The Lexington Public Library has asked a Fayette Circuit Court judge to vacate an arbitration panel's ruling that would award $927,491 to Kathleen Imhoff, the library's former chief executive officer.
The three-member panel overstepped its authority, disregarded Kentucky contract law and denied the library its due-process rights by deciding material issues of fact without a hearing, the library's attorneys have argued in a motion to Judge Thomas Clark.
"This court cannot turn a blind eye to these and other egregious defects in the arbitration proceedings by simply rubber-stamping the panel's order as Imhoff requests," wrote Keith Moorman, an attorney for the library.
Clark has scheduled a hearing for Aug. 12.
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They said Imhoff had a four-year employment contract that allowed the library board of trustees to fire her for cause and not be obligated to continue paying her $137,035 annual salary and benefits. However, the library instead dismissed Imhoff without citing a cause. Her contract did not specify what her compensation would be in such an event, so the library must honor the remaining two years of her deal at a cost of $446,129 and pay damages, interest and fees totaling $481,362, the arbitrators said.
"The panel ... essentially rewrote the agreement to impose an implied contractual obligation that the panel conceded did not appear on the face of the agreement," Moorman wrote.
State law allows judges to vacate an arbitration panel's rulings if the award was procured through fraud or corruption, there was evident bias by one or more arbitrators or the arbitrators exceeded their powers.
In his own motion, Imhoff attorney Richard Getty told Clark "the arbitration was in all respects proper and the award is final and binding ... There are no legitimate grounds for vacating or modifying this award, as there is no evidence that the arbitrators exceeded their authority or that their decision was fraudulent in any way."
The library board dismissed Imhoff in 2009 after the Herald-Leader detailed more than $134,000 she spent on travel, meals, gifts and other items over five years. A city audit later raised more questions about library spending and reported that 1,522 images of "adult materials" were found on a library computer assigned to Imhoff, in violation of library policy.
Imhoff defended her spending as proper and denied viewing adult images on the computer. Imhoff said she took the computer home with her for work duties, and someone else evidently used it to view the images without her knowledge. She also said her office at work had been broken into on three occasions, allowing someone to tamper with her computer.
In 2010, Imhoff sued the library for more than $5 million in damages. She alleged that she was dismissed in violation of her contract, that she was publicly defamed by the library board chairman, and that she was discriminated against because she is a woman. Clark dismissed the second and third claims but referred the first to arbitration.
After a library board meeting Wednesday afternoon, library attorney J. David Porter said the agency has insurance coverage, but it's not yet clear how much of the proposed award to Imhoff the insurer would pay. Generally, such insurance policies may cover the unpaid salary due to Imhoff but not the damages, Porter said.
Should the library need to pay all or part of the $927,491, it would likely use reserve funds, said Ann Hammond, the library's executive director.
The library has more than $10 million in assets — mostly cash and investments — to cover such future expenses as a possible new branch location, technology improvements and emergency repairs, Hammond said.
The library is an independent non-profit agency, although it runs on public money and is overseen by a board nominated by the mayor and confirmed by the Urban County Council. Last year it reported $15.1 million in revenue.