Hood v. City of Memphis, Tenn., 533 F. Supp.2d 646 (N.D. Miss. 2008).

Surya Gunasekara, M.R.L.S., 1L, University of Mississippi School of Law

Mississippi recently sued the City of Memphis and their municipal utility company Memphis Light, Gas and Water Division (MLGW) (collectively “Memphis”) for wrongfully appropriated groundwater from an interstate aquifer. The Northern District Court of Mississippi dismissed the action without prejudice holding that the State of Tennessee was a necessary and indispensable party to the action. If the state of Mississippi wishes to pursue its claim, it will have to file an original action against Tennessee with the U.S. Supreme Court.

Background
The Memphis Sands Aquifer (the Aquifer) is an underground reservoir that lies beneath parts of Northwestern Mississippi, Western Tennessee, and Eastern Arkansas. The Aquifer consists of a “400-900 foot thick layer of very fine to very coarse sand interlaced with beds of clay and silt.”1 This unique geological configuration results in what is arguably one of the best sources for high quality water in the U.S.    
     
Memphis owns and operates one of the largest artesian water systems which makes it “the largest city in the world that relies solely on groundwater wells for its water supply.”2 Essentially, all of Memphis’ water is drawn from the Memphis Sands Aquifer. As Memphis is located near the Mississippi/Tennessee state line, many of the wells operated by MLGW are situated near the border between the two states.

Historically, the Aquifer naturally flowed in a southwesterly direction. Increased pumping by Memphis over the past few decades has reversed this flow and the Aquifer now flows north from Mississippi into Tennessee. Memphis’ pumping has also contributed to the development of a cone of depression in the Aquifer centered under Memphis. These two factors allow water, which originally lay under Mississippi soil, to migrate into Tennessee where it can be pumped and put to use by Memphis.

Mississippi alleges that a third of Memphis’ water requirements, or 60 million gallons per day, was being pumped by MLGW’s wells and wellfields from Mississippi’s groundwater.3 Mississippi argued that this misappropriation of water unjustly enriched Memphis by enabling the city to sell off water belonging exclusively to Mississippi. Mississippi sought injunctive relief from the court for this misappropriation of Mississippi’s groundwater. In addition, Mississippi sought damages for: (1) the value, plus interest, of all the water pumped from Mississippi’s share of the Aquifer since 1985; and (2) the value of the past and future unjust enrichment or costs avoided by Memphis and MLGW (estimated at several hundred million dollars for each charge).4

Indispensable Parties
Memphis claimed the case should be dismissed because the State of Tennessee was an indispensable party. Rule 19(a) of the Federal Rules of Civil Procedure requires a person or entity to be joined as a party to a lawsuit if in the person’s absence complete relief cannot be given among those already a party, or the person’s absence would impair his ability to protect his interest.5 If a person is an indispensable party but cannot be joined for some reason (it would deprive the court of jurisdiction, for instance), the court must decide whether the case can proceed or must be dismissed. Courts must consider the following factors: the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties; the extent to which any prejudice could be lessened or avoided by protective provisions in the judgment or other measures; whether a judgment rendered in the person’s absence would be adequate; and whether the plaintiff would have an adequate remedy if the action were dismissed.6

The district court first examined whether joinder was possible under Rule 19(a). Acknowledging that there were no reported cases involving the apportionment of interstate groundwater or aquifers, the court concluded that the doctrine of equitable apportionment could logically be applied to groundwater. The doctrine has typically been the means of resolving disputes over interstate surface waters. Because the aquifer in dispute had never been apportioned between the states by agreement or by the Supreme Court, the district court would have to engage in de facto appropriation and divide the water between Mississippi and Tennessee to determine each state’s share. Since Tennessee’s absence would impair its ability to protect its interest (water resources), the state must be joined under Rule 19(a). Tennessee’s joinder, however, would deprive the district court of jurisdiction. Controversies involving two or more states fall under the original and exclusive jurisdiction of the Supreme Court.

The court therefore turned to Rule 19(b) to determine whether the action should proceed or be dismissed with Tennessee labeled as an indispensable party. Applying the four-part test outlined above, the court found that any ruling would certainly be prejudicial to Tennessee’s interests, since the court would be deciding the water rights of each state. The court did not see any way in which protective provisions could be added to the judgment to avoid harm to Tennessee. Finally, the court concluded that a judgment rendered without the presence of Tennessee would simply not be adequate.

Conclusion
The Northern District Court of Mississippi found that Tennessee was an indispensable party to the action pursuant to Rule 19(b). The court lacked the authority to join Tennessee, however, because controversies between states are under the original and exclusive jurisdiction of the U.S. Supreme Court. The action was accordingly dismissed without prejudice. The court noted that the Aquifer lies beneath Arkansas as well, but made no determination regarding the indispensability of Arkansas to the action. The court recommended that the state Attorney General of Arkansas be made aware of the court’s opinion

In awarding costs to the prevailing party the district court ruled that due to the unique procedural developments Mississippi and Memphis would split Memphis’ reasonable costs of $50,233.33. Mississippi has since filed a notice of appeal to the Fifth Circuit Court of Appeals.

Endnotes
1.  Complaint at 4, Hood v. City of Memphis, Tenn., 533 F.Supp.2d 646 (N.D. Miss. 2008).
2.  Id. at 2.
3.  Id. at 3.
4.  Id. at 7-9.
5.  Fed. R. Civ. P. 19(a).
6.  Id. at 19(b).