Entergy New Orleans has filed a federal lawsuit against a former contractor it claims engineered the scheme to pay actors to praise the utility's proposed power plant, demanding the contractor pay for costs related to a New Orleans City Council probe of the scandal.
The utility is suing the Hawthorn Group, of Alexandria, Virginia, to recoup "all costs associated" with the City Council's investigation, according to the lawsuit.
"Hawthorn acted intentionally, grossly deviated from the applicable standard of care of similar professionals, and acted in bad faith," the lawsuit says. "Hawthorn is contractually and legally obligated to reimburse Entergy for the costs associated with the council’s investigation."
The lawsuit, filed in U.S. District Court on Wednesday, comes as Entergy tries to resurrect its image amid the paid-actors controversy, which has led to the resignation of the utility's local chief executive and resulted in a council threat to impose a $5 million fine.
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The lawsuit does not seek reimbursement for the fine, which Entergy has offered to pay as a $5 million "donation" to the city.
But after receiving the results of its investigators' probe — which found Entergy culpable in the scandal — the council is considering forcing Entergy to pay the $5 million as a penalty, not a donation, which could be seen as a "cost associated" with the investigation.
In order to generate what appeared to be public support for the proposed $232 million power plant in New Orleans East, Hawthorn subcontracted its work to Crowds on Demand, a California firm, without Entergy's written approval, in violation of its contract, Entergy attorney Thomas Flanagan claims in the suit.
Suzanne Hammelman, Hawthorn's president and chief operating officer, declined to comment Wednesday.
The backdrop of the lawsuit was Entergy's push to build the 128-megawatt power plant, which it said would provide a needed source of local generation and help bolster power reliability in New Orleans.
The council agreed 6-1 in March to let the company move forward with the plant, despite heavy opposition from activists who said Entergy should instead expand its renewable power sources and upgrade its power transmission lines.
But not long after the vote, The Lens reported that some Entergy supporters who attended two council meetings on the plant were in fact paid to be there.
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Entergy investigated the allegations and then put the blame for that move solely on Hawthorn and Crowds on Demand, though it admitted to asking Hawthorn for specific numbers of supporters.
The City Council's own investigation, however, found that Entergy "knew or should have known" that people would be paid, based on emails, text messages and other communications between Entergy and its contractor.
The council slapped Entergy with costs of conducting its investigation, such as payments to investigators and to its utility regulatory advisers.
The suit filed Wednesday seeking to recoup those costs also wants Hawthorn to pay Entergy's attorneys fees and specifically asks for a judge to declare Entergy ignorant of Hawthorn's plans to pay professional actors or Crowds on Demand.
Entergy said in a statement Wednesday that it does not want Hawthorn to pay its $5 million donation, but a fine, if imposed by the council, would presumably be seen as a cost associated with the investigation.
"Entergy has maintained throughout this proceeding that it did not authorize or direct Hawthorn or any other person or entity to pay individuals to attend or speak at City Council meetings," the statement said.
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