The U.S. Supreme Court has declined to take up an appeal from the City of Des Moines on an Iowa Supreme Court ruling that the city will have to pay back millions of dollars in electric and gas franchise fees that were illegally collected. Des Moines attorney, Brad Schroeder represented those in the class action suit. He talked with Radio Iowa about the decision.
“It wasn’t completely unanticipated certainly, the percentages are pretty small that the U.S. Supreme Court actually accepts on this sort of appeal. Like I said, it wasn’t entirely unexpected, but still it’s good news when you actually get word that they are denying to take a look at the case,” Schroeder says.
Lisa Kragnes of Des Moines got the case rolling after noticing the city utility franchise fees that were collected between 2004 and 2009.
“She continues to feel vindicated at each turn, whether it’s a district court ruling or now twice in front of the Iowa Supreme Court or now the U.S. Supreme Court, and every looks at it and comes to the same conclusion. Which is ‘hey this is an illegal tax, you shouldn’t have done it and it needs to be paid back’,” Schroeder says.
“That was what she claimed in 2004 when we filed the suit to begin with.” Kragnes says Kragnes and some 100,000 Des Moines residents will now get that money back.
“We actually have been working on that while we’ve been working on this ruling. We had hoped to keep things moving at the district court level in spite of this challenge to the U.S. Supreme Court, but the city filed a motion to delay the proceedings and the court granted it under these circumstances,” Schroeder explains.
“So now our first order of business is to get that stay lifted so we can continue the process of mapping out a process for getting refunds issued.” He is not sure exactly how much the city will have to pay.
“It’s hard to say at this point, our initial estimates were around $40-million in terms of total damages. It’s probably still pretty close to that, although costs and interest have continued to accumulate,” Schroeder says. Schroeder has said earlier that the legislature’s passage of a law in 2009 pushed by the City of Des Moines to allow cities to collect up to 5% franchise fees would likely make the impact of the ruling outside of Des Moines much less.
The original Polk County District court ruling said the city had overcharged because the fee didn’t reflect the actual expenses to the city for handling utility lines and infrastructure.