Judge rules against bill in smog fee suit

The Associated Press
Tuesday June 05, 2001

SACRAMENTO — Attorneys who argued against the state’s vehicle smog fees are unlikely to receive an $88 million fee an arbitration board once awarded them, a judge ruled Friday. 

Lawyers for the state called the decision a victory for taxpayers and said they expected the fee to eventually be cut to less than $18 million, adding at least $70 million to the state treasury. 

Representatives of the firms originally awarded the large fee by referred comment to their lawyers, who did not return calls seeking comment. 

The decision came two weeks after Sacramento Superior Court Judge Joe Gray’s tentative decision that said the three-member arbitration panel that awarded the fee exceeded its authority. 

The delay was requested by the attorneys who successfully argued that the state knowingly and unconstitutionally collected a $300 fee on out-of-state car registrations until 1999. The fee was intended to limit the entry of cars from states with less restrictive emissions policies. 

The Legislature decided to return the fee plus interest in as many as 1.7 million cases. 

Elwood Lui, a Los Angeles attorney who helped the state fight the fee, said he liked the judge’s decision but expected it to be appealed. 

In 1998, a superior court judge awarded the firms $18 million when he struck down the smog fee. But Gov. Gray Davis sought to have the fees set through binding, private arbitration, because he thought the panel would drive the fee even lower. 

Gray did not specify a fee, so the attorneys may receive the original $18 million. 

The case could be settled on appeal, another arbitration panel could be convened or the Legislature could pass a law paying the attorneys a set amount. 

The attorneys first asked for $100 million, or about 17 percent of the $665 million earmarked for the smog refunds. Instead, they were given 13.3 percent, or about $8,800 an hour. 

Another aspect of the arbitrated fee is to be decided next week. Board of Equalization chairman Dean Andal has sued to stop the award on the basis that the arbitration panel spent tax dollars, a legislative power. 

Andal’s attorney, Eric Norby, said the issue would likely be settled in higher courts, but added he was pleased with the judge’s decision Friday. 

“At this point $88 million more is going back to the general fund, meaning more money for schools, police, or to pay one day’s power at least” Norby said. 

An important part of the judge’s decision was that the five firms – Milberg Weiss Bershad Hynes & Lerach LLP, Weiss & Yourman, Blumenthal Ostroff & Markham, Sullivan Hill Lewin Rez & Engel, and Richard M. Pearl — should not be paid for lobbying the Legislature to order the refunds, Norby said. 

The original case, Jordan v. state Department of Motor Vehicles, ended October 1999, six months before the legislation passed. 


On the Net: 

Gray’s tentative ruling: http://www.saccourt.com/courtrooms/trulings/dept54/apr18d54.tr