Overcharged DWP customers could get an additional $50 million in refunds, new lawyers say

The deal had been touted as a win for aggrieved L.A. ratepayers who had been hit with grossly inflated bills from the Department of Water and Power: A settlement of a class-action lawsuit that would provide refunds or credits for 100% of what they were wrongly charged, according to the utility.

One of the attorneys who represented customers who sued the utility called the agreement a “home run.” It was eventually expected to return more than $67 million to ratepayers.

Now a new set of attorneys have taken over the case after accusations that lawyers engineered the lawsuit and 2017 settlement to help the city. They say the whole agreement needs to be re-examined and possibly reworked.

In a legal filing made Thursday, attorneys Brian Kabateck, Anastasia Mazzella and Brian Hong argued that key areas that had been previously overlooked could yield more than $50 million in additional refunds for customers — and that ratepayers are probably owed even more because of other omissions.

The filing marks the latest chapter in the fallout over the 2013 DWP billing debacle, in which hundreds of thousands of customers were erroneously charged. It comes days after FBI agents descended on the DWP headquarters and City Hall, serving search warrants that city officials said were tied to the billing settlement and an ensuing legal battle with the company that oversaw the launch of the new software that spit out faulty bills.

Experts now say that the settlement could be tossed or replaced — a move that could trigger new dilemmas for the utility and City Atty. Mike Feuer, whose office worked on the deal.

Feuer spokesman Ivor Pine said Thursday afternoon that their office had just received the filing and had yet to review it.

However, in a statement, Pine said lawyers for the city had spoken to Kabateck and that they shared key goals, including ensuring that the terms of the settlement, which “provide 100% return to the ratepayers, are implemented effectively.”

Utility and city officials have defended the legal agreement. In an interview last month, Feuer said that “the settlement, I still believe, was a good settlement for the city and for ratepayers.”

Kabateck is not the first attorney to cast doubt on the agreement.

Critics — including attorneys for other customers suing the DWP over the billing disaster — challenged the deal after it was initially proposed to the court four years ago. They called the agreement “half-baked” and argued that it put too much power in the hands of the same agency that had bungled the billing. A revised settlement was ultimately approved two years ago.

The city, in turn, sued PricewaterhouseCoopers, the consulting firm that oversaw the implementation of the billing software, in an attempt to recover tens of millions of dollars that it argued it was owed for the debacle. But the company fired back in court and put forward a troubling revelation: The lead plaintiff in the ratepayers’ class-action lawsuit against the city, Antwon Jones, had been represented by an attorney who was also working for Feuer on the PricewaterhouseCoopers lawsuit.

L.A. ratepayers were “victimized by the city, which effectively filed a lawsuit against itself,” Kabateck and his colleagues wrote in Thursday’s filing.

The city brought in “favorable attorneys who were willing to agree to the terms of the settlement, which placed the city in control of practically every aspect of the settlement,” the attorneys wrote.

The ongoing case also has revealed that companies owned by Paul Paradis, the attorney who, at one point, represented Jones and worked for the city, secured $36 million in no-bid contracts from the DWP to help remedy the billing problems — work that was tied to the court settlement about which Paradis had advised the city.

Jones, the plaintiff in the class-action lawsuit, has not been accused of wrongdoing.

Kabateck and the other attorneys now representing Jones and other ratepayers assert that if it is ultimately determined that Paradis or his companies obtained money through fraud, they would seek to claw that money back for L.A. ratepayers.

Also in the filing, Kabateck said that he wants to delve into documents and testimony about the billing snafu, noting that “no discovery has been conducted concerning the nature of the errors” tied to the rollout of the new system in September 2013. He and his fellow attorneys want to test whether customers truly received the 100% refund they were promised, using a “statistically relevant sampling.”

Attorney Tim Blood, who also filed a lawsuit against the city over the billing errors, said he had raised concerns about the power granted to the DWP, under the settlement, to determine refund amounts.

“I’m very happy that, at long last, this settlement is going to get the scrutiny it deserves,” Blood said.

DWP spokeswoman Ellen Cheng said in a statement that the agreement included “multiple layers of independent review” of the utility’s decisions on bills, including the right to appeal to a third party and ultimately to 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,” including the testing that Kabateck had proposed, Cheng said.

Kabateck and his fellow attorneys also raised questions in the filing about whether it was too hard for some customers to claim refunds.

For one category of eligible customers, “no ratepayer would know how to make such a claim,” they wrote. In addition, customers who were charged overdraft fees because the DWP charged their bank account incorrectly have received nothing, the attorneys added, calling it “extremely disconcerting.”

The DWP, in turn, was released under the settlement from a broad array of possible complaints against the utility, Kabateck and his colleagues wrote. They said that for some customers, that legal relief is “so broad ... it potentially shocks the conscience.”

In an interview Thursday, Kabateck said he was troubled that customers had to “speak now or forever hold your peace.”

“I’m not sure your average customer would know they had been misbilled, incorrectly billed, or had any other dispute with DWP,” he said.

As the scandal over the alleged double dealing in the Jones case has unfolded, Feuer’s office has blamed Paradis and Paul Kiesel, another outside attorney hired by the city. However, Kiesel told The Times his work for the city was done at the “express direction” of Feuer’s office.

Retooling the Jones settlement could prove costly. Kabateck and his fellow attorneys said in their filing that they want to retain consultants and other personnel to investigate the agreement, “with the city to bear the costs.”