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Robert Reilly, managing director of Willamette Management Associates, a business valuation practice in Chicago, gestures in Missoula County District Court Monday as he testifies how he reached a valuation of $142.8 million for Mountain Water Co.

Dinner at The Pearl Cafe.

Wings at Hooters.

A Walmart receipt that includes a personal item, Metamucil.

Car service identified as Shah's Limo in one place, a cab ride in another.

These costs are among the reimbursement requests from Mountain Water Co. and The Carlyle Group that the city of Missoula is quibbling with in its case against the water utility.

This week, Judge Karen Townsend heard the parties argue about which among the defendants' more than $7 million costs are "reasonable and necessary" for the city to pay – since the law notes the plaintiff foots the bill for "just compensation" in a couple of scenarios.

In a court document, the city proposes slashing the request to some $3.5 million, and for a variety of reasons. "Excessive" hours are just one of its justifications.

"Hours that are not properly billed to one's client are also not properly billed to one's adversary," said the city in its proposed order, its hope for how the judge will rule.

In court and expert reports, witnesses for the city have questioned the other side's expenses, and retired Montana Supreme Court Justice James Nelson went so far as to call one billed trip a "junket."

But the city itself has spent some $6 million and counting in legal and other fees, and its detailed receipts aren't included in court documents.

In its own court filings, global equity firm Carlyle and Mountain Water point to the city's known expenses, and at least one time referred to the municipality as the pot calling the kettle black in the hard-fought case.

"While the rates the city is paying its attorneys are not the touchstone of 'reasonableness' ... Mr. (Harry) Schneider charges the city $600 per hour – substantially more than any of Mountain Water's attorneys," wrote Mountain and Carlyle in their own proposed findings to the court.

"This fact is certainly probative of the reasonableness of the rates charged by Mountain Water's counsel."

Here's a sampling of some of the odd charges, and ones causing fireworks in the case – and some explanations.


  • Mountain Water's claim notes more than $7,800 for five executives from one firm, Montague, DeRose and Associates of California, to travel to Missoula, according to the city's court filing. "Attached to that claim are the five individuals' receipts for lodging at the DoubleTree Hotel, dining at The Pearl and Finn & Porter, and limousine service to and from the airport in San Francisco." Yet the city noted just one person from Montague testified in court.
  • The water company hired Baker Donelson, whose lead attorney for Mountain is based in Tennessee. "Associate attorneys made a combined total 14 round trips to Missoula, some for as long as four weeks," read the city's court document." For attorney fees alone (not including any travel costs), Mountain Water claims $104,212 for time its attorneys spent in transit between Chattanooga, Tennessee, and Missoula, Montana." In court, though, a witness for the defense noted a firm in Helena was originally tapped to be in the lead because lawyer John Alke is familiar with Mountain Water Co. However, the firm broke up partway through the case, the water company sought other expertise in condemnation, and found it in Baker Donelson.
  • One economist with a national profile testified in court for some 30 minutes about his own financial theories. However, Arthur Laffer, known as the architect of Reaganomics, didn't spend much time discussing the situation in Missoula. Laffer Associates billed for 28 full-time days of preparation in all, or more than one month of work. The total came to $61,400, and the city noted Laffer "did not submit an expert report and was not deposed." He charged some $10,000 a day for travel, according to the court document. 
  • The bills include consultations that lawyers on the case had with big shots from Williams & Connolly, a law firm with a client list that's included Hillary Rodham Clinton and Oliver North. Carlyle's claim includes $3,281, according to the city's court filing: "Consultation with yet another team of out-of-state attorneys in the final stages of the case was not a necessary expense of litigation."
  • The city also notes a lengthy list of lawyers who billed time to the case. "Defendants' submissions in support of their claims for attorney fees identify 88 separate timekeepers who billed defendants for their time," read the court document. "These timekeepers include at least 15 attorneys at the Garlington, Lohn and Robinson firm, at least 10 attorneys at the Baker, Donelson ... firm, at least 30 attorneys at the Holland & Hart firm, and four attorneys from the Hughes, Kellner, Sullivan and Alke firm." In its own court filing, though, the defense notes most of the time was billed to a minority of the lawyers. Take Baker Donelson, for instance, with 27 timekeepers: "Fully 93 percent of the claimed attorneys' fees are associated with the above four attorneys (including a Garlington Lohn & Robinson partner) and one paralegal. Six of the timekeepers billed just 4.4 hours collectively."


The city's own expenses recently topped $6 million, and it also has sought out-of-state legal expertise. The court isn't reviewing the city's own expenses, though, and they aren't part of the court files.

At the same time, Mountain Water and Carlyle point to the city's actions as driving some of their own legal efforts in their proposed findings of fact and conclusions of law. The defendants also offered examples of where they've been conservative in spending.

" ... Mountain Water chose to claim only the federal per diem of $59 for its food and incidental costs, rather than actual cost," read the defendants' court filing. It noted the same is true for Carlyle.

On the other hand, Mountain Water and Carlyle pointed to the amount of work the parties generated that resulted in "the tremendous amount of litigation work."

  • The city disclosed 27 expert witnesses compared to Mountain Water's 18.
  • The city disclosed 28 fact witnesses compared to Mountain's 19.
  • The city served 105 requests for production on Mountain Water and 58 on Carlyle, not including sub parts; Mountain Water served 88 requests for production on the city, and Carlyle served 27.

"A condemnation case of this scale has been seen only once before in Montana's history, namely, the last time the city sought to condemn Mountain Water's property," the court filing said of the case the city lost in the 1980s.

In the court document, Mountain Water and Carlyle take issue with actions by the city, including the way it "fell short of its discovery obligations in its production of experts' files." It notes the emails of Roger Wood, an investment banker, as one example.

"While testifying in deposition, Mr. Wood acknowledged that (he) had only been asked by the city's counsel the day before his deposition to search for and produce responsive emails," the court document said. "Needless to say, because of the short notice, he did not produce any such emails at or before his deposition."

Only on the last possible day of a deadline set by a court-appointed special master did the city finally provide the information, some 2,751 pages of new documents, the defendants said.

The example demonstrates that Mountain Water's and Carlyle's "attorneys were required to engage in increased work and motions practice that would not have been necessary but for the city's discovery conduct."


Mountain Water president John Kappes declined to discuss the expenses billed by the defendants' lawyers and experts, citing the pending decision on attorneys' fees by Judge Townsend.

However, lawyers for the city addressed some of the questions about the city's $6 million fees, and its own use of out-of-state legal expertise.

In an email, Schneider, with Perkins Coie, said more than 95 percent of the fees billed by his firm are for work he himself performed.

"Generally speaking, the city used just one one-of-state lawyer on the litigation, and that was a deliberate choice," Schneider said. " ... One associate in Seattle performed limited and discrete legal research early on, but other than that, there were no out-of-state lawyers on the case other than me.

"Indeed, there were no out-of-town lawyers other than me."

As to the total amount, city communications director Ginny Merriam said it reflects the city's work on not only the eminent domain case in district court, but its participation in other proceedings. The figure accounts for the city's work at Montana Public Service Commission, another court case involving the Montana Consumer Counsel, as well as the appeal to the Montana Supreme Court.

Natasha Prinzing Jones, of Boone Karlberg in Missoula, said the defendants' maneuvers forced the city to spend legal time on matters that ended up being sideshows in the case.

"When they did that, they forced the city and its attorneys to participate and respond to their unreasonable and unnecessary activities," Jones said.

As just one example, she said Mountain Water submitted an expert report claiming it had excess water rights, and it argued it had the ability to sell Missoula's "most senior water rights." In response, she said, the city had to hire experts to "demonstrate the fallacy of those arguments."

The city also had to prepare to cross examine Mountain Water's expert, but the company never put the person on the stand, Jones said. Then, in the recent court hearing about fees, she said the defense abandoned the $32,000 claim related to the water rights expert.

"But we had to spend an enormous amount of resources on experts and attorney time to deal with this opinion that appears to have been completely unnecessary and unreasonable by their acknowledgement last Monday," Jones said.

She also said the defendants took 39 depositions, "an unprecedented number," contrasted with the city's eight. As a result, the city had to prepare witnesses, participate in the depositions, buy transcripts, and review them.

"It caused a huge amount of expense for the city's lawyers and cost to the city," Jones said.

Yet in trial, she said, the defense used only some 10 of those depositions. 

Last year, the city won the right to use its power of eminent domain to buy the water system, and the decision is pending before the Montana Supreme Court. In the meantime, Carlyle sold the utility to Liberty Utilities, the subsidiary of a Canadian company.

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