LA WATCHDOG--On Thursday, the incompetence of wannabe mayor City Attorney Mike Feuer was on full display as the City dropped its ill-conceived lawsuit against Pricewaterhouse Coopers, the consultant to the Department of Water and Power in its botched rollout of customer billing system in 2013.
This is a lawsuit that never should have been happened. Rather, the City Attorney, representing DWP, should have followed its customary practice and settled with PwC over its role in the customer billing system fiasco pursuant the contract between the two parties. This would have saved everybody a lot of time and trouble and most likely resulted in a payment by PwC in the tens of millions (in essence a return of a portion of their consulting fees) to the Department.
But Feuer and his office got greedy, believing they would be able to prove fraud on the part of PwC and collect massive damages far exceeding the limit of those specified in the contract between PwC and DWP. This was based on the self-serving advice of two class action attorneys retained by City Attorney who had a lucrative contingency arrangement where they would collect 20% of the damages.
While there is good possibility that PwC committed fraud, its New York lawyers from Gibson Dunn (ironically, an LA headquartered firm) had the City’s attorneys for breakfast, lunch, and dinner. Through discovery, they uncovered the fraudulent settlement of the 2015 class action suit against the DWP, an arrangement cooked up by lawyers from the City Attorney’s office. They also exposed a $30 million no bid contract with Paul Paradis, a New Jersey class action lawyer retained by the City Attorney. The discovery process also resulted in David Wright, the Garcetti appointed DWP General Manager, and Paradis invoking their Fifth Amendment rights when questioned about the flow of money between Paradis, the plaintiff’s lawyers, and possibly Wright.
All these dirty dealings resulted in the FBI raiding City Attorney’s office and DWP’s executive suite on July 22 looking for evidence of “bribery, kickbacks, extortion, mail fraud, and money laundering.”
While the exposure of corruption by these “bad apples” is a valuable public service, it forced the City to drop its lawsuit against PwC. Unlike a settlement, this unilateral action exposes the City to claims by PwC for the reimbursement of its expenses, including court costs, legal fees that no doubt be in the millions, and possible penalties for litigation misconduct.
There may be other motives for dropping this litigation. According to Jamie Court, the President of Consumer Watchdog who has an excellent nose for sniffing out corruption, this is an effort to “silence” the investigation of corruption in the City Attorney’s office, City Hall, and DWP.
It is once again time for Feuer to have the good graces to resign as City Attorney. (A recall is too expensive because you need 300,000 valid signatures, 15% of the registered voters).
Meanwhile, the DWP, its Board of Commissioners, the Ratepayers Advocate, and the City need to do a thorough and independent investigation of this fiasco, starting with the role of DWP and PwC in the botched rollout of the customer billing system; the class action lawsuit, its fraudulent settlement, and the payment of $15 million in legal fees to the undeserving plaintiff’s lawyers; the $30 million no bid contract; the role of Feuer and his office; and any subsequent litigation.
Once again, DWP and its employees are being discredited because of the actions of a few “bad apples.” At the same time, Ratepayers will be footing the bill. More to the point, however, this fiasco highlights the fact that the major problem with our Department of Water and Power is City Hall and our elected officials.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: firstname.lastname@example.org.)