Attorney for MWC employees will appeal condemnation (June 16, 2015)

It’s round one.

Those were the fighting words of attorney Gary Zadick, who is representing 39 employees of Mountain Water Co. as they battle the city of Missoula’s ongoing attempt to take over the water system.

Zadick was referring to Missoula County District Judge Karen Townsend’s decision Monday to issue a preliminary order of condemnation. Zadick said he plans to appeal the ruling, and he is working on it right now.

The employees intervened to oppose the city’s condemnation of their company, arguing they would be harmed if the city owns the water system.

They contend the city has failed to make them whole by not committing to their current pay matrix using a cost-of-living adjustment, refusing to commit to merit-based pay adjustments and refusing to commit to giving employees credit for years of service for retirement and benefits purposes.

The employees also have expressed concerns that the city would not retain their current organizational structure, instead dispersing them into different departments under different supervisors, effectively demoting some of them and putting them at risk of being overburdened, and therefore more likely to be fired.

In her order, Townsend ruled that the city’s offer of employment to the Mountain Water employees is reasonable and fair.

The judge concluded that because Mountain’s parent company – the global equity firm The Carlyle Group – has agreed to sell it and two California utilities to Liberty Utilities, which is itself the subsidiary of Canadian conglomerate Algonquin Power and Utilities Corp., the employees were facing a change in ownership no matter how she ruled.

Employees face disruption and uncertainty in the immediate future under an imminent change in ownership, Townsend wrote. Employment by Liberty exposes employees to the vagaries of employment by an extremely large for-profit enterprise. Employment by the city confers advantages on employees in terms of job security, the benefits of stability of ownership and much greater accessibility to information, managers and decision makers.

Townsend noted that while the original agreement between Carlyle and Liberty only provided for retaining the Mountain employees for 18 months, the city of Missoula made an offer to employ them for at least five years. Subsequently, Liberty expressed a commitment to guarantee employment for five years as well.

Townsend wrote that Liberty general manager Greg Sorensen told her he was not sure what had brought about the improved offer to employees, but agreed it had happened after the city offered five years.

The judge wrote that the original agreement that guaranteed employment for only 18 months is the best evidence of the true level of Liberty’s commitment to the security of employees.

Townsend also wrote that under private ownership, the employees have been excluded from important decisions regarding their future since 2010, when Sam Wheeler began serious negotiations regarding the sale of Mountain Water and his two California utilities to Carlyle.

She wrote that Carlyle’s managing director of infrastructure, Robert Dove, requested that information about the city’s efforts to acquire the water system be kept under the radar to avoid provoking Mountain general manager John Kappes.

Mr. Kappes and employees were likewise kept uninformed of Carlyle’s plans to sell Park Water to Liberty during the first five months of 2014, when Carlyle had been planning its sale since at least January 2014.

The judge noted that Kappes and eight other executives in California would receive class B shares worth millions of dollars if Mountain is sold to Liberty, and that this money is intended to secure the alignment of their interests with Liberty.

Townsend noted that the effect on employees is one factor to be considered in determining whether acquisition by the city is more necessary but is not dispositive – that is, the only factor to consider.

So long as Mountain Water is part of a large for-profit enterprise, employees have no guarantees regarding continuity of ownership or job security, Townsend wrote. Changes in corporate ownership, changes in structures and changes in management subject employees to potentially drastic personal consequences without notice, including changes in compensation, benefits, working conditions, changes to job descriptions and organizational structures and income and benefit disparities.

Zadick said he had a meeting with all of Mountain Water’s employees on Tuesday morning, but he declined to discuss what they conveyed to him, citing attorney/client privilege.

Calls to several Mountain employees were not returned Tuesday.

They prefer to be employees of a private employer, Zadick said. There are people there who have worked to retirement. There has never been a layoff. They are paid well for their work, the benefits are better and they will have better long-term security with Liberty Utilities. It’s a step down to work for the city. A court order barring them from their choice is simply wrong in this country.

Zadick said he disagreed with Townsend’s contention that the employees will be subject to upheaval under corporate ownership.

If you sat through the trial and listened to the city’s plan, and how dispersed and broken up and spread around the employees would be, the fact is the city’s retirement plan is inferior, he said. The city said their wages are comparable. They’re not comparable. It’s black and white. They are less.

Zadick said Townsend missed several key points.

The District Court in this decision failed to consider undisputed testimony from Mountain Water personnel that the city’s wages are lower, the city’s benefits are lower and they will get no credit for years of service, retirement-wise, Zadick said. They will lose money (if the city is allowed to take over the water system). The city extended a 12-month employment offer to some employees and five years to others, but after that you have to negotiate. You don’t have a job. The agreement is nothing. You go pack your drawers and desk and go home.

Zadick said that the last time the city tried to condemn the water system, in 1986, the Montana Supreme Court found that municipal ownership was not more necessary, and he feels this case is headed down the same path.

We do plan on appeal, he said.

Source: The Missoulian