ORDER GRANTING IN PART PLAINTIFFS' MOTION FOR CLASS CERTIFICATION

Transcription

1 Fulton County Superior Court ***EFILED***RM Date: 1/5/2017 2:49:51 PM Cathelene Robinson, Clerk IN THE SUPERIOR COURT OF FULTON COUNTY THE STATE OF GEORGIA MELVIN A. PITTMAN et al., ) ) Plaintiffs, ) ) v. ) ) CITY OF EAST POINT et al., ) ) Defendants. ) ) Civil Action File No CV ORDER GRANTING IN PART PLAINTIFFS' MOTION FOR CLASS CERTIFICATION In this putative class action for claims concerning alleged unlawful billing by the City of East Point's electric power utility, presently before the COUl1 is Plaintiffs' Motion for Class Certification (the "Motion") filed October 14, After considering the Motion, Defendants' response filed November 14, 2016, and Plaintiffs' reply filed November 28, 2016 and hearing oral argument on December 9,2016, the Court hereby enters the following Order. I. STANDARD OF REVIEW "When a coul1 determines the propriety of a class action, 'the first issue to be resolved is not whether the plaintiffs have stated a cause of action or may ultimately prevail on the merits but whether the requirements of [O.C.G.A ] have been met.,,, Peck v. Lanier Golf Club, Inc., 298 Ga. App. 555, 556 (2009) (citation omitted). Page 1 of 17, 2016-CV

2 "Under Georgia law, a case may proceed as a class action if all prerequisites of O.C.G.A (a) are satisfied: numerosity, commonality, typicality, and adequacy, and if at least one ground of O.C.G.A (b) is satisfied." Bickerstaffv. Suntrust Bank, 299 Ga. 459, (2016) (citation omitted). Pursuant to O.C.G.A , (a) One or more members of a class may sue or be sued as representative parties on behalf of all only if: (1) The class is so numerous that joinder of all members IS impracticable; (2) There are questions of law or fact common to the class; (3) The claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) The representative parties will fairly and adequately protect the interests of the class. (b) An action may be maintained as a class action if the prerequisites of subsection (a) of this Code section are satisfied, and, in addition: (1) The prosecution of separate actions by or against individual members of the class would create a risk of: (A) Inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class; or (B) Adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; (2) The party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or (3) The court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to Page 2 of 17, 2016-CV

3 other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) The interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) The extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) The desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) The difficulties likely to be encountered in the management of a class action. II. ALLEGATIONS OF THE COMPLAINT According to the Second Amended Complaint, [t]his is a class action proceeding on behalf of the Individual Plaintiffs and others similarly situated brought against the City of East Point pursuant to O.C.G.A (c), for purposes of demanding refunds of the erroneous and illegal collection of taxes in the form of the illegal [Power Cost Adjustment] and [Economic Cost Recovery] charges, the amounts charged to the City's electrical utility customers as a result of the City's purported adoption of 'Proposal 2' on January 7, 2013, the '[Municipal Competitive Trust] Refund Monies,' as well as excessive electric utility charges and improper funds transfers between the City's electric utility enterprise fund and the City's general fund... (Sec. Am. Compl. ~ 21.) The City buys bulk electrical power supply through the Municipal Electric Authority of Georgia ("MEAG") and Southeastern Power Administration ("SEPA") and then resells the electricity to customers in the City. (Id. ~~ 26,27.) The City operates an electric power department that engages in billing and collection activities with the City's customers. (Id. ~ 28.) The governing authority Page 3 of 17, 2016-CV

4 of the City, pursuant to legislative enactment, sets the electric power rates charged to the City'S customers. (Id.,-r 29.) 2010 pea Ordinance On November 8, 2010, the City of East Point City Council (the "City Council") "ostensibly adopted Ordinance No , the City's initial power cost adjustment ordinance (the '2010 PCA Ordinance')." (Id.,-r 31) (emphasis in original). The 2010 PCA Ordinance provided for the imposition of a power cost adjustment of 7.1 mills per kilowatt per hour charged to all the City's electric customers. (Id.,-r 32.) The "first read" regarding the 2010 PCA Ordinance occurred on November 1,2010 at a regularly scheduled meeting of the City Council. (Id.,-r 34.) (Id.,-r 35.) According to (i) the meeting agenda and meeting minutes of the City Council's regular meeting of November 1, 2010, and (ii) the meeting agenda for the City Council's specially called meeting of November 8, 2010, the City Council failed to hold a public hearing regarding the 2010 PCA Ordinance, prior to the City's adoption of the 2010 PCA Ordinance. January 2013 Ordinance Ordinance No was purportedly adopted on January 7, (Id.,-r,-r 36,37.) Ordinance No imposes a power cost adjustment ("PCA") rider and an economic cost recovery ("ECCR") rider. (Id.,-r 39.) The meeting agenda and minutes of the City Council's January 7,2013 regularly scheduled meeting makes Page 4 of 17, 2016-CV

5 no reference to Ordinance No (Id. ~ 40.) The PCA rider adds $ to each electric utility bill. (Id. ~ 50.) The ECCR rider adds $ to each electric utility bill. (Id. ~ 51.) The City Council approved the ECCR rider of $ even though MEAG already has an environmental debt service cost as part of its fixed rate for the City's wholesale cost. (Id. ~ 52.) This environmental debt service cost is built into the retail base rate billed to the City's customers. (Id.) The PCA rider of $ had an end date of June (Id. ~ 56.) However, the City continued to bill the foregoing PCA and ECCR riders after June 30,2013. (Id. ~ 60.) June 2013 Ordinance Ordinance No was purportedly adopted on June 1,2013. (Id. ~ 42.) June 1,2013 was a Saturday and the City Council did not meet this day. (Id. ~ 45.) Ordinance No imposes a PCA rider and ECCR rider. (Id. ~ 46.) The minutes of the City Council's May 13, 2013 work session indicate "'no action taken' in respect to a proposed 'Amendment to the Electric Ordinance.'" (Id. ~ 48.) Plaintiffs cannot locate any meeting agenda or meeting minutes showing that Ordinance No was voted on or adopted. (Id. ~ 47.) MeT Refund Monies from MEAG Tn 1999, MEAG established the Municipal Competitive Trust (the "MCT"). Page 5 of 17, 2016-CV

6 (Id. ~ 78.) The MCT was funded in part by MEAG surcharges charged to MEAG participants, including the City. (Id. ~ 79.) In November 2006, the City adopted Resolution No , authorizing the City's execution and delivery of the First Amendment to the MCT (the "First Amendment"). (Id. ~ 81.) The First Amendment authorized MEAG to apply funds from the Reserve Funded Debt Trust Account and/or the Credit Support Operating Trust Account as a credit against the City's contract billings from MEAG. (Id.) Its purpose was to lower the City's annual generation charges from MEAG from January 1,2009 through December 31,2018. (Id.) However, since January 2009, the City has intentionally overbilled its customer to fun an "off the books" slush fund account at MEAG to raise revenue for the City's general fund. (Id. ~ 105.) These overbillings through MEAG total $34,992, since January 2009 and $26,968,179 since January (Id. ~~ 95, 108.) In. FINDINGS OF FACT AND CONCLUSIONS OF LAW A. Class Definitions "The class of plaintiffs for whose benefit the named Individual Plaintiffs bring this action are separated into a primary class and four separate subclasses." (Id. ~ Ill.) The Primary Plaintiff Class is defined as Page 6 of 17, 2016-CV

7 (Id. ~ 112.) (Id. ~ 113.) (Id. ~ 114.) (Id. ~ 115.) [a]ll persons and entities who are or were formerly customers of the City of East Point's electric power utility during the period of time commencing five years prior to the January 4, 2016 commencement of this proceeding, running through and including that future date which is the date of the final termination of this proceeding. The PCA Plaintiff Class is defined as [a]ll persons and entities who are or were formerly customers of the City of East Point's electric power utility and who have paid (and who hereafter pay) any monies to the City of East Point pursuant to and as a result of a PCA imposed by the City of East Point. The ECCR Plaintiff Class is defined as [a]ll persons and entities who are or were formerly customers of the City of East Point's electric power utility and who have paid (and who hereafter pay) any monies to the City of East Point pursuant to and as a result of an ECCR imposed by the City of East Point. The Proposal 2 Plaintiff Class is defined as [a]ll persons and entities who are or were formerly customers of the City of East Point's electric power utility and who have paid (and who hereafter pay) any monies to the City of East Point pursuant to and as a result of the PCA and ECCR rate/riders and rate increases in ECG's Proposal 2 which was purportedly adopted by the City of East Point on January 7, The MEAG Overbilled Plaintiff Class is defined as Page 7 of 17, 2016-CV

8 [a]ll persons and entities who are or were formerly customers of the City of East Point's electric power utility and who have billed and paid as a result of Defendant City of East Point requesting that MEAG increase the City's wholesale power supply costs by the amount that the Defendant City of East Point is otherwise credited in accordance with Amendment 1 of the MCT. (Sec. Am. To Sec. Am. CompI. ~ 116.)1 B. Whether the class is ascertainable Defendants, citing to Marcus v. BMW of North America, LLC, 687 F.3d 582 (3d. Cir. 2012), argue "an essential prerequisite of a class action, at least with respect to actions under Rule 23 (b )(3), is that the class must be currently and readily ascertainable based on objective criteria." Id. at But see Mullins v. Direct Digital, LLC, 795 F.3d 654, 657 (7th Cir. 2015) (rejecting "the heightened requirement under Rule 23(b )(3)" of ascertainability). Regardless of a split in the federal circuits, Georgia courts have considered whether a class is "readily ascertainable" prior to proceeding to the full O. C. G.A analysis. Res. Life Ins. Co. v. Buckner, 304 Ga. App. 719,732 (2010). Defendants point out the Primary Plaintiff Class consists of all East Point electric power utility customers from January 4, 2011 through present. However, the PCA Plaintiff Class and ECCR Plaintiff Class are based on allegations 1 On November 28, 2016, Plaintiffs filed their Second Amendment to the Second Amended and Restated Complaint and amended the definition of the MEAG Overbilled Plaintiff Class. Page 8 of 17, 2016-CV

9 regarding a 2010 ordinance and the MEAG Overbilling Plaintiff Class is based on Amendment 1 of the MCT which went into effect in Plaintiffs correctly point out that O.C.G.A (g) restricts suits for refunds to the last five years. The PCA Plaintiff Class is "each person or entity that paid a [PCA] as a result of the ostensible enactment of Ordinance No According to the date produced by Defendants, this subclass consists of 49,132 former or current electric customers since January 5, 2011." (PIs.' Reply 16.) At oral argument, Plaintiffs represented the PCA Plaintiff Class and the Primary Class consist of the same members. The ECCR Plaintiff Class is "each person or entity that paid an [ECCR] rate / rider. According to the data produced by Defendants, this subclass consists of 32,178 former or current electric customers since January 5, 2011." (Id.) The Proposal 2 Plaintiff Class is "each person or entity that paid the electric rate increases and the PCA and ECCR rate / riders pursuant to the adoption of the ECG's Proposal 2. According to the data produced by Defendants, there are 23,246 former or current electric customers that meet the subclass definition." (Id.) The MEAG Overbilled Plaintiff Class is "each and everyone of the City's electrical customers by causing the electric rates to remain artificially high despite the fact that the City is receiving credits from MEAG from the MCT funds. [T]his Page 9 of 17, 2016-CV

10 subclass consists of all 49,132 former and current electric customers." (Id ) ascertainable. The Court finds the pnmary class and four subclasses are readily C. Whether the class is so numerous that joinder of all members is impracticable (O.C.G.A (a)(I» The Court finds the class is not so numerous that joinder of all members is impracticable. The Court notes Defendant did not argue the class is so numerous that joinder of all members is impracticable in their response to the Motion for Class Certification. D. Whether there are questions of law or fact common to the class (O.C.G.A (a)(2» The Court finds there are questions of law or fact common to the class. The Court notes Defendant did not argue there are no questions of law or fact common to the class in their response to the Motion for Class Certification. E. Whether the claims or defenses of the representative parties are typical of the claims or defenses of the class (O.C.G.A (a)(3» Defendants argue the alleged conflicts of interest of Mr. Pittman, Mr. Johnson, and Mr. Urquhart, as discussed further below, mean that their claims and defenses are not typical of the class. (Defs.' Br ) The Court disagrees. Rather, the COUl1 analyzes the conflicts of interest as whether Mr. Pittman, Mr. Page 10 of 17, 2016-CV

11 Johnson, and Mr. Urquhart are able to fairly and adequately protect the interests of the class under O.C.G.A (a)(4).. See discussion infra Part III, Sees. F.2, F.3. The COUli finds the claims or defenses of the representative parties are typical of the claims or defenses of the class. F. Whether the representative parties will fairly and adequately protect the interests of the class (O.C.G.A (a)(4)) "The important aspects of adequate representation are whether the plaintiffs' counsel is experienced and competent and whether plaintiffs' interests are antagonistic to those of the class." Liberty Lending Servs. v. Canada, 293 Ga. App. 731, 739 (2008) (citation omitted). The Court notes Defendants do not raise any objection to MI. Hurt's "competency as a lawyer." (Defs.' BI. 14.) Nonetheless, after a review of the Affidavit of James W. Hurt, JI., the Court finds Mr. Hurt to be experienced and competent in cases involving class actions. 1. Whether Plaintiffs' counsel have a conflict of interest O.C.G.A (a)( 4) "serves to uncover conflicts of interest between named parties and the class they seek to represent." Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 594 (1997). This includes "the qualifications of the counsel to represent the class." In re Warfarin Sodium Antitrust Litig., 391 F.3d 516,532 (3d Cir. 2004). Page 11 of 17, 2016-CV

12 Plaintiff Melvin A. Pittman is the husband of Earnestine Pittman. Earnestine Pittman was the mayor of the City of East Point from January 2010 through January Ms. Pittman was the mayor when the City Council adopted Ordinance Nos , , and Prior to serving as mayor, Ms. Pittman was a member of the City Council from 2003 to According to Defendants, it is undisputed Plaintiffs' counsel also represents Ms. Pittman. (Defs.' Resp. 14.) To quote Defendants, "how can the same attorneys represent the class who claims an ordinance is illegal and at the same time and in the same lawsuit represent the person who was responsible for the allegedly illegal conduct by signing the ordinance?" (Def.'s Resp. Br. 15.) In response, Plaintiffs submit the affidavit of Ms. Pittman who states Plaintiffs' counsel does not "represent [her] legally in connection with the legal proceeding in respect of which this Affidavit is given (the "Suit"), or in connection with any matter relating to the Suit, or in connection with any unrelated matter." (E. Pittman Aff.,-r 6.) Ms. Pittman is the Chief Financial Officer of EPCDC, Inc. (Id.,-r 2.) EPCDC, Inc. was dismissed by the Court as a party plaintiff on December 8, However, at the time of Ms. Pittman's deposition on July 21, 2016, EPCDC, Inc. was still a party plaintiff. The Court finds while Plaintiffs' counsel represented EPCDC, Inc. there is no evidence that counsel ever personally represented Ms. Pittman or currently represents her. Page 12 of 17, 2016-CV

13 The COUlt therefore finds there is no conflict of interest with counsel. 2. Whether Mr. Pittman has an impermissible conflict of interest A "plaintiff must not have interests antagonistic to those of the class." Schatzman v. Talley, 91 F.R.D. 270, 273 (N.D. Ga. 1981) (citation omitted). It is necessary "the interest of the class representative is not antagonistic to or in conflict with other members of the class." Buford v. H & R Block, Inc., 168 F.R.D. 340, 351 (S.D. Ga. 1996), aff'd sub nom. Jones v. H & R Block Tax Servs., 117 F.3d 1433 (Ll th Cir. 1997). In Schatzman, the court found the class representative's familial "relationship create [ d] conflicts of interest between [the class representative's] loyalties to the former trustees, the trust beneficiary and the other proposed class members." Id. at 275. According to Mr. Pittman, his "wife's prior position on the East Point City Council and as Mayor of the City of East Point will in no way whatsoever impair or negatively impact my willingness and ability to vigorously prosecute the interests of the respective classes and to protect the interests of the class members." (M. Pittman Aff. ~ 7.) However, Mr. Pittman concedes "the events and actions that took place that are the basis of this lawsuit occurred at least in part while [his] wife was mayor." (M. Pittman Dep. 49:25-50:4.) Q: And you don't believe that your wife did anything wrong or had anything to do with the events or actions that are the subject of this lawsuit, do you? A: I do not. Page 13 of 17, 2016-CV

14 Q: And if it was subsequently proven that your wife was involved or took actions that are the subject of this lawsuit you would stand by your wife; is that right? A: Yes, with clarification. I am her husband. Of course I stand by my woman. I do not believe she's done anything to - taken any actions that are illegal, unlawful, or unethical. Q: And you don't believe that she took any actions or has done anything that are the basis of any of the claims you make in this lawsuit; is that right? A: That is correct. Q: But if it is later proven that she did you would stand by your woman; is that right? A: Without a doubt. (Id. 50:5-25.) According to the Complaint, Ordinance No was purportedly adopted on January 7, (Sec. Am. Compl.,-r,-r 36,37.) Ordinance No imposes a PCA and ECCR rider. (Id.,-r 39.) The meeting agenda and minutes of the City Council's January 7, 2013 regularly scheduled meeting makes no reference to Ordinance No (Id.,-r 40.) Mr. Pittman concedes his "wife presided over that city council meeting." (M. Pittman Dep. 53:16-21.) According to Mrs. Pittman, her signature was forged on Ordinance No (E. Pittman Dep. 192:16-22.) She also testified her signature was forged on Ordinance No (Id. 193: 8-15.) Ordinance No also imposes a PCA rider and ECCR rider. (Sec. Am. Compl.,-r 46.) The Court finds Mr. Pittman's marriage to Mrs. Pittman creates a potential conflict of interest such that he cannot adequately represent the class. Page 14 of 17, 2016-CV

15 3. Whether Joseph Johnson and Norman T. Urquhart have an impermissible conflict of interest Mr. Johnson and Mr. Urquhart are appointed members of the East Point Business and Development Authority ("BIDA"). Defendants assert "[t]heir actions in this lawsuit [were] in direct conflict with their oath and admitted obligations as appointed members of BIDA." (Defs.' Resp. 20) (emphasis added). Defendants do not assert Mr. Johnson's and Mr. Urquhart's relationship with BIDA creates a conflict of interest such that they cannot fairly and adequately protect the interests of the class. The Court finds Mr. Johnson and Mr. Urquhart do not have an impermissible conflict and can adequately and fairly protect the interests of the class. On this point, the Court finds Defendants' argument to be without merit. G. Whether that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy (O.C.G.A (b)(3)) Common issues of fact and law predominate if they have a direct impact on every class member's effort to establish liability and on every class member's entitlement to injunctive and monetary relief. Where, after adjudication of the classwide issues, plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual claims, such claims are not suitable for class certification under Rule 23(b)(3). Rollins, Inc. v. Warren, 288 Ga. App. 184, 187 (2007). Page 15 of 17, 2016-CV

16 Defendants argue "[e]ach electric customer's bill will have to be analyzed to determine the amount charged, and the amount paid, whether it was paid on time, [and] how any late fee impacts it" and therefore Plaintiffs cannot satisfy O.C.G.A (b )(3). (Defs.' Resp. 21.) However, [w]e note that the need for individual damage calculations does not defeat class certification, so long as the liability inquiry presents common legal issues. Here, the plaintiffs seek remedies which will be standard and formulaic across the class: those who have paid will get a refund, and those under a threat of being assessed the ETF will receive injunctive relief against enforcement of the contract provision. The need for individual calculation of damages does not defeat class certification, so long as the liability inquiry presents common legal Issues. EarthLink, Inc. v. Eaves, 293 Ga. App. 75, 77 (2008). The Court finds the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. H. CONCLUSION For the reasons stated herein, the Court hereby GRANTS IN PART Plaintiffs' Motion for Class Certification. The class shall be certified as stated; however, Melvin Pittman is hereby removed as a plaintiff and class representative because of his potential conflict of interest. Page 16 of 17, 2016-CV

17 -ft' SO ORDERED, this 2 day of January, Ke~1l~2~$( Fulton County Superior Court Atlanta Judicial Circuit Page 17 of 17, 2016-CV