United States v. Robert Geranis , 808 F.3d 723 ( 2015 )

United States Court of Appeals
For the Eighth Circuit
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Nos. 13-3394/14-3195
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United States of America
lllllllllllllllllllll Plaintiff - Appellee
State of Missouri
lllllllllllllllllllllIntervenor Plaintiff - Appellee
v.
Robert Geranis; Leroy Harris; Mike Doak; Gerald Duvall
lllllllllllllllllllllIntervenor Defendants - Appellants
Benton County Sewer District No. 1 of Benton County, Missouri; William Seek,
solely in his capacity as President an Trustee of Benton County Sewer District No.
1, also known as Ted Seek; John Grate, solely in his capacity as Trustee of Benton
County Sewer District No. 1; Joseph Gualco, solely in his capacity as Trustee of
Benton County Sewer District No. 1; Stephen Tibbetts, solely in his capacity as
Trustee of Benton County Sewer District No. 1
lllllllllllllllllllll Defendants - Appellees
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Appeals from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: September 23, 2015
Filed: December 15, 2015
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Before MURPHY, MELLOY, and SMITH, Circuit Judges.
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MELLOY, Circuit Judge.
In 2013, voters of Benton County Sewer District No. 1 (“District”) voted to
dissolve the District, as permitted under Missouri law. The day before the election,
the United States filed the present lawsuit on behalf of the U.S. Department of
Agriculture (“USDA”) to enjoin dissolution of the District. A Voter Representative
Group (“Group”), which consists of four individuals who are all District voters,
customers, ratepayers, and property owners, seeks to intervene in the lawsuit. The
district court1 denied the Group’s motion to intervene, and the Group appealed. While
the appeal was pending before this Court, the existing parties sought court approval
for an asset purchase agreement to sell the District’s assets (primarily the physical
infrastructure of the sewer system) to a private entity and finally dissolve the District.
The Group renewed its motion to intervene. The district court2 denied the motion
again, citing the Group’s lack of standing. The Group appeals the district court’s
denial of both motions. We affirm.
I. Background
The District was created in 1994 in accordance with Missouri law. See Mo.
Rev. Stat. § 204.250 (providing for the establishment of common sewer districts). In
the years that followed, the District’s Board of Trustees (“Trustees”) obtained funding
to construct and operate a sewer system through state and federal grants and by
1
The Honorable Scott O. Wright, United States District Judge for the Western
District of Missouri.
2
The Honorable Beth Phillips, United States District Judge for the Western
District of Missouri.
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issuing a revenue bond to the USDA secured by a lien against the physical
infrastructure of the system. Ultimately, the District constructed a common sewer
system that remains in operation today, serving approximately 365 customers.
On October 3, 2012, the Benton County Circuit Court entered a consent
judgment requiring the District to undertake extensive upgrades and repairs in order
to comply with the Missouri Clean Water Law. Missouri v. Benton Cnty. Sewer Dist.
No. 1, No. 12BE-CC00052 (30th Cir. Ct. Oct. 3, 2012). In response, voters in the
District circulated a petition to place on the ballot the question: “Shall the Benton
County Sewer District #1 of Benton County, Missouri be dissolved?” In the April 2,
2013 General Municipal Election, the question of dissolving the District appeared on
the ballot and a majority of District voters voted “Yes.” In the same election, a
majority of District voters voted against a proposed plan to levy property taxes to help
finance the operation of the District. No issue was presented on the ballot concerning
the fate of the physical infrastructure of the common sewer system operated by the
District.
On the day before the election, the United States filed the present lawsuit
against the District and the Trustees, seeking declaratory judgment and injunctive
relief on behalf of the USDA. The United States also sought a temporary restraining
order to preserve the District’s status quo in the event of a vote to dissolve the District.
The district court granted the temporary restraining order upon finding that: (1)
dissolution of the District would leave USDA without an adequate remedy for
recovering the revenue bond; and (2) discontinued use of the sewer system would
pose a threat to public health and welfare.
On April 19, 2013, the United States filed an application for a preliminary
injunction, seeking an order that the District and the Trustees would not initiate the
process of dissolution. The District filed a response neither supporting nor opposing
the preliminary injunction. Rather, the District expressed a desire to resolve the
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matter in a way that would be fair to the District’s customers and voters, as well as to
the USDA. On May 1, 2013, the district court granted the preliminary injunction.
On May 23, 2013, the Group filed a pro se motion to intervene as a defendant.
One of the individuals, Gerald Duvall, was an existing party to the lawsuit in his
official capacity as a Trustee. All of the Group members voted to dissolve the District.
In its motion, the Group argues that the District and the Trustees are not proper
defendants because their authority was terminated by the April 2, 2013 election.
The State of Missouri intervened as a plaintiff on June 14, 2013. The State’s
motion opposed immediate dissolution of the District on the grounds that it would
result in noncompliance with the Missouri Clean Water Law. The State indicated that
it would not oppose orderly dissolution guided by the court to ensure compliance with
state law. The district court granted the State’s motion to intervene.
On July 12, 2013, the Group secured counsel. In an amended motion to
intervene, the Group claimed an interest in: (1) upholding the vote to dissolve the
District, (2) dissolving the District, (3) opposing repayment of the bond to the USDA,
(4) opposing the State’s claims under the Missouri Clean Water Law, and
(5) proposing on-site sewage treatment alternatives. No existing party filed an
opposition to the Group’s motion. On October 3, 2013, the district court denied the
Group’s motion to intervene on the grounds that it did not meet the requirements of
Federal Rule of Civil Procedure 24(a). The Group appealed this decision on October
30, 2013.
In the months that followed, efforts to resolve the fate of the sewer system
continued. On April 24, 2014, while the Group’s appeal was still pending, the United
States and the State filed a joint motion for approval of the asset purchase agreement.
The proposed agreement provided for sale of the District’s assets to Missouri-
American, an experienced private owner and operator of sewer systems in Missouri.
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Under the agreement, Missouri-American would pay $750,000 directly to the USDA
as partial payment of the outstanding balance the District owes for the revenue bonds.
The District’s other debts owed to the USDA would be discharged. Following the
sale, the District would be dissolved. The District and the Trustees filed a response
indicating they neither support nor oppose the proposed sale.
In response to the proposed asset purchase agreement, the Group renewed its
motion to intervene to oppose the joint motion for approval of the agreement. The
United States and the State filed joint suggestions in opposition to the Group’s
renewed motion to intervene, arguing the Group lacks standing and cannot meet the
requirements to intervene as of right. On July 17, 2014, the district court scheduled
a hearing for July 30, 2014, during which the parties were permitted to present
witnesses. The Group did not present any evidence pertaining to intervention. On
August 11, 2014, the Group filed additional suggestions in opposition to the proposed
asset purchase agreement and in support of its renewed motion to intervene.
On August 25, 2014, the district court approved the asset purchase agreement
and set in motion the sale of the District’s sewer system to Missouri-American.3 The
district court also denied the Group’s renewed motion to intervene on the same basis
as the earlier denial, as well as lack of Article III standing. The denial of a motion to
intervene of right is immediately appealable as a final judgment. Our review is de
novo.
3
The Missouri Public Service Commission granted Missouri-American’s
application for a Certificate of Convenience and Necessity on November 12, 2015,
effective December 12, 2015. (Case No. SA-2015-0065). The sale is scheduled to
close on December 18, 2015. Upon closing, Missouri-American will immediately
take over and operate the sewer system
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II. Discussion
As our precedent indicates, “Article III standing is a prerequisite for
intervention in a federal lawsuit.” Standard Heating & Air Conditioning Co. v. City
of Minneapolis, 137 F.3d 567, 570 (8th Cir. 1998). To demonstrate standing, a
proposed intervenor must show: (1) injury, (2) causation, and (3) redressability. Lujan
v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). In particular, the injury must be
“concrete, particularized, and either actual or imminent.” Curry v. Regents of the
Univ. of Minn., 167 F.3d 420, 422 (8th Cir. 1999). The alleged injury must also be
“fairly traceable to the defendant’s conduct” and capable of being remedied by a
favorable decision. United States v. Metro. St. Louis Sewer Dist., 569 F.3d 829, 834
(8th Cir. 2009).
In the district court, the Group expressed concern that the existing parties were
not considering its interests as to four major issues. In order to proceed, the Group
must show that it has standing on at least one of its asserted interests. As discussed
below, we conclude the Group has failed on each ground.
First, the Group claims an interest in upholding the vote to dissolve the District
and immediately dissolving the District. These interests are shared by all the voters
who voted to dissolve the District. Thus, on this ground, the Group “fail[s] to allege
a specific individualized injury necessary to establish standing in federal court.”
Nolles v. State Comm. for Reorg. of Sch. Dists., 524 F.3d 892, 900 (8th Cir. 2008)
(finding a group of Nebraska voters did not have standing to challenge the application
of the state constitution to a state referendum process). Further, the existing parties
have not ignored or attempted to undermine the vote in support of dissolution. Rather,
they seek to effectuate the District’s dissolution in accordance with Missouri law,
which requires “no district shall be dissolved until all of its outstanding indebtedness
has been paid.” Mo. Rev. Stat. § 67.950(9). The Group’s interest varies only insofar
as it seeks an unlawful immediate dissolution.
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Second, the Group claims an interest in opposing the repayment of the revenue
bond the District issued to the USDA. Missouri law requires that the revenue bond
“shall be payable solely from the revenues derived and to be derived from the
operation of the sewerage system acquired, constructed, improved or extended in
whole or in part from the proceeds of the bonds.” Mo. Rev. Stat. § 204.390. As
ratepayers, the Group may be properly situated to assert economic interests in
avoiding increased rates. See Metro. St. Louis Sewer Dist., 569 F.3d at 835 (noting
an association of businesses “is properly situated to assert the utility related economic
interests of its members”). However, the Group does not show how any such injury
is actual or imminent. Through this lawsuit, the parties have arranged a solution for
repaying the USDA that will lower rates. In other words, the Group’s alleged injury
would arise only if: (1) Missouri-American and the District receiver failed to close on
the sale of the District’s sewer system, (2) the USDA continued to demand payment
on the revenue bond, and (3) the District raised rates to pay the bond obligation.
Further, even if we rule in the Group’s favor, its interests in opposing repayment are
at odds with the Bond Agreement as well as Missouri state law, which require
repayment of the bond. Because the parties do not challenge the law itself, we cannot
find standing where the asserted theory of redressing the injury is clearly contrary to
the applicable law.
Third, the Group claims an interest in opposing the State’s claims under the
Missouri Clean Water Law. Missouri law requires sewer districts to abide by a
number of environmental and administrative regulations. The Group has failed to
established how the enforcement of these laws amounts to a “personal and individual”
injury. Hollingsworth v. Perry, 133 S. Ct. 2652, 2662 (2013) (quoting Defs. of
Wildlife, 504 U.S. at 560 n.1). Rather, the Group asserts only a “generalized
grievance,” which is available to all of the members of the District. In other words,
the Group’s claim of “harm to his and every citizen’s interest in proper application of
the . . . laws, and seeking relief that no more directly and tangibly benefits him than
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it does the public at large” cannot provide the basis for standing. Id. (quoting Defs.
of Wildlife, 504 U.S. at 573–74).
Finally, the Group claims an interest in proposing on-site sewage treatment
alternatives. The record indicates residents of the District will be permitted to apply
to unhook from the central sewer system due to the sale of the District’s sewer system
to Missouri-American. However, because a state agency must grant permission to
residents seeking to install on-site systems and because the geological conditions in
the District are unfavorable to such systems, it is unlikely that many residents will be
able to unhook from the central sewer system. Any injury the Group could suffer with
regard to the ability to construct on-site systems is not “personal and individual” to
the Group, and it is not caused by the dissolution of the District. Moreover, the sale
of the sewer system to Missouri-American results in the immediate dissolution of the
District, yet there is no way to guarantee that the Group’s members could construct
on-site systems. “Relief that does not remedy the injury suffered cannot bootstrap a
plaintiff into federal court; that is the very essence of the redressability requirement.”
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 107 (1998).
III. Conclusion
Based on the foregoing, we conclude the Group does not have Article III
standing. Because this is a prerequisite for intervention in this Circuit, we need not
address intervention separately. The judgment of the district court is affirmed.
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