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Hanson Bridgett Successfully Represents Santa Clara Valley Water District  

March 31, 2015 (SAN FRANCISCO, CA) — Hanson Bridgett LLP is pleased to announce that it has secured a full reversal of a multi-million dollar judgment against the Santa Clara Valley Water District (Water District). The case involved a broad challenge to the Water District’s groundwater production charges, and the lower court’s adverse judgment posed a serious threat to the Water District’s operations. Late last week, the California Court of Appeal issued its opinion ordering that the judgment be reversed.

The Water District manages the water supply in Santa Clara County. The District’s operations are extensive, but include preserving and protecting the County's groundwater supply by recharging the groundwater basins, so that water is available for pumping, and distributing imported and surface water to relieve pressure on the groundwater basins. Parties that pump groundwater pay a volumetric groundwater production charge that funds certain District activities. The charges are reviewed annually by the Board of Directors.

Great Oaks Water Company (Great Oaks), a water retailer that pumps large amounts of water from County basins, sued, challenging the groundwater charges in effect in 2005-06.  Great Oaks claimed that the charges violated restrictions established by Article 13D of the California Constitution, also known as Proposition 218, and the Santa Clara County Water District Act. The trial court largely sustained Great Oaks’ claims and awarded Great Oaks a full refund of more than $4.6 million plus interest. Had that judgment stood, the Water District faced a risk that it could have been forced to refund hundreds of millions of dollars in charges collected during the last decade.

In its published decision, California's Sixth District Court of Appeal reversed the trial court, ruling that the Water District had complied with the procedural requirements of Proposition 218. It also found that the Water District's rate setting under the District Act was entitled to deference under constitutional separation-of-powers principles, and the District had not abused its discretion when setting the challenged groundwater charges. Finally, the court ruled that a full refund would not have been an appropriate remedy, even if a violation had been proven. Hanson Bridgett Partner Joe Quinn and Senior Counsel Adam Hofmann represented the Water District in the Sixth District Court of Appeal.

The 80-page opinion was authored by Presiding Justice Conrad L. Rushing. Associate justices Eugene M. Premo and Franklin D. Elia concurred.

“We are gratified by Court of Appeal’s thorough, well-reasoned opinion,” Quinn said. “This case was very important because Great Oaks’ claims—and the trial court’s judgment—struck at the heart of the Water District’s ability to fund operations and manage the local water supply. Public finance law can be complicated, but the panel took care to work through the many issues to determine that, in fact, Great Oaks had not demonstrated that the charges were improper and the trial court erred in holding otherwise.”

“It’s a good day when you can deliver this kind of news to a client that works so hard to do the right thing by the community,” Quinn added.

About Hanson Bridgett LLP

Founded in 1958, Hanson Bridgett has more than 150 attorneys located in offices in San Francisco, the North Bay, Sacramento, and the East Bay. Our clients range from multinational Fortune 500 corporations to individuals, including a number of public agencies in California. More information on Hanson Bridgett can be found at www.hansonbridgett.com.
Michelle Klopp
Hanson Bridgett LLP
Chief Marketing Officer
(415) 995-5075