UPDATE: The Minnesota Supreme Court has just announced it will hear a pivotal legal case challenging the city of Duluth’s stormwater utility fees. This review follows a class-action lawsuit initiated by local businesses, including Moline Machinery LLC and Glass Merchant Inc., which alleges the city has imposed unfair charges since 2015. The outcome could impact up to 1,500 businesses and potentially cost the city $14.85 million in refunds.
The lawsuit, filed in September 2021, claims that Duluth’s fee structure disproportionately burdens certain properties, particularly commercial entities, compared to multifamily housing developments. The plaintiffs argue that the city has provided “sweetheart deals” to select properties while overcharging others, creating an inequitable system.
In November 2024, Judge Eric Hylden ruled in favor of Duluth, stating that the city’s rates were designed merely to “break even” with no intent of profit. However, the Minnesota Court of Appeals revived the case in September 2023, indicating that evidence could support claims of unjust enrichment.
The stormwater fees are calculated based on the amount of impervious surface on properties, directly affecting how much runoff each business contributes to the city’s sewer system. Moline claims it was overcharged between $28,818 and $32,569 annually.
Officials from Duluth argue that the appellate court’s decision challenges the legal framework governing municipal stormwater fees. Elizabeth Sellers Tabor, Assistant City Attorney, stated the ruling could have “detrimental consequences” for municipal utilities, stressing that the state Legislature grants cities authority over such fees without a mechanism for refunds.
Conversely, the plaintiffs’ attorneys, Shawn Raiter and J.D. Feriancek, assert that the city’s approach violates equitable principles and argue that the Supreme Court must clarify the legal standards relating to municipal utility charges. They contend that the current system unfairly restricts the plaintiffs’ ability to recover overpayments.
The League of Minnesota Cities has also entered the fray, filing an amicus brief to highlight the broader implications of the case statewide. Attorney Paul Merwin noted that the court’s decision will influence how cities across Minnesota manage stormwater regulations and utility fees.
As the Supreme Court prepares to hear the case, both sides have agreed to submit written briefs and responses throughout May 2024. Oral arguments are expected to follow, setting the stage for a potentially landmark decision impacting municipal fee structures across Minnesota.
Stay tuned for updates on this developing story, as the implications of the Supreme Court’s ruling could reshape the landscape of stormwater management and utility billing in cities statewide.
