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No spectators crowded the San Bernardino County Courthouse last summer to watch a six-week bench trial more likely to induce drowsiness than public outrage. Expert witnesses testified about how the Los Angeles Department of Water and Power (DPW) set its rates for California agencies and schools, a subject plaintiffs’ lawyer Eric R. Havian himself admitted was “dry as dust.” There wasn’t even a jury. Fearful of numbing a panel’s minds, he’d opted for a bench trial. But the testimony and evidence Havian gathered supported a premise that was anything but dull. He contended the DWP, since at least 1988, had deliberately overcharged state agencies and schools by about 20% a year — resulting in illegal charges of more than $200 million. San Bernardino County Superior Court Judge John P. Wade agreed. Last June, he ordered the utility to repay $223.8 million to plaintiffs including the Los Angeles Unified School District and the California Department of Parks and Recreation. The judge had harsh words for the DWP and Los Angeles, which he said “intentionally ignored the plain language” of the state law governing utility rates to state agencies. State of California ex rel. Barakat v. Los Angeles Department of Water & Power, No. SCVSS 100293. ‘My best client ever’ The decision delighted Havian, a partner at Phillips & Cohen in San Francisco, a 15-lawyer firm specializing in qui tam (whistleblower) cases. He credits the win to a persistent whistleblower — “my best client ever,” energy consultant Sam Barakat — skilled expert witnesses and sheaves of incriminatory documents culled from DWP’s dust-choked warehouse in southern Los Angeles. Though Havian, 53, was a federal prosecutor for eight years, he’s rarely set foot in a courtroom since joining Phillips & Cohen about 15 years ago. Nearly all whistleblower cases settle because the stakes are so high. The DWP case was his second trial since joining the firm. Havian has negotiated significant settlements in a number of qui tam cases, including $111.2 million for the federal government from Northrop Grumman Corp. in 2003 to settle allegations that a company acquired by Northrop had inflated its bills. He’s secured $20.8 million on behalf of four cities that claim they were sold millions of lead-contaminated water valves and is working out settlements for 150 other plaintiffs. He’s also continuing to settle a case involving efforts to defraud in a federal program that provides high-speed Internet connections to schools and poor neighborhoods. Defendants have already paid $33 million. Havian first heard about what became the DWP case a decade ago, when Barakat told him about possible violations of an obscure 1986 California law that required public utilities to charge their public-agency customers only their proportionate share of the capital costs of power. Havian was initially skeptical, but Barakat’s research and tenacity persuaded him to pursue the case. He filed suit in 2000 on behalf of Los Angeles County and other major DWP customers. None were aware of the law or the overcharges. He spent more than two years in intense discovery, which included painstaking reviews of dozens of boxes of memos and correspondence from DWP’s warehouse. “There’s no substitute for diving into documents and looking at them,” he said. “That’s where all the good stuff is . . . .Those dusty boxes are the biggest asset you have.” The plaintiffs’ team used those documents at trial to bolster the plaintiffs’ claim that the DWP was aware of the pricing law but ignored it when setting rates. Havian’s co-counsel was Wayne T. Lamprey of Goodin, MacBride, Squeri, Day & Lamprey of San Francisco. Phillips & Cohen attorneys Mary A. Inman and Jessica T. Moore were also vital to the plaintiffs’ success. DWP attorney Marc S. Harris said the case hinged on how to interpret a utility-rate statute that had never before been challenged. Expert witnesses had different opinions, said Harris, now a partner in Mayer Brown’s Los Angeles office. At the time of the trial, he was a partner at Beck, De Corso, Daly, Kreindler & Harris. Harris said the plaintiffs did not prevail on allegations of malice, and their filing under the California False Claims Act was dismissed before trial, preventing them from pursuing treble damages. The parties expect to reach a settlement by the end of the month, Havian said. Barakat, the whistleblower, will receive 19% of the negotiated amount.

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