Plantier v. Ramona Mun. Water Dist.

• Decision Date: 24 October 2022
• Docket Number: D079529
• Parties: EUGENE G. PLANTIER, as Trustee, etc. et al., Plaintiffs and Appellants, v. RAMONA MUNICIPAL WATER DISTRICT, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

EUGENE G. PLANTIER, as Trustee, etc. et al., Plaintiffs and Appellants,
v.
RAMONA MUNICIPAL WATER DISTRICT, Defendant and Respondent.

D079529

California Court of Appeals, Fourth District, First Division

October 24, 2022

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of San Diego County No. 37-2014-00083195-CU-BT-CTL, Gregory W. Pollack, Judge. Affirmed.

Patterson Law Group, James R. Patterson and Jennifer M. French; Carlson Lynch and Todd D. Carpenter for Plaintiffs and Appellants Eugene G. Plantier, as Trustee of the Plantier Family Trust, Progressive Properties Incorporated and Premium Development, LLC.

Procopio, Cory, Hargreaves &Savitch, John D. Alessio, Adriana R. Ochoa and Gregory V. Moser for Defendant and Respondent.

Hanson Bridgett, Adam W. Hofmann and Sean G. Herman for California Association of Sanitation Agencies as Amicus Curiae on behalf of Defendant and Respondent.

O'ROURKE, J.

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Appellants Eugene G. Plantier as trustee of the Plantier Family Trust, Progressive Properties Incorporated (at times, Progressive), and Premium Development, LLC (at times, Premium Development) brought a putative class action against respondent Ramona Municipal Water District (District), seeking declaratory and monetary relief for District's alleged violation of Proposition 218 (Cal. Const., art. XIII D, § 6^[1]) in its method of setting sewer charges. They appeal an order in which the trial court decertified their class action on grounds of an irreconcilable conflict among class members, based in part on the court's sua sponte reconsideration of a 2015 order granting class certification. Plaintiffs contend the court abused its discretion in reconsidering the class certification order. They further contend the court erred because (1) they pleaded that the sewer service charges exceeded the funds required to provide the service, and thus the entire class was overcharged; (2) there was no conflict of interest among class members; and (3) District did not meet its burden on its decertification motion. Plaintiffs finally contend the court abused its discretion by failing to permit them to file a renewed class certification motion or amend the class definition or claims. We affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

District provides water and wastewater (sewer) services to businesses and residents in an unincorporated area of San Diego County. (See Plantier v. Ramona Municipal Water Dist. (2019) 7 Cal.5th 372, 376 (Plantier).) It

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charges for sewer service based on estimated wastewater capacity needs, flow and strength for different customer types or classes. District uses an "Equivalent Dwelling Unit" (EDU) system, levying fixed sewer rates based on the number of EDU's assigned to the particular type of development. An EDU is a measure representing the daily usage of a typical single family home (200 gallons per day of wastewater flow and 200 milligrams per liter each of biological oxygen demand and suspended solids). EDU's are assigned to each property based on the type of use and the property's estimated wastewater system capacity needs. Each parcel connected to the sewer system is charged for service by multiplying the fixed sewer service charge per EDU by the number of EDU's assigned to the parcel.

In November 2013, Plantier and Progressive presented a claim against District, attaching and incorporating a draft complaint "stat[ing] the factual allegations upon which th[e] claim [was] based." The complaint alleged that District's EDU system "does not meet the requirements set forth in . . . Section 6(b)(3) . . . and related statutory requirements" and thus the fees were unlawful and invalid. It alleged the sewer service charge was subject to section 6(b)(3), and in violation of that section, the charge was "imposed based solely on EDU[']s, without regard to actual wastewater use, a property's proportional burden on the wastewater system, or the actual cost of providing a property with wastewater service." The complaint alleged that the lack of a rational relationship between the sewer charge and actual wastewater use "resulted in the systematic overcharge of wastewater consumers for whom the proportional cost of providing their property with wastewater service is less than their EDU-based [sewer charge]." It also alleged District's connection fees were invalid, as they were also "imposed on a per-EDU basis without regard to the cost of 'the physical facilities

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necessary to make a . . . sewer connection'" and thus did not meet the definition of Government Code section 66013, subdivision (b).

In January 2014, after District rejected the claim, plaintiffs filed a putative class action complaint alleging in part that District's EDU billing system violated Proposition 218. The operative first amended complaint, brought on behalf of all District customers who paid a sewer service charge on or after November 22, 2012, sought declaratory relief as well as damages in the form of a refund of the assertedly unlawful charges. Plaintiffs repeated their allegations concerning how District's charges violated section 6(b)(3). They again alleged that the lack of a rational relationship between the sewer charge and actual wastewater use "resulted in the systematic overcharge of wastewater consumers for whom the proportional cost of providing their property with wastewater service is less than their EDU based [sewer charge]."^[2]

Plaintiffs successfully moved for and obtained certification of the requested class before Judge Timothy Taylor. In part, plaintiffs argued District's liability could be determined" 'in one stroke'" because it had uniformly applied its arbitrary EDU schedule and EDU-based charges to all parcels connected to the sewer system during the class period, the charges were assessed in the same manner, and all of those charges violated section 6(b)(3). Judge Taylor ruled common issues-namely, whether the EDU-based

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charges violated section 6(b)(3)-predominated over individual issues.^[3] Judge Taylor ruled the proposed class was ascertainable and numerous,^[4]

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that plaintiffs were adequate class representatives,^[5] and that the plaintiffs' claims were typical of the class, as plaintiffs and the class members were assigned EDU values and assessed sewer charges based on that value. Judge Taylor found no present conflict of interest among the class members, ruling: "To the extent there is a potential for conflict among the class members, the matter may be resolved later. A mere potential conflict is not a ground for denying certification. ... However, if a conflict in fact arises, the class action may be decertified."

After a bench trial, the court ruled plaintiffs failed to meet an exhaustion of administrative remedies requirement in Proposition 218 because none of them had participated in a Proposition 218 rate increase hearing. (Plantier, supra, 7 Cal.5th at p. 379.) This court reversed, and the California Supreme Court in Plantier affirmed that decision. (Id. at p. 390.)

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Following remand, plaintiffs challenged Judge Taylor and the matter was reassigned to Judge Gregory Pollack, who notified the parties the court had concerns over a conflict of interest between class members who underpaid for sewer services and those who overpaid. Judge Pollack eventually granted District leave to file a motion to decertify the class.

In its decertification motion, District argued the calculation of sewer service charges was a "zero-sum" scenario. It argued the appellants' class "includes both harmed ratepayers who were allegedly overcharged, and unharmed-indeed, benefitted-ratepayers who (if Plaintiffs' theory is correct) were allegedly undercharged. Courts have consistently found that grouping harmed and unharmed persons into a class definition makes the class imprecise, overbroad, and unable to meet the ascertainability prong necessary for maintaining a class action." District maintained the plaintiffs' proportionality challenge, as well as their claim for a refund, created fatal conflicts of interest among the class members, defeating any claim that they had a well-defined community of interest. According to District, the proposed relief-refunding charges to overpaying customers-would permit it to seek back charges from customers who underpaid, underscoring the current and potential conflicts. It argued that awarding all charges paid since 2012 would amount to an over $50 million judgment that District would have to pay by assessing charges to current ratepayers, creating another conflict. District also argued plaintiffs failed to show sufficient causation for liability of damages to justify certification, and they could not show they had suffered overcharges or that their claims were consistent with all other ratepayers, thus they were inadequate class representatives. Finally, they argued because Plantier and Orrin Day, the owner of Progressive and Premium

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Development, were commercial property owners who did not live in Ramona, their interests were antagonistic to the majority of class members.

District supported its motion with declarations from Alex Handlers, a principal at an independent public financial advisory firm with expertise in water and sewer rates and finance, Michael Metts, a professional engineer at a firm with a wastewater practice and Craig Schmollinger, District's acting general manager and chief financial officer. It attached deposition excerpts from various putative class members, some of whom testified they would be upset if their sewer rates increased as a result of the lawsuit, and would want their lawyers to stop prosecuting the lawsuit if that were the case.

In opposition, plaintiffs argued District did not identify new law or evidence of changed circumstances to justify decertifying the class. They asserted District did not present evidence, much less new evidence, showing an actual conflict among the...