Court Clears the Way for Water Authority's Lawsuit to Be Heard

Short Title
Court Clears the Way for Lawsuit Against MWD to Be Heard
Overrules yet another round of MWD "demurrers" seeking to dismiss the case without trial

San Francisco Superior Court Judge Richard Kramer today ruled that the San Diego County Water Authority’s legal challenge to the Metropolitan Water District of Southern California’s 2011 and 2012 wholesale water rates will move forward, despite another round of pre-trial motions by MWD that sought to dismiss most of the case.

After a two-hour hearing, Judge Kramer overruled MWD’s demurrer in its entirety.  He also denied MWD’s motion to strike language from the Water Authority’s petition that described a pattern of misconduct by MWD and a majority of its member agencies to discriminate against the Water Authority and 3.1 million ratepayers in San Diego County through the setting of MWD’s rates. Judge Kramer said he would address the relevance of the Water Authority's allegations regarding the "Member Agency Managers Working Group" through subsequent orders governing the scope of discovery. Judge Kramer also denied MWD's motion to strike the Water Authority's allegation that MWD's rates violate Proposition 13.

The next hearing before Judge Kramer will take place on August 3 and will address MWD’s latest attempt to prevent the Water Authority from taking any discovery in this case, including regarding the Member Agency Managers Working Group.  In January 2012, Judge Kramer made an initial ruling that the Water Authority was entitled to discovery.  MWD first unsuccessfully petitioned the Court of Appeal to reverse Judge Kramer.

When that failed, MWD asked the Court-appointed discovery referee, retired San Francisco Superior Court Judge James Warren, to block the Water Authority from taking any discovery.  But in June 2012, Judge Warren denied MWD’s request.   He recommended that the Water Authority was entitled to specific categories of discovery regarding its claims, including discovery regarding the Member Agency Managers Working Group.  The August 3 hearing will relate to MWD’s most recent motion on the issue, which again takes the position that the Water Authority is not entitled to any discovery, and asks Judge Kramer to reverse Judge Warren’s recommendation.

“From the beginning of this case MWD has tried to shield its conduct from any review by any court,” said Daniel Purcell, special counsel for the Water Authority with the law firm of Keker and Van Nest in San Francisco.  “But the Water Authority is entitled to court review of MWD’s water rates and its intentional discrimination against San Diego and its ratepayers.  Today’s ruling is another step in the right direction.”

In June 2010, the Water Authority filed a lawsuit challenging MWD’s 2011 and 2012 wholesale water rates; it filed a new complaint on June 8, 2012 as required in order to challenge the rates adopted by MWD’s Board for 2013 and 2014.  The cases raise similar issues. The new lawsuit was necessitated by MWD’s delay tactics, which have prevented a timely trial and resolution of the first lawsuit, and MWD’s decision to continue setting unlawful, discriminatory water rates for 2013 and 2014. 

In the new case, the Water Authority again alleges that MWD improperly overcharges for the transportation of water and uses that money to artificially lower the cost of MWD’s imported water.  This violates California’s Constitution, other state law and standard water utility practice. The Water Authority estimates its ratepayers will pay more than $50 million per year in 2013 and 2014 in gross overcharges under MWD’s adopted water rates.  By 2021, if left unchallenged, the overcharges could grow to more than $217 million annually.  The stakes in the rate challenges are estimated at $2 billion to $3 billion over a 45-year period.

To view a copy of the complaint challenging MWD's rates, click here: http://www.sdcwa.org/sites/default/files/files/water-management/ratechallenge/2ndAmendedPetition.pdf

For more information, visit www.sdcwa.org/mwdrate-challenge.