The Fine Print: How Big Companies Use "Plain English" to Rob You Blind (15 page)

Entergy also told state officials and a reporter for the
New Orleans Times-Picayune
that Seeber was merely a self-taught energy auditor. Seeber did not have credibility, Entergy said, and besides, he was really hard to deal with. An Entergy spokesman said that Seeber was just in it for the money.

Eventually the state transportation agency met Entergy more than halfway. A government lawyer wrote Seeber that the state “does not wish to pursue collection of interest” on any overcharges. The agency disputed neither the legitimacy of collecting interest nor the $3 million estimated interest charge, but, in the end, the state settled with Entergy for about fifteen cents on the dollar. Seeber went public with his criticism, saying the state gave away too much in looking out for the interests of Entergy to the detriment of Louisiana citizens.

The next year, Lillian Regan, the city public-utilities director, brought Seeber back to New Orleans to audit Entergy’s streetlight bills again. Seeber found that, despite having been put on notice eight years earlier, Entergy had committed more billing abuses. According to Seeber, Entergy charged the city excessive amounts for the repair and maintenance work of its own power lines. And there were still plenty of phantom streetlights. Indeed, Seeber said he found that some of the imaginary streetlights that Entergy billed the city for in 1994 were still on the city’s bills.

“Vindictive billing,” Seeber called it. “The abuses were far worse than what we found in the first streetlight audit.” Seeber calculated the overcharges, after eight years, at about $15 million. When the penalties negotiated under the terms in the 1994 deal were added in, the bill came to $25 million.

Mayor Marc Morial’s aides said the figure could be more than $40 million, but they met with the president of the Entergy utility to work out a settlement. When the mayor got nowhere, the city took Entergy to court. The lawsuit charged that Entergy did not simply make mistakes, but engaged in systematic overbilling. When caught, the lawsuit said, Entergy refused to allow inspection of its records, a tactic the city described as “clearly calculated to obstruct a legitimate investigation of its actions and the failure of performance of its obligations to the city.” Entergy claimed it was just protecting records that were not relevant to the audit.

In a front-page article, the
Times
-
Picayune
characterized the litigation as “the extraordinary step of filing suit against the city’s electric and gas provider, a subsidiary of New Orleans’ only Fortune 500 company.” That a mainstream newspaper regards suing a vendor for overcharging taxpayers as “extraordinary” speaks volumes about what has become a widespread bias in the news these days. The gratuitous mention of Entergy as the only Fortune 500 company in town helps make clear the journalistic tilt toward the rich and powerful, rather than to their readers, the people forced to pay Entergy more than it was legally due.

Unmentioned in the news was the relative size of the dispute. At the time, the New Orleans city government budget was about $500 million a year. In 2002 the city was facing a $25 million shortfall between revenue and expenses. Even after paying Seeber’s full fee, the city would have recovered enough to pay all of its bills for a week. Instead, the local newspaper left the impression that the $25 million was a burden to Entergy.

As the lawsuit proceeded, a new mayor was elected. A man with a deep understanding of monopolies, Mayor Ray Nagin had been the general manager of Cox Cable New Orleans, the local Cox cable television monopoly. He had many close ties to Entergy executives and even appointed a senior Entergy lawyer as New Orleans city attorney.

Nagin quickly fired Lillian Regan, the city official who had hired Seeber and been adamant that the utility should make a full refund on the overcharges. Regan found herself facing criminal charges in a taxi-license case, although the case was so weak that the judge who heard the accusations dismissed the charges. Regan’s alleged crime had been to waive fifty-dollar fees for a handful of down-on-their-luck taxi drivers, including a cabbie whose leg had been amputated. In dismissing the case, the judge said in open court that he would have done the same thing had he been in charge of cab licenses.

Still, no one in New Orleans missed the message that was being sent
by the mayor’s office. Nagin, a native son who grew up to become a monopolist executive, would go after petty corruption with a vengeance. But for his fellow monopolists at Entergy, the biggest and most powerful company in town? A very lenient standard of justice awaited them.

Evidence of this was soon at hand: Nagin agreed to settle with Entergy for $6.7 million, ending the lawsuit. Entergy got to keep more than half of the overcharges. After the penalties that were waived, Entergy paid just twenty-six cents on each dollar owed to the city. Mayor Nagin explained that he settled because of the costs and risks of litigation, but he did not publicly lecture Entergy or speak of the company in the moralistic tones that he used in referring to Regan, who had been wrongly accused of petty corruption. That’s solidarity among monopolists.

The big discount for cheating sent a clear signal to Entergy: overcharging pays because, even when caught, the company can still keep most of the money. What Entergy needed to do next was make sure that Seeber never came back to audit the bills it sent the city.

That Entergy wanted to make sure Seeber would not ever get another chance to audit its records became clear when Seeber obtained an internal Entergy report and posted it on the Internet. The report details an Entergy strategy to “eliminate the need” for the city to hire an electric-bill auditor. Entergy says the report should not have been released and that it should be interpreted as part of a plan to make sure all bills were proper, thus eliminating any need for independent audits. But Entergy had another strategy to keep the insistent Seeber from sniffing out the misdeeds in its big invoices to the City of New Orleans.

That brings us back to the light pole on Tulane Street.

Nathaniel Joseph had been a fruit seller with a stand on the sidewalk outside Charity Hospital. At closing time one day in March 1996, fifty-eight-mile-per-hour winds snapped the light pole at its rusty base, dropping 626 pounds of steel on his Joseph’s head. He survived, but after several surgeries, he suffers constant pain and will require lifelong medical care for his disabilities. He sued Entergy, which had the contract to maintain the pole, and the city, which owned it.

Entergy denied any liability for the rusty pole, but the courts ruled otherwise, saying the contract Entergy had with the city made clear that it alone was responsible. Nathaniel Joseph was paid more than $3 million in damages and his wife, Kecia, received an additional $100,000 for loss of consortium, legalese for an inability to have sexual relations with her husband.

Entergy turned around and sued TriStem, claiming that Seeber should
have to pay Joseph for his injuries and medical care. Entergy argued Seeber’s company, not Entergy, had been negligent. As the city’s energy billing auditor, Entergy asserted, Seeber knew or should have known that the light pole on Tulane Avenue was rusted. Entergy said that Seeber had a duty to inform Entergy and had failed in that obligation. (Seeber’s contract, by the way, contained no requirement that he review safety conditions; his brief was to identify excessive and unwarranted charges by Entergy.)

An angry Seeber saw Entergy’s strategy as payback: the company was trying to punish him for repeatedly exposing their overcharges. So Seeber wrote to each of the company’s directors and to J. Wayne Leonard, the chief executive, complaining that Entergy was trying to ruin his business with a baseless lawsuit.

Judge Kern A. Reese of the state civil court summarily tossed out Entergy’s suit against Seeber. Before doing so, though, Judge Reese took note of an Entergy complaint that, by writing those letters, Seeber, who was acting as his own lawyer, was improperly attempting to influence the litigation. A defendant should deal only with the lawyers of the company suing him, Entergy argued. Since Seeber was acting as his own lawyer the court rules applied to him.

Judge Reese ordered Seeber to never mention the fruit vendor’s injury case to anyone at Entergy, and specifically not to Leonard, the chief executive. Seeber protested that his business required him to have contact with Entergy and the lawsuit could require him to make mention of the fruit vendor’s case, whereupon the judge designated two Entergy lawyers as the only people in the company to whom Seeber could mention the fruit vendor’s case. The judge’s action might seem like the government imposing prior restraint on free speech, but the courts sometimes impose limitations on those appearing before them in the name of what judges call the efficient administration of justice.

Entergy promptly appealed the dismissal of its lawsuit—still trying to make Seeber pay for the fruit vendor’s injuries—but then let the case sit. If the appeals court ever held a hearing on it, the case would almost certainly be dismissed. By not pursuing the appeal, Entergy kept the case technically alive. By chilling Seeber’s speech, Judge Reese had given Entergy a powerful lever toward getting rid of TriStem, as Seeber discovered in 2007.

In his short book called
Wired for Greed
and in interviews with reporters, Seeber publicly called Entergy “the most crooked utility in the country.” He also sent a 400-page report to the Entergy chief, detailing what
he said were two decades of fraudulent Entergy financial and other reports. He wasn’t the only one questioning the integrity of Entergy’s financial statements. A large Florida utility holding company, FPL Group, had called off a merger with Entergy in 2001. In a statement, the Florida company said the merger collapsed because of “discrepancies in Entergy’s financial forecasts and Entergy’s repeated refusal to provide financial documents.”

Entergy seized on the letters alleging false financial and other reporting as a means of going after Seeber: though forbidden to do so, Seeber had in fact mentioned the fruit vendor case in his letters asserting fraudulent filings by Entergy. The company’s lawyers claimed this was contempt of court and that the proper punishment was forty-five days in jail.

Seeber was ordered to appear before Judge Reese. Before the hearing began, I watched Marcus V. Brown, the Entergy lawyer, walking in and out of the judge’s chambers—meeting with the judge without Seeber’s lawyer being present. What was said could not be heard, but when the hearing began Judge Reese adopted a stern tone that left no doubt that Seeber was in trouble.

Two TriStem employees testified that Seeber had instructed them to make sure all references to the fruit vendor’s injury case were removed from his report. Brown argued that Seeber should have personally reviewed the report to make sure his instructions were followed precisely. Judge Reese sided with Entergy, stating that Seeber’s conduct was contemptuous and must be punished.

Seeber and his lawyer, Philip C. Ciaccio Jr., repeated that the two passages were simple mistakes.

“Inadvertent error,” Judge Reese said, was no excuse because “when you are the captain of the ship, you are responsible for everything that happens to the ship.”

Then Judge Reese paused and looked out at the spectator section of his courtroom. He asked a bearded man taking notes—the only person in the room not involved in the case—to identify himself. I stood up, gave my name and said I was a staff reporter for the
New York Times
. After our exchange, Judge Reese stopped hectoring Seeber and spoke in a tone that almost resembled neutrality.

After a break, Judge Reese ordered Seeber jailed for thirty days, not the forty-five days Entergy sought. Then the judge added that he would suspend all but seven days because Seeber had tried to remove any references to the fruit vendor’s lawsuit from the 400-page report. Next the judge moderated his order further, saying he would drop even the week
in jail on the condition that Seeber write a letter apologizing to J. Wayne Leonard for mentioning the fruit vendor case.

Seeber had arrived in court fully expecting he would be sent to jail. He walked out of the courtroom a free man, saying that he was sure that but for my presence the judge would have jailed him for forty-five days. Brown, the Entergy lawyer, looked panicked after failing to get the forty-five-day jail sentence the company desired. He told me bluntly that the court proceedings should not be covered in the
New York Times
and that I had no business being there.

Examining Entergy’s behavior in light of the company’s eleven-page “Code of Entegrity” is revealing. CEO Leonard writes on the first page that “if you are under the impression that ideals and standards don’t have a place in today’s business world, remember that they do, right here.” He continues: “Like safety, integrity is not merely a ‘sometimes’ proposition. It is a constant. It is a touchstone that impacts everything we do. Here at Entergy, honesty and integrity are absolutely essential in everything we do. It’s who we are.”

As the deadly electrified Medusa of Tulane Avenue shows, however, for Entergy safety can be a sometime thing.

The alignment of Entergy’s policies and conduct is also in question when it comes to the repeated revelations about overcharging customers.

And the attempt to silence—and even imprison—Joe Seeber is still another example of Entergy’s failure to live up to its own creed. Six pages into the ethics code for which Leonard wrote the introduction is a legend in bold capital letters:
“RETALIATION IS NOT TOLERATED.”
The document continues: “Entergy strictly prohibits retaliation against anyone for making a complaint or report, with reasonable belief, of a violation of the law, the Code of Entegrity or a System Policy. Further, retaliation is prohibited against anyone participating in an investigation or proceeding relating to an alleged violation….”

Seeber remains furious at the retaliation he suffered from Entergy, but he is no coward. “They do not intimidate me,” Seeber says, adding that he would love to go back to New Orleans to audit the city’s Entergy bills again. Of course, since Seeber only gets paid when he proves overbilling, what chance could there be that he would catch the company yet again overbilling for millions of dollars?