A Court Ordered San Diego to Refund About $79.5 Million in Water Overcharges. Its Customers Are Settling for $40 Million — Roughly $62 Each for 436,069 Households, With a Third Going to the Lawyers. No Claim Form. Opt-Out by September 28.

The case is Patz v. City of San Diego, San Diego Superior Court Case No. 37-2015-00023413-CU-MC-CTL, filed in 2015 by two single-family water customers, Daniel Patz and Joan Chesner. Their claim was constitutional: Proposition 218 (article XIII D, section 6(b)(3) of the California Constitution) bars a local agency from charging a property more for a service than the proportional cost of providing it, and San Diego's tiered residential rates — higher unit prices for higher usage — charged heavy users more than the water cost to deliver. The court certified a class on August 16, 2019, and after trial entered judgment for the class. The city's own outside counsel, in a legal alert, put the result at “a damages award of approximately $79.5 million”; class counsel Gibbs Mura describes “a Judgment ordering the City of San Diego to repay class members approximately $79 million.”

San Diego appealed on April 1, 2022. On July 30, 2025 a divided Court of Appeal — two justices in the majority, with Justice Menetrez dissenting at length — affirmed the finding that the city had not shown its tiered rates matched the cost of service. But the appellate court did not simply order the money paid. While the appeal was pending, the Legislature passed Senate Bill 1072 (chaptered September 20, 2024, effective January 1, 2025), a bill class counsel says was “drafted by counsel for these water districts.” It changes the remedy for a Proposition 218 violation: instead of writing refund checks, an agency may credit the overcharge against future rates. The Court of Appeal sent the case back to the trial court to decide whether that new law wiped out the cash refund. The city then asked the California Supreme Court to review the decision and was turned down.

That remand is the whole story of the number. With a $79.5 million judgment in hand but a live question over whether any of it had to be paid as cash, the parties told the court on November 3, 2025 that they had reached a settlement in principle. The figure is $40,000,000 — a little over half the judgment.

The court-approved notice, as reported by claim-tracking services (the official settlement site had not yet published it when we checked), breaks the fund down as follows:

The fee request is exactly one third of the fund. The estimated class is approximately 436,069 single-family accounts, which makes the average refund about $62 — our division, and an average only. Refunds are not equal: each account's payment is “based on the difference between what they actually paid and what they would have paid” under lawful rates, per the city's expert calculations, so a household that used a lot of water in the top tiers between 2014 and 2023 gets more, and a low-volume household gets little or nothing. Set the $26.96 million going to customers against the $79.5 million a court said they were owed and the class is recovering roughly 34 cents on the dollar.

Any money left unclaimed — checks never cashed — goes to the Sierra Club California Water Committee rather than back to the city.

The settlement class is single-family residential water customers of the City of San Diego between August 14, 2014 and December 1, 2023. Apartment buildings, condominium master meters, businesses and customers of other agencies (the neighboring Otay Water District case, Coziahr, is separate) are not in it.

There is no claim form. The administrator, CPT Group, identifies class members from the city's own billing records and calculates each refund from them. Class members who received a notice can use its ID and passcode to confirm their contact details and choose between a paper check and an electronic payment; that is optional. If you moved out of San Diego after 2014, the address on file is the one that matters — contact the administrator at 1-888-903-0334 or SDWaterSettlement@cptgroup.com to update it.

The administrator's website, SDWaterSettlement.com, existed on September 1, 2026 but displayed only the case name, the administrator's contact details and the line “Pardon our dust, this site is under construction! Please come back later.” The important-dates and court-documents pages were placeholders. We will link the notice and the settlement agreement when they are posted.

September 28, 2026 is the deadline both to exclude yourself from the settlement and to object to it. Opting out means no refund from this fund but keeps any individual claim; objecting means staying in and telling the court why the terms — for instance, the one-third fee, or the discount from the judgment — should not be approved. December 11, 2026 is the fairness hearing at which the San Diego Superior Court decides whether to grant final approval.

Payments follow within 30 days after final approval and the resolution of any appeals. If no one appeals, that points to early 2027; a single appeal of the approval order could add a year or more. Eleven years in, the class has learned what a delay costs: the trial court's judgment ran from August 2014 and kept accruing monthly until the city adopted compliant rates.

One more consequence is already visible on San Diego water bills. Because the tiered structure was found unlawful, the city has been moving toward a flatter rate design — which, as local coverage has noted, means households that conserve water are likely to pay more per unit than they did under the tiers. The refund closes the old dispute; the rate change is the part that lasts.