johnson that resulted in the city removing Peterka from all committees for two months. Further, the city directed Peterka to speak to Johnson in a "professional manner and to refrain from making derogatory remarks to her and to discuss City business at Council meetings in a professional manner," according to City Council minutes from Aug. 23.

On Tuesday, Drange called for a special meeting to be held next week to discuss allegations against an unnamed employee and the council agreed that all city employees will now be required to keep a log of their daily activities so that the information can be used in future labor negotiations.

Knutson said the current City Council and many residents are still "frustrated" that the city is locked into long-term contracts with employees and law enforcement and that utilities and taxes are increasing. He said citizens feel like they're being held "over a barrel and that barrel isn't going any place."

In his resignation comments Tuesday, Houselog said it appears the current council is blaming city employees for the "mess we are in" when the fault lies with the council and their actions and "not from the employees who are trying to do their jobs with the turmoil and distrust."

As he gathered his papers from the table and took a seat in the audience, Houselog said he wants "no part" of that kind of action.

The remaining council members, who spent more time discussing replacement of a coffee pot than they spent discussing Houselog's abrupt resignation, said they would ask for volunteers to be appointed to finish out the remaining year in Houselog's term.

Peterka said, sarcastically, that there should be plenty of volunteers willing to get "nasty letters" and have people "scowl at you all the time. It's wonderful."

In an interview after the meeting, Drange said she was shocked by Houselog's resignation. "I did not see that coming," she said. "He's a nice person. I hate to lose him."

Carolyn Lange
A reporter for more than 30 years, Carolyn Lange covers county government and regional news with the West Central Tribune.
(320) 894-9750