San Diego has agreed to create a $40 million fund for single-family residential water customers in a long-running lawsuit over rates the trial court found unconstitutional. Eligible customers who were overcharged under the court-approved calculation do not need to file a claim to receive a refund.
The settlement does not pay every customer or promise a uniform amount. Payments depend on historical account data, the calculated overcharge for each customer and that customer's share of the net fund after court-approved deductions.
The class spans more than nine years of water service
The settlement class includes single-family residential water customers of the City of San Diego from August 14, 2014, through December 1, 2023. Current residency is not the stated test; the relevant question is whether a person was a covered customer during that period.
The lawsuit alleged that the city's rate structure was unconstitutional because charges to single-family residential customers were not proportional to the cost of providing their water service. The city denies overcharging class members and denies that money is owed.
The trial court previously found the rate structure unconstitutional and selected a refund methodology. The Court of Appeal affirmed the calculation. The notice says the trial court has not yet decided how a newer law, Government Code section 53758.5, applies to the refund award, leaving a legal issue that may affect the final distribution.
Refunds are automatic, but not universal
Customers determined to have been overcharged do not need to submit a claim form or supporting documents. The calculation uses city account records and an expert methodology based on the difference between what each customer paid and what the customer would have paid without the unlawful rates.
Not every class member experienced an overcharge under that calculation. Customers for whom the methodology finds no overcharge will receive no individual refund, even though the notice says all class members benefited from the city changing the rates that were in effect during the period.
People can visit sdwatersettlement.com to see whether they are estimated to receive a refund. The site also allows customers to confirm contact information and select a preferred payment method, such as paper check or an available electronic option. Those steps may help delivery but are not presented as claim requirements.
Individual amounts come from the net $40 million fund
The city will pay $40 million into the settlement fund. Each eligible customer's refund is based on the court-affirmed overcharge calculation and the customer's share of the net amount available for distribution. The notice gives no fixed per-person floor or cap.
Administration costs are expected to be no more than $199,000, subject to court approval. Class counsel may request up to $13,333,333.33 in attorneys' fees and up to $500,000 in expenses. The class representatives may each seek a $7,500 service award. The court will decide what deductions are fair and reasonable.
Any money remaining after distribution would go to a court-approved recipient. The notice identifies the Sierra Club's California Water Committee, including its San Diego chapter, for that purpose.
Doing nothing keeps the refund and triggers the release
A customer who stays in the class can receive an automatic refund if the calculation shows an overcharge. Doing nothing also means being bound by the settlement and giving up the right to pursue another lawsuit against the city over the released issues.
Customers who want to preserve their ability to pursue those claims separately must opt out. That choice eliminates any settlement refund. A customer may instead object to the settlement while remaining in the class and retaining eligibility for a payment.
The settlement becomes effective only if the court grants final approval. Payments will not be made if approval is denied or the agreement is otherwise terminated, and appeals could extend the timetable.
September 28 is the deadline for legal choices
Opt-out forms must be sent to the settlement administrator by September 28, 2026. The official site provides the form, and the notice requires the customer's name, address, telephone number and signature.
Objections must be received by the court or filed on the case docket by September 28. The notice requires details about the customer's water-service address, the basis for the objection and any attorney assisting with it. Objecting does not remove a customer from the class.
The final approval hearing is scheduled for December 11, 2026, at 9 a.m. in Department C-67 of San Diego Superior Court's Hall of Justice. The notice does not state a timezone and warns that the date may change, so customers should confirm the schedule at sdwatersettlement.com.