By Sue Pasco, CIRCLING THE NEWS
March 10, 2021
The following tale, which has more turns than a mystery novel, involves the Los Angeles Department of Water and Power, misconduct at the City Attorney’s Office and the increasingly high utility rates paid by residents.
The story begins in 2013 when the DWP paid for a billing system installed by Pricewaterhouse Coopers (PwC).
Before the system was implemented, the DWP was warned by the State of California auditor, Elaine Howle, that the software program was not ready for installation and should be delayed.
This was made clear, when the DWP was later audited by the state, and Howle in a 2015 report wrote: “This report concludes that the premature launch of CIS may cause the department to spend in excess of $200 million on the project, which is significantly more than the department’s original budget of roughly $87 million and its more recent November 2014 budget of nearly $181 million.”
Howle said, “The department’s executive management was well aware of the significant problems associated with CIS and yet made the questionable decision to launch the new system.” (Visit: https://www.auditor.ca.gov/pdfs/reports/2014-105.pdf)
The DWP ignored this warning, which resulted in billing delays followed by billing overcharges to DWP customers of at least $67.5 million, according to a L.A. Times 2016 story (“DWP Owes L.A. Customers $67.5 Million Because of Rampant Overbilling.”).
Several class actions were filed on behalf of all ratepayers against the DWP and the City.
One of those actions was filed by Antwon Jones, who found his lawyer by contacting a website for consumer complaints about LADWP bills that had been set up by Paul Paradis, who was working for DWP. Shortly after, Paradis became a special counsel to the City of L.A. under City Attorney Mike Feuer.
The City Attorney’s office came up with a plan to settle the numerous lawsuits. They would use a plaintiff who had an attorney that was favorable to the City. That lawsuit would than negate other ratepayer lawsuits.
The day after filing the Complaint in April 2015, the lawyers for Jones initiated a more “friendly” settlement that was agreed to in less than thirty days and subsequently approved by the Court in 2017.
The story might have ended there, but instead of admitting that DWP had made a mistake in a premature rollout of the billing system, Feuer announced that the City was suing Pricewaterhouse Coopers for more than $80 million dollars for the faulty system.
None of this information might have come out, if PwC had not retained attorney Daniel Thomasch of Gibson Dunn to defend the company’s reputation.
The FBI raided the DWP and City Attorney’s Office in July 2019 looking for documents that may have evidenced criminal conduct. Two of Feuer’s top deputies resigned, and he denied knowing about what was going on.
When asked by Superior Court Judge Elihu Berle to provide information, the City Attorney’s office delayed producing documents and witnesses for deposition. When deposed, Feuer simply refused to answer many questions or could not recall what had happened.
Other attorneys in Feuer’s office took the Fifth Amendment and refused to answer questions.
The deposition testimony of Paul Kiesel, however, is telling. A former law partner of one of Feuer’s top deputies, and a former president of the State Bar of California, Kiesel testified: “A decision was made by the city to use the same plaintiff who was going to sue Pricewaterhouse Coopers to then file suit against the City of Los Angeles with all of the causes of action that have been asserted in the other (class action) claims, to have one complete lawsuit that would then be the vehicle to resolve the Department of Water and Power’s CC&B [billing] issues.”
The City felt it had a lawsuit it could control. A quick settlement would fully reimburse ratepayers and dismiss other pending suits against the city. (https://www.dailyjournal.com/articles/353145-how-la-s-water-bill-suit-became-mired-in-controversy)
To keep its involvement under wraps and recognizing that it would be unethical and a clear conflict of interest, the City Attorney’s Office lawyers arranged for the complaint they had drafted to be filed by Jack Landskroner, a class action lawyer from Ohio, and Michael Libman, a Los Angeles area- based personal injury lawyer.
When the Antwon Jones lawsuit was quickly settled for $67.5 million, about $15 million went to the attorneys, with Landskroner apparently receiving the majority of the money.
What about the other class action lawsuits? Other attorneys representing DWP ratepayers, such as Timothy Blood, an attorney from San Diego, quickly saw problems with the settlement.
According to a 2019 Daily Journal story (“Attorneys Warned Judge Multiple Times about Problems with Los Angeles Water Billing Settlement”), Blood had reviewed the proposed Jones settlement and what he “saw was a jury-rigged agreement awash with errors. . . .The settlement was silent on issues such as exactly how much ratepayers were owed, and it appeared to serve as a broad release of claims, including that of his class action clients.”
Blood also could not understand how Landskroner was paid millions of dollars in a case in which there had been no discovery and a settlement was reached in 30 days.
Attorneys for PwC uncovered the conflict of interest and the misconduct of the City. The Jones Settlement came under scrutiny, and a new class action counsel Brian Kabateck was chosen by the Court.
In a 2019 Courthouse News Service story “Overcharged LA Utility Customers Say They Deserve Millions More”), Kabateck said, “It is our preliminary conclusion that the customers and rate payers of the LADWP were in some manner victimized by the city’s and/or outside counsel’s actions. It is also our opinion that there is additional money owed to the rate payers, and other claims were likely waived or eliminated because there was little or no likelihood the city could recover from PricewaterhouseCoopers on those claims.”
Circling the News has contacted and filed a public document request to the City Controller’s office, and Ron Galperin, asking for the total amount this debacle has cost Los Angeles taxpayers –including the attorney’s fees for unethical conduct. CTN received a reply on March 10, “Referred requester to the City Attorney.”
CTN has also contacted consumer advocate Jamie Court, who alerted us that there was a $2.5 million sanction against City Attorney Feuer, paid for by taxpayers.
On Monday this week, the Daily Journal ran a story titled “Class Counsel in LA Water Bill Case Is Ordered to Pay Nearly $2 Million.”
This story is far from over and CTN plans to keep you up to date on the latest court proceedings.
Below are links to L.A. Times stories on the subject: