Lisa Kragnes v. City of Des Moines, Iowa, 2012 Iowa Sup. LEXIS 18

Remanded to determine class certification and which franchise-fee costs relate to municipal administration under police power.
District court certified a class of Des Moines utility customers paying electricity or gas franchise fees from 7/27/1999 forward and ordered refunds for excess fees.
City increased franchise fees from 1% to 3% in 2004 and to 5% in 2005.
Kragnes alleged the fees were illegal taxes; Kragnes I held a city may charge a fee tied to regulatory costs, and remanded for class certification and merits.
District court found excess fees and ordered refunds for amount exceeding $1,575,194 (electric) and $1,574,046 (gas) annually, retaining jurisdiction for refunds and fees; this court affirmed as modified and remanded.
Legislature later amended statutes addressing franchise-fee regulation.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the class should be decertified for intraclass conflict.	Kragnes argues no fundamental conflict; Kragnes as property owner can represent class.	City contends a latent conflict exists between Kragnes and other class members who would bear tax burdens.	No reversible error; no fundamental conflict precludes certification.
Whether class members have a due-process opt-out right.	Rule 1.263(1) permits class action without opt-out given safeguards.	Shutts requires opt-out rights for due process.	District court did not err; opt-out not required under Iowa rules.
What costs are properly includable as franchise-fee-related administrative expenses.	Kragnes seeks broader inclusion of costs.	City seeks additional components.	Adopted specific components; lost-tree value and indirect costs limited; acute costs disallowed.
Whether plaintiffs are entitled to a postdeprivation refund for overcharged fees.	McKesson/Hagge support meaningful refund relief.	Refund could disrupt fiscal administration.	Refunds permitted; remedy to be structured to minimize disruption.
Whether the class should be divided into subclasses for remedies.	Subclassing unnecessary.	Subclasses may be needed due to varying remedy interests.	No compelled subdivision; court may decide on remand if warranted.

Kragnes v. City of Des Moines, 714 N.W.2d 632 (Iowa 2006) (remand for class certification and relation of fees to administrative costs; authority to assess franchise fees)
Valley Drug Co. v. Geneva Pharmaceuticals, Inc., 350 F.3d 1181 (11th Cir. 2003) (conflicts among class members in pricing schemes can defeat certification)
Pickett v. Iowa Beef Processors, 209 F.3d 1276 (11th Cir. 2000) (intraclass conflict where some members benefit from conduct harming others)
Hagge v. Iowa Dept. of Revenue and Finance, 504 N.W.2d 448 (Iowa 1993) (restoration of unlawfully collected taxes; refund remedy)
McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18 (1990) (due-process sufficiency of postpayment refunds for overpayments)
Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (Supreme Court 1985) (due process and opt-out considerations in class actions)
Adams v. Robertson, 520 U.S. 83 (1997) (jurisdictional considerations in class actions; not deciding due-process issue)