LOS ANGELES – A $67 million settlement between Los Angeles County utility customers who were overcharged due to faulty meters and the Department of Water and Power should be tossed due to the discovery of millions more in damages, according to new attorneys representing the class action plaintiffs.
The report filed in Los Angeles County Superior Court caps a turbulent week for city officials and the Los Angeles Department of Water and Power. FBI agents raided LADWP headquarters Monday, July 22 as part of an ongoing investigation into the settlement and the utility’s top director was ousted by LA Mayor Eric Garcetti shortly after.
In 2016, the LADWP reached a $67.5 million settlement with overcharged utility customers. The department blamed a consulting firm for designing faulty meters.
But LA and the utility sued the consulting firm, PricewaterhouseCoopers, over the botched meter reading system. PricewaterhouseCoopers argued in court an attorney who represented the lead plaintiff in the meter-reading class action also acted as outside counsel for the city and LADWP in the separate lawsuit.
PricewaterhouseCoopers argued this relationship ensured a more favorable settlement for the city.
Now the class of customers are represented by attorney Brian Kabateck, who says large groups of customers were excluded from the initial settlement.
In a 31-page report filed on Thursday, the class claims there is at least $50 million owed to customers in addition to the $67 million initial settlement.
There were customers who are owed back-billing pay, others from separate class actions, solar subclass customers and many others, says Kabateck.
“The exclusion of these claims makes no sense. As part of the overall aim to refund 100% to the rate payers and maximize recovery, class counsel intends to reopen the settlement and request that the foregoing claims be included so the class may receive an immediate benefit,” writes Kabateck.
Attorney’s fees should be paid out if a special master assigned to audit and investigate relationships in the case determines ethical violations occurred, the class says.
Moreover, class members want the court to reopen discovery in the ratepayer case against the city of Los Angeles and the utility.
“It is our preliminary conclusion that the customers and rate payers of the LADWP were in some manner victimized by the city’s and/or outside counsel’s actions,” writes Kabateck. “It is also our opinion that there is additional money owed to the rate payers, and other claims were likely waived or eliminated because there was little or no likelihood the city could recover from PricewaterhouseCoopers on those claims.”
In a statement, an LADWP spokesperson said the settlement included multiple layers of review of the incorrect billing statements, which were then reviewed by a third-party monitor and approved by the court.
“However, in keeping with the city’s twin goals of achieving a 100% return to ratepayers of all overcharges and fully remediating the billing system, we welcome a thorough review of the settlement, the payouts and the programs developed to identify class members,” the spokesperson said. “This includes the sampling of the payouts that class counsel proposes.”
A spokesperson for the City Attorney’s Office said while it disagrees with most of the report filed in court, it agrees ratepayers should be repaid in full. The spokesperson did not address the claim that terms of the settlement intentionally excluded customers.
Jamie Court from the nonpartisan Consumer Watchdog says customers should not just be compensated for money, but also any legal rights they may have waived from the class action settlement.
“Those consumers should be able to sue when their smart readers are in error and they waived their rights with the fraudulent settlement,” said Court. “The conduct here rose to malice and fraud.”\
Before the FBI raided the LADWP headquarters, Court asked California Attorney General Xavier Becerra’s office to take over the corruption probe of the Los Angeles City Attorney’s Office and the utility. A top executive at LADWP, David Wright, was set to leave the post later this year but was replaced by 35-year veteran of the agency Marty Adams after the raid.
Court said, “We need fresh blood in that department.”
Los Angeles City Attorney Mike Feuer is set to be deposed in the class action on Aug. 2.
— By Nathan Solis