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Wednesday, July 5, 2017

WATER BILLING DEBACLE

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Class action or individual lawsuits is decision before the court

The class action lawsuit filed by Scott Pernici, Michael Jones and Mark Defatta against the City of Shreveport in March of this year has survived the first challenge by City of Shreveport attorneys who attempted unsuccessfully to have the litigation dismissed. The ruling by Caddo Judge Mike Pitman against the city was not unexpected by legal pundits who had reviewed the extensive pleadings by the Harper Law Firm.

The next step in the process is the hearing, which is probably 60 days away, to determine if the class should be certified. If Judge Pitman rules in favor the the plaintiffs, then all of the claims by city water users will be consolidated into one lawsuit versus individual lawsuits. There is no doubt that the city will vigorously oppose certifications of the class in the hopes that the economics and logistics of filing thousands of lawsuits will, in effect, stop the efforts to recover the alleged overbillings.

The requirements for a class action are very comprehensive: The class is so big that joining in all the claimants by name is impractical; the claimants have common questions of law or facts; the claims or defenses of the city are common to all the claimants; and the persons bringing the suit will fairly and adequately protect the interests of the class. Additionally, a class action must serve to have consistent results, promote judicial economy, and be a practical vehicle for claimants to pursue their claims.

The city has approximately 65,000 water customers that live both in and out of the city. Mayor Ollie Tyler has acknowledged that many of the water bills issued by the city are incorrect; the city has filed suit against the company that sold the water billing software to the city. The exact number of residents who have been overbilled has yet to be determined; Jerry Harper of the Harper Firm believes that at least 50 percent of the residents have overpaid. Harper also believes that the average amount overbilled for a household is approximately $80 a year.

Whether or not the class is certified or not, the plaintiffs must prove that the city did, in fact, overbill water customers. The ordinance that defines water usage is complex; it provides that charges are to be based on the “average winter consumption,” which is computed for the months of November, December, January and February, calculated after the month with the highest metered usage and the month with the lowest metered usage have been deleted. The lawsuit alleges that the city has never implemented a system to properly record and bill monthly usage for the billing formula.

Assuming that the Harper Firm can prove non-compliance with the city’s billing ordinance, the next issue to be resolved is how many years of payment can be recovered. The city will no doubt argue that a resident’s water bill is an “open account” and, thus, subject to a oneyear prescriptive period – i.e., recovery for only 12 months of bills from the date the suit was filed (March 29, 2017). Harper will argue that a water bill account with the City of Shreveport is, in effect, a contract and, thus, subject to a 10-year prescriptive period – i.e., recovery for 10 years of overpayment. If the city wins the open account argument, Harper estimates the average recovery to be approximately $80; if Harper’s contract argument succeeds, then the average recovery would be approximately $800.

The potential liability of the city is difficult to compute because the records of all the water users have yet to be examined, and the recovery period (one year or 10 years) has not been determined. Harper’s best guess is that a class action recovery could be in the tens of millions of dollars. Assuming the class is certified, Harper’s next step will be to require the city to provide the water billing records for all the residential customers – either for one year or, as he hopes, 10 years. Of course, the city will oppose the production of records without reimbursement of expenses; it is anticipated that Judge Pitman will require the city to initially shoulder the burden for production of the records, with a ruling that, if the plaintiffs do not prove their case, these costs will be charged to them.

Assuming a judgment is taken against the city, the next issue to be resolved by the court is how the claimants recover overpaid water bills as well as who pays the attorney fees for the Harper Firm. A judgment against the City of Shreveport is only collectable if the City Council passes an ordinance to pay the sums due. The city is struggling at present to make its financial ends meet; gaming revenues in the Riverfront Fund are being used to pay approximately $9 million of operating costs in this fiscal year budget.

Harper advises that “both before and after filing these suits, we were trying to get the city to correct its improper billing practices. That was our objective, and we sought out those objectives before ever filing suit. The Tyler administration cannot seem to get past the notion that this requires them to admit they are doing something wrong. At this point, that is the worst-kept secret in North Louisiana. What they should do is start working on correcting the billing system and ridding itself of questionable practices in awarding contracts for city services. Former campaign managers for the mayor have no place in that system. The city has already all but admitted Sand Beach was right in finding the errors made by Systems and Software by filing a lawsuit against them nearly a year after we told them they needed to do so. My clients are not the city’s problem. Its dysfunctional billing system and its Architectural and Engineering Selection Committee are the problems. The sooner the city deals with this as a deliberate and straightforward manner, the less it will cost the taxpayers.”

John E. Settle Jr. has been a resident of Shreveport since January 1977. His articles appear regularly in local publications. He can be reached at 742-5513 or e-mail to: john@jsettle.com

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