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Friday, September 29, 2000



State expected to
appeal judgment on
vending machines


By Debra Barayuga
Star-Bulletin

The state is expected to appeal a $3.7 million judgment for failing to collect money from vending machines at county government buildings.

Under a 1981 state law, money from vending machines at federal, state and county government buildings that do not compete with vending stands run by blind vendors is to be deposited into a retirement and pension account for the benefit of all blind vendors. The state is required to manage the account.

At county buildings, the counties are required to deposit proceeds from vending machines into the account, but didn't.

Thirty-eight blind vendors sued the state in 1996, saying the state as trustee was required to enforce the law and obtain compliance by the counties.

Circuit Judge Elizabeth E. Hifo ruled Wednesday that the state's "breach of trust legally caused damage and loss to the plaintiffs in the amount of $3.8 million," for the period of 1981 to July 2000.

Because of a $150,000 settlement reached with the city, damages were reduced to $3.7 million.

The state argues that the court exceeded its powers, noting that the Legislature did not intend to make the state the "insurer of last resort" for violations of law by the counties, nor intend to leave liability issues such as these up to the courts.

"We believe the state should not have been found liable and the damages determined by the court were inflated and speculative," said Deputy Attorney General Charles Fell.

Attorneys for the blind vendors say the state is continuing to escape from its trust duties.

The fiduciary violations involve state law, not county law, placing enforcement responsibility on the state, said Evan Shirley, one of the attorneys for the blind vendors.

"You can't take somebody else's money, act as a trustee and claim immunity."

Circuit Judge Linda Luke in March ruled that the state is required to implement and enforce the law and that its "failure, neglect or refusal to do so is a breach of trust and fiduciary obligations."

Hifo also had ordered the state to hire a qualified investment adviser, provide blind vendors with quarterly and annual reports, develop a 10-year investment plan, prepare a retirement and health plan and hire an expert to expand the vending machine program to increase revenues.



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