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The Value Gap: The verdict and settlement in George Floyd’s death were rare — but these financial measures could boost police accountability

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The Value Gap is a MarketWatch Q&A series with business leaders, academics, policymakers and activists on how to reduce racial and social inequalities.

Money talks — but the absence of it speaks volumes too, according to Joanna Schwartz.

Schwartz, a UCLA School of Law professor with a focus on police accountability, has spent years poring over city budgets, lawsuits and public-records requests to determine that police officers “virtually never” pay in a court settlement or jury verdict that puts them on the hook for misconduct. When police departments dig into their own coffers, the financial toll is light, she adds.

The status quo — coupled with the tough legal task of suing police officers to begin with — can insulate police departments from financial pressures prompting policy changes.

Schwartz said she had watched portions of George Floyd’s videotaped death in horror last year. Floyd, 46, died May 25, 2020 under the knee of former Minneapolis police officer Derek Chauvin.

In the moment, she didn’t expect the “massive sea change” that followed in discussions about police accountability and police-community relations. Now there’s increasing talk about lowering legal barriers on alleged police-misconduct cases and raising the financial obligations of police departments and officers.

A newly passed Colorado bill attaches some personal financial responsibility to officers and curbs the legal doctrine of qualified immunity, while a recently introduced federal bill, the Cost of Police Misconduct Act, would require local, state and federal agencies to report their judgments and settlements to the Justice Department.

The federal bill is meant as a companion to the George Floyd Justice in Policing Act, according to its sponsors. That bill, which the House passed in March, focuses on the legal barriers plaintiffs face in misconduct cases.

The city of Minneapolis agreed in March to pay Floyd’s family $27 million to resolve a civil lawsuit ahead of Chauvin’s criminal trial. (A jury convicted the former officer last month of murder and manslaughter. He awaits sentencing, and his motion for a new trial is pending.)

The verdict and multimillion-dollar settlement, however, “don’t reflect what happens in the vast majority of these cases,” Schwartz said.

It’s still unknown how many local, state and federal changes will come in the aftermath of Floyd’s death, Schwartz said, and the history of policing in the U.S. is filled with periods of reform and backsliding.

But Schwartz, who spoke with MarketWatch for a wide-ranging Value Gap interview one year after Floyd’s killing, said she’s hopeful “we are poised to be at a moment of advancement.” The conversation has been edited for length and clarity:

MarketWatch: The George Floyd Justice in Policing Act limits the use of qualified immunity when civilians sue police officers. What is qualified immunity and why is it a problem for police accountability?

Schwartz: Qualified immunity is a legal defense that police officers and other government actors can raise when they’re being sued for violating people’s constitutional rights. Qualified immunity is a defense that was created by the Supreme Court back in 1967. And the defense started as a good-faith protection for officers, but the Supreme Court has made it stronger and stronger over the years.

Today, qualified immunity has nothing to do with officers’ good faith. They’re entitled to the defense now so long as there’s not a prior court decision with virtually identical facts — and so there are cases where officers have clearly violated people’s constitutional rights, but because they have the good luck to have violated those rights in a way that a prior court hasn’t held to be unconstitutional, they’re shielded from liability. And the hair-splitting in these cases can be pretty extreme.

Beyond the people who are denied justice — despite the fact that their constitutional rights have been violated — qualified immunity has had a number of other broader harms. … For one, each of these court decisions in which officers who violate people’s rights are granted qualified immunity sends a troubling message to law enforcement that they can, in [Supreme Court] Justice [Sonia] Sotomayor’s words, “shoot first and think later” without consequence.

Qualified immunity also increases the risks and costs and time associated with civil-rights litigation, because litigating qualified immunity can add years to a case. The Supreme Court has said that if an officer is denied qualified immunity, they can immediately appeal. And there are many examples of cases that have been pending for years resolving the qualified-immunity issue.

MarketWatch: Since George Floyd’s killing, lawmakers in New Mexico, Colorado and New York City have passed laws curbing qualified immunity. Are these places outliers or signal of a coming change? And does it really matter if there’s still no change in federal law?

Schwartz: These state bills are important and they do effect important changes. … They’ve created essentially a state corollary to the federal right to sue, and for those state law claims, the legislators have said that qualified immunity is not a defense. So they are essentially creating an alternative way to sue.

[But] these state legislative actions are not a substitute for action on the federal level, because there are a lot of states where legislation creating this kind of state cause of action without qualified immunity has no real chance of being passed.


‘In order for lawsuits to deter, there has to be some pressure to learn from those cases and to change behavior so that those kinds of harms don’t recur.’

MarketWatch: What has been the status of police reform through legislation this past year? In the courts this past year, have judges been taking a new tone or new approach to cases alleging police misconduct?

Schwartz: There’s a lot of movement in courts and legislatures to address police misconduct and accountability. In the court system, it’s hard to quantify what the effects are of this past year of protest and reform in the wake of George Floyd’s killing. But you certainly can see a lot of anecdotal evidence or examples of courts taking account of the current moment.

[There is] a very powerful qualified-immunity case decision by [United States Southern District of Mississippi] Judge Carlton Reeves, a case called Jamison v. McClendon, that over more than 70 pages describes in depth the rash of killings of Black men, and situates those killings within a larger historical context tracing back to the Civil War.

I don’t know if it has translated into different rulings. The Supreme Court has had the opportunity to revisit qualified immunity over the past several years and seemed like it might take some action in the spring and summer of 2020, but ultimately declined to hear the cases that teed up a reconsideration of qualified immunity.

They have, however, been sending signals that they believe that prior cases with virtually identical facts are not necessary when there are obvious constitutional violations. But it doesn’t seem like the Supreme Court is inclined to reformulate the doctrine anytime soon.

In state legislatures and also in local governments, there’s a lot of attention being paid to police reform and all sorts of bills that are being considered, some involving qualified immunity, things like ending chokeholds, ending no-knock warrants. In some local governments, there’s a whole reconsideration about what police should be authorized to do.

MarketWatch: We’ve been talking about civil lawsuits where the results can be a money damage award from a jury or a settlement offer. What has your research shown about who ends up paying those damages?

Schwartz: My research definitively shows, I think, that police officers virtually never pay anything in settlements and judgments entered against them. And even though qualified immunity is premised in part on the idea that individual officers should be shielded from financial liability, my research makes clear that officers virtually never pay anything even when [plaintiffs] overcome qualified immunity.

Most states have some form of indemnification law, which sets out that when police and other government officials are sued for conduct that is in the scope of their employment, part of their job, that they will be provided with a lawyer and that any settlement and judgment will be paid by the government employer. And there are exceptions to these rules. But what I found in my research is that even when an exception would seem to apply, if an officer acted willfully, or punitive damages were awarded against them, officers still virtually never pay.

Local governments, generally speaking, want to satisfy the settlements and judgments entered against their officers because they believe it’s important to ensure that officers continue to vigorously enforce the law, and don’t want to leave officers financially responsible.

In the rare circumstances in which officers are not indemnified … officers still virtually never pay. And that’s because most plaintiffs and their lawyers don’t see much point in pursuing claims against officers who don’t have the money to pay settlements or judgments in these cases. And so generally, if an officer is not going to be indemnified, the plaintiffs will try to reach a settlement with the city, or sue another officer who will be indemnified.

I’ve done a separate study examining where exactly the money is paid. There’s a lot of variation from city to city. Some cities have the money to pay settlements and judgments taken from the general funds of the city. Some have agencies, like police departments, pay into central litigation funds. And the money is taken from there.

Some have police departments pay settlements or judgments from their budgets. And in smaller cities, they are usually insured. The insurance premiums are paid in one of those three ways as well.

When I looked the actual financial impact on police departments, what I found was that even when money was taken from police departments’ budgets to pay settlements and judgments of police-misconduct suits, those payments did not tangibly affect those police-department budgets in most cases.

MarketWatch: So is there a disconnect problem?

Schwartz: If you look back to the originating purposes of the right to sue for constitutional violations, the Supreme Court has said, and Congress has said, pretty much anybody who’s looked at the statute has said, the goals are to compensate and deter. And to my mind, making sure that local governments are financially responsible for these settlements and judgments is an important way of achieving the compensation goal.

If individual officers had to pay themselves, in most cases, plaintiffs wouldn’t be compensated fully for the violation of their rights. But the current system is undermining the deterrence angle. In order for lawsuits to deter, there has to be some pressure to learn from those cases and to change behavior so that those kinds of harms don’t recur.


‘In many cities, police departments make no effort to gather and analyze information from the lawsuits that are brought against them. And these suits can have very valuable information.’

MarketWatch: So is the solution to make police departments and police officers more responsible for the money damages bill?

Schwartz: If had a magic wand, I would do three things. One is — although I would continue having local governments carry the majority, or vast majority, of the financial obligations in these cases — I would create circumstances where individual officers could be required to pay some sort of financial sanction when they have misbehaved. And Colorado’s statute that they passed in the wake of George Floyd’s killing, offers, I think, a compelling model for this. …

The second is that I would create some financial responsibility for police departments in these cases. Making police departments pay settlements and judgments from their resources, would, I think, cause police departments to pay more attention to these cases and the money that’s being spent in them.

To be clear, the way in which this would work in reality is that during the budgeting process, the police department and city would negotiate what the expected cost was in litigation, and that money would be given to the department as part of their funds.

MarketWatch: What’s the final thing?

Schwartz: The final thing that I would do is create systems requiring police departments to gather and analyze information from lawsuits brought against them. … These suits can have very valuable information about the types of misconduct that officers get into; which officers end up getting sued more often.

And all too often, that information is ignored by departments. Part of that might be because departments don’t have to pay settlements and judgments in these cases — and maybe if the money came out of their own budgets, they would pay more attention.

MarketWatch: One of the ideas that’s come to the fore this past year is defunding the police. Is that the solution to better police-community relations? And what about the idea that communities need an adequately funded police department to fulfill public-safety duties?

Schwartz: I think that the debate about defunding the police has obscured areas in which people on both sides of the debate could probably agree.

I think that the kinds of changes that have recently been adopted in [Minnesota’s] Brooklyn Center, in response to the killing of Daunte Wright, are changes, including providing that unarmed, trained, non-police public safety people are charged with responding to people in mental health crises. And reducing the authority of police to stop cars for things like broken tail lights and air fresheners on the rearview mirror.

Those are steps that reduce the footprint of police and are consistent with the defund movement. These are changes that were also embraced by the mayor. And they are changes that presumably will make police safer too.

So it seems like there are ways in which the debate about whether we should defund the police obscures areas in which we can agree that police are currently being tasked with responding to things and addressing all sorts of problems that might be better handled by other people.


‘Decades of reports and investigations about police departments have revealed the police departments aren’t very good at policing themselves, that they very rarely discipline or fire their officers.’

MarketWatch: What happens when governments carry liability insurance? Which places do this?

Schwartz: The largest cities, like New York and Chicago, are self-insured, meaning that they pay settlements and judgments from their funds. Smaller jurisdictions — and the vast majority of police departments are quite small and operate in cities and towns that are quite small — those smaller jurisdictions rely on liability insurance, or at least they tend to.

Sometimes insurance is provided by private insurers. Other times, there are pooled liability insurers, which essentially means that sheriffs’ offices or police departments within a state all contribute to an insurance fund. And then, when an officer or department is sued within that state, the pooled resources are used to pay that insurance.

I found that some insurers use their role to encourage law-enforcement agencies to reduce risk. Although the larger self-insured cities, I found, don’t make much effort to gather and analyze information from lawsuits brought against them, insurers have been tracking claims and information from those claims to try to reduce risk in multiple areas — in medicine, for example, and also in municipal liability.

For example, I spoke to a risk manager who worked for a pooled insurance in Idaho, who reported that a review of claims against sheriffs’ offices revealed that jails within the state were more likely to be sued if they had not adopted certain policies: if they didn’t have two people on staff at any given time, if they didn’t have a nurse or medical provider on call, if they didn’t have facilities that were compliant with the ADA, the Americans with Disabilities Act.

And so the risk manager, the insurer, required that all the sheriffs’ offices’ jails adopt a set of eight different policies if they wanted to keep their liability coverage and low premiums. And the risk manager reported to me that most of the sheriffs’ offices that had the funds to make those changes did.

MarketWatch: Could insurers have more sway over law enforcement? Or are people in city halls not paying attention?

Schwartz: I don’t think that we know for sure, but liability insurers, and insurers generally, respond to liability risk. They are seemingly less prone to the kinds of political pressures that might discourage a city council in a larger self-insured city from demanding these kinds of changes.

MarketWatch: We’ve been talking about police accountability and community relations from a money point of view. That’s different from the intangible concept of trust. To what extent do money-based proposals get the U.S. to a better place in police-community relations?

Schwartz: I don’t think that money-based solutions solve the problems in and of themselves. I don’t think that there’s any single change that can be made to bring in a golden age of police accountability. But an important aspect of these claims for money damages is that they are brought by and pursued by individuals who have been wronged by the police.

In debates about qualified immunity that I’ve been part of, I’ve heard the response from law enforcement that it affects police officers’ morale to be sued, and that instead, we should let police departments supervise and discipline and fire officers themselves.

But the past many decades of reports and investigations about police departments have revealed the police departments aren’t very good at policing themselves; that they very rarely discipline or fire their officers.

I wish it were different, but until we are in a place where police and government are more transparent about the wrongs that they commit and more willing to pay reparations for those harms, we’re stuck with this adversarial system. It’s the best, though imperfect, path forward.

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