FBI raids, dropped suit and stonewalled depositions marked LA water bill tangle this year

Imagine hiring an attorney, and then finding out that lawyer was never really on your side.

That predicament for a Los Angeles water customer was at the heart of this year's Los Angeles Department of Water and Power litigation debacle.

Three investigations, six resignations, and one dropped case later, the $67 million water billing case refuses to go away after settling 41/2 years ago.

In 2015 the class action, Antwon Jones v. City of Los Angeles, BC577267 (L.A. Super. Ct., filed April 1, 2015), seemed to quickly and quietly resolve. Ratepayers were set to be reimbursed by the city, which then sought to extract damages from the company it blamed for the billing software fiasco, Pricewaterhouse Coopers LLC. After a two-year approval process, Los Angeles County Superior Court Judge Elihu M. Berle blessed the settlement. By then attorney fees had ballooned and some parties voiced displeasure with the settlement.

Four years passed. Then, a whole new subplot spawned a torrent of litigation.

Concurrent to all of this, PwC attorney Daniel Thomasch, a Gibson, Dunn & Crutcher LLP partner who was defending the company from the city's suit, was working to uncover critical documents regarding the Jones settlement. He said he discovered that the attorneys hired by the office of Los Angeles City Attorney Michael N. Feuer to defend the water billing litigation also represented plaintiff Jones. The plaintiff, a Van Nuys ratepayer who was hit with an exorbitant water bill, had hired Paul O. Paradis to represent him. A week later, Paradis was hired by the city, and never told Jones.

But Thomasch faced roadblocks, including the city's refusal to produce a draft complaint against PwC showing Paradis representing Jones. When Thomasch in a deposition questioned a witness for the city about Paradis' relationship with opposing counsel, the city officials and attorneys reportedly walked out. Paradis, a New York attorney who advertised that he fought for consumers, finessed two extraordinary feats. He managed to get the city of Los Angeles to sue itself as a way to dissolve other pending ratepayer lawsuits the city was facing. This was done by drafting a lawsuit and handing it off to opposing counsel whom he picked to replace himself. The attorney who replaced him as Jones' counsel was another out-of-state attorney, Jack Landskroner of Ohio, who made $10 million settling the case without conducting discovery.

Paradis also got the city to approve over $30 million in no-bid contracts for his company, Aventador Utility Solutions, in order to remediate the very matter he was hired to litigate. Aventador, named after a high-end Lamborghini that has a starting price of $400,000, listed Paradis' Oceanside Santa Monica condo as its place of business. Those contracts were canceled following news reports, but not before almost $22 million was paid out. Paradis renamed the company Ardent, after another sports car.

Berle first acknowledged the double representation during a hearing a year ago, and summoned attorneys to appear in March. At that intense hearing, Thomasch, speaking in rapid-fire, complete sentences, told Berle he had been misled, and how the ratepayer settlement was a sham before the case was even filed.

"It was a collusive scheme from its inception through today as the cover-up continues through a wall of privilege and obfuscation," Thomasch told Berle.

The usually unflappable Berle addressed Landskroner with a raised voice, asking the class attorney if any of his fees were kicked back to Paradis. Question after question, Landskroner stood up and took the Fifth Amendment against self-incrimination. Both Landskroner and Paradis ended up pleading the Fifth against all questions during their depositions.

Following news reports, Paul Kiesel, special counsel to the city in the litigation, and Paradis resigned, and Feuer launched an internal investigation. His office, now represented by Eric M. George of Browne George Ross LLP, maintained it didn't know about the scheme, and cast blame on special counsel as rogue actors.

In April, the city attorney's office claimed to have discovered for the first time emails by Paradis and Kiesel discussing preparation of the draft ratepayer complaint, and their handing it over to opposing counsel.

What ensued was a blame game. Kiesel said the drafting and the filing of the complaint was green-lighted by the city attorney's office. During an emotional deposition, Kiesel said the plan was hatched during meetings with the city in early 2015, although he did not provide any evidence. He testified Plan A was for the city to sue PwC on behalf of the city and a ratepayer, Jones, but the plan was called off by the city.

The city found itself in a bind, facing multiple other lawsuits, Kiesel said. But Paradis had an idea: draft a complaint on behalf of his client, Jones, which would copy all the other causes of action from the other pending lawsuits. Landskroner would file the lawsuit, and a settlement would globally resolve all the lawsuits.

Kiesel said the complaint for Jones, became known as the "white knight complaint." An email shows he offered to pay the filing fees for Landskroner's local counsel in Los Angeles. Then in July the FBI showed up. Agents swept the offices of the city attorney, the Department of Water and Power, and Kiesel Law LLP, looking for evidence of wire fraud, collusion, kickbacks and extortion tied to the billing cases. A day later, David Wright, the head of the utility, quit his job and pleaded the Fifth.

By then Brian Kabateck, former president of the Los Angeles County Bar Association, came into the case as the new attorney for the Jones class, estimating that between $50 million and $80 million is owed.

In September the city dropped its lawsuit against PwC, citing the unavailability of key witnesses who pleaded the Fifth Amendment, and vowed to claw back fees from Landskroner. It was yet another development in the roller-coaster saga.

But it's not over. The storyline continues into 2020, with PwC seeking sanctions against the city for what it is calling persistent discovery abuse. As in many previous battles, the city isn't expected to stand down.