Citing late filing, judge may toss class-action lawsuit against MID

A judge is inclined to throw out one of two class-action lawsuits against the Modesto Irrigation District because it was filed 13 days after a statute of limitations expired, the judge said in a tentative ruling Thursday.

Both lawsuits seek refunds for tens of thousands of electricity customers because they’re forced to subsidize farmers’ water prices, plaintiffs say.

Attorneys are expected to debate before Stanislaus County Superior Court Judge William Mayhew on Friday. He could issue a final ruling then or sometime after.

Plaintiff Andrew Hobbs beat the deadline by one day by filing his lawsuit on March 15, 119 days after the MID board restructured electricity rates. It appears that case will continue to move toward trial.

The other plaintiff, Dave Thomas, worked separately with another law firm and filed his lawsuit two weeks later, missing a deadline set in the state’s water code. In legal briefs, his attorneys reasoned that the 120-day filing clock resets each time MID collects an alleged illegal tax, presumably with each monthly bill, essentially extending the window indefinitely.

“Our state Constitution explicitly protects against not just the initial passage of an illegal tax but the subsequent imposition and collection of the illegal tax,” Thomas’ lawyers contended in a brief.

But Mayhew sided with MID in his tentative ruling, saying Thomas’ lawsuit “was not commenced within this time period and is thus barred.” MID’s attorneys had noted that state lawmakers enacted the statute of limitations to provide utilities with “certainty when setting electric rates, so they may rely on projected revenues, stabilize their finances and make their services more efficient, and to avoid needless litigation.”

“We’re very pleased with the tentative ruling,” MID spokeswoman Melissa Williams said Thursday.

Both plaintiffs recently asked Mayhew to merge their lawsuits into one. That request will be moot, he said in a separate tentative ruling, if Thomas’ lawsuit is tossed.

Overcharging electricity customers to benefit farmers might be legal under state law if voters were asked to approve the arrangement, but MID has not. Neither has the MID board – a majority of whose members are farmers – raised power rates in recent years, since an attorney in 2012 warned the board that doing so without letting customers vote might be illegal.

The district’s average yearly profit from selling electricity, or income minus expenses, has been more than $93 million since 2010, according to bonding documents. MID uses the extra money to repay debt, build reserves and cover the farm water subsidy, amounting to $17 million this year.

Both plaintiffs live in Modesto. Hobbs’ lawsuit goes further than Thomas’ by also accusing MID of overcharging residential customers to subsidize businesses paying lower electricity rates, particularly large industry.

Thomas has been an officer of the Stanislaus Taxpayers Association for many years, although that group is not involved in either lawsuit.

The court hearing is scheduled for 8:30 a.m. Friday in Department 21 at the City Tower building, 801 10th St., Modesto.

This story was originally published August 25, 2016 at 6:21 PM with the headline "Citing late filing, judge may toss class-action lawsuit against MID."