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Utility Customers May See Reduced Bills

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Utility customers in Florence, San Tan Valley, and Queen Creek (Pinal County) may see a credit on their water and wastewater bill during the first quarter of 2022.

On November 19, 2021 a proposed settlement of a class action lawsuit was filed in the United States District Court for the District of Arizona. The lawsuit alleged that Johnson Utilities and other defendants unlawfully increased water and wastewater rates beginning in October of 2011. If approved by the court, a settlement of $10,350,000 will be paid to the class and, after legal and other fees paid, distributed to class members.

Plaintiff class members include all Johnson Utilities customers who paid for water and/or wastewater services after October 1, 2011. The litigation commenced on December 8, 2017 when a class action complaint was filed by customers Tisha Castillo, Karen Christian, and Steve Pratt. The complaint was based on facts asserted in a May, 2017 federal grand jury indictment alleging that George Johnson, his company, Johnson Utilities, and others bribed the Chairman of the Arizona Corporation Commission to implement increased rates that the Commission had previously rejected.

After a seven-week criminal trial, the jury could not reach a unanimous agreement and the United States decided not to retry the case. A second amended class action complaint was filed in May, 2020, including additional claims related to the alleged bribery and including new claims of fraudulently transferring funds from Johnson Utilities to family members and others.

After much legal wrangling which went all the way to the U.S. Ninth Circuit Court of Appeals, the plaintiffs and defendants engaged in an exchange of information regarding the claims and defenses against the claims. Recognizing the complexity, delay, risk, and expense of continuing the litigation, the parties engaged in settlement negotiations with the assistance of a neutral mediator. Ultimately, they agreed to settle for $10,350,000, about half of the alleged actual damages from higher rates.

In January 2021 Johnson Utilities sold all utility-related assets to EPCOR, which is currently the water and wastewater provider for the former Johnson Utilities service areas. Unlike most class action settlements, where great expense is incurred in finding class members and soliciting an agreement to participate in the distribution of an award, plaintiff's lawyers (Stinson LLP and Krislov & Associates, Ltd.) negotiated with Epcor to utilize its relationships with customers to contact customers through bill inserts and simply credit amounts due. No action need be taken by current customers who were also Johnson Utilities customers to receive a credit on their utility bill, although customers will be able to opt out of the settlement should they choose to do so.

After attorney fees and expenses associated with processing the claim, long time customers may see a $172 credit on their Epcor bill during the first quarter of 2022, adding about $7 Million in purchasing power to the local economy.

Plaintiffs Castillo, Christian and Pratt said that they are pleased to commit the Johnson Utilities saga to history even though the settlement is less than they had hoped for the community.
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Sunday, 21 April 2024

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