County of Suffolk v. Long Island Lighting Co., CV 87-0646.
| Court | United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York) |
| Citation | 87 F.Supp.2d 187 |
| Docket Number | No. CV 87-0646.,CV 87-0646. |
| Parties | COUNTY OF SUFFOLK, a municipal corporation, and Robert Alcorn, Christopher S. George, Fred Harrison, Peter Maniscalco, William F. Quinn, Robert Hoffman, Susan Chase, Yolanda Owens, James Roth, Myra Berkoff and Sandra Rosenberg on behalf of themselves and other similarly situated, Plaintiffs, v. LONG ISLAND LIGHTING COMPANY, Stone & Webster Engineering Corp., Charles R. Pierce, Wilfred O. Uhl, Charles J. Davis, and Andrew W. Wofford, Defendants, and Marketspan Corp., Intervenor-Defendant. |
| Decision Date | 09 March 2000 |
v.
LONG ISLAND LIGHTING COMPANY, Stone & Webster Engineering Corp., Charles R. Pierce, Wilfred O. Uhl, Charles J. Davis, and Andrew W. Wofford, Defendants,
and
Marketspan Corp., Intervenor-Defendant.
Page 188
Judith P. Vladeck, Karen Honeycutt, Vladeck, Waldman, Elias & Engelhard, P.C., New York City, for plaintiff-class members.
United States Attorney Loretta Lynch, by Igou M. Allbray, Assistant United States Attorney, Brooklyn, NY, for the United States Government.
Michael Lesch, Leboeuf, Lamb, Greene & MacRae, L.L.P., New York City, for intervenor-defendant.
Cynthia R. Clark, Keyspan Corporation d/b/a Keyspan Energy, Brooklyn, NY, for intervenor-defendant.
MEMORANDUM, FINDINGS OF FACT, CONCLUSIONS OF LAW, ORDER, AND JUDGMENT
WEINSTEIN, Senior District Judge.
Page 189
TABLE OF CONTENTS
I INTRODUCTION ............................................... 189
II FACTS ...................................................... 189
III JURISDICTION ............................................... 191
IV INTERPRETATION OF THE STIPULATION .......................... 192
V STATUTE OF LIMITATIONS ..................................... 195
VI LAW OF THE CASE ............................................ 195
VII INTEREST ................................................... 196
VIII ATTORNEYS' FEES ............................................ 196
IX CONCLUSION ................................................. 196
I INTRODUCTION
The Class seeks a declaration interpreting the judgment and stipulation of settlement of a RICO class action and False Claims action ("Stipulation"). See County of Suffolk v. Long Island Lighting Co., 710 F.Supp. 1428, 1452-66 (E.D.N.Y.1989) (Stipulation appended). It contends that the Long Island Lighting Company and its successors, including Keyspan Corporation ("LILCO"), are required to pay the Class approximately $21.5 million more than LILCO intends to pay. Additionally requested are interest on past due amounts and attorneys' fees.
LILCO responds that the $21.5 million is being provided to ratepayers in the form of reduced taxes on their electric bills. Essentially, LILCO contends that the tax benefits reaped by the Class as a result of rate reductions resulting from the RICO class action are appropriately included in the $390 million aggregate settlement LILCO agreed to pay.
The Class is entitled to the relief it seeks.
II FACTS
A decade ago LILCO was in serious financial trouble as a result of its construction of the Shoreham nuclear power plant. Ratepayers had brought a class action alleging that LILCO and those associated with it had fraudulently obtained rate increases from the New York State Public Service Commission (PSC) by making deliberate misrepresentations to the PSC respecting Shoreham. Extensive litigation followed. See, e.g., County of Suffolk v. Long Island Lighting Co., 710 F.Supp. 1428 (E.D.N.Y.1989) [LILCO I] (approving settlement); County of Suffolk v. Long Island Lighting Co., 710 F.Supp. 1487 (E.D.N.Y.1989) [LILCO II] (final judgment); County of Suffolk v. Long Island Lighting Co., 710 F.Supp. 1387 (E.D.N.Y. 1989) (dismissing claims by Suffolk County), aff'd as modified, 907 F.2d 1295 (2d Cir.1990); County of Suffolk v. Long Island Lighting Co., 685 F.Supp. 38 (E.D.N.Y.1988) (standing to bring suit); see also County of Suffolk v. Long Island Lighting Co., 14 F.Supp.2d 260 (E.D.N.Y. 1998) (rejecting modifications of Stipulation to allow acceleration of payments); County of Suffolk v. Long Island Lighting Co., Civ. No. 87-0646, 1995 WL 761828 (Dec. 19, 1995) (extending life of Citizens Advisory Panel), aff'd sub nom, County of Suffolk v. Stone & Webster Engineering Corp., 106 F.3d 1112 (2d Cir.1997) [LILCO III].
Faced with the substantial possibility that it would be liable to pay a judgment for billions of dollars — resulting in bankruptcy — LILCO settled the suit. LILCO agreed to pay "the sum of Three Hundred Ninety Million Dollars ($390,000,000) in the form of (i) rate reductions, and (ii) payments to Former Ratepayers." Stipulation ¶ 2(a). The $390 million figure was arrived at after intense negotiations by the parties with the aid of the court-appointed Special Master.
Page 190
Payments were to be made over a ten year period, with the largest payments ballooning in the latter years. The amount and terms of the payments were fixed at a level that it was believed the stock and capital markets would recognize as reasonable, thus avoiding further injury to LILCO's financial standing. There was a concern that setting the aggregate settlement payment too high would result in a "boomerang effect," that is to say, a higher settlement would have unsettled the financial markets causing LILCO to pay exorbitant interest on needed loans, in turn requiring LILCO to charge higher electric rates to cover these costs. As the decision approving the settlement put it:
higher payments in the RICO settlement would present a serious danger to LILCO by threatening investor confidence in the financial health of the utility. This would lead to higher interest rates if LILCO's bonds were not certified as of investment quality. The higher interest rates would, in turn, under standard PSC practice, be charged back to ratepayers as allowable utility costs. These additional costs would then, the experts for the PSC concluded, more than outweigh any increased level of payments above the schedule set out. . . .
LILCO I, 710 F.Supp. at 1434.
The settlement worked. LILCO has prospered.
The Stipulation, settlement and judgment are specific about the amount that was to be paid by LILCO to ratepayers.
LILCO shall pay to the Ratepayer Class . . . the sum of Three Hundred Ninety Million Dollars ($390,000,000) in the form of . . . rate reductions. . . . (Stipulation ¶ 4(a)).
The annual rate reductions required by the Stipulation shall be accomplished in accordance with the following schedule, commencing on the month and date indicated:
June 1990 ____ $20 million
June 1991 ____ $20 million
June 1992 ____ $20 million
June 1993 ____ $30 million
June 1994 ____ $30 million
June 1995 ____ $40 million
June 1996 ____ $50 million
June 1997 ____ $60 million
June 1998 ____ $60 million
June 1999 ____ $60 million
[Total = $390 million]
(Stipulation ¶ 4(d)).
Instead of paying the sums due under the schedule, LILCO has paid less, leading to a deficit that will amount to more than $21.5 million by May 31, 2000. The following table sets out the monthly installments made by LILCO, the resulting monthly tax "reduction," and the total monthly bill "reduction" to the Class.
Class Settlement Amounts
Claimed as Payments by LILCO
(1) (2) (3)
Base Rate Savings to Aggregate
Reduction Ratepayers Reduction
paid by from Revenue in Ratepayers'
LILCO Tax Reductions Utility Bills
Nov-90 $ 1,390,068 $ 70,932 $ 1,461,000
Dec-90 9,484,054 483,946 9,968,000
Jan-91 3,085,552 157,448 3,243,000
Feb-91 2,333,907 119,093 2,453,000
Mar-91 1,927,638 98,362 2,026,000
Apr-91 70,407 3,593 74,000
May-91 950,499 48,501 999,000
Jun-91 1,285,409 65,591 1,351,000
Jul-91 1,784,920 91,080 1,876,000
Aug-91 1,974,259 100,741 2,075,000
Sep-91 1,960,938 100,062 2,061,000
Oct-91 1,547,058 78,942 1,626,000
Nov-91 1,231,176 62,824 1,294,000
Dec-91 1,306,341 66,659 1,373,000
Jan-92 1,521,369 77,631 1,599,000
Feb-92 1,435,738 73,262 1,509,000
Mar-92 1,332,981 68,019 1,401,000
Apr-92 1,313,952 67,048 1,381,000
May-92 1,278,749 65,251 1,344,000
Jun-92 1,390,296 94,356 1,484,652
Jul-92 1,865,948 126,638 1,992,586
Aug-92 2,140,631 145,281 2,285,912
Sep-92 2,289,847 155,407 2,445,254
Oct-92 1,853,424 120,741 1,974,165
Nov-92 1,302,066 84,823 1,386,889
Dec-92 1,353,908 88,200 1,442,108
Jan-93 1,581,749 96,001 1,677,750
Feb-93 1,448,382 91,399 1,539,781
Mar-93 1,420,471 87,766 1,508,237
Apr-93 1,462,090 87,122 1,549,212
May-93 1,309,568 78,033 1,387,601
Jun-93 1,763,424 105,078 1,868,502
Jul-93 3,005,860 185,806 3,191,666
Aug-93 3,314,684 204,895 3,519,579
Sep-93 3,390,447 209,579 3,600,026
Oct-93 2,526,112 164,809 2,690,921
Nov-93 1,951,237 127,304 2,078,541
Dec-93 2,127,583 138,808 2,266,391
Jan-94 2,468,220 161,033 2,629,253
Feb-94 2,355,796 153,698 2,509,494
Mar-94 2,308,631 150,621 2,459,252
Apr-94 2,186,272 142,638 2,328,910
May-94 1,959,254 127,826 2,087,080
Jun-94 2,434,556 158,836 2,593,392
Jul-94 3,366,900 219,664 3,586,564
Aug-94 3,385,983 220,909 3,606,892
Sep-94 3,207,401 209,259 3,416,660
Page 191
Oct-94 2,416,663 157,669 2,574,332
Nov-94 2,012,919 131,327 2,144,246
Dec-94 2,132,676 139,141 2,271,817
Jan-95 2,346,471 153,090 2,499,561
Feb-95 2,227,501 145,327 2,372,828
Mar-95 2,198,716 143,450 2,342,166
Apr-95 2,045,118 133,428 2,178,546
May-95 1,999,192 130,432 2,129,624
Jun-95 2,637,161 172,055 2,809,216
Jul-95 3,613,354 235,744 3,849,098
Aug-95 4,225,647 275,691 4,501,338
Sep-95 4,158,512 271,312 4,429,824
Oct-95 2,977,377 194,251 3,171,628
Nov-95 2,447,362 146,088 2,593,450
Dec-95 2,587,733 154,467 2,742,200
Jan-96 2,918,332 170,840 3,089,172
Feb-96 2,876,073 168,366 3,044,439
Mar-96 2,790,974 163,384 2,954,358
Apr-96 2,622,888 151,347 2,774,235
May-96 1,844,949 106,458 1,951,407
Jun-96 3,531,894 203,799 3,735,693
Jul-96 4,750,743 274,129 5,024,872
Aug-96 5,017,629 289,529 5,307,158
Sep-96 5,142,032 296,707 5,438,739
Oct-96 3,916,519 227,945 4,144,464
Nov-96 3,238,365 198,660 3,437,025
Dec-96 3,434,210 210,675 3,644,885
Jan-97 3,968,093 220,310 4,188,403
Feb-97 3,659,697 203,187 3,862,884
Mar-97 3,378,235 187,561 3,565,796
Apr-97 3,340,028 186,184 3,526,212
May-97 3,182,598 177,409 3,360,007
Jun-97 4,116,406 229,462...To continue reading
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