Parallel lawsuits against MID seek to combine

Two class-action lawsuits against the Modesto Irrigation District should join forces in a united effort, both suing parties agree in a request to the judge overseeing both cases.

Both ask that MID stop illegally inflating power bills to subsidize farm water prices, and both seek unspecified refunds for tens of thousands of electricity customers. Although similar and filed at nearly the same time, the lawsuits were prepared by two law firms working independently of each other – until now.

The lawsuits are “effectively identical,” reads a motion filed by plaintiff Dave Thomas’ attorneys, purporting buy-in from the other plaintiff, Andrew Hobbs. Both allege that MID essentially “imposes and collects illegal taxes,” the motion reads, by subsidizing farm water while overcharging electricity customers, without seeking voter approval for the arrangement.

Consolidating would streamline things for all involved and produce one trial instead of two, says the request, to be heard by Stanislaus Superior Court Judge William Mayhew on Aug. 19.

MID does not contend that both plaintiffs “assert virtually identical claims,” the utility’s attorneys say in court papers. But the consolidation issue won’t matter, MID says, if the judge throws out the Thomas lawsuit on a technicality because it allegedly was filed 13 days late.

Hobbs sued 119 days after the MID board in November restructured its electricity rates, beating a 120-day statute of limitation by a single day, MID’s motion says. But Thomas’s lawsuit came 133 days after the MID board vote and should be tossed, the utility contends.

State lawmakers established the time limit for suing because “irrigation districts are entitled to certainty when setting electricity rates, so they may rely on projected revenues, stabilize their finances and make their services more efficient,” MID lawyers said in the motion.

MID’s statute-of-limitation strategy is “misguided,” Thomas’ side says in court papers.

Although the lawsuits are similar, Hobbs also accused MID of overcharging residential customers to subsidize businesses paying lower electricity rates. If allowed to consolidate, the two camps would align their claims in new wording, they say.

The district has balked at pinpointing its electricity profit, which is used to repay debt, build reserves and cover the farm water subsidy, amounting to $17 million this year. Bonding documents last year put the district’s yearly electricity profit at more than $90 million.

MID “denies any and all wrongful conduct,” its lawyers say in a separate court document. The utility “did not act arbitrarily, capriciously or wholly without evidentiary support, did not abuse its discretion,” and the board embraced rates “supported by substantial evidence,” the court papers read.

The utility asks that Mayhew find that MID’s prices are legal, and “to the extent those rates generate funds used to underwrite irrigation water service, that use of those funds may continue.”

This story was originally published July 19, 2016 at 4:18 PM with the headline "Parallel lawsuits against MID seek to combine."