HomeMy Public PortalAboutExhibit MSD 18H5 Counterclaim 032408Exhibit MSD 18H5
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
UNITED STATES OF AMERICA,
and
STATE OF MISSOURI,
Plaintiffs,
v.
Case No. 4:07 -CV -1120 (JCH)
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT,
Defendant.
STATE OF MISSOURI'S REPLY MEMORANDUM IN SUPPORT OF MOTION
TO DISMISS METROPOLITAN ST. LOUIS SEWER DISTRICT'S
COUNTERCLAIM AND TO STRIKE AFFIRMATIVE DEFENSES
Defendant Metropolitan St. Louis Sewer District's (MSD) memo in opposition,
when carefully examined, does not present any basis for denying the State's motion to
dismiss counterclaims and strike affirmative defenses. First, it is useful to note that MSD
acknowledges that the counterclaims and the affirmative defenses at issue are based on
the same constitutional provisions. Defendant Metropolitan Sewer District's
Memorandum in opposition to Plaintiff State of Missouri's Motions to Dismiss
Counterclaims and Motion to Strike Affirmative Defenses (Docket No. 73) ("MSD Memo
in Opposition") at 3. Thus, as a practical matter, the counterclaims and affirmative
defenses rise and fall together. The State's motion is based on law and is readily resolved
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from the pleadings without the need for expensive and time consuming discovery that
MSD seeks.
MSD acknowledges that it can raise funds to pay "through its fees or incurring
additional indebtedness." MSD Memo in Opposition at 7. Thus, MSD has a choice of
methods for raising funds. MSD concedes that one of these methods, raising rates, can be
done without voter approval: "MSD acknowledges that the decision in Missouri Growth
Ass'n v. Metropolitan St. Louis Sewer Dist., 941 S.W. 2d 615 (Mo. App. E.D. 1997) held
that MSD's current, water usage -based billing format does not constitute a "tax" subject
to the Hancock Amendment, Art. X § 22(a)." MSD Memo in Opposition at 8. In other
words, MSD has the ability to raise its fees without a vote under the Hancock
Amendment so long as it maintains its current, water usage -based billing format. As with
the rate structure in Missouri Growth Ass'n, MSD need only have a vote of its board to
get the revenue it needs to comply with the law, including any order of this court.
MSD goes on to claim that prior to the Missouri Growth Ass'n decision in 1997,
the Hancock Amendment prevented it from raising rates without a vote. MSD Memo in
Opposition at 8. MSD provides no basis for this claim, and in fact, there is none. In all
relevant respects, the Hancock Amendment has been unchanged since its passage in
1980, so the only thing that prevented MSD from raising revenue prior to 1997 was its
chosen method of assessing service fees. Like Dorothy and the ruby slippers, MSD
always had the means to solve its problem. MSD just had to discover for itself that it had
the means. In addition, § 309(e) of the Clean Water Act ("CWA"), 33 U.S.C. s 1319(e),
applies prospectively if a municipality cannot raise the revenue needed to comply with a
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court order. At this point, a court order has not even been imposed. As a result, so long
as MSD has the ability to raise revenue at the time a judgment is entered, the state
liability provision of 309(e) has no application.
MSD says that "[a]s a practical matter" it is limited in how much it can raise rates.
MSD Memo in Opposition at 8-9. That is debatable factually, but irrelevant legally. All
municipal water systems face practical constraints on raising rates. Section 309(e) of the
CWA only creates state liability if "laws of that State prevent the municipality from
raising revenues needed to comply with such judgment." If Congress had wanted to
create state liability in all situations where a municipality did not or could not, for
practical reasons, meet its federal CWA obligations, Congress would have needed to do
so expressly. Instead, Congress limited state liability to situations where the state created
legal barriers. No legal barrier exists to raising rates needed to comply with a judgment
of this court.
Article V, Sec. 26(b) does not create a barrier to satisfying a judgment. That
provision requires a vote on acquisition of debt, but debt is only one of two means of
raising revenue for compliance. Again, MSD acknowledges that it can raise funds to pay
either "through its fees or incurring additional indebtedness." MSD Memo in Opposition
at 7.
MSD's argument on standing undermines, rather than supports, standing for its
counterclaim. MSD indicates "[t]o the extent the State may become liable for a money
judgment, it will be liable ultimately to the United States and not to MSD." MSD Memo
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in. Opposition at 10 (emphasis in original). The United States Supreme Court has been
reluctant to recognize standing to assert claims of third parties except in rare instances.
We have adhered to the rule that a party "generally must assert his own
legal rights and interests, and cannot rest his claim to relief on the legal
rights or interests of third parties." Warth v. Seldin, supra, at 499, 95
S.Ct. 2197.
We have not treated this rule as absolute, however, recognizing that
there may be circumstances where it is necessary to grant a third party
standing to assert the rights of another. But we have limited this
exception by requiring that a party seeking third -party standing make
two additional showings. First, we have asked whether the party
asserting the right has a "close" relationship with the person who
possesses the right. Powers v. Ohio, 499 U.S. 400, 411, 111 S.Ct. 1364,
113 L.Ed.2d 411 (1991). Second, we have considered whether there is a
"hindrance" to the possessor's ability to protect his own interests. Ibid.
Kowalski v. Tesmer, 543 U.S. 125, 129-130 (2004). Thus, to establish third -party
standing MSD would have to show a close relationship with the United States and a
hindrance to the United State's protecting its own interest. Here, neither element exists.
MSD, as a defendant in this case, has an adverse, rather than close, relationship with the
United States and, in any event, the United States is certainly in a position to protect its
own interests. MSD cannot have standing to assert on behalf of the United States and, in
addition, § 309(e) of the Clean Water Act ("CWA"), 33 U.S.C. § 1319(e), does not
appear to create of a cause of action directly for municipalities.
This conclusion applies equally to affirmative defenses. To raise an affirmative
defense, a party must have standing:
In this case, the intervenors have no standing to raise the defense of res
judicata to the federal consent decree. This defense, if it is available at
all, may be raised only by MSD. MSD's decision not to assert this
defense does not give the intervenors standing to raise it, as a party may
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assert a third party's rights only if, inter alia, the third party is unable to
assert its own rights, a condition not present here. Singleton v. Wulff,
428 U.S. 106, 115-16, 96 S.Ct. 2868, 2874-75, 49 L.Ed.2d 826 (1976).
U.S. v. Metropolitan St. Louis Sewer Dist., 952 F.2d 1040, 1043 (8th Cir. 1992). Thus, to
the extent it seeks to rely on 309(e) for its affirmative defenses, MSD also lacks standing.
MSD goes on to argue "the laws of Missouri have prevented compliance with
Clean Water Act requirements and that they may continue to prevent compliance with
any future judgment." MSD Memo in Opposition at 11. This provides no basis for an
affirmative defense or a counterclaim. Even if true, and the State strongly disputes the
truth of this claim, MSD would not escape liability. Liability under the CWA is strict.
American Canoe Assn v. Murphy Farms, 412 F.3d 536, 540 (4th Cir 2005) ("[T]he CWA
creates a regime of strict liability for violations of its standards."). Such a State barrier to
compliance would not relieve MSD of liability under federal law, and, therefore, would
not provide a basis for MSD to pursue a claim against the State.
MSD attempts to manufacture a connection to the "unfunded mandates" provision
of the Hancock Amendment, Art. X, Sec. 16 of the Missouri Constitution, despite the fact
that all of the claims in the complaint are based on federal law. If that provision applied,
the remedy would be to relieve it of the State obligation at issue, not to give an award of
damages. Fort Zumwalt School Dist. v. State, 896 S.W.2d 918 (Mo. 1995)1. Thus, even
' The Missouri Supreme Court has made it clear that the Hancock Amendment provides only for
a declaratory judgment to determine whether a state statute violates the Missouri Constitution
and to relieve the state subdivision from the underlying legal mandate. Taylor v. State of
Missouri, --- S.W.3d ----, 2008 WL 712736 at *2 (Mo. banc March 18, 2008)(holding the
Hancock Amendment does not authorize a judgment for damages or injunctive relief). Here, the
mandates of which MSD complains are federal requirements not state mandates.
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if state claims were asserted, relief from State unfunded mandates would not relieve MSD
of the obligation to comply with federal law, an obligation it owes to the United States.
Missouri retains it s Eleventh Amendment Immunity. First, as to abrogation, even
MSD acknowledges that the cases it cites stand for the proposition that Congressional
abrogation, if it occurred, occurred as to suits brought by the United States. MSD Memo
in Opposition at p 17 ("The Eleventh Amendment does not protect the State from
potential liability to the United States under § 309 if it should be found that state law
prevents MSD's compliance with any judgment." Emphasis added.).
Waiver of that immunity must be made in the clearest terms:
Accordingly, our "test for determining whether a State has waived its
immunity from federal -court jurisdiction is a stringent one." . . ..
Generally, we will find a waiver either if the State voluntarily
invokes our jurisdiction,..., or else if the State makes a "clear
declaration" that it intends to submit itself to our jurisdiction....
See also Pennhurst State School and Hospital v. Haldernnan, 465 U.S.,
at 99, 104 S.Ct. 900 (State's consent to suit must be "unequivocally
expressed").
College Say. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666,
675-676, 119 S.Ct. 2219, 2226 (1999). The State did not voluntarily invoke jurisdiction.
The Eighth Circuit has already recognized that if a case is brought against MSD, the State
must be a party. Metropolitan St. Louis Sewer Dist., supra, 952 F.2d 1040. The Eighth
Circuit went on to note that "[t]he statute requiring the joinder of the State in such actions
does not prohibit the joinder of the State as a plaintiff...." Id. at 1044. Thus, the act of
joining the case as a plaintiff does nothing more than what is mandated by 309(e): it joins
Missouri as a party. Unless and until Missouri seeks some remedy beyond that which the
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federal government is entitled, the joinder of the State is not a clear declaration,
unequivocally expressed, that the Missouri intends to submit itself to the jurisdiction of
the court so as to allow a claim by MSD.
MSD's reliance on Lapides is misplaced. Lapides v. Board of Regents of
University System of Georgia, 535 U.S. 613, 614, 122 S.Ct. 1640, 1641 (2002). In
Lapides, Georgia was sued in State court and removed to federal court. As a result,
Georgia had a choice as to whether to go into federal court and its choice to remove to
federal court constituted a decision to waive immunity. Missouri has no choice on
whether to be in federal court.
Citing Lapides as support, MSD complains of unfairness. There is no unfairness
here because the State has asserted no State claims. The lack of State claims is no mere
oversight. Missouri could have chosen to include the state equivalent of the federal
claims in order to get penalties that go to the State treasury or injunctive relief over and
above that available under federal law. See 644.051, RSMo and 644.076, RSMo. The
State could also have chosen to include state claims for violations that are not covered by
the current counts of the complaint. The State has taken none of these steps. At this
point, the State could only add these claims with MSD's consent or by order of the court.
FRCP 15(a). As a consequence, MSD need only defend claims it would face if the State
was not a party at all.
Missouri's state sovereign immunity remains in tact in this case for the reasons
cited in its original motion. The Howlett case cited by MSD has no application in this
situation because Congress has not created a cause of action that MSD may bring against
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the State. Howlett v. Rose, 496 U.S. 356, 383 (1990). Plaintiffs in Howlett had been
brought under 42 U.S.C. § 1983 against political subdivisions. In Howlett, the Court
concluded that where Congress created a cause of action against an entity under federal
law, a state may not override Congress through application of sovereign immunity. The
Court specifically noted that Congress excluded states from liability under § 1983, but
included political subdivisions. As a result, extending state sovereign immunity to these
entities violated the supremacy clause. Here, § 309(e) does not create a cause of action
for any entity other than the federal government, so the supremacy clause is not violated.
In addition, MSD includes state claims among its counterclaims. Congress has not
abrogated state sovereign immunity for claims brought under state law. Consequently,
the counterclaims are barred by State sovereign immunity.
MSD has argued that it had no need to raise its constitutional issues during the
permitting process, so exhaustion of administrative remedies does not apply. The State
maintains its position that MSD has, indeed, failed to exhaust administrative remedies.
Further consideration of this issue will require the presentation of evidence. In the
context of a motion to dismiss, this defense is premature and will, therefore be withdrawn
and, if necessary, raised in later proceedings.
Conclusion
For the reasons stated herein and in the State's original motion and memorandum,
MSD's counterclaims against the State of Missouri must be dismissed and affirmative
defenses 9 through 12 must be stricken.
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Respectfully Submitted,
JEREMIAH W. (JAY) NIXON
Attorney General
/s/Joseph P. Bindbeutel
JOSEPH P. BINDBEUTEL
Senior Chief Counsel
Agriculture and Environment Division
Missouri Bar Number: 28656
P.O. Box 899
Jefferson City, MO 65102
(573) 751-8805 phone
(573) 751-8796 facsimile
ATTORNEYS FOR PLAINTIFF
STATE OF MISSOURI
CERTIFICATE OF SERVICE
I hereby certify that on this 24th day of March, 2008, 1 electronically filed the
foregoing with the Clerk of the Court using the CM/ECF system which sent electronic
notification to the following:
Terry Satterlee
Thomas Greyer
David R. Erickson
Shook, Hardy & Bacon, L.L.P.
2555 Grand Boulevard
Kansas City, MO 64108
Telephone: 816-474-6550
Fax: 816-421-4066
Attorneys for Defendant/Counterplaintiff Metropolitan St. Louis Sewer District
Robert Murray
John Gianoulakis
Kohn, Shands, Elbert, Gianoulakis & Giljum, LLP
One U.S. Bank Plaza, 24`x' Floor
St. Louis, Missouri 63101
Telephone: (314) 241-3963
Fax: (314) 241-2509
Attorneys for Defendant/Counterplaintiff Metropolitan St. Louis Sewer District
Kathryn MacDonald
Sara Colangelo Wyche
Environmental Enforcement Section
Environment and Natural Resources Division
United States Department of Justice
P.O. Box 7611, Ben Franklin Station
Washington, DC 20044-7611
Telephone: (202) 353-7397
Fax: (202) 514-4180
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Attorney for Plaintiff United States of America
Maxine I. Lipeles
Elizabeth J. Hubertz
Interdisciplinary Environmental Clinic
Washington University School of Law
One Brookings Drive
Campus Box 1120
St. Louis, MO 63130
Telephone: (314) 935-8760
Fax: (314) 935-5171
Attorney for Intervening Plaintiff Missouri Coalition for the Environment Foundation
Dale A. Guariglia
Bruce C. Oetter
John R. Kindschuh
Bryan Cave, LLP
One Metropolitan Square
211 N. Broadway, Ste. 3600
St. Louis, MO 63102
Telephone: (314) 259-2000
Fax: (314) 259-2020
Attorneys for Proposed Intervenor Missouri Industrial Energy Consumers
Is/Joseph P. Bindbeutel
JOSEPH P. BINDBEUTEL
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