Here's how residents impacted by Suffolk's Southwest Sewer District overcharges can get a settlement payment
The Suffolk County Legislature holds a general meeting at the William J. Lindsay County Complex in Hauppauge in May. Credit: Morgan Campbell
Suffolk County plans to finalize a $120 million settlement next week — which includes a $37.8 million attorney payout — in a decade-old lawsuit filed by ratepayers of the Southwest Sewer District alleging they were overcharged by at least $260 million.
The settlement includes $4.36 million for more than 400 plaintiffs — averaging about $11,000 — and $77.8 million for sewer district capital improvements over 10 years, according to the agreement that became public last week.
In a 4-3 vote Thursday, the legislature’s Ways & Means Committee advanced a bill earmarking the settlement funds to the full board on Dec. 16.
Presiding Officer Kevin J. McCaffrey (R-Lindenhurst), Legis. Steven J. Flotteron (R-Brightwaters), the deputy presiding officer, and Legis. Robert Trotta (R-Fort Salonga), the chairman of the committee, all voted no. Trotta cited the attorney fees while McCaffrey and Flotteron questioned the use of a sewer fund to pay the $42.1 million for the plaintiffs and attorneys.
The legislature previously adopted a resolution in August authorizing a settlement. Judge David T. Reilly signed the finalized agreement on Nov. 18.
"The settlement shields the county from exposure to massive liability, while also ensuring that critical sewer infrastructure projects are undertaken for the benefit of taxpayers in the Southwest Sewer District," County Executive Edward P. Romaine said in a statement.
Attorneys for the plaintiffs declined to comment.
What is the history of the case?
The lawsuit was first filed in 2015 by two residents and an apartment complex, Harbor Club LLC. The complaint alleged the county illegally collected excessive sewer district taxes that were placed in Fund 405, a reserve account meant to stabilize taxes, according to the settlement. This, plaintiffs had argued, created a surplus that diverted those excess funds to the county's operating budget.
They argued the fund was "improperly created at its inception," and "improperly utilized for general fund purposes," county attorney Chris Clayton told lawmakers in a brief overview of the case at Thursday's committee meeting.
How much do the plaintiffs receive?
The settlement includes a formula to divide the $4.36 million. The formula is based on the value of a plaintiff’s property based on 2015-16 tax year divided by the total value of all the properties impacted by the overcharge. That percentage is then multiplied by the $4.36 million to determine individual shares.
How can impacted residents claim payment?
The settlement payment and attorneys’ fee payment is delivered to the plaintiffs' law firm Pillsbury Winthrop Shaw Pittman within 30 days of the agreement. The plaintiffs can then expect within 30 days a FedEx mailing that outlines the notice of the settlement and their individual share. A law firm on the case "shall exercise reasonable diligence to determine a valid and current address," according to the settlement.
Payment requires the plaintiffs sign a release, which says the plaintiffs cannot sue at a later date after and agree to waive certain claims related to sewer tax rates and other issues.
What if plaintiffs don't accept the settlement?
The settlement includes an indemnification clause if a ratepayer challenges the settlement. Claims must be brought for future lawsuits within three years if the plaintiff does not sign the release. Eight million dollars will be held in escrow to cover potential payouts. The county is not responsible for those disputes.
Why did the county settle?
The county denied wrongdoing and did not admit any liability in the agreement. The county agreed to settle "to avoid the cost and uncertainty of continued litigation while also benefiting the taxpayers of the [Southwest Sewer District]," the agreement says.
The plaintiffs sought a return of about $656 million and discovery alone was estimated to cost the county $35 million, according to the settlement.
The county’s potential exposure, the plaintiffs contended, was about $1 billion, according to the settlement.
Why did some lawmakers vote against it?
Trotta cited the $37.8 million in attorney fees. "Based upon that I would never vote for this in a million years," he said.
McCaffrey said he objected to Fund 405 being used to pay $42.18 million to plaintiffs and attorneys. He said his understanding when the legislature previously approved a resolution authorizing a settlement was that the fund would not be used for that purpose.
He said as the county consolidates its sewer districts into a single wastewater management district in 2026, the property owners in the Southwest Sewer District are expected to receive a credit from Fund 405 starting in 2029.
"That money will go away and the residents of the Southwest Sewer District who we claim were harmed in this lawsuit — we’re going to take an action that will further harm them the next 15 years," he said.
Flotteron told Newsday he agreed with McCaffrey’s viewpoint and said while he’s "proud of the new administration" for settling the lawsuit, he’s concerned the ratepayers are "becoming a victim again."
Joe Werkmeister joined Newsday in 2022 and covers Suffolk County government and politics. He is a graduate of St. Bonaventure University and previously worked as the editor of two North Fork community newspapers.
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