When taxpayer money is squandered, lost, or otherwise frittered away, everyone loses.
So when not one representative of the 70 towns entitled to a $36 million class action settlement objected to handing over nearly $9 million of that settlement to the attorneys who represented them, it is very troubling.
The settlement stems from the effort to recover some of the Connecticut Resource Recovery Authority’s failed $200 million pact with Enron.
Representatives from some of those 70 towns, including West Hartford, Hartford, Manchester, and Waterbury, actually stood up in Waterbury Superior Court and told Judge Dennis Eveleigh, who is presiding over the case on the state’s Complex Litigation Docket, that the attorneys actually deserve the proposed huge gold mine for their efforts.
David Golub, of the Stamford firm Silver, Golub & Teitell, representing the towns, told the judge that about four firms put in about 9,000 hours of work on the case. Even with the fees distributed to four different law firms, taxpayers would still pay an astounding hourly rate of about $1,000 per hour.
To put this in perspective, law blogs are currently bustling with chatter about how some Manhattan law firms are now charging $1,000 per hour. One blogger asked whether such an excessive legal fee be “per se unconscionable?”
But that’s not the only baffling and troubling issue with the case.
Judge Eveleigh seems to be working against giving back as much money as possible to the taxpayers. Despite the $36 million award, and now, less nearly $9 million for the attorneys, taxpayers will recover only 12.5 percent of CRRA’s pact with Enron, the judge issued a gag order to halt CRRA to talk to its towns about how the fees will affect future tipping fees.
CRRA is the state’s trash-to-energy agency, and towns pay “tipping fees” to dump their trash at its facilities. That garbage is converted to energy and sold. CRRA sets the tipping fees based, in part, on what it can offset by energy revenue. When its deal with Enron went sour, tipping fees went up.
The towns went ballistic, arguing that they shouldn’t have to pay for CRRA’s errors. But this is tricky stuff. After all, CRRA is a state agency. Any win for the 70 towns probably means that the money will have to come from taxpayers across the state. Moreover, today’s CRRA is not the same as the one that made the egregious error. After Enron went bust, the legislature passed a law sweeping out the old CRRA board and installing a new one, with increased representation by the towns. In fact, the mayors and first selectmen of several towns in the class action are on the CRRA board. The legislature authorized CRRA to take steps to put its house in financial order, increasing tip fees if necessary.
Yet the plaintiffs argue it was illegal for CRRA to talk about increasing tip fees.
Consistent with legislative direction, CRRA has gone out and sued banks, law firms, and others who were responsible in one way or another for CRRA entering into the deal with Enron. The settlements from those suits have been used to pay off CRRA debt (thus, keeping tip fees from rising further).
Also, when it settled one suit last February, the board wanted to return $14.8 million to the towns immediately — but the towns’ lawyer and the court stopped CRRA from returning the money. Then, in his final decision in June, Eveleigh asserted CRRA was “unjustly enriched” by retaining the money it wanted to give back voluntarily. One of the most damning aspects of Judge Eveleigh’s decision is his statement that CRRA did not suffer any loss because it passed costs on to the towns in the form of higher tip fees. But CRRA is not done trying to collect from other parties. It is, indeed, in the midst of suit in Texas against several banks. The defendants in that case are now trying to get it tossed, based in part on Eveleigh’s ruling. They are clearly ecstatic because if CRRA suffered no loss, it doesn’t have any damages. Case closed.
