The city of Los Angeles was ordered by a judge Tuesday to pay $2.5 million in sanctions stemming from protracted litigation over the botched rollout of a Department of Water and Power billing system in 2013.
The new system, which led to some customers being wildly overbilled while others weren’t charged at all, sparked years of litigation, a multimillion-dollar class-action settlement and an FBI probe that included searches of the DWP and the City Attorney’s Office.
Following the settlement of the class-action ratepayer lawsuit, the city of Los Angeles sued consulting firm PricewaterhouseCoopers, essentially blaming the company for the failed rollout of the billing system and looking to foist financial responsibility on the firm. The class-action settlement was generally valued at $67 million, but a DWP document obtained by the Los Angeles Times indicated that associated costs would raise the price of the resolution to about $300 million.
The city’s litigation against PricewaterhouseCoopers, however, fell apart last year, when the city abandoned the lawsuit, citing the FBI probe and the subsequent unwillingness of witnesses to testify in the case. Dropping the suit left the city on the hook to cover the cost of the class-action settlement.
Earlier this year, attorneys for PricewaterhouseCoopers filed court papers seeking sanctions against the city, saying it “misused the discovery process” in multiple ways, including “misrepresenting and concealing key facts from the court” to avoid disclosing documents, ignoring a court order to produce a witness, failing to produce various documents and providing false or evasive testimony. The company requested roughly $8 million in sanctions for what it called “egregious discovery abuse.”
Los Angeles Superior Court Judge Elihu Berle on Tuesday ordered the city to pay $2.5 million in sanctions. According to the Daily Journal, Berle ruled in court that the city and its lawyers had committed “serious abuse” in terms of discovery, and “this serious abuse merits considerable sanctions.”
The City Attorney’s Office issued a statement Tuesday saying, “We strongly disagree with the court’s ruling, and when we have the transcript and signed order, we will review them carefully to evaluate all our positions.”
Daniel Thomasch, an attorney representing PricewaterhouseCoopers, called the $2.5 million in sanctions “the consequence of the pervasive discovery abuse by the city and its counsel throughout this politically motivated litigation.”
“The city’s discovery abuse was the direct result of its attempt to hide from the court and ratepayers its prior participation in the filing and settling of a sham consumer class-action, which was part of the city’s multi-year effort to shift the blame for DWP’s own billing failures to PwC,” Thomasch said in a statement. “Today’s ruling comes after the city’s complete surrender on the merits of its baseless case against PwC, and vindicates the rule of law by holding the city and its lawyers accountable for their egregious abuses.”
Attorneys for PricewaterhouseCoopers last year raised accusations of fraud and double-dealing by attorneys hired by the City Attorney’s Office in the litigation. The firm contended that the city hired attorney Paul Paradis as a legal consultant in its lawsuit against the company — while Paradis was at the same time representing a DWP customer suing the city in the class-action lawsuit.
PricewaterhouseCoopers argued in court papers that the arrangement with Paradis was made specifically to secure a more favorable legal outcome for the city and DWP.
While the city denied wrongdoing, it subsequently canceled $30 million in contracts it had awarded Paradis for legal services and efforts to correct the billing system issues.
Paradis and the city both denied any wrongdoing. An attorney for Paradis told the Los Angeles Times last year that Paradis stepped down as special counsel for the city to focus on “cybersecurity work” he was doing for the DWP.
The allegations contributed to a July 2019 FBI search of the downtown DWP headquarters and the City Hall East offices of the city attorney. The City Attorney’s Office acknowledged at the time that the searches stemmed from the handling of the class-action litigation and the lawsuit against PricewaterhouseCoopers, and said the office would “cooperate fully” with the probe.
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