Los Angeles’ Gas Utility User Tax Class Action Settlement

Southern California Gas Co. customers may be entitled to a part of a $32.5 million class action settlement ending claims that the city of Los Angeles improperly assessed a user tax.

Those who can benefit include Southern California Gas Co. customers who used the utility for natural gas between April 16, 2014, and the present.

A group of natural gas customers filed a class action lawsuit against Los Angeles alleging the city had assessed the City Gas User Tax illegally. According to the complaint, the Gas User Tax (GUT) was meant to be assessed on the cost of the gas delivered to customers; however, the city of Los Angeles allegedly used additional costs to assess the tax.

The class action lawsuit alleged that costs for billing, reading meters, preparing bills, processing statements and establishing service were all used to inflate the cost of the GUT passed on to customers. In short, the city assessed the tax it charged to customers on their total bill. The plaintiffs claimed that these charges were not taxable under the ordinance establishing the tax.

The plaintiffs argued Los Angeles should pay them and other customers back for improperly assessed GUT payments. They also sought a court order stopping the assessment of GUT on services beyond the cost of the gas.

“Plaintiffs also all other taxpayers are entitled to refunds of all GUT improperly collected on the Customer Charge and the Service Establishment Charge for the maximum period permissible, along with interest,” the complaint stated.

Under the terms of the settlement agreement, the city of Los Angeles does not admit any wrongdoing, but has agreed to cease the use of service and other charges to calculate the Gas User Tax. The assessment will change starting 70 days from the date that the settlement agreement is approved, saving natural gas customers approximately $8.2 million each year.

In addition to paying $32.5 million in the class action settlement, after May 1, 2021, the city says it will collect 75% of any Gas User Tax collected for the settlement fund. However, the city may also pursue an amendment to the tax that would allow it to collect the GUT based on other service charges, as it did prior to the settlement.

Under the terms of the class action settlement, Class Members will automatically receive a reduced Gas User Tax rate 90 days after the agreement is finalized by the court. This reduction will continue for up to six years. The city has also agreed to pay $40,000 to each lead plaintiff, $500,000 to charitable nonprofits, and up to $8.125 million in attorneys’ fees.

Class Members will be automatically entered into the class action settlement unless they opt out. Class Members can opt out online or by mail. A unique ID number available on the class action settlement notice is required to opt out online.

The deadline for Class Members to opt out or object to the settlement is Dec. 29, 2020: however, Class Members who receive a re-mailed Summary Notice will have additional time, until Jan. 18, 2021, to opt out of or object to the settlement agreement.

A fairness hearing in the class action settlement is scheduled for March 17, 2021.

Who’s Eligible

Southern California Gas Company customers who used the utility for natural gas between April 16, 2014, and the present and were assessed a Gas User Tax.

Potential Award

Varies.

• Seventy days after the settlement is final, the Gas User Tax will no longer be calculated using service or customer charges
• The settlement fund will be used to apply a reduced Los Angeles City Users Tax rate for Southern California Gas Co. customers that will last for up to six years

Proof of Purchase

Class Members will automatically be entered into the settlement; however, Class Members who wish to opt out online will be asked to provide a unique claim ID number available on their settlement notice.

Opt Out Form

CLICK HERE TO OPT OUT »

Opt Out Form Deadline

12/29/2020

Case Name

Engquist, et al. v. City of Los Angeles, Case No. BC591331, in the Superior Court of California for the County of Los Angeles

Final Hearing

03/17/2021

Settlement Website

GasTaxSettlementLA.com

Claims Administrator

Engquist v. City of Los Angeles
c/o JND Legal Administration
PO Box 91010
Seattle, WA 98111
info@GasTaxSettlementLA.com
1-833-707-1454

Class Counsel

Defense Counsel

OFFICE OF THE LOS ANGELES CITY ATTORNEY

COLANTUNONA HIGHSMITH & WHATLEY P.C

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