The state Appeals Court agreed with a lower court ruling that the city conspired against a north Everett business and tried to cover it up by violating the state Public Records Act.

The city was ordered to pay Cedar Grove Composting $143,000, plus $127,644 in costs and attorney fees, which was less than half of the $283,000 Cedar Grove had sought.

Mayor Jon Nehring called the ruling “unfair” but said the city doesn’t know if it will appeal to a higher court.

Karen Dawson, a spokeswoman for Cedar Grove, said justice has prevailed.

“The records proved that city of Marysville staff and the city’s PR firm (Strategies 360) orchestrated a complex campaign against Cedar Grove, funded by tax dollars, that had the intent and outcome of shaping a negative public opinion of Cedar Grove,” Dawson said July 15 in an email.

Nehring said years ago about 1,000 people signed a petition saying they were “tired of the smell” coming from the composting business across the river from Marysville. Lawsuits were filed, and Cedar Grove issued a public records request. The city released 10,000 records, but withheld some because of attorney-client privilege with Strategies 360. A judge ruled against the city on those, saying the PR firm was acting more like an employee than a consultant. The city then released those records.

But what bothers Nehring is the courts even wanted the city to release 173 records “we never saw.” Those records were possessed by Strategies 360 and some by the Tulalip Tribes, which as a sovereign nation is not privy to the Public Records Act.

“The citizens of Marysville paid tens of thousands of dollars to a private PR firm to manufacture stories and draft letters to be submitted by citizens to generate negative media stories focused on Cedar Grove and provoke citizen lawsuits against Cedar Grove,” Dawson’s email continues.

“We did not participate in that mailer,” Nehring insisted July 13. “How would we even know about those records? It’s disturbing, but we complied.”

In the appeals court ruling, it says it really didn’t matter if the city “used” the information or not. It says Strategies 360 should have been part of the records request as an employee of the city.

The court went on to say the fine is not excessive because of the city’s delayed response, it withheld some records, and it did not explain why some were withheld. The court hopes to “deter future misconduct” with the fine.

Trial court papers say Strategies 360 worked closely with Mike Davis, the leader of an anti-Cedar Grove citizens group, and the city in a campaign against Cedar Grove. Strategies 360 consultant Al Aldrich reportedly even advised the city to start using phones rather than email so as not to get caught up in the public records request. Aldrich also reportedly emailed to Steve Gobin of the Tulalip Tribes a sample anti-Cedar Grove mailer that was to be sent to homes in Marysville and Everett.

The mailer looked like it came from the Puget Sound Clean Air Agency. In 2011, the agency fined Cedar Grove $169,000 for violations going back years.

“We are trying not to share the draft with Gloria and Marysville folks, primarily to give them ‘plausible deniability’ about the mailer and its contents,” one of the records says.

The fine was later reduced to $119,000 in recognition of the company’s efforts to control odor.

“Cedar Grove always has been and remains committed to being a good neighbor and continually invests in state-of-the-art technology, including odor-mitigation technology,” Dawson said.

In writing the opinion for the appeals court, presiding Judge J. Robert Leach said that Strategies 360, by acting in the interest of Marysville and being paid to do so, was effectively working as an employee, and it was not necessary if those communications were shared with the city in order for them to be disclosable. It was a deliberate attempt to conceal the city’s role in the campaign, Leach wrote.

Nehring said the Association of Washington Cities is concerned about the ruling, wondering if all consultants would be subject to public records requests.

But in the appeals court’s conclusion July 6, it says specifically that this does not set a precedent that every government contract is subject to public records requests. Plus, it doesn’t apply to all third-party contractors. It only applies to private firms that act as public employees.

The state’s public disclosure law was passed in 1972 with a 72 percent approval vote with the goal to keep government honest.

Nehring said he is a fan normally of the Public Records Act.

“It forces government to be transparent,” he said, adding he doesn’t like “frivolous requests.”