Pocatello Settles Fee Payer Class Action Lawsuit for $4.5 Million

After five years of litigation, including a successful appeal to the Idaho Supreme Court, a class action lawsuit against the City of Pocatello over the recovery of illegally assessed utility fees has been settled for the amount of $4.5 million paid by the City. The class consists of all of the City of Pocatello’s utility fee payers who paid the illegally assessed utility fees from April 2012 through April of 2014.

On September 27, 2019, Judge Stephen S. Dunn, District Judge of the Sixth Judicial District, entered an order of final approval, finding that the settlement was fair, reasonable, and adequate for the class in the amount of $4.5 million. Judgment in that amount was entered by the Court on October 24, 2019. The dispute has a lengthy history in the courts, beginning with a lawsuit in 2012 filed by the Building Contractors Association of Southeast Idaho which ultimately resulted in a court ruling that the City had illegally assessed a utility fee which was in fact a “disguised tax” because it was used for the general purposes of the City rather than for the intended purpose, thereby violating the United States and Idaho Constitutions. The District Court ordered the City to immediately cease the illegal fee. The class action lawsuit was filed shortly afterwards in 2014 to recover the impermissibly collected fees as a “takings” under the Fifth Amendment of the United States Constitution. The $4.5 million judgment represents the total amount of illegally charged fees and prejudgment interest charged to the class from April 2012 through April 2014.

The class action lawsuit, originally dismissed by the District Court, was successfully appealed to the Idaho Supreme Court. In September of 2017, the Idaho Supreme Court ruled that the City’s decision merely to cease the assessment of the illegal fee was not a sufficient remedy, but that fee payers could be entitled to a recovery of the fees under a Fifth Amendment “takings claim.” The case was remanded to District Court. The parties entered into negotiations for resolution in November of 2018, and arrived at a settlement that the District Court preliminarily approved in July 2019. Notice of the proposed settlement was disseminated publicly in July and August both in the media and by mail, reaching tens of thousands of the class members. The District Court held a fairness hearing on September 16, 2019, resulting in the order granting final approval of the settlement.

The plaintiffs and the class members in this case are represented by local attorneys Michael Gaffney and John Avondet of Beard St. Clair Gaffney PA and Nathan Olsen of Petersen Moss Hall and Olsen. Information pertaining to the terms and conditions of the settlement, including the payment process to the class can be found at https://www.pocatello.us/756/Class-Action-Settlement.