Boston saved $1.5 million in winter costs by bullying salt company and violating city charter

By adamg - 12/18/09 - 6:48 pm

A federal appeals court today rejected a Charlestown salt company's lawsuit against Boston over what it was owed for delivering extra salt during the winter of 2004-2005, in part because Mayor Tom Menino never signed an authorization for the purchase, which violates the city charter.

The US Court of Appeals for the First Circuit also ruled that even though city public works officials threatened to hold International Salt liable for crashed emergency vehicles and other potential mayhem if the city ran out of salt that winter, they never formally declared an "emergency," under which the company could have supplied salt with the understanding it would seek reimbursement for its extra costs later.

The company initially agreed to supply 75,000 tons of salt to Boston at a rate of $26.42. With city salt supplies dwindling during an unusually snowy winter, city public-works officials asked the company in February, 2005 to supply additional salt at the same rate. The company, however, said that because of higher costs charged by shippers, the company would have to increase its rate for the extra salt to $46.36 a ton (later changed to $56.37 a ton). After several rounds of fruitless negotiations - and after the city used up 3,000 tons of salt on one day:

Ultimately, on February 10, the Boston Commissioner of Public Works, Joseph Casazza, telephoned International Salt's Chief Executive Officer, Robert Jones, to demand written assurance that the company would continue to supply the City with salt. The Commissioner presented his demand as a safety issue; it was the middle of winter, in emergency conditions, and he did not want the City to be shut down or to face problems with unsafe streets or with police and fire vehicles being unable to move about. Mr. Casazza threatened to hold International Salt responsible for streets rendered unsafe by lack of salt. He deflected any talk of price as not his responsibility.

Faced with that threat, the company agreed to keep supplying salt - but it told city officials it would sue after the winter, which it did. It provided another 27,000 tons of salt to the city that season - and billed the city $1.5 million extra.

Unfortunately for the company, a provision in the city charter requires the mayor to sign off on any contracts worth more than $10,000. The appeals court ruled that it was up to the company to ensure compliance:

In Massachusetts, a party seeking to enter into a municipal contract has the responsibility of knowing the limitations on a municipality’s contracting power, and such party cannot recover on a contract that does not comply.

The court added the city never filed the necessary paperwork for an "emergency," including documents to be filed with the state:

Although the City exerted a great deal of pressure on International Salt to supply more salt - pressure which was ultimately successful - International Salt has not met its burden of proving that a true emergency existed. Public Works Commissioner Casazza and Public Works Superintendent Canavan both testified that they did not consider the City’s salt supply to be at an emergency level in mid-February 2005. International Salt introduced no competing testimony.

Complete ruling.