LA city attorney said he delegated $67M settlement litigation

Los Angeles City Attorney Michael N. Feuer described himself as an "engaged manager" who delegated to a large team of attorneys overseeing 2,000 cases at any given time.

But the "reprehensible breach of ethics" he said was committed by outside private counsel hired to represent the city's interests in a controversial 2015 water billing settlement slipped passed him, according to Feuer's recent court deposition.

Feuer voluntarily sat for the deposition about a month after the FBI searched the city attorney's office and the Department of Water and Power for evidence of bribery, kickbacks and extortion related to a $67 million settlement ensnared in fraud allegations.

The lead ratepayer in the settlement has testified he was unaware his attorney was also working for the city when he drafted his lawsuit and handed it off to friendly opposing counsel, who collected about $15 million in legal fees without conducting discovery. Jones v. City of Los Angeles, BC577267 (L.A. Super. Ct., filed April 1, 2015).

Four attorneys working for the city have resigned, as well as the head of the water utility, and four parties have pleaded the Fifth Amendment during depositions. Three investigations are underway.

Feuer was questioned by Gibson, Dunn & Crutcher LLP attorneys representing Pricewaterhouse Coopers, whom Feuer is suing over the implementation of a disastrous billing system rollout.

The deposition was provided to the Daily Journal on Tuesday evening by Feuer's office.

Feur appeared as an apex witness, meaning his deposition wasn't necessarily relevant to uncovering information in the case, but because he is a high-ranking officer it could serve to spur a settlement.

Since the collusion allegations surfaced, Feuer has maintained that he did not know about it and vowed to crack down on any misconduct in his office. Much of that was repeated during his Aug. 13 testimony, in which he said he delegated his responsibilities to Chief Deputy City Attorney James P. Clark and his former head of civil litigation, Thomas Peters.

Feuer testified that from the beginning he instructed his staff to resolve lawsuits so ratepayers would get "100 cents on the dollar for every claimed overcharge."

Feuer said, "I do not recall" more than 60 times when answering questions regarding the progress of the litigation.

He said he had agreed to hire Paul O. Paradis of New York and Paul R. Kiesel of Beverly Hills as special counsel on the recommendation of Peters and Clark, giving them no other mandates.

Feuer said it was Peters who exercised the authority of the city attorney's office in overseeing the special counsel, and he believed he exercised that right. Peters has resigned.

"Did [Peters] relay to you how it came to be that he was closely supervising the actions of Mr. Paradis and never discovered what was going on?" asked Gibson Dunn attorney Daniel J. Thomasch.

"We have never had that conversation directly or indirectly," said Feuer.

Feuer was steadfast in saying he didn't know about special counsel directing a lawsuit against the city until April 24 of this year, when his office said it first discovered a trove of emails indicating the scheme.

Kiesel, who testified everything he did was at the direction of the city attorney's office, said previously most of the emails were sent in January when he was still special counsel.

In his deposition, Feuer said after the discovery of the emails, "I made inquiry of Mr. Clark and through counsel to Mr. Peters, and the denials were swift, clear and unequivocal."

He was shown January 2015 emails from Kiesel to Clark telling him that he got other plaintiffs' attorneys to drop their lawsuits in exchange for a tolling agreement on the statute of limitations. The plan was to then file two lawsuits against PwC, one by the city and the other on behalf of Antwon Jones, with the help of those attorneys.

Clark responded to Kiesel saying "Mike" was "on board" with that plan.

After some back and forth with Thomasch, Feuer said, "I have no recollection with regard to this issue."

He also testified he didn't recall Clark apprising him of any further updates. The emails were exchanged a day after members of the city attorney's office and water and power department met to discuss a litigation strategy.

Kiesel had testified that it was the demise of that plan that led to Paradis telling the city he could re-purpose his client Jones as the plaintiff in a controlled lawsuit against the city. A settlement would quickly ensue, serving as a broad release of the other pending lawsuits. Kiesel testified this plan was given the green light by the city attorney's office but the attorney did not provide documentation, saying it was discussed in person.

The plan, referred to as a reverse auction, is legal providing that provisions are followed such as advising the plaintiff what is happening.

Asked about concerns regarding the settlement being brought to his attention four years ago by San Diego attorney Timothy Blood, who said the city wrongly shut him out of the settlement and copied his lawsuit, Feuer said he asked Clark to evaluate the claims. Feuer responded to a follow-up question by saying he did not find out if the complaint was copied.

Further, Feuer testified he didn't know who from his office authorized the paying of more than $10 million in fees to the class action settlement lawyers, but he said it would have been Clark's decision.

The city attorney said he grew acquainted with Kiesel during a case in which they were opposing counsel, then through the Los Angeles County Bar Association. Kiesel also advocated for funding for the courts during the time Feuer, then a state assemblyman, sat on the Judiciary Committee, Feuer said. He also mentioned Kiesel was a political supporter of his.

At one point during his deposition Feuer said his office still had a good case against PwC.

"I believe that your client attempted to defraud the city of Los Angeles," Feuer told Thomasch.

"I believe that the city attorney' office has, through its oversight of outside counsel and work with outside counsel, has made every effort to hold your client accountable," said Feuer.

The city attorney said he became immediately concerned when he learned the judge in the matter, Elihu M. Berle, voiced skepticism of his office's conduct in the litigation.

"But I do know that I was very concerned that Judge Berle, for whom I have a lot of respect, and before whom I have appeared previously, would in any manner question whether any aspect of our office's work was anything other than with full integrity, and I took action thereafter," said Feuer.