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Jax Daily Record Tuesday, Jan. 5, 202101:27 PM EST

Aaron Zahn responds to JEA special committee report

His attorney describes findings as ‘disparaging and defamatory inferences, innuendos, and coerced statements.’
by: Max Marbut Associate Editor

After the Report of the Special Investigatory Committee on JEA Matters was released Jan. 4, former JEA CEO and Managing Director Aaron Zahn issued a response through his attorney.

“Mr. Zahn vehemently disagrees with the disparaging and defamatory inferences, innuendos, and coerced statements contained in the report,” said John Mullen of the Phelps Dunbar firm in Tampa.

The report presents evidence that Mayor Lenny Curry’s administration, in concert with Zahn, engaged in an effort from 2017-19 to privatize JEA, the public electric and water utility, by selling it to a private entity through a competitive bid process.

The report, result of a yearlong investigation ordered by City Council, also alleges that some actions related to the possible sale and a JEA employee bonus plan promoted by Zahn that was squashed, were conducted outside requirements of the Florida Sunshine Law and that information that should have been public record was withheld.

“The Report’s obvious bias should not be a surprise to anyone has read the so called ‘interviews’ on which many of the report’s conclusions are purportedly based. A brief review shows that JEA coerced the testimony of its employees by threatening to fire them with cause or pay them a severance if they cooperated. Witnesses were most often solicited to testify as to what they assumed, speculated or heard in the media – instead of testify about facts,” Mullen said.

He also said responsibility for the process should be placed with others in addition to Zahn, including the utility’s board of directors, consultants that were retained for the bid process and the city Office of General Counsel.

“The truth around JEA’s strategic planning process is complex and definitively involved the Mayor, City Council, the entire Board, OGC and countless strategic advisors,” Mullen said.

Mullen is representing Zahn in litigation related to his termination by JEA’s board and his right to arbitration of about $1 million in compensation.

JEA contends that Zahn committed fraud, breached his fiduciary duty and the public trust as CEO and misrepresented the terms of his employment agreement to the board.

Curry appointed Zahn to the board in February 2018.

On April 6, 2018, JEA CEO Paul McElroy resigned, citing that the Curry administration’s desire to sell the utility was “certainly part of the decision to retire,” according to the investigatory committee’s report.

A week later, Zahn resigned from the board and announced his candidacy as JEA’s interim CEO. 

The board voted April 17, 2018, to appoint Zahn interim CEO. He was appointed permanent CEO at the board’s meeting on Nov. 27, 2018.

Zahn began, according to the report, promoting a “doom and gloom” forecast for JEA that could only be mitigated by privatization.

Zahn also advocated for a “Performance Unit Plan,” an employee incentive bonus program.

In July 2019, the board approved issuing an Invitation to Negotiate the purchase of JEA and also to adopt the PUP.

The incentive program was scrapped at the Dec. 17, 2019, board meeting after the Council Auditor’s Office raised questions about its financial impact to the utility, followed by hearings on the matter conducted by City Council.

Then, on Dec. 24, the board convened an emergency meeting and voted to cancel the ITN.

Zahn was terminated “with cause” Jan. 28, 2020, by the unanimous vote of the board.

On May 8, Zahn filed with the American Arbitration Association a claim against JEA for wrongful termination and breach of contract.

JEA filed a lawsuit against Zahn June 5 in the 4th Judicial Circuit, along with a motion to preclude the arbitration in favor of proceeding in court.

On Oct. 15, the court ruled in favor of Zahn’s right to arbitrate his claims against JEA ­and that JEA’s claims against Zahn must also be arbitrated.

JEA filed Oct. 23 a Motion for Reconsideration that was denied Nov. 18.

On Dec. 1, JEA filed its Initial Appeal Brief seeking to overturn Circuit Judge Waddell Wallace’s order in the 1st District Court of Appeal.

Mullen filed Zahn’s answer to the appeal Dec. 30.

Zahn contends that he is entitled to binding arbitration to resolve any “dispute, controversy or claim arising out of, connected with and/or otherwise relating to” matters related to Zahn’s employment by JEA, including compensation for terminating his contract before it expired.

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