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PricewaterhouseCoopers Lawyers Won’t Say If Review Will Be Sought in Axing of Sanctions
C.A. Scraps $2.5 Million Award Against City of L.A.; Majority Says Statutes Relied Upon by Plaintiff in DWP Case Do Not, Independently, Authorize Award of Monetary Sanctions, Through Other Sections Do; Grimes Disagrees
By a MetNews Staff Writer
Lawyers for the powerhouse global consulting firm of PricewaterhouseCoopers were mum Friday as to whether review will be sought in the California Supreme Court of a Court of Appeal decision ordered a vacating of the $2.5 million sanction awarded that was against the City of Los Angeles in litigation brought, then dropped, by the city in connection with the Department of Water Power billing scandal.
The granting of review, if sought, appeared probable in light of an emphatic partial dissent by Justice Elizabeth A. Grimes, who argued that the proposition put forth by the majority as to the unavailability of sanctions under the sections that were cited contravenes long-held notions by the courts and defies reason.
Grimes, a member of Div. Eight, who sat on assignment to Div. Five. Justice Carl H. Moor of that division authored the majority opinion, in which Presiding Justice Laurence D. Rubin joined.
Lawyers for the plaintiff must weigh whether to seek an audience in the state’s high court or simply go back to the trial court, having been granted permission Moor’s opinion to take another stab at garnering sanctions, under other sections, on the assumption that Los Angeles Superior Court Judge Elihu M. Berle would award the same amount, again.
Gross Overcharges
On March 6, 2015, the city sued PricewaterhouseCoopers—referred to by Moor as “PWC” and by Grimes as “PwC”— blaming it for the DWP billing system that grossly overcharged hundreds of thousands of customers, sparking litigation. Then, on September 26, 2019, the city filed a request for dismissal with prejudice of its action against PWC (and others) and the dismissal was entered on Oct, 2, 2019.
PWC on June 29, 2020, moved for monetary sanctions based on the city’s misconduct in discovery, and Berle on Oct. 6, 2020, granted it.
Div. Five held, in a 2-1 decision filed late Thursday, that the statutes invoked by PWC—Code of Civil Procedure §§2023.010 and 2023.030—do not support Berle’s order.
Moor also declared that the Superior Court retains jurisdiction to award discovery sanctions after a case is dismissed with prejudice, as a collateral matter, and said that whether or not a sanction motion is timely, the justice said, is left up to the discretion of the trial judge. As to those determinations, Grimes was in agreement.
Inefficacy of Provisions
Sec. 2023.010, Moor noted, merely lists types of conduct that constitute discovery abuses.
He went on to explain:
“Section 2023.030 describes the types of sanctions available under the Discovery Act when another provision authorizes a particular sanction. Section 2023.030 does not independently authorize the court to impose sanctions for discovery misconduct.”
The section begins:
“To the extent authorized by the chapter governing any particular discovery method or any other provision of this title, the court, after notice to any affected party, person, or attorney, and after opportunity for hearing, may impose the following sanctions against anyone engaging in conduct that is a misuse of the discovery process:”
It then enumerates possible sanctions, such as monetary sanctions, evidence sanctions, striking pleadings or portions of them, and contempt.
Moor wrote:
“The award of monetary sanctions in this case, which was based solely on sections 2023.010 and 2023.030 without regard to any other provision of the Discovery Act, constituted an abuse of discretion because it was outside the bounds of the court’s statutory authority.”
He set forth:
“We cannot evaluate on this record whether the sanctions awarded may have been an appropriate exercise of the trial court’s discretion under other discovery provisions because the defendant presented its costs in the motion below based on the general categories of misconduct described in section 2023.010, rather than on the defendant’s reasonable expenses incurred as a result of sanctionable conduct under discovery provisions other than sections 2023.010 and 2023.030.”
Remand Ordered
The jurist went on to say:
“We recognize that the statutory language of section 2023.030 limiting sanctions ‘to the extent authorized’ by other provisions of the Discovery Act was not addressed in the trial court, and no prior case law squarely held that section 2023.030 requires monetary sanctions to be authorized by another provision of the Discovery Act. As a result, we conclude the order in this case must be reversed and remanded to allow PWC an opportunity to present the issue of sanctions to the trial court for determination under the law as clarified.”
He continued:
“Our conclusion that the sanctions order must be reversed, and any award of sanctions must be made in conformance with the requirements of the Discovery Act, is not intended to absolve the City of the serious and egregious nature of the conduct at issue; we take no position as to the amount of monetary sanctions that would be appropriate for the trial court to assess on remand.”
Grimes’s Opinion
Disagreeing with “the majority’s unprecedented statutory analysis,” Grimes said:
“I see no basis in statutory law, case law, or common sense to conclude, as the majority does, that sections 2023.010 and 2023.030 ‘do not authorize the court to impose sanctions in a particular case,’ or that section 2023.030 does not ‘independently’ authorize the court to impose sanctions for discovery misconduct….I read those statutes just as other courts, up to now, have universally done.”
She presented this view:
“I understand the majority to mean that the trial court, instead of assessing the City’s course of conduct throughout this litigation, must instead assess compliance with the specific procedures or prerequisites of the particular discovery method in connection with each individual motion that PwC successfully made or defended against—and then determine expenses reasonably incurred in connection with that item….That approach… ignores the fact that monetary sanctions for the discovery abuses found by the trial court—withholding documents and asserting false claims of privilege to prevent document production and depositions—are authorized by other provisions of the Discovery Act….
“…In my view, no more is required to enable the trial court to award monetary sanctions under section 2023.030 for the egregious and ongoing misuses of the discovery process at issue here.”
Raised by Court
Government Code §68081 provides that “[b]before…a court of appeal…renders a decision in a proceeding other than a summary denial of a petition for an extraordinary writ, based upon an issue which was not proposed or briefed by any party to the proceeding, the court shall afford the parties an opportunity to present their views on the matter through supplemental briefing.” In obedience to that provision, Div. Five on July 6 said in a letter to counsel on appeal in part:
“The parties may submit letter briefs on or before Friday, July 15, 2022, addressing whether the trial court had authority to award monetary sanctions in this case pursuant solely to the provisions of Code of Civil Procedure sections 2023.010 and 2023.030. The parties are cautioned against relying on cases that concern nonmonetary sanctions, or sanctions awarded under statutes other than California’s Civil Discovery Act, without explaining the distinction and the relevance.” Letter briefs were provided by both sides. Grimes remarked: “Let us not forget that, except for the City’s jurisdictional and timeliness claims, the trial court’s ‘authorization to impose sanctions’ was never asserted as an issue in the trial court or on appeal, until the majority put it at issue with its own novel statutory analysis, never before argued by counsel and never before considered by any other California court.”
The reprehensibility of the misconduct was underscored by Grimes in her separate opinion, though it was not clear how that relates to the legal question the majority brought up.
“This case presents a record of egregious discovery abuse that is unmatched in my experience,” she commented.
The jurist noted that the city “does not contend on appeal that it did not engage in discovery abuses for which sanctions are recoverable under the Civil Discovery Act.”
New York attorney Paul Paradis and Beverly Hills lawyer Paul Kiesel were brought in by the city as special counsel on March 6, 2015, to instigate litigation against PWC and others. Discovery that was resisted in the case would have revealed skullduggery—which eventually did emerge.
Paradis represented Antwon Jones, a DWP customer who had made a claim against the city based on over-charges; Kiesel and the city knew of that representation; Paradis enlisted the services of an Ohio lawyer, Jack Landskroner, to bring a class action against the city, with Jones as the named plaintiff; Paradis told Landskroner that the case was “pre-settled” on terms acceptable to the city; the Superior Court approved a $67 million settlement which included approximately $19 million in attorney fees; the city paid Landskroner $19,241,003 and he kicked back $2,175,000 to Paradis, who later pled guilty to one count of bribery, with sentencing scheduled for next month; Paradis admitted bribing DWP officials; one such official was the then-DWP general manager, David H. Wright, who was sentenced on April 25, 2022, in U.S. for the Central District of California to 72 months in prison.
‘Enormity’ of Abuses
Grimes said in her separate opinion:
“The majority has described the factual and procedural background at length. Yet that description does not convey the constant and egregious nature of the City’s discovery abuse over a period of almost two and a half years. Nor does it describe how gradually, at hearing after hearing, it finally became clear to the trial court that the City Attorney’s office, and not just outside special counsel, had colluded from the outset with Mr. Antwon Jones’s lawyers to create a settlement in the Jones class action against the City that would enrich the lawyers, deprive the Jones class of due compensation, defraud the public, and orchestrate the amount of the City’s damages in its case against PwC—all the while engaging in a coverup of the collusion by refusing to provide discovery and asserting false claims of privilege. The record discloses the enormity of the City’s discovery abuse; its genesis at the very outset in January 2017 and its continuation virtually unabated until the City abruptly dismissed its complaint; and the court’s increasing understanding, over the course of numerous hearings, of the scope of the abuse, culminating in the court’s ultimate conclusion the City’s conduct amounted to a fraud on the court.”
The case is City of Los Angeles v. PricewaterhouseCoopers, LLC, 2022 S.O.S. 5331.
The city was represented on appeal by Deputy City Attorneys Kathleen A. Kenealy and Joseph A. Brajevich, along with Eric M. George, Guy C. Nicholson and Kathryn L. McCann of the Century City firm of Browne George Ross O’Brien Annaguey & Ellis LLP. Casey J. McCracken, Daniel J. Thomasch, Lauren J. Elliot and Joseph M. Ortega of offices of Gibson, Dunn & Crutcher acted for PWC.
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