Herald American

Norwalk hires outside law firm for utility users tax challenge

NORWALK — The City Council has hired an outside law firm, Daley and Heft, to help defend it in a class-action lawsuit filed by two San Diego attorneys on behalf of Norwalk residents Alfred A. Gonzalez and David Reynoso against the city’s utility tax.

Officials Feb. 3 allocated $95,000 toward current, past and future services, Deputy City Manager Ernie Hernandez said in a written report to the council.

City Attorney Steve Dorsey said an initial hearing is tentatively set for May 6 in Los Angeles Superior Court. His firm, Richards, Watson and Gershon, will work in association with Daley and Heft. The latter firm has handled similar cases and has a unique technical knowledge in the subject matter, Hernandez said.

Costs of the Daley and Heft firm will range from $110 an hour for a paralegal to $250 an hour for one of the partners, Hernandez said.

The suit, entitled Telephone Services Claim for Refund and Other Relief, was filed July 29, 2014.

The city’s original utility tax was approved in 1992. It was updated to add cellphones in 2007, officials said.

Officials were aware of the pending lawsuit last year and conducted a special election Nov. 4 asking residents to approve updated language in the utility tax law regarding telecommunications with no increase in rates.

That was overwhelmingly approved by voters.

City officials hoped that the vote would strengthen the city’s case as loss of the communications provision of the utility tax could mean a decrease of about $2 million a year from the tax and could result in cutbacks in city services and personnel layoffs.

Resident Jerry Ori chided the council for not putting the issue on the ballot when the update was approved by ordinance several year ago and warned that if the judge rules in favor of the plaintiffs, the city would not only lose the $2 million a year but could be ordered to reimburse residents who paid the tax.

He said class-action suits against communities are rare and added the city could escape reimbursement “if the judge feels sorry for you.”