Critics raised early concerns about DWP legal settlement

Lawyer Tim Blood in his San Diego office.

By Dakota SmithStaff Writer

Feb. 10, 2022 5 AM PT

In June 2015, attorney Tim Blood and other lawyers representing Los Angeles Department of Water and Power customers over inaccurate charges caused by a new billing system were growing increasingly suspicious of the city attorney’s office.

The city had entered into settlement discussions with an out-of-state attorney who was also suing over the faulty charges. Attorneys representing other plaintiffs couldn’t get details about the agreement.

Blood called City Atty. Mike Feuer to talk about his concerns, but the city attorney quickly became angry and passed the phone to a top deputy, Blood recalled in a recent interview.

Unable to get answers, Blood wrote to Feuer the next day, accusing city attorneys of acting unethically and engaging in “secret” discussions.

“As you are well aware, the DWP has a disturbing history of a lack of transparency and deception, a history that continues and appears to now be actively promoted by the city attorney’s office,” the San Diego-based Blood wrote in the 2015 letter, which was first reported by the Daily Journal, a legal newspaper.

Long before federal prosecutors alleged that Feuer’s office helped engineer a class-action lawsuit against the city over the faulty DWP bills — all part of an effort to control the settlement terms — attorneys and others said they raised red flags.

They didn’t allege the criminal behavior that federal prosecutors now say took place. But at court hearings and in letters to Feuer and Mayor Eric Garcetti, Blood and others questioned the settlement. They asked why the out-of-state lawyer was getting more than $10 million in attorney fees, and why the city was so quick to settle.

Today, Blood said he doesn’t feel vindicated by recent plea agreements filed by prosecutors that lay out the bribes, kickback and extortion that allegedly accompanied the scheme.

“While some people are finally being held accountable, the Los Angeles political and legal culture that allowed this scandal to grow has not been addressed,” Blood said.

Back in 2015, “no one said or did anything other than circle the wagons,” Blood said.

As a result of the scandal, Feuer’s top attorney overseeing civil litigation agreed to plead guilty last month, and three others, including the DWP’s former top executive, have either pleaded guilty or agreed to plead guilty to various crimes connected to the billing fallout.

Feuer, who is running for mayor, declined to be interviewed. A spokesman for the city attorney’s office said Blood’s letter did not raise red flags about collusion, either in 2015 or today.

“At the time, Mr. Feuer interpreted Mr. Blood’s letter as coming from an aggressive plaintiffs’ lawyer impugning his competition so he could replace him as the lead negotiator in the settlement,” said spokesman Rob Wilcox, adding that at the time the city was committed to quickly paying back DWP customers.

FBI agents leave the downtown headquarters of the Department of Water and Power.

Feuer’s phone call with Blood was contentious because the city attorney had significant disagreements with Blood’s allegations, Wilcox said.

Feuer has said he was unaware of the scheme, which began after a faulty DWP billing system sent erroneous bills to hundreds of thousands of customers in 2013.

With the utility facing multiple class-action lawsuits, the city’s legal team was authorized by an unnamed “city attorney official” in Feuer’s office to seek out a friendly lawyer to file a class-action lawsuit against the city, according to court documents filed by prosecutors.

That way, a lawsuit covering all the DWP claims could be settled quickly and in a way that was “orchestrated by the city on the terms desired by the city,” prosecutors said.

The city entered into an initial settlement agreement with Ohio attorney Jack Landskroner in 2015. Landskroner, who was never charged with a crime and died last year, collected $10.3 million in attorney fees in the case — money that came from the DWP.

An attorney for the Landskroner estate declined to comment.

Federal prosecutors refer to an “Ohio attorney” in court filings but have not named him. The Ohio attorney secretly funneled $2 million to Paul Paradis, an outside lawyer brought in to work for the city attorney’s office on the DWP billing litigation, prosecutors said in Paradis’ plea agreement.

Paradis drafted the lawsuit that the Ohio attorney filed against the city, prosecutors said. Paradis used non-public information provided to him by members of the city attorney’s office and the DWP to draft the complaint, prosecutors said in the agreement.

Along with Blood, attorney David Bower raised concerns about how the class-action case was being handled. At a December 2015 hearing, Bower told the judge overseeing the case that Landskroner had done no discovery, the process by which lawyers gather evidence.

“There’s not one deposition that’s been taken in the case,” Bower told Los Angeles Superior Court Judge Elihu Berle, according to a court transcript.

Bower, who also represented DWP customers, told the judge that the city was using a legal strategy in which the defendant enters into a weak settlement with the most “ineffectual class lawyers” to quickly resolve the case and preclude other claims from being filed.

Blood, the San Diego attorney, also accused city attorneys of using that legal strategy in his letter to Feuer, which Bower signed.

“Everything we told the court that we suspected was happening was happening,” Bower said last month.

Wilcox, Feuer’s spokesman, denied that the city’s legal strategy was to settle with the weakest plaintiffs. He also denied that there was any “secret settlement,” and that the mediator in charge of the settlement kept the initial settlement terms and memorandum of understanding confidential.

The initial settlement terms were publicly revised and approved after the court heard and evaluated criticisms about them from attorneys, Wilcox said. He also said the city is trying to recoup the $10.3 million paid to Landskroner.

Mike Feuer outside Los Angeles City Hall.

In 2019, Berle, the judge in the case, assigned a former federal prosecutor to investigate the settlement.

A 595-page report released last year by Edward Robbins concluded that two top attorneys in Feuer’s office — Thomas Peters, who agreed last month to plead guilty to one count of aiding and abetting extortion, and Jim Clark — were the “shot callers” for a “sham” lawsuit against the city.

A lawyer for Clark didn’t respond to a request for comment. Another attorney representing Clark previously told The Times that Clark wasn’t interviewed by Robbins.

Other attorneys for the city — both staff and outside counsel — who were working on the billing litigation violated ethics rules, the report found. Some of those attorneys told The Times last year they didn’t act improperly, and others didn’t respond to a request for comment.

The report mentioned Blood’s June 2015 letter, saying it “put Feuer on notice of the problematic nature of the settlement. Mr. Blood’s instincts were good given his limited information.”

Robbins’ report and prosecutors’ court filings also have highlighted an internal email written in August 2015 by one of the city’s outside attorneys.

In an email received by half a dozen attorneys working for the city, attorney Maribeth Annaguey listed 20 reasons why the high attorneys’ fees proposed by the mediator overseeing the case were difficult to support. Landskroner had done “little demonstrative work to advance the interests of the class,” Annaguey wrote, and the DWP had been committed to “fully refund” and credit its customers before the lawsuits were filed.

Annaguey did not respond to questions from The Times.

Feuer spokesman Wilcox said Feuer didn’t see Annaguey’s email at the time it was written, but said it did not raise red flags.

“While Ms. Annaguey’s email shows she thought the attorneys’ fee award was too high, it does not suggest Ms. Annaguey believed any illegal activity had occurred,” Wilcox said.

Jamie Court, head of the nonprofit group Consumer Watchdog, compares the scandal laid out by prosecutors to the chicanery and corruption carried out by city leaders who schemed to bring water from the Owens Valley to L.A. in the early part of the 20th century.

Court wrote to Garcetti in October 2015, describing the settlement as “one-sided and corrupted,” according to the letter, which was reviewed by The Times.

Court didn’t know about the alleged criminal behavior at the time, but he questioned the high fees paid to Landskroner, among other issues.

“Make no mistake, this settlement is not fair to ratepayers,” Court wrote in the letter to Garcetti, which was also sent to Feuer. “It is an inside job between the LADWP and an attorney who doesn’t truly represent the interest of the community.”

Garcetti’s team referred Court to Mel Levine, then the president of the DWP board of commissioners, to discuss the settlement.

Despite talks with the city, Court still objected to the final settlement, arguing it gave too much power to the DWP because it let the utility determine how much customers should be repaid.

Asked about Court’s letter, a Garcetti spokesman said last month the blame for the scandal lies with the “criminals who conspired to defraud the taxpayers for their own personal gain.”

Court takes a different view, saying City Hall ignored the warnings.

“No one on the inside bothered to take any of these criticisms seriously,” Court said.