As I understand it, the original contract had a severance clause. After the vote, the city council signed a new contract without the clause a mere 3 days prior to the new law going into effect.
The voters had spoken, and the council at that point lacked the legal authority to sign such a contract. The new contract should be voided.
“As I understand it, the original contract had a severance clause. ....”
O.K. that makes all the difference. From what you said, the Council members were really in the wrong. This whole thing is on them. I was just speaking for the general principle of the sanctity of contract law.
That is a legal argument, and therefore subject to a court ruling -- hence the lawsuit. My guess is that the referendum had NOT gone into effect yet, so the council DID have the right to make a new contract on that point.
But, did the council have a legal right to make ANY contract without a serverance clause? That would be another legal question.
And third, is there such a thing as a non-terminating contract? Without a severance clause, I would still expect a contract can be broken, with the courts deciding what the value of that broken contract was. I would expect a court to only maintain a contract if the contract itself had value to one participant that was impossible to replace with a monetary settlement.
But what seems clear to me is that you can't simply declare a valid contract to be null and void because citizens pass a referendum against it.
BTW, the criminals in this case are the elected officials, not the company. The officials behaved badly in trying to thwart the will of the people. They of course could be voted out of office in the next election, if the people remember and decide to do so.