Costs of defending Sebastopol's federal lawsuit with CVS Pharmacy have risen to at least $300,000, about what the city annually spends on parks and landscaping, according to city budget documents.
CVS and Armstrong Development have sued Sebastopol claiming that a temporary ban on drive-thru businesses violates their civil rights.
In August 2012, after three years and two dozen often-emotional public hearings, the city approved a $10 million CVS and Chase Bank development at Petaluma and Sebastopol avenues.
Four months later, a City Council that included two new members elected amid a backlash over the development put a moratorium on drive-thrus, which CVS claimed was an integral part of its business. The chain sued the city on Christmas Eve.
The city hired Meyers Nave law firm to fight the lawsuit and budgeted $150,000 per year for two years. But as the case has accelerated, city staff is asking for another $150,000 and hopes to wrap the defense work this fiscal year.
The council will decide on the budget adjustment at its meeting Tuesday night.
"I can't say if it's the most expensive lawsuit the city has ever fought, but it's in the ballpark of being one of the more expensive," said Larry McLaughlin, city manager. "Hopefully next year we will be back to normal and not have that extreme expense."
McLaughlin, who also serves as city attorney, said a lawsuit of this size requires outside counsel. McLaughlin is representing the city in a different case over the CVS development. In that suit, a citizens' group sued the city alleging it overlooked the project's environmental impact.
Mayor Robert Jacob, who was elected last November, said the CVS lawsuit is worth fighting to protect the quality of life of Sebastopol's residents. The council temporarily banned drive-thrus, he said, so they could have more time to study the impact the businesses have on traffic, pedestrian safety and the environment.
Jacob called the lawsuit "frivolous" and said it was "robbing the city of essential city services."
"This is CVS flexing its muscles against a small town and a small budget," he said. "A corporation may have civil rights, but a drive-thru isn't one of them."
CVS is the 13th largest corporation in the U.S., according to Fortune 500. A message left for CVS corporate communications was not returned Monday. CVS has previously declined to comment on the pending litigation.
A hearing on a summary judgment is scheduled for February, and the case could go to trial in August.
John Necker, co-founder of SebastopolCitizens.org, a city government watchdog, said he is not for or against drive-thrus, but regretted that the costs to defend the lawsuit have ballooned.
"I think it's unfortunate that it has reached this state," he said. "They should have anticipated the litigation."
Councilwoman Sarah Glade Gurney said that the city has the right to enact ordinances prohibiting drive-thru businesses. She pointed out that the ordinance does not stop CVS from building the project without a drive-thru.
"It is our prerogative to issue a temporary freeze on drive-thrus," she said. "I think a judge will decide that on our side."
You can reach Staff Writer Matt Brown at 521-5206 or matt.brown@pressdemocrat.com.
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