Opinion
H049436
03-27-2023
MIRIAM GREEN, Plaintiff and Appellant, v. CITY OF PALO ALTO, Defendant and Appellant.
NOT TO BE PUBLISHED
(Santa Clara County Super. Ct. No. 16CV300760)
Greenwood, P. J.
The parties, plaintiff Miriam Green and defendant City of Palo Alto (City), separately appeal from the judgment and order after judgment entered by the trial court regarding the gas and electric utility rates set by the City. The parties have reached a settlement of the underlying issues and, without waiving their respective appellate contentions, jointly move for a stipulated reversal of the judgment and order. We grant the motion and reverse pursuant to the stipulation of the parties.
I. Procedural Background
Green, individually and on behalf of others similarly situated, filed a consolidated class-wide petition for writ of mandate and complaint for injunctive relief against the City, challenging the City's gas and electric utility rates set in 2012, 2016, and 2018, and billed for service in fiscal years 2016 through 2019. Although not alleged in her complaint, Green additionally challenged the City's practice of charging rent to its utilities, asserting that such practice was not a reasonable cost of service. After Green initiated this action, the City continued to set new gas and electric rates effective for each year from 2019 through 2022, using the same rate-setting procedures challenged in this case. The parties agreed to toll Green's similar claims pertaining to the rates for those years pending resolution of this case.
On June 25, 2021, after a bifurcated trial, the trial court entered judgment, ruling in favor of the City with respect to its electric rates and in favor of Green with respect to the City's gas rates. The trial court ordered the City, in relevant part, to pay $12,618,510 into a common fund for Green and the "Gas Class" plaintiffs. On September 7, 2021, the court denied the City's motion for a new trial and ordered the City to pay the judgment to the class members in two installments within two years. The City filed a timely notice of appeal on September 21, 2021, and Green filed a timely notice of cross-appeal on October 1, 2021.
After the parties filed their respective notices designating the record on appeal but before briefing commenced, the parties reached a global settlement of the issues underlying the appeal, including all tolled claims relating to the City's 2019-2022 gas rates. The agreement includes a provision that the parties seek relief from this court reversing the judgment. To that end, the parties have jointly moved for stipulated reversal.
In their motion, the parties not only request that we reverse the trial court's judgment, but they also propose the following instructions to the trial court on remand: "1. The trial court is directed to implement the parties' settlement in a manner consistent with their settlement agreement, including but not limited to: (a) consider the parties' stipulation to file an amended consolidated complaint or other requests to add and/or consolidate claims challenging the City's gas and electric rates collected in fiscal years 2019 through 2023; (b) consider the parties' motion for preliminary approval of their settlement; (c) if it grants preliminary approval, direct the parties to give notice to the settlement class identified in the settlement, hold a final fairness hearing to consider approving the settlement agreement, and consider class counsel's motion for attorney fees; and (d) if final approval of the settlement agreement is granted after consideration of any objections by class members, enter judgment in accordance with the settlement agreement and direct the City to comply with all terms of the settlement. The trial court is further directed to enter judgment for the City on all claims challenging the City's electric rates and in favor of Green and each of the certified gas classes on all claims challenging the City's gas rates, except with respect to the rent issue. 2. In the event the trial court does not finally approve the settlement or its final approval is reversed on appeal, the trial court shall retry the rent issue consistent with this reversal order and remand instructions. 3. Upon completion of the retrial of the rent issue, if necessary pursuant to paragraph 2 of these instructions, the trial court is directed to enter judgment consistent with the original judgment entered in this action for the City on all claims challenging the City's electric rates and in favor of Green and each of the originally certified gas classes on all claims challenging the City's gas rates, except with respect to the rent issue it shall enter judgment consistent with its decision on retrial. 4. The clerk is directed to issue a remittitur forthwith."
The settlement agreement provides that, should this court grant the parties' motion, the parties shall seek leave in the trial court to file an amended complaint addressing the tolled claims. Thereafter, the parties shall seek preliminary approval of the settlement agreement and revision to the certified classes to include the additional years challenged in the tolled claims. The City shall provide refunds in the form of gas utility credits to current customers, or cash refunds to former customers, with payments being made in three installments over approximately two years, and excluding refunds for rent payments. Customers in ill health or over the age of 65 may request expedited payment regardless of current customer status. Class members will be provided with notice and opportunity to opt out of or object to the settlement. The agreement provides a total settlement fund in the amount of $17,337,111.
II. Discussion
On appeal, the City contends that the trial court erred in determining that its practice of charging rent to utilities was not a reasonable cost of service. The City argues that (1) the trial court misapplied controlling law in determining that rent payments from the gas utility to the City's general fund were not reasonable under Proposition 26; (2) Green did not include the rent issue in her pre-litigation claims or complaint; and (3) the trial court erred in refusing to permit the City to introduce additional evidence before resolving Green's claims. Green disagrees, contending that the rent issue was properly raised and decided.
The reason that the parties seek a stipulated reversal, as outlined in the motion and declaration in support of the motion for reversal, is that the City seeks to avoid the risk of issue preclusion based on the portion of the trial court's judgment addressing the rents the City charges to its gas and electric utilities for use of general fund assets. The parties also agree that reversal is necessary to return the case to the trial court for approval of the class action settlement, as required by California Rules of Court, rule 3.769(a). Reversal of the judgment, they contend, would allow the trial court to order the parties to give notice of the settlement terms to the class and would enable the City to provide relief to the class more quickly than if the parties litigated this appeal and, likely, sought Supreme Court review. The parties further contend that reversal would allow the parties to settle claims challenging eight years of utility rates, comprising the four years which are the subject of this appeal and four subsequent years which the parties agreed to toll.
The parties' joint motion and declaration supports the conclusion that a summary reversal pursuant to stipulation is appropriate under the facts of this case and the law. (See Code Civ. Proc., § 128, subd. (a)(8).)
A. Effect on Nonparties and the Public
For the reasons stated in the motion, we find no possibility that the interests of nonparties or the public will be adversely affected by the reversal. This is a class action in which all City gas customers, with few exceptions, are parties. The settlement agreement contemplates class-wide relief. Although the parties' proposed settlement results in a lower aggregate settlement fund for the litigated rates, it provides additional relief for the tolled claims without the need for further litigation and provides quicker relief for the litigated claims by avoiding a potentially lengthy appeal process.
The settlement will also require both approval by the trial court and notice and opportunity to object for class members. This markedly reduces risk of an adverse effect on nonparties.
Additionally, summary reversal of the judgment would save both private and public resources because it would obviate the need for briefing by the parties and review of the record by this court. The public interest is served by a speedy resolution of this appeal because it will conserve judicial resources.
B. Effect on Public Trust and Pretrial Settlement
This court further finds that the parties' grounds for requesting reversal are reasonable. The parties have reached an agreement that will, upon approval of the trial court, conclude this litigation because respondents have agreed to not seek to recover costs in the future. These grounds outweigh any erosion of public trust from the nullification of a judgment and outweigh the risk that the availability of a stipulated reversal would reduce the incentive for pretrial settlement. "[P]ublic trust in the courts is also enhanced by settlements of pending appeals and related litigation." (Union Bank v. Braille Inst. of Am. (2001) 92 Cal.App.4th 1324, 1331.)
III. Disposition
The June 25, 2021, judgment is reversed pursuant to the stipulation of the parties. The matter is remanded to the trial court for further proceedings consistent with the parties' settlement agreement. The trial court is directed to consider and implement the parties' settlement in a manner consistent with the parties' settlement agreement. In the event the trial court does not finally approve the settlement, the trial court shall reinstate the judgment previously imposed or take any other action the trial court deems appropriate. Each party shall bear their own costs on appeal. The remittitur shall issue forthwith.
We accept the stipulation to reverse the judgment below but on remand decline to order retrial of the rent issue as such order would require examination of the merits of the case and exceed the scope of the stipulated reversal. Likewise, on remand, we express no opinion as to the rent issue itself.
WE CONCUR: Grover, J. Wilson, J.