Mar. 5, 2019
Counsel admits attorneys represented both defendant and plaintiff
By most accounts a $67 million class action settlement over water misbilling by the city of Los Angeles resolved quickly and quietly. Some attorneys say that’s because counsel for the city drafted the complaint and picked its own opposing counsel.
By most accounts, a $67 million class action settlement over water misbilling by the city of Los Angeles resolved quickly and quietly. Some attorneys say that's because counsel for the city drafted the complaint and picked its own opposing counsel.
In an admission that possibly gives rise to legal ethics violations, a lawyer for Beverly Hills attorney Paul R. Kiesel said in court Monday that Kiesel had an attorney-client relationship with lead class plaintiff Antwon Jones while at the same time also representing the city's interests as special counsel. Also involved was New York consumer attorney Paul O. Paradis, according to court documents. Jones v. City of Los Angeles, BC577267 (L.A. Super. Ct., filed April 1, 2015).
The complaint was drafted by the city before being turned over and filed by Ohio attorney Jack Landskroner, who previously worked with Paradis and Kiesel, court documents allege.
The case was criticized by consumer advocates for settling quickly with no discovery and high attorney fees. Landskroner of Landskroner Grieco Merriman LLC made $15 million, while Paradis made nearly $2 million.
Both Kiesel and Paradis stand to receive nearly 20 percent of potential fees recovered in the city's pending case against Pricewaterhouse Coopers LLP, which sold the billing system to the city. City of Los Angeles v. Pricewaterhouse Coopers LLP, BC574690 (L.A. Super Ct., filed March 6, 2015).
During a hearing in Los Angeles County Superior Court Monday, a normally subdued Judge Elihu M. Berle probed counsel over the origin of the class action, ordering depositions of Landskroner, Paradis and Kiesel.
He also asked if any of the $19 million in attorney fees were kicked back to city counsel, to which Landskroner's attorney declined to provide an answer, citing the Fifth Amendment against self-incrimination on behalf of his client.
"How much of the $19 million was paid to Mr. Paradis?" Berle asked bluntly.
"In light of the allegations made, I have advised Mr. Landskroner to assert his privilege," said his Los Angeles attorney, Mark T. Drooks of Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow PC.
In a rebuke of the way the class action was allegedly handled, Pricewaterhouse Coopers defense attorney Daniel J. Thomasch of Gibson, Dunn & Crutcher LLP said Paradis responded to an inquiry on his website from Jones about filing a lawsuit but Jones never knew Paradis would be simultaneously representing the city.
"We believe it is very clear the settlement was arranged before the suit was ever filed," said Thomasch.
Paradis and Kiesel, who were hired by the city in December 2014, say they represented Jones until April 1 when the complaint was filed by Landskroner, who was brought in five days before the lawsuit. Thomasch said the plan was to bring in someone who would help the city with its case against Pricewaterhouse Coopers.
"Paradis prepares the complaint but he can't file it so he hands it off to his friend. What Mr. Jones didn't know is he essentially had a secret agent as his counsel," said Thomasch, adding the city knew about the circulated complaint before it was filed.
"No one raised a question," said Thomasch.
"It was a collusive scheme from its inception through today as the coverup continues through a wall of privilege and obfuscation," said Thomasch, who added that to this day Paradis and Kiesel never disclosed to Jones that they were no longer his counsel.
Thomasch then dropped another bomb: A company controlled by Paradis received three no-bid contracts totaling $36 million from the city in order to remediate the billing fiasco, he said.
"At the same time he is counsel for the city in a class action with a contingency fee for recovery he may get against us," said Thomasch.
Paradis, who declined to speak in court, took notes and occasionally shook his head. Kiesel appeared toward the end of the hearing, speaking briefly regarding the scheduling of his deposition.
Kiesel's attorney Robert Kehr of Kehr, Schiff & Crane LLP told Berle that Jones' attorney-client relationship ended once Landskroner was brought in.
"What we do know after April 1 his only communication with Mr. Paradis had been the fact that his power had been turned off. He never discussed the substance of class action," said Kehr, who said the opposing counsel in the case were not adverse parties.
"They shared a community of interest," Kehr told Berle.
"So they're good buddies? They just sue each other? It's OK for buddies to sue each other?" Berle responded.
"It is perfectly OK for the plaintiffs and the defendants in the class action to come to a mutually agreed settlement and to work together to effect that settlement," answered Kehr.
"So when Jones files a lawsuit against the city, they are on the same side? In mediation, they are just going in as parties that represent each other and everything is hunky-dory?" asked Berle.
"I think that is substantially correct," said Kehr.
Jeffrey Koncius, another Kiesel Law attorney, said Jones was referred out when he wanted to pursue claims against the city.
Jones' attorney, Jeffrey B. Isaacs of Isaacs Friedberg LLP, disputed this, telling Berle that Paradis introduced Landskroner to Jones as someone who would assist with filing the complaint. He said he communicated to Paradis at least 10 days after the complaint was filed with the understanding it was about the dispute with the city.
Consumer advocate Jamie Court of Consumer Watchdog, who is not involved with either of the cases, said the matter was a conspiracy to defraud ratepayers that went ignored by the city attorney's office.
"The city attorney needs to come clean to protect the integrity of his office and show that he has clean hands. These allegations are as serious as they come and Mr. [Michael] Feuer must address them immediately to live up to his duty to ratepayers, the public and the integrity of his office," said Court.
"Mr. Feuer needs to fire Jim Clark, Tom Peters, Paul Kiesel and Paul Paradis, as well as immediately refer this case to the California attorney general's office for an independent investigation," said Court.
Berle barred the city from paying Paradis or Landskroner and set an March 19 court date.