LB Citizens for Utility Reform & Several LB Residents File Class Action Lawsuit Alleging City Hall Violated City Charter With Natural Gas Utility Rates Exceeding Prevailing Area Rates, and More; Read Actual Court Complaint
Suit Seeks Return of $38 Million; Also Seeks Injunction Stopping City Hall From Further Rates Exceeding Prevailing Rate
City Hall Issues Response With Quotes From City Attorney Robert Shannon; We Post Verbatim
We post complaint and claim, verbatim
Response by City of Long Beach
(May 31, 2001) -- Thousands of LB residents and businesses who were charged natural gas commodity rates by their City Hall-run utility roughly twice as high as So. Cal Gas this past winter, could get rebates -- potentially hundreds of dollars per household, thousands for some LB businesses -- and City Hall could face a $38 million fiscal chasm -- if a class action lawsuit by LB Citizens for Utility reform (LBCUR) and several LB residents (listed below) ultimately prevails.
The class action suit, filed in L.A. Superior Court this morning on behalf of several LB plaintiffs (listed below) "and a class consisting of all customers of the City of Long Beach Gas Department from December 1, 2000, through the date of trial," alleges in pertinent part that the City of Long Beach, the City Council and City Manager Henry Taboada (in his official capacity) [the named defendants] violated City Charter 1502 "by not basing the rates for gas by the City of Long Beach Gas Department upon the prevailing rates charged for gas by like utilities in the Southern California area and by instead charging plaintiffs and members of the class significantly more for gas than is being charged by these other utilities. This conduct has caused the proposed plaintiff class to suffer significant damages, in an amount estimated to exceed $38 million."
[City Charter section 1502 provides, "The rates to be charged users for any services or commodities supplied by any public utility owned and operated by the City shall be based upon the prevailing rates for similar services and commodities supplied or sold by other like utilities whether public or private, operating in the Southern California area."]
The suit further alleges the defendants violated City Charter section 1501 "by failing to establish adequate reserves to be used for contingencies" which "could have been tapped to ensure rate stabilization." .
In a stinging allegation, the suit also alleges the City Council violated LB Municipal Code section 15.36.100 by failing to adopt resolutions disapproving rates posted by the City Manager, which the suit alleges were not reasonable or comparable to other like utilities.
The suit also alleges a taxpayer claim against all defendants claiming waste of public funds.
The suit seeks "disgorgement and/or payment of all overcharges to the proposed class" alleging "Such charges currently are $38 million and increasing."
The complaint also seeks injunctive relief prohibiting the defendants from charging customers "gas rates that are significantly different and higher than the gas rates charged by like utilities in the Southern California area."
The suit was brought by plaintiffs LB Citizens for Utility Reform (LBCUR) and LB residents John Donaldson, Adrea and Pete Stoker, Amelia Nieto, Roger Erickson, John R. Deats, Traci Wilson-Kleekamp, Joseph Weinstein, Colette Marie and Richard McLaughlin, Ronald B. Noe.
The complaint was filed by Pasadena-based attorneys Dan Stormer and Virginia Keeny and L.A. based attorney Robert D. Newman. We have posted a copy of the complaint in .pdf form, which can be viewed by clicking complaint view here. [We have omitted exhibits A & B to the complaint, which are Council resolutions cited by number in the complaint; exhibit C is a copy of a government claim filed with the City Clerk, which we will post shortly.)
In a written statement, LBCUR co-chair John Donaldson said,
"We have tried to work with city officials for months to bring these gas prices into line with the legal limits imposed by the City Charter. At this point, we have no recourse except to bring suit to protect the interests of the residents of Long Beach,"
In the afternoon of May 31, the City of Long Beach released a response to filing of the class action lawsuit. It quoted LB City Attorney Robert Shannon as follows:
"While the City of Long Beach recognizes and sympathizes with its natural gas consumers who were subjected to an outrageous rise in natural gas rates beginning in December, 2000, the rate increase was due to an unlawful conspiracy by other parties to restrict the supply of gas putrchased by the City.
"Long Beach Energy was forced to pay grossly inflated rates for natural gas and that increased cost was passed to the ratepayer. The City did not profit from the rate hike and is itself a victim of this unlawful activity.
It is unfortunate that by filing this lawsuit Pasadena attorney Dan Stormer and the Long Beach Citizens for Utility Reform ave misdirected the focus away from the actual wrong doers."
A narrative portion of the city's release (not quoting Mr. Shannon) added that "[In March of this year, the City Attorney's office filed an anti-trust class action suit on behalf of its ratepayers against Southern California Gas Co., El Paso Natural Gas Co. and others to recover that money. If successful, the ratepayers will be directly reimbursed. The case is now pending in Federal court and is being aggressively pursued."