Recovering $90 Million for a Failed Municipal Water Meter and Billing System
Our Client’s Challenge
The City of Jackson, Mississippi, faced a problem. It signed a $90 million contract with the international firm Siemens for a new automated water meter and billing system. The city paid for the project with a $170 million bond financing on a promise from Siemens that the new system would generate $120 million in savings and increased revenue.
Those savings did not materialize. Instead, the system cost the city and its residents significantly. The new meters were not installed correctly or were never synced properly with the wireless network, causing meter reading errors and transmission problems. The billing system also dramatically overcharged many residential customers — including those least able to afford it — while not issuing any bills to some institutional water users. Despite the city’s efforts to correct the system, the promised savings and revenue never appeared. Siemens was paid $90 million while the city was left with a defective system that was inferior to the old one.
Pressure soon mounted on the City of Jackson to do something. There were media stories featuring images of low-income residents holding water bills for thousands of dollars. The city put other spending and projects on hold, including work to comply with a $300 million consent decree from the EPA, which began exerting its own pressure. The city struggled with budget cuts as bond payment deadlines approached, creating a dire financial situation.
The city threatened to sue Siemens, which dismissed the problems as being Jackson’s fault. The company contended that the city was not using the system properly. Siemens also said it would assert its own claims to recoup alleged costs for project delays it blamed on Jackson.
When a new mayor assumed office, he was determined to address the problem — and engaged Lightfoot for the task.
Drawing on experience gained handling similar cases for both plaintiffs and defendants, Lightfoot’s team analyzed Jackson’s situation. Our lawyers knew they were working against a clock. The situation had already gone on for several years, and any further delays would just compound the damage — but thorough preparation would also be key given Siemens’ earlier response to the threat of litigation.
The Lightfoot team spent more than six weeks in Jackson laying the groundwork for the lawsuit. They met with witnesses and technical experts in order to prepare the strongest case possible, including a detailed damage model. When Lightfoot and Jackson filed the suit in June 2019, the claims were backed up with solid evidence and careful analysis.
In particular, the suit challenged the structure of Jackson’s so-called energy performance contract with Siemens and whether a water meter and billing system could really bring about greater energy efficiency. Lightfoot and Jackson took the position that it was not possible and, as a result, the contract should be invalidated in part for failing to comply with statutory requirements.
Lightfoot secured an $89.8 million settlement for Jackson. The amount not only recovered all of what the city paid Siemens, but Jackson also retained $25 million in improvements made to its wastewater treatment system under the contract.
The fact that Siemens went from threatening its own claims to participating in settlement discussions and ultimately paying $89.8 million speaks to the strength of Lightfoot’s case, the firm’s deep experience and the value of its detailed preparation. All were leveraged on behalf of the client to secure a favorable result that set a meaningful precedent.