Facts

On May 21, 2002 and May 28, 2003, defendant Pajaro Valley Water Management Agency enacted two ordinances charging residents an $80 fee per acre foot of water pumped. It sued plaintiffs Ray Amrhein, other resident farmers, homeowners, and business owners charged the fee to validate the 2002 ordinance. The plaintiffs brought a reverse validation action against defendant to invalidate the 2003 ordinance.

PLAINTIFFS' CONTENTIONS:
The plaintiffs contended defendant's ordinance violated Proposition 218's requirement that a fee increase be approved by vote. Neither the 2002 nor 2003 ordinance were enacted by the residents' vote. In fact, the directors who passed the ordinances had a conflict of interest because they directly benefited from the fees plaintiffs were charged.

DEFENDANT'S CONTENTIONS:
The defendant contended the ordinances did not have to be passed by vote because they were unrelated to property and thus not subject to Proposition 218.

Damages

The plaintiffs sought to set aside the ordinances as well as a refund of the $13.5 million in fees collected. The defendant disputed plaintiffs' claim that defendant would have collected $300 million more in fees had the ordinance remained in effect.

Result

Judge Samuel Stevens ruled in defendant's favor. Plaintiffs appealed. While the appeal was pending, the court stayed three related cases. Plaintiffs asked for reconsideration after the appellate court affirmed. Upon reconsideration, the court ruled the 2002 ordinance was subject to Proposition 218. Defendant subsequently agreed to a global settlement whereby it would return $13.5 million in collected fees, set aside the ordinances, and pay the plaintiffs $1.8 million in attorney fees.