JEA files lawsuit against former CEO Aaron Zahn

JACKSONVILLE, Fla. — JEA is suing Aaron Zahn for counts of fraud, breach of fiduciary duty, breach of the public trust, fraudulent inducement, declaratory relief, and preliminary and permanent injunctive relief.

In the complaint, JEA states that Zahn’s fourteen months of being CEO has left JEA with a damaged reputation, criminal and legislative investigations, credit downgrades by bond rating agencies, and massive bills from law firms, lobbying groups, and investment banks.

The complaint also states that Zahn made false or misleading statements to the JEA Board about JEA’s financial condition and would have JEA’s senior leadership team and other subordinates to manipulate information.

“Zahn breached his duties and the public trust by, among other things, knowingly or recklessly violating Florida law by seeking to approve the PUP and issue himself and other members of the senior leadership team performance units that would have looted the utility for 18 hundreds of millions of dollars in the event of a sale; and continually putting his own personal financial gain above the interests of JEA.”

The end goal for the lawsuit is for the employment agreement between Zahn and JEA to be void and unenforceable, and for Zahn to pay JEA the amounts “improperly” paid to him as a retroactive salary increase, and for JEA to no longer pay Zahn any amounts he claims under the employment agreement as it would be “wasting public funds”.

It appears that Zahn, according to court documents, filed for arbitration before the American Arbitration Association based on a previous employment agreement on July 23, 2019. In a JEA statement, they are saying Zahn is claiming nearly $1 million from JEA. However, JEA is stating that they should not have to pay that amount as JEA because the employment agreement is void.

If the lawsuit does take place, and the court finds that Zahn’s employment agreement is null and void, then JEA does not have to pay the arbitration agreement.

JEA released the following statement Friday afternoon along with the documents for the lawsuit:

“Mr. Zahn’s claim that he is entitled to nearly $1 million from JEA is disappointing given the damage he has caused to JEA and the Jacksonville community. JEA’s decision to terminate Mr. Zahn for cause was the right one, and JEA is fully committed to defending that decision in a transparent court proceeding. JEA remains focused on what it does best: providing great service for our customers.”

Aaron Zahn’s attorney released a statement saying the lawsuit has no factual basis and “are a rehash of largely disproven conspiracy theories.”

"JEA and OGC's lawsuit is nothing more than a disguised press release in response to Mr. Zahn's demand for arbitration. The claims of the lawsuit have no factual basis and are a rehash of largely disproven conspiracy theories. The OGC, specifically Jason Gabriel, Sean Granat, and Lawsikia Hodges, are trying to protect their public and professional reputations by using a lawsuit to distance themselves from JEA policy decisions made with their full participation and approval.

"It is keenly interesting that JEA now disavows the strategic work of JEA's own Board of Directors, the OGC itself, 100+ JEA employees, McKinsey & Co., JP Morgan, Morgan Stanley, and numerous other industry-leading consultants. The claim that Mr. Zahn presented misleading forecasts is absurd given that JEA's current CEO, Paul McElroy, presented a similar outlook of JEA's past and future on numerous occasions between 2014 - 2018, including in February and March of 2018 (See February 14, 2018 City Council Meeting Materials; March 15, 2018 City Council Meeting Materials; and March 20, 2018 JEA Board Meeting Materials)."

Read the full complaint here.