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Lawsuit seeks millions from city of Glendale over illegal water rates

Lawsuit seeks millions from city of Glendale over illegal water rates
A stayed class-action suit against Glendale over its former illegal water-rate structure is going forward. The city remade its water rates in 2018, the same year an appeals court ruled the previous rate structure violated Proposition 218. (Justin Sullivan / Getty Images)

A group of Glendale residents is demanding the city repay millions of dollars for years of miscalculated water rates in a class-action lawsuit spearhead by a member of a local government watchdog group.

Previously stayed, the suit is moving forward following a state Supreme Court decision on Wednesday to not review the Second District Court of Appeal’s December ruling that the water-rate structure the city adopted in 2014 violated state law.

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As a result of the high court’s decision, “there isn’t an issue of liability, it’s just an issue of how much [the city owes to rate payers],” according to Roland Kedikian, a board member of Glendale Coalition for a Better Government, which brought the initial water-rate suit against the city in 2014.

A fellow coalition board member, Bill Taliaferro, is behind the class-action lawsuit. He is pursuing it separately from the coalition, and Kedikian is not party to Taliaferro’s suit.

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“The benefit is for it to go to all the rate payers,” Kedikian said of the class-action lawsuit, which he estimated is seeking $3 million to $5 million from the city.

The city’s legal counsel had hoped the high court would review a portion of the appellate court’s ruling that the city erred when it based its water rates on predictions of customers’ future demand for water instead of on customers’ previous consumption.

As a result, the rates violated Proposition 218, passed by voters across the state in 1996, which mandates pricing be based on “analysis of cost,” the court ruled.

“We asked the Supreme Court to look at that because there’s some difference of opinion among the courts,” Glendale City Atty. Michael Garcia said.

Counsel for the city also argued in its petition for review that the “courts went too far in limiting its City Council’s rate-making decision discretion” in a related case, arguing that there are multiple correct ways to derive the rates.

The state Supreme Court gave no explanation why it denied a review, leaving the lower court’s decision in place.

“At the end of the day, we’re still pleased with the outcome,” Garcia said, pointing out that the city prevailed in some aspects of the multi-issue case.

A city decision to charge customers a fire-protection fee was upheld over the coalition’s argument that customers should not be liable for something they said benefited the general public.

On other matters, the court sided with the coalition.

In January 2017, an L.A. Superior Court judge ruled that the city incorrectly placed itself in a lower-cost water-rate tier. The city did not appeal that ruling.

“They didn’t appeal because they were dead wrong on that one,” Kedikian said.

Glendale officials recalculated the city’s water rates last year, and those rates have not been disputed, Garcia said.

“So it’s sort of an academic point, at this point,” Garcia said.

However, the new rates don’t void the ones improperly calculated between 2014 and 2018, Kedikian said.

City officials will still have to adjust the old rates and credit rate payers the cost difference, he said.

Meanwhile, the two sides have another legal matter to resolve.

In December, the same appellate panel ordered a separate case brought by the coalition against the city in 2014, concerning its electricity rates and General Fund transfers, to return to L.A. Superior Court for further proceedings.

A hearing date for the matter has not yet been set, according to both parties.

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