Judge approves Sioux City's nearly $6.5M settlement of lawsuit over utility franchise fee

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SIOUX CITY, Iowa — An Iowa judge has approved the settlement of a class-action lawsuit in which the city of Sioux City agreed to return nearly $6.5 million in franchise fees to city residents and businesses.

Judge Jeffrey Neary, of Woodbury County District Court, approved the deal Friday, the Sioux City Journal said (http://bit.ly/1yHz4Ez ). Sioux City resident Kathleen Sweisberger filed the lawsuit in 2006 on behalf of all households and businesses that paid a 2 percent franchise fee for gas or electricity to MidAmerican Energy Co. or Woodbury County Rural Electric Cooperative from Sept. 5, 2001, to May 25, 2009. Lawyers say nearly 62,000 individuals and businesses will qualify for settlement payments.

Iowa courts have ruled that the franchise fees were illegal and the state legislature has since legalized franchise taxes of up to 5 percent.

The Sioux City Council approved the settlement in April and will borrow money to pay it. The city raised the franchise tax to 5 percent from 2 percent to pay off that debt.

Nearly $2.16 million, or 33 percent of the settlement, will go Lane & Waterman, the Davenport law firm that represented Sweisberger, under the terms of her contract with the firm.

Richard Davidson, who worked on the case, said the remaining $4.3 million will be divided among businesses and individuals who paid the franchise fees. The payment average is $69.28 per class member, but, Davidson said, larger users will receive higher amounts. The estimated figure for St. Luke's Regional Medical Center is $52,000, for example, and $46,500 for Mercy Medical Center.

A similar lawsuit in Des Moines resulted in a $39 million judgment. Dubuque is in the process of settling another suit for $2.6 million.


Information from: Sioux City Journal, http://www.siouxcityjournal.com

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