Water Otay District and City of San Diego Tiered Water Rates Class Action Lawsuits

On April 5, 2019, Gibbs Law Group filed a fifth amended complaint against the City of San Diego, which operates utility systems that provide water services to approximately 1.4 million residential, commercial, and wholesale customers. On November 14, 2016, Gibbs Law Group filed a second amended complaint against Otay Water District, the San Diego County Water Authority, the Metropolitan Water District of Southern California, and the City of San Diego.  

The class action lawsuits state that the California Constitution requires public water providers, like the city of San Diego and Otay Water District, to anchor their rates to the actual cost of providing the water service. Article XIII D of the constitution forbids public water agencies from imposing fees for water services that are disproportionate to the costs of actually delivering the water to each residence. Accordingly, the lawsuits allege that the city and water district have overcharged consumers for their water services and seek refunds for consumers, along with court orders requiring the water districts to enact rates that do not violate the constitution.   

Read a copy of the Coziahr v. Otay lawsuit here, which is on behalf of all single-family residential customers of the Otay Water District who received residential water service after July 14, 2014. And read a copy of the Patz v. City of San Diego lawsuit here which is on behalf of all single-family residential customers of the City of San Diego who received water service after August 14, 2014. 

The Court recently issued rulings on liability and remedies—including compensation to make up for overcharges — in favor of the plaintiffs. In the Otay case, the Court determined in March 2021 that Otay Water District has failed to prove that its tiered rates correspond to the actual cost of providing service at a given usage level, among other things. Similarly, in the Patz case, the Court issued a September 13, 2021, Statement of Decision asserting that the City of San Diego “failed to demonstrate by substantial evidence that the tiered water rates imposed by its 2013 and 2015 ratemakings are proportional to the cost of service attributable to each customer’s parcel, as required by Proposition 218.”  

In both cases, the Court ruled that the water rates the defendants have charged do not comply with the California constitution and that the city of San Diego and Otay Water District must start using water rates that are consistent with the California Constitution. The Court also issued decisions in both cases awarding class members refunds for unconstitutional overcharges. In the Otay case, the Court issued a Statement of Decision ordering Otay Water District to repay class members approximately $24 million. In the San Diego case, the Court issued a Judgment ordering the City of San Diego to repay class members approximately $79 million.  

 On April 1, 2022, the City of San Diego filed an appeal in the Patz case challenging the Court’s decisions on liability and remedies. Our attorneys filed a counter-appeal, and those appeals are pending. On July 12, 2022, Otay Water District filed a motion for a new trial challenging the Court’s award of a refund to class members. All relief the Court awards to the class must wait until the Court rules on post-trial motions and any appeals are resolved.