Federal Judge Tosses Skokie's Lawsuit Against Evanston Over Water

CHICAGO — A federal judge tossed out Skokie's federal civil rights lawsuit against Evanston Friday, finding the village has not been injured and failed to state a claim. The order clears the way for a Cook County judge to rule on a suit filed more than two years ago where Evanston asked the court to enforce a wholesale water rate it adopted following the expiration of a 24-year-old deal between the neighboring towns.

U.S. District Judge Charles Kocoras found that, even if all of the claims in Skokie's suit about the negotiations that led to rate hike were accepted as true and read in the most favorable light for the village, Skokie has no standing to sue in federal court and granted Evanston's motion to dismiss the suit.

Both the federal and state suits flow from disputed negotiations in 2017. Skokie claims Evanston refused to allow it to take part in negotiations with Niles and Morton Grove that led to the creation of the Niles-Morton Grove Water Commission, a inter-governmental partnership that spent $80 million on new infrastructure to connect to Evanston's water supply and become a new customer for the city.

The village alleges that negotiators acting on behalf of Evanston's elected officials raised rates for "arbitrary" and "discriminatory purposes unrelated to and outside the scope of their governmental duties and authorities," suggesting the city was looking to plug a hole in its budget on the backs of Skokie water consumers.

Evanston argued the water rates were calculated properly using industry standards. The applicable state law, lawyers for the city pointed out, said Evanston and any other municipality that draws water from the lake must offer it for sale to anyone who presents a pipe at its border — and that municipalities may not charge out-of-town consumers any more than its own residents.

The city charged its own residents $3.09 per 1,000 gallons at the time it was seeking $2.06 per 1,000 gallons from Skokie, according to a table included in Evanston's Cook County complaint. Meanwhile, Chicago charged its suburban customers $3.88 per 1,000 gallons. Attorneys for Evanston have argued nothing is preventing Skokie from buying its water from its neighbor to the south rather than to the east.

As first reported by Patch last July, Skokie unilaterally gave itself a discount and began paying $0.78 per 1,000 gallons instead of paying the higher rate of $2.06 a per 1,000 gallons — less than the $1.08 per 1,000 gallons the village would have owed under the expired agreement, which was first adopted in 1993 and extended multiple times. After the Evanston City Council voted to raise the price in September 2017, attorneys for the city asked a Cook County judge to declare the rate valid.

Skokie responded to Evanston's Cook County complaint by filing the now-dismissed federal civil rights lawsuit alleging violations of the Fifth and Fourteenth amendments in June 2018. The village was joined by three residents and a local nut company as plaintiffs in its claim that Evanston violated their constitutional rights to due process and equal protection when the municipalities failed to negotiate an agreement. Cook County Circuit Judge Celia Gamrath put the state case on hold after Skokie's federal lawsuit.

In a ruling issued more than a year after arguments on Evanston's motion to dismiss the case, Kocoras emphasized Skokie and its co-plaintiffs never paid a higher rate — in fact the village instead gave itself a 37-percent discount. (Since then, Skokie has raised water rates on its own residents at least twice for a total of a 16 percent price hike — on top of the village's separate 5 percent "utility tax," which it says also covers the cost of water.)

"Thus, until Skokie actually pays an increased water rate set forth by the Ordinance, its alleged injury is neither actual nor imminent," Kocoras found. "Indeed, the Circuit Court of Cook County may determine Evanston's rate is invalid, thereby curing Skokie's injury."

The judge also pointed out the Illinois Metropolitan Water Reclamation District Act, which regulates water rates for lakeside municipalities, specifically leaves it in the hands of Cook County judges to determine a reasonable rate, provided that any other town may get water at the same rate that a lake-adjacent town charges its own consumers. In this case, Skokie wants to pay significantly less for Evanston water than Evanston residents currently pay.

It was not immediately clear how much Skokie taxpayers have paid to argue the dismissed federal suit — or how much the village could owe Evanston if a Cook County judge certifies new rates. Previously, the village improperly withheld records of its communications with Evanston officials regarding water as well as its legal fees with the firm that represented it in state court, according to the Illinois Attorney General.

Michael Lorge, Skokie's village attorney and its highest-paid employee, has not responded to repeated inquiries about the case. But, in a press release last year, he said the village's "unique litigation" sought to establish it was "unreasonable and unfair" for municipalities to charge "arbitrary and disparate water rates" to different customers.

Arguing before Kocoras last year, Lorge said the issue of the case was whether a municipality located along the lake can charge different rates to different customers.

"It isn't logical, it isn't appropriate and it isn't fundamentally fair for every single municipality to be at the whim of Evanston when they negotiate out rates. There is a fundamental fairness here that needs to be addressed, and it goes to the heart for the whole state," he said, according to a transcript of the Aug. 21, 2018, hearing.

"In the dark of night," Lorge told the judge, "They passed a rate in executive session that was higher than anything that was ever put on the table, and their circuit court action is simply a declaratory judgement saying, 'Tell Skokie that we had a right to do that.'" (Contrary to Lorge's claim, the Evanston City Council did not pass the ordinance raising rates in executive session. In fact, it was approved unanimously in open session on Sept. 25, 2017.)

"I will start paying closer attention to my water bill," said Kocoras, after telling attorneys for both municipalities he normally just pays the bill when it comes.

Evanston Mayor Steve Hagerty and city attorney Michelle Masoncup both declined to comment on the ruling. But after Skokie filed its suit, the city posted a video of Hagerty answering questions about the water dispute. One question asked if Skokie had other options for water.

"Skokie does have other options, including the city of Chicago," Hagerty said. "One option they don't have is more water subsidized by Evanston taxpayers." Evanston officials have argued Skokie had been taking advantage of artificially low rates for years.

John Lockerby, Skokie's village manager, said Kocoras "ruled narrowly on procedure and not on the substance of the case" in his decision granting Evanston's motion to dismiss the case.

"We continue to believe the least expensive and most expeditious way to get to a fair solution is to settle this dispute through binding arbitration," Lockerby said. But it was not clear the village manager meant the dismissed federal suit was intended to bring about binding arbitration or why the village would contend filing the suit would be less expensive than pursuing arbitration through Cook County Circuit Court.

Skokie Mayor George Van Dusen said the village intended to continue paying $0.78 per 1,000 until a judge rules otherwise. Even though it is less than the rate in the last contract between Skokie and Evanston, Van Dusen said the village contends it should instead pay the price in Evanston's mostly signed recent water contract at the time of the village's now-dismissed suit — the one between Evanston and the Niles-Morton Grove Water Commission.

When asked if Skokie plans to appeal Kocoras' dismissal of its federal suit, Van Dusen said the village is continuing to analyze its legal options. He previously said the move to raise rates was "born of financial desperation in Evanston City Hall."

Evanston's request to enforce the higher rates comes back before Gamrath for a status hearing Oct. 24.

Read More:

• Skokie Violated Law By Withholding Water Docs: Attorney General
• Evanston Asks Federal Judge To Dismiss Skokie Water Lawsuit
• Village Hikes Consumers Prices While Unilaterally Cutting Payments
• Skokie Sues Evanston Saying New Water Rate Violates Civil Rights
• Skokie Calls Evanston Water Lawsuit 'Reckless And Hostile'
• Evanston Sues Skokie To Enforce Water Rate Hike

U.S. District Judge Charles Kocoras' Sept. 27, 2019, order dismissing Skokie's federal lawsuit against Evanston over water rates: