(Editor’s note: This is the second part of the story “LADWP Water Rates to Rise: City Has Legal Bills to Pay.” Yesterday CTN examined how the City is dependent on DWP for part of its annual budget. )
In 2013, the DWP rolled out a billing system that wasn’t ready. That resulted in a class action lawsuit. The City Attorney’s office ensured that the lawyer who was suing the city was a “friend,” which is not legal.
In 2015, City Attorney Mike Feuer sued PricewaterhouseCoopers (PwC), the company who implemented the billing system.
To paraphrase, PwC said “not so fast. We told you the system wasn’t ready” and took the City of L.A. to court. The California state auditor had already placed the blame on the city for rolling out the billing system before it was ready.
With allegations of fraud, there was a July 2019 FBI raid of the DWP’s headquarters and the city attorney’s office.
PwC’s attorney, Daniel Thomasch, said in September 2019 that the consulting firm intended to pursue monetary sanctions against the city for litigation misconduct. Some experts estimate that PricewaterhouseCoopers has spent a seven-figure sum fighting the city’s case.
The firm’s “defense has revealed that the DWP perpetrated a fraud on the court, on [PricewaterhouseCoopers], and on the DWP’s own customers, in its attempt to cover up its own failures,” Thomasch said.
Arrests so far include Paul Paradis (former lawyer in the City Attorney’s office), former DWP chief executive David Wright (appointed by Mayor Eric Garcetti), David Alexander (former LADWP executive) and Pacific Palisades resident Thom Peters (senior official in the City Attorney’s office). Peterson was charged on January 10 in Federal Court for aiding and abetting extortion.
According to a December 13, 2021, Department of Justice press release, Paradis is cooperating with the ongoing investigation into the alleged collusive litigation and corruption at LADWP.
CTN reached out to L.A. City Controller Ron Galperin in March 2021 to ask how much money had been spent in lawsuits by the City Attorney and the DWP. His office responded, “Because our office isn’t the custodian of these records, I would suggest trying the City Attorney’s office or the City Administrative Officer as well.” And gave CTN the City Attorney’s office contact Rob Wilcox, which we contacted.
CTN never received a response.
Mike Feuer, who is now running for Mayor, said in a July 2021 statement to the L.A. Times that the 595-page report that found attorneys in his office took part in the scheme to settle litigation was one-sided.
“It is incomplete, it contains a lot of conjecture, and many, many errors, and omissions that are material to the outcome,” Feuer said. “It’s riddled with untrue statements, it omits key facts, and it reaches conclusions that have no factual support.”
NEW RATEPAYER SETTLEMENT UNDERWAY
The original ratepayer settlement was overturned and a new class-action counsel attorney, 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 ratepayers 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 ratepayers, and other claims were likely waived or eliminated because there was little or no likelihood the city could recover from PricewaterhouseCoopers on those claims.”)