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Court of Appeal:
Lawyer in DWP Billing Case Must Return $1.65 Million Fee
However, Michael J. Libman Is Relieved of Order to Pay $116,000 in Discovery Sanctions
By a MetNews Staff Writer
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MICHAEL J. LIBMAN |
Tarzana attorney Michael J. Libman on Friday lost in his challenge to an order by Los Angeles Superior Court Judge Elihu M. Berle to disgorge $1,65 million received as fees in a class action against the City of Los Angeles based on overcharges for water and electricity, but the Court of Appeal did relieve the lawyer and his firm of an order imposing discovery sanctions in the amount of $116,000.
Justice Carl H. Moor of Div. Five authored the majority opinion, joined in by Presiding Justice Laurence D. Rubin. Justice Elizabeth A. Grimes wrote a concurring opinion.
“[T]he egregious nature of Libman’s ethical violations in this case supported complete forfeiture of the fees that he received,” Moor wrote.
But the discovery sanction cannot stand, he said, because it was imposed under the court’s powers which relate to penalizing parties, and Libman was an attorney for a party, not a party.
DWP’s Overbilling
Libman was brought in as local counsel for Antwon Jones and for a class of City of Los Angeles ratepayers. Excessive fees had been charged to hundreds of thousands of customers, starting in 2013, owing to a faulty billing system designed by PricewaterhouseCoopers for the city Department of Water and Power (“DWP”).
On Dec. 9, 2014, Jones engaged the services of then-attorney Paul Paradis of New York. Unknown to Jones, that same month, the city hired Paradis and Beverly Hills lawyer Paul Kiesel as special counsel in an action against PricewaterhouseCoopers.
A draft of a class action complaint, provided to Jones, listed Paradis, Kiesel, and Gina Tufaro as his lawyers.
After the city declined to waive the conflict, Paradis brought in Ohio attorney Jack Landskroner to act, ostensibly, as the attorney for Jones and the class, explaining—it later emerged—that the city wanted to use Jones’s action as the vehicle for settling all claims based on the DWP’s over-billing on terms favorable to the city.
Kiesel recruited Libman as “liaison counsel.”
Jones’s class-action complaint was filed on April 1, 2015. The attorneys were listed as Libman and Landskroner.
Although Kiesel was representing the city in the action against PricewaterhouseCoopers and Libman handling a suit against the city, Kiesel and Libman jointly represented plaintiffs in a personal injury case (in which there was a $2.5 million verdict, and an action against a home repair store, in which the verdict was for $1.415 million.
$19 Million Fee-Award
Under the terms of a $67 million settlement of the class action, approved by Berle, the city paid $19,241,003.99 to Landskroner as fees and costs. Landskroner handed over $1.65 million of that sum for fees and $3,370.01 for expenses.
He also paid $2,175,000 to Paradis. That kickback was viewed as a bribe and for accepting it, Paradis was sentenced on Nov. 7, 2023, by U.S. District Court Judge Stanley Blumenfeld Jr. of the Central District of California to two years and nine months in prison.
Landskroner died June 19, 2021.
The U.S. Attorney’s Office announced in 2021 that “Kiesel is cooperating with the investigation and is not charged with any wrongdoing.”
Moor’s Opinion
Moor noted that Berle, in addition to imposing the invalidated monetary sanctions, also imposed nonmonetary sanctions, including striking his opposition to Jones’s motion for disgorgement. He wrote:
“The only issues that the defaulted party may raise on appeal from a default judgment are questions related to the court’s jurisdiction, the sufficiency of the pleadings, whether the relief awarded exceeded the relief requested in the pleading, and related procedural issues.”
Nonetheless, he said, “[e]ven were we to address the merits of Libman’s contentions, however, we would find no abuse of discretion.”
The justice noted that an attorney’s violation of the Rules of Professional Conduct can justify a ruling declaring that fees be forfeited. He pointed to three former rules (now superseded) that were in effect when Libman committed violations of them.
No Written Disclosure
One, he said, “prohibits an attorney from representing a client without providing written disclosure to the client when the attorney has a legal, business, financial, professional, or personal relationship with another person or entity that the attorney knows or reasonably should know would be affected substantially by resolution of the case,” commenting:
“As one example in this case, Libman invited Kiesel, who was acting as special counsel for the City, to join him as cocounsel on other trials without disclosing this business and financial relationship to Jones or the trial court. No further analysis was necessary and no abuse of discretion has been shown.” Another rule barred fee-splitting without a client’s written consent. Jones declared that he did not hire Libman and did not consent to his receiving a fee.
A third rule forbids knowingly making false statements to the court. Moor said there is “ample evidence to support the trial court’s finding” that Libman breached that stricture.
“As just one example, Libman listed himself as cocounsel with Kingsley and Kingsley on 32 class action lawsuits,” he wrote. “The evidence showed that he was not in fact cocounsel on any of the cases that he listed.”
Another falsehood brought out by attorney Brian Kabateck—who was brought into the case by Berle in 2019 as the new class counsel after a scandal erupted over the conflicts of interest—was Libman’s representation that in 2013 and 2014, he was readying to represent his mother-in-law in an action over the DWP’s inflated bills. Kabateck disclosed that the mother-in-law had died in 2012.
Grimes concurred in the result but disagreed as to a need to discuss the applicability of two Code of Civil Procedure sections.
The case is Libman v. City of Los Angeles, B313095.
Libman Comments
Libman, who represented himself on appeal, said Friday:
“I am disappointed and disagree with the Courts of Appeal’s decisions of today. I am dismayed that the court chose to ignore irrefutable evidence that Brian Kabateck, in conspiracy with others, manufactured and fabricated evidence against me. The Court of Appeal also shrugged off the admitted to… and undisclosed friendship between Brian Kabateck and Judge Elihu Berle, in addition to all the evidence of multiple acts of perjury involving Brian Kabateck in Jones as reported by the LA Times on November 6, 2023 based on Paul O. Paradis’ State Bar complaints that are now matter of public record.”
He added:
“I will likely appeal further. Finally, I hope my case and situation will be the harbinger of much needed reform in our civil justice system, at least in the Los Angeles County Superior Court system.”
Kabateck Responds
Kabateck, who—along with two members of his firm, Anastasia K. Mazzella and Hugo B. Flores—represented Jones on appeal, responded:
“The Court of Appeal opinion is concise and clear. In my opinion, Mr. Libman’s continued failure to accept responsibility for his own actions is obvious. Years ago when Mr. Libman began to wage his war on my team, my family and me, I suggested, as the opinion recites, that he turn his ire on the people that got him into this fine mess. Instead he has repeatedly doubled down on a false narrative that Judge Berle, myself and others have formed some manufactured conspiracy.
“The evidence of his malfeasance is outlined in the Court of Appeal’s opinion. Now, apparently desperate and at the end of the road he is relying on made up claims of perjury that may or may not have been created by Paul Paradis, who was just sentenced to 33 months in Federal prison for his role in this case, that my team has been working hard to clean up for almost five years.
“These same allegations were brought up by Mr. Paradis years ago and are old news. Desperate people make desperate attempts to shift the blame on the very people trying to clean up their mess.”
Kabateck continued:
“During that same time Mr. Libman has threatened me and my family, accused Judge Berle of taking a bribe and has sued one of my partners, my law firm and me as well as the Attorney General of the United States, the FBI and others. I currently have a restraining order against Mr. Libman in this case.
No lawyer doing the job that I was directed to perform by the Court should have to go through what my family, my co-workers and I have endured at the hands of Mr. Libman, including his insults and personal attacks. Enough is enough.”
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