City of LA & LADWP Clear Significant Hurdle in Litigation Against PriceWaterhouse Coopers, LLP for Botched Customer Billing System Design & Implementation
Judge Rejects PwC’s motion and allows City’s fraudulent inducement claims to proceed
|In a hearing held on Thursday September 24th, Superior Court Judge, the Hon. Elihu Berle, rejected a motion filed by PricewaterhouseCoopers (PwC) to dismiss the claims asserted by the City of LA (the City) that PwC fraudulently induced the City, through the Los Angeles Department of Water and Power (LADWP), to enter into a contract with PwC for the replacement of LADWP’s customer billing and information system. In a ruling from the bench, the Judge held that the City may continue to pursue these claims of fraudulent inducement.
The ruling is a significant victory for the City and LADWP customers because it allows the City to pursue additional millions of dollars in damages that well-exceed the $60 million paid by LADWP to PwC to oversee the design, systems integration and implementation of the new billing system.
“We’re pleased the Court agreed that our case against PricewaterhouseCoopers, based on the City’s allegations of fraud on the ratepayers of Los Angeles, can proceed,” said City Attorney Mike Feuer. “We expected PricewaterhouseCoopers’ lawyers to play hardball and we’re more than ready for that fight.”
LADWP General Manager Marcie Edwards added, “The Court’s decision will allow us to attempt to recover much of the costs borne by the utility and our customers for the problems experienced with the billing system design and implementation. We hired PwC and paid them $60 million to deliver a product that worked. Instead, as our complaint alleges, we ended up with a nightmare for our customers and our employees as we managed the fallout of the faulty integration and programming of the new system. What our complaint also alleges, and is even worse, is that PwC fraudulently misrepresented their track record to secure the contract, among other misrepresentations. While we work to recover every penny spent in connection with the faulty implementation, we can report that we have since fixed most of the critical billing system problems, and at this time we are exceeding industry standards for on-time bills and other key metrics, while lowering call hold times to under three minutes.”
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