Judge certifies class in water rates lawsuit

A judge has granted class certification to residents of the Orange County city where a successful challenge to a tiered water rate system affected municipal rate structures across California.

Residents in San Juan Capistrano are seeking refunds for the five years the tiered rates were in place instead of the 10 months for which the city offered refunds.

Under Orange County Superior Court Judge William D. Claster's order, the two named plaintiffs represent a class of potentially 6,000 people who paid the illegal rates.

"Because there are readily available records as to each customer, their water usage and how much they were charged for service, it should not be difficult to determine who is part of the class and what amount of damages they should be entitled to," according to the decision issued Monday. "The fact that the evidence at trial eventually may lead to the exclusion of certain customers from the certified class does not preclude certification."

The class will not include approximately 6,300 ratepayers who waived their right to sue when they accepted refunds from the city that compensated for 10 months of illegal rates, which was the time between the trial court ruling that the rates were illegal and the city implementing new rates.

Eric J. Buescher, a principal with Cotchett, Pitre & McCarthy LLP in Burlingame, said Wednesday he expects to send class notification to approximately 5,500 residents who didn't sign the waiver. He said attorneys are "very pleased" with Claster's decision to certify the class.

San Juan Capistrano's attorney, Jeffrey V. Dunn, a partner at Best Best & Krieger LLP, said Wednesday the case is rare because it seeks city money derived from ratepayers.

"If money comes out of that fund for whatever reason, it's money that's paid for by the ratepayers. It's money that will eventually go back into the fund by ratepayers, or they lose services," Dunn said.

While the rates were charged between February 2010 and July 2015, the refund applied only to what was paid after Aug. 28, 2013, when now-retired Orange County superior court judge Gregory Munoz ruled the rates violated Proposition 218.

The 4th District Court of Appeal affirmed the ruling in April 2015. The state Supreme Court declined a request from the state attorney general's office to depublish the opinion.

Cities across California have cited the decision when adjusting or declining to implement steeply tiered rates. Capistrano Taxpayers v. City of Capistrano, 235 Cal.App.4th 1493 (Cal. App. 4th Dist. April 20, 2015).