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    Court of Appeal Rules For City Hall, Affirms Dismissal Of Activists' Class Action Suit Seeking LB Gas Rebates For Dec. 2000-May 2001 Rate Spike

    (January 7, 2005) -- A CA Court of Appeal has ruled for LB City Hall in affirming dismissal (by a lower court on pretrial motions) of a class action lawsuit by LB Citizens for Utility Reform (LBCUR) and several prominent LB activists, challenging the actions of LB's City Hall-run gas utilility in charging unusually high rates from Dec. 2000-May 2001...and seeking rebates for LB gas consumers that could have totalled roughly $40 million. posts the Court of Appeal opinion on a link below...with the caveat that the Court of Appeal did not certify it for official publication, effectively preventing courts and other parties from citing or relying on it other cases.

    The plaintiffs in the suit brought on behalf of LB consumers were LBCUR, John Donaldson, Adrea and Pete Stoker, Amelia Nieto, Roger Erickson, John Richard Deats, Traci Wilson-Kleekamp and Steve Kleekamp, Joseph Weinstein, Colette Marie and Richard McLaughlin and Ronald B. Noe.

    The LB City Attorney's office mounted a vigorous defense, noting that if the plaintiffs prevailed, a multi-million dollar sum could end up being the responsibility of LB's Gas Fund and thereafter LB's General Fund (i.e. LB taxpayers).

    The plaintiffs' suit alleged that the City of Long Beach, the City Council and former City Manager Henra Taboada, alleging (among other grounds) violation of LB City Charter section 1502 which provides that the City Hall run utility's rates "shall be based upon the prevailing rats for similar services and commodities supplied or sold by other like utilities, whether public or private, operating in the Southern California area."

    The lawsuit alleged that the City Charter required setting ratres similar to those set by Southern California Gas. City Hall said the Charter required that its rates fall within a reasonable range of all "like utilities" in Southern California (which included So . Cal Gas, San Diego Gas & Electric and Southwest Gas).

    On pretial motions, a trial court below dismissed the lawsuit...and on January 6, 2005, the Court of Appeal affirmed.

    To view the Court of Appeal decision (as indicated, not certified for official publication), click here.


    City Attorney Robert Shannon told

    We're obviously very happy with the reuslt. I think it's a good result and we're glad it's behind us.

    That's apart from the fact that if the plaintiffs had prevailed, as much as $40 million might have been recovered against the city, an outcome I never thought likely. It's also because the pendency of the [LBCUR] lawsuit has potentialy interfered with our ability to prosecute a lawsuit in which we're trying to recover substantial damages for the city from Southern California Gas.

    The plaintiffs claim [in the LBCUR suit] was basically that we were required to maitnain the same gas rate level as So Cal Gas we whould have anticipated the price spike and brought our prices down to So Cal Gas. In our suit, we've alleged that So Cal Gas was at that time engaged in a conspiracy with other defendants...The recent "El Paso" gas settlement was a partial settlement in which the City of Long Beach recovered $14.9 million from El Paso, but the lawsuit continues as to So Cal Gas, which we consider culpable and the LBCUR suit said we should be following.

    The Court of Appeal awarded the respondents (City Hall, former City Manager Taboada) "their costs"...which doesn't mean attorney fees but does mean items such as filing costs, depositions, esperts and the like. "I expect it will be in the thousands of dollars, less than $100,000" said City Attorney Shannon, who indicated he plans to pursue cost recovery because taxpayers did have to defend the lawsuit.

    One of the co-plaintiffs, Traci Wilson-Kleekamp told, "It makes you wonder why we have a City Charter if it's not going to protect the ratepayers. The people are just ATM machines to these municipalities with no checks and balances and that's unfortunate. The good thing about the lawsuit is it did prompt the city to make some much needed changes, like not depending on buying on the spot market."

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