COEUR d'ALENE - The City of Coeur d'Alene lost its second appeal on Thursday against a $3.2 million wrongful dismissal case concerning a police officer in 2009.

The Ninth Circuit Court of Appeals ruled that the district court did not abuse its discretion in declining to admit a failed polygraph test as evidence in the case.

The Ninth Circuit also concluded there was sufficient evidence to sustain the jury's verdict on the officer's dismissal, as well as the emotional distress claim.

"Given this conclusion," the court ruled, "we need not - and do not - reach any other issue urged by the parties."

Former Police Lt. Daniel Dixon, a 17-year veteran of the force before his termination in 2009, had been accused of conduct unbecoming an officer, such as cheating on his time card in order to receive pay for hours he didn't work and falsifying another officer's time card as a means to harass.

Dixon was demoted to patrol. When he did not show up for work following the demotion, he was fired.

In October 2011, a jury found that negligent training inside the department and indifference to Dixon's constitutional rights led to the firing, and awarded the officer $3.7 million in damages.

That decision was appealed by the city, which argued in part that the judge erred in not allowing the jury to hear the results of a polygraph test that Dixon reportedly failed.

A federal judge upheld the lower court's ruling in July 2012, but reduced the damages to $3.2 million.

"I still believe the city acted appropriately," City Attorney Mike Gridley said Friday, adding that he will meet with outside counsel to determine the city's options moving forward. One of those options could be an appeal to the Supreme Court of the United States.

"We haven't had an opportunity to digest it to determine what options we have, if any," Gridley said. "We need to determine whether we have a viable appeal to the Supreme Court."

Gridley said it was unusual for the Ninth District to rule so quickly on an appeal. The court heard arguments on Oct. 1, and most rulings generally take much longer.

Dixon's attorney, Larry Beck, issued a press release on Friday stating that Dixon and his wife Heidi Dixon were pleased with the ruling.

"The Dixons urge the City of Coeur d'Alene's mayor, council and administration to finally recognize and accept the jury's unanimous verdict for the Dixons on all eight issues," Beck wrote in his statement. "As the Court of Appeals stated 'There was sufficient evidence to sustain the verdict.'"

Beck said the appeals court found the evidence was sufficient in two of the state law claims alone, and the court did not even have to consider the federal claims that the Dixons also prevailed on in trial.

Beck said it is important to note that his client offered to drop the entire suit months before the trial if the city would agree to reinstate Dixon to his former position.

"They are spending hundreds of thousands of dollars on these appeals, which will be added on at the end of this thing," Beck said on Friday. "The appeals are so time-consuming and expensive."

Because the city is self-insured, the claim will be paid out of a legal fund the city maintains, but Gridley said because of the size of the award, a portion of that may have to be paid out of city reserves.

City Finance Director Troy Tymesen could not be reached for comment on Friday.