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City Attorney sues gas companies; council approves contingency contract for antitrust case
Summary
City Attorney James Hahn announced a civil lawsuit alleging a conspiracy among major gas companies; the council approved hiring a private law firm on a 15% contingency to pursue damages under California antitrust and unfair competition laws.
City Attorney James Hahn announced that the City of Los Angeles has filed an antitrust/unfair business-practices action alleging a conspiracy by major natural gas suppliers to limit competition, and the City Council approved a contingency contract with the private law firm Engstrom, Lipscomb & Lack to assist in the litigation.
Hahn told the council that evidence indicates executives from Southern California Gas Co., San Diego Gas & Electric and El Paso Natural Gas met in 1996 and agreed not to compete in Southern California and Baja California markets. "The purpose of that meeting was, we believe, to legally agree not to compete against each other," Hahn said, and he said the conduct hindered pipeline construction that would have increased supply and lowered prices.
Hahn said the city will pursue remedies under California law, including the Cartwright Act (state antitrust statute) and Business and Professions Code section 17200, seeking treble damages, disgorgement of profits to be rebated to consumers, civil penalties (Hahn cited up to $25,100 per count under the statute) and injunctive relief to prevent further anti-competitive conduct.
To staff the litigation, the council approved a contingency-fee contract with Engstrom, Lipscomb & Lack. The agreement as presented calls for a 15% contingency fee on recoveries attributable to the City of Los Angeles, with the private firm covering litigation costs; the city attorney said the firm has prior involvement in related litigation. Councilmembers Joel Feuer, Janice Chick and Ridley-Thomas joined as authors of the motion. The roll call recorded 12 ayes.
Council members praised the move as a consumer-protection step. "This is a bold step in the right direction for consumers not only in Los Angeles but throughout the state," Feuer said. Council members said they would seek coordination with other public prosecutors, and Hahn said the city is coordinating with Long Beach and seeking broader participation from district attorneys, the state attorney general and other local governments.
The motion authorizes the city attorney to negotiate and execute the contingency agreement and to pursue the civil remedies described in the complaint.
