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Delta Township Settles Class Action Lawsuit Regarding Lansing Board of Water and Light (LBWL) Electric Franchise Agreement


Delta Township Settles Class Action Lawsuit Regarding Lansing Board of Water and Light (LBWL) Electric Franchise Agreement
To Avoid Risk of Future Claim Damages
Franchise Class Action Settlement amounts to $2,300,000.

Delta Township electric ratepayers to the Lansing Board of Water and Light should have received a Legal Notice of Class Action via mail regarding the payment of franchise fees as part of their Franchise Agreement to provide electrical service to Delta Township.  The following is additional information.

Am I eligible for a refund/credit for franchise fees paid on my Lansing Board of Water and Light electrical service bills?

If you received a notice of class action or have seen the legal notice of class action you may be qualified to receive a refund of franchise fees paid:

Qualifications:

  1. If you are currently a Delta Township ratepayer to the Lansing Board of Water and Light and received electric services between January 1, 2018 and June 30, 2020.
  2. If you were a ratepayer at some point between January 1, 2018 and June 30, 2020 but are no longer a ratepayer.

If I qualify what do I need to do:

To receive a credit:
If you are a current ratepayer, and do not wish to receive a distribution by check, you do not need to do anything, a credit will be applied to your LBWL electric account.

To receive a cash distribution payment: 
If you would like a cash distribution payment by check, you are required to submit a sworn claim that identifies your name, address, and the periods of time in which you paid electric charges to the LBWL. This request must be received no later than January 7, 2021 and mailed to:  Kickham Hanley PLLC, 32121 Woodward Avenue, Suite 300, Royal Oak, Michigan 48073 or emailed to khtemp@kickhamhanley.com.

It is very important for any class member who paid electric charges but does not have a current electrical service billing account to submit a claim in writing.  It will not be possible to receive a credit without a current account.

To Opt out or exclude yourself from the settlement:
Class Members who wish to exclude themselves from the Settlement may write to the Administrator, stating that they do not wish to participate in the Settlement and that they wish to retain their right to file an action against the Township.  This proposed settlement should not be interpreted, in any way, as suggesting that the claims alleged against the Township have legal or factual merit.  The Township has challenged the validity of Plaintiff’s claims. This request for exclusion must be received no later than January 7, 2021 and mailed to:  Kickham Hanley PLLC, 32121 Woodward Avenue, Suite 300, Royal Oak, Michigan 48073 or emailed to khtemp@kickhamhanley.com.

If you opt out of the settlement, your shares of the net settlement fund will be deducted from the Net Settlement Fund and subsequently paid to Delta Township.

How much will I receive:
Final pro-rata shares of the settlement fund will be decided at a settlement hearing in Eaton County Circuit Court at 2:30 pm on February 18, 2021, to determine whether the proposed settlement as set forth in the Settlement Agreement dated September 23, 2020 is fair, reasonable, and adequate and should be approved by the Court.  If you wish to view the hearing remotely, you may view a live stream of the hearing on YouTube by visiting https://tinyurl.com/deltasettlement.

The total settlement fund is $2,300,000.  The settlement fund will be decreased by the following amounts:

  1. The Law Firm of Kickham Hanley P.L.L.C. may request attorney fees (which shall not exceed 33% of settlement amount).
  2. The Law Firm of Kickham Hanley P.L.L.C. may request expenses reimbursed pursuant to the settlement agreement.
  3. The Law Firm of Kickham Hanley P.L.L.C. may request out of pocket expenses of the Claims-Escrow Administrator, Kickham Hanley PLLC.
  4. An incentive award made by the court to the class representative Jane Stephens, not to exceed $20,000.
  5. Any Opt-outs of the settlement by ratepayers and paid to Delta Township.

The final “net settlement fund” will be distributed as pro-rata shares by the claims administrator.

Background:
The Township has had a franchise agreement for electric service with the Lansing Board of Water and Light (LBWL) for nearly 100 years.  The LBWL franchise expired in 2017 and a new electric franchise agreement was negotiated including franchise fees consistent with other municipalities.  Franchise fees are common in franchise agreements.  The Township does not receive any tax revenue from the LBWL despite being home to the Errickson Power plant and the new Delta Energy Park as well as an extraordinary amount of equipment and infrastructure.  The franchise fees provided nearly $2.5 million for the Township annually. This revenue allowed the Township to keep tax rates low on residents and businesses and provide a stable revenue source to address major capital improvements needs with its facilities, public safety, and parks.

In September 2018,  a resident of Delta Township represented by the law firm of Kickham Hanley P.L.L.C. (which has filed at least 22 class action law suits against municipalities and was recently referenced in a Detroit Free Press article linked below) brought a class action suit against the Township alleging that the franchise fee was a violation of the Headlee Amendment, Violation of Equal Protection, unjust enrichment, and violation of the Foote Act.

https://www.freep.com/story/news/local/michigan/oakland/2018/10/08/lawsuits-sewer-storm-water-bills-michigan-detroit/1418087002/

 In January 2020, Eaton County Circuit Court Judge Mauer heard a motion by the Township to dismiss the case.  The unjust enrichment and Foote Act claims were dismissed by the court.  The Court also indicated it would likely dismiss the violation of equal protection claims.  However, Judge Mauer declined to dismiss the Headlee claim.  The case was pending in the Michigan Court of Appeals at the time when a settlement was agreed to by the parties.

The Township contends that the franchise agreement is legal.  However, in order to mitigate the risk of a larger judgement and to be judicious with taxpayer funds, the Township Board of Trustees decided to settle this class action lawsuit in August 2020. 

The Township has managed its finances very judiciously by putting aside the franchise fees that were collected, which were intended for needed major capital improvements.  This settlement does not change the Township’s revenue needs.  The Township has not determined how it will replace this revenue. 

The following are legal notices of class action that will be sent to ratepayers.

Below is a link to the electric Franchise Agreement between Delta Township and the Lansing Board of Water and Light.

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