By Dakota Smith, LOS ANGELES TIMES
July 25, 2019
Four years ago, Los Angeles City Atty. Mike Feuer cast himself as a champion for ratepayers socked by wildly inflated bills after the Department of Water and Power rolled out a disastrous new billing system.
Facing a bank of news cameras in his City Hall office, the city attorney vowed to secure tens of millions of dollars from PricewaterhouseCoopers — the firm that oversaw the billing system’s implementation. Feuer also told reporters he wasn’t afraid that the global consulting firm would push back in court.
“Bring it on,” he declared.
Now, City Hall’s handling of that case, and its larger response to the 2013 DWP billing debacle, has created what may be the biggest threat to Feuer’s political future, including a possible run for mayor.
FBI agents raided the city attorney’s office on Monday, serving search warrants on multiple staffers in an investigation into two cases that emerged from the DWP’s billing problems.
Critics have questioned whether Feuer exercised proper oversight of his legal team as it settled a class-action lawsuit with thousands of the utility’s customers. And they warn that the actions of his office could cause the case against PricewaterhouseCoopers to collapse, leaving the DWP — and ratepayers — on the hook for the cost of the troubled billing system.
Feuer is set to be deposed in the coming weeks by lawyers for PricewaterhouseCoopers. The consulting firm alleges the city took part in a fraudulent scheme to control the outcome of the 2015 class-action lawsuit.
Feuer’s office has denied that it was involved in or aware of the alleged scheme and has blamed outside attorneys it hired for any wrongdoing.
Speaking to The Times last month, he said he has ordered an internal ethics investigation, which is ongoing.
“The chips fall where they fall,” Feuer said, adding that he takes his role “very seriously” in getting to the bottom of the allegations of double dealing by outside lawyers hired by his office who worked on the billing litigation.
Feuer is seen as a likely candidate for mayor in 2022, when Mayor Eric Garcetti will be forced out by term limits. And the city attorney hasn’t discouraged talk of such a campaign.
“It’s likely that when the time comes, I’ll run for mayor,” he told The Times last month, adding, “I have to earn that situation and we’re not at that point yet.”
The election is still three years away, so it’s unclear how big an issue this will still be for voters. Still, political experts said it could expose Feuer to attacks over his integrity. The image of FBI agents striding into his office, said Dan Schnur, who teaches political communications at USC and Pepperdine University, is not a good look.
“The combination of the acronyms FBI and DWP make for a pretty nasty attack ad,” Schnur said.
The FBI raids also pose a challenge for Feuer in his present job, said Jaime Regalado, professor emeritus of political science at Cal State Los Angeles. Feuer has focused on high-profile issues, including immigration, banking and homelessness, during his tenure.
“People have thought that the city attorney’s office is above the fray, above politics. So to have this happen is troubling,” he said. “He’s been a positive force in the city, but he might be remembered for something like this.”
Feuer is a political veteran who has served both on the City Council and in the state Legislature. When he was elected city attorney in 2013, he was expected to bring order to an office that had become unpredictable under his predecessor, Carmen Trutanich, whose volatile public persona ultimately turned off voters.
The DWP, already unpopular with many voters because of its poor customer service, began drastically overcharging some customers in late 2013, with some bills inflated tenfold or more.
The culprit, Feuer said, was PricewaterhouseCoopers, the consulting giant that had implemented the billing software. The city sued the firm in 2015.
But the consulting firm eventually struck back in court, saying it had found evidence of fraud by attorneys working the city.
PricewaterhouseCoopers alleges that attorneys worked both sides of a class-action lawsuit over the billing errors filed by Van Nuys resident Antwon Jones that resulted in a $67-million settlement for ratepayers.
Several class-action lawsuits were filed against the city, but PricewaterhouseCoopers alleges in court documents that the city chose to settle with Jones so it could control the outcome of the settlement and avoid scrutiny of the DWP billing system. Jones hasn’t been accused of wrongdoing.
Feuer’s office has cast blame on its outside counsel — New York attorney Paul Paradis and Beverly Hills attorney Paul Kiesel — whom the office hired to work on the lawsuit against PriceWaterhouseCoopers. In court documents filed this month, attorneys for the city wrote that it appears Paradis drafted Jones’ lawsuit against the city.
Kiesel told The Times that his work was done at the “express direction” of Feuer’s office.
Attorney Ian Friedman, who represents Jack Landskroner — the lawyer who filed the Jones lawsuit against the city — told The Times on Wednesday: “Any contention that the city was unaware of the conduct of its outside counsel during the settlement process in this case would be misleading,”
Paradis’ attorney did not respond to a request for comment.
Before stopping work for the city attorney’s office earlier this year, Kiesel and Paradis had been working under a contingency agreement that would have paid them nearly 20% of any settlement or damages awarded in the city’s lawsuit against PricewaterhouseCoopers.
Cities can hire outside attorneys to handle cases on a contingency-fee basis only if certain safeguards are in place, according to a 2010 California Supreme Court ruling, so attorneys don’t try to maximize their profits at the expense of the public. Government agencies must retain control over the course and conduct of the case, and oversee the outside attorneys, according to the ruling.
Today, Feuer’s oversight of the outside counsel is under scrutiny. His office signed off a $30-million contract for one of Paradis’ companies in 2017, so the DWP could comply with the terms of the ratepayer settlement.
Feuer didn’t know about that contract until earlier this year, said city attorney’s office spokesman Rob Wilcox.
Feuer’s office also faces ethical questions over why attorneys allowed Paradis to represent the city in mediations in the Jones lawsuit, given that the city attorney’s office knew that Paradis had at one point represented Jones.
“The city attorney had an obligation to closely monitor his outside attorneys and he failed completely,” said Jamie Court, president of Consumer Watchdog. “The only question is whether Feuer was in on the scheme or just negligent.”
Feuer’s office declined to respond to those criticisms or explain why Paradis was allowed to advise the city in the Jones case, given that he had represented Jones at one point .
However, Wilcox spoke broadly, saying any actions taken by the outside attorneys “with respect to the pursuit or filing of Jones v. DWP were not disclosed to the city attorney’s office. And therefore it would not have been possible to oversee that conduct.”
Times staff writer David Zahniser contributed to this report.
Dakota Smith covers Los Angeles Mayor Eric Garcetti and City Hall for the Los Angeles Times.