Illegal water fee structure ends with $79.5 million for overcharged San Diegoans

How cities price the water they deliver to residents was the subject of a case in which lead counsel Andre M. Mura and his team from Gibbs Law Group LLP and Berding & Weil LLP won a $79.5 million judgment on claims the city of San Diego overcharged single-family customers for years. The judgment included an injunction requiring San Diego to bring its rates in line. Patz et al. v. City of San Diego, 37-2015-00023413-CU-MC-CTL (S. Diego Co. Super. Ct., filed July 14, 2015).

After years of litigation, a trial judge agreed that the city's fee structure violated the California Constitution because it was not tied to the actual cost of water delivery. While the city's appeal over the result and the class' cross-appeal for greater class compensation progress, the sum San Diego owes grows by $643,000 per month until it adjusts its rates, along with interest on the entire amount.

It was the first class action judgment after trial against a water district, lawyers at Gibbs said. A 2015 case involving water rates reached a similar outcome at the appellate level. Capistrano Taxpayers Association v. City of San Juan Capistrano, 235 Cal. App. 4th 1493 (4th DCA, op. filed Apr. 20, 2015).

The outcome was significant, Mura said, because it addresses a familiar problem. "You see, water districts flout the Constitution regarding customer rates all the time. We focused on the impact on single families. I remember a good moment for us when despite all the city's explanations of how an adverse ruling would harm the public, their defense expert couldn't support what the city claimed."

"Our challenges were to convince the court that there was a violation, first, and then how to calculate damages," said Steven M. Tindall, who tried the case with Mura plus Kyla J. Gibboney and Ezekiel S. Wald from Gibbs and with Daniel L. Rottinghaus, Theresa M. Filicia, Carlotta A.R. Kirby and Howard J. Silldorf of Berding & Weil LLP. "The city insisted this was the only way single-family water rates could be determined, but we showed they have different rates for commercial and multi-family customers."

One of Kirby's roles after the class certification notice was published was to field calls from class members. "I must have spoken to hundreds of them, wanting to share their stories," she said. "Some were sad stories about water cutoffs, and they showed me just how significant the outcome could be."

"San Diego used the same experts as Capistrano did," said Filicia. "It's not surprising that the outcome was the same. Still, it was very gratifying to prevail and to have the court agree with our analysis."

- John Roemer