IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 21, 2009
No. 08-60648 Charles R. Fulbruge III
Clerk
BLUEFIELD WATER ASSOCIATION INC., A Mississippi Non-Profit
Corporation,
Plaintiff-Appellee
v.
CITY OF STARKVILLE MISSISSIPPI, A Municipal Corporation,
Defendant-Appellant
------------------------------------------------------------------------
TEXAS RURAL WATER ASSOCIATION,
Amicus Curiae
Appeal from the United States District Court
for the Northern District of Mississippi
Before JONES, Chief Judge, and HIGGINBOTHAM, and HAYNES, Circuit
Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
This dispute over water provision emerges from a grant of preliminary
injunctive relief to plaintiff-appellee Bluefield Water Association by the United
District Court of the Eastern District of Mississippi, requiring defendant-
appellant, the City of Starkville, to change its main pipe interface with Bluefield
No. 08-60648
and to turn over its customers in a disputed area to Bluefield on terms specified
by the court. We affirm in part and reverse in part.
I
The Mississippi Public Service Commission authorized (“certificated”)
Bluefield Water Association, which was incorporated as a non-profit water
association in 1965, to provide water services in a designated area of Oktibbeha
County, Mississippi. The Farmers Home Administration, a federal agency later
subsumed into the Rural Development office of the Department of Agriculture,
loaned Bluefield money for its startup and operation. Bluefield’s certificated
service area comprised some land near the city of Starkville, Mississippi.
Pursuant to a 1986 Water Purchase Contract, Starkville supplies Bluefield’s
water, which Bluefield distributes to its customers in what we call the “western
service area.”
As it grew, and apparently beginning in the mid-1990's, Starkville
provided water service for some residents and businesses in Bluefield’s area,
without complaint. Because these customers are located in the eastern part of
Bluefield’s service area, we refer to this contested area as the “eastern service
area.”1 In 2004, negotiations commenced for the acquisition of the reportedly
financially troubled Bluefield by Starkville. Bluefield noted—apparently as a
bid to raise its selling price—that Starkville’s provision of water in the eastern
service area violated Bluefield’s exclusive right to provide water within its
certificated area. In late 2007, citing shortage of water to supply its customers,
1
The eastern service area service area generally falls to the east of the north-south
Highway 25 Bypass, but the record suggests this dividing line is not clean. We define this area
as that land within Bluefield’s certificated area currently served by Starkville.
2
No. 08-60648
Bluefield requested that the city allow it to access a 12-inch pipe in lieu of the
8-inch pipe with 6-inch connector. The city refused.
With negotiations at a standstill, Bluefield filed a complaint in the United
States District Court on March 17, 2008, and on May 8 of that year requested a
preliminary injunction with two distinct facets. First, it invoked federal law
protecting rural utility providers indebted to Department of Agriculture,
providing in part that “[t]he service provided or made available through any
such association shall not be curtailed or limited by inclusion of the area served
by such association within the boundaries of any municipal corporation or other
public body . . . .”2 Alleging that Starkville’s encroachment violates this
provision, Bluefield asked the court to provide immediate relief from the eastern
service area encroachment, pursuant to one of several proposed remedies.
Second, invoking supplemental jurisdiction, Bluefield asked for the court to
enforce its contract with the city by ordering connection to a larger water main
in Starkville’s system. It argued that Starkville’s refusal to do so left its
customers vulnerable to disastrous financial and public health consequences in
case of disruptive events such as flooding.
On July 9, 2008, the district court granted broad relief on both facets. Its
preliminary injunction ordered Starkville to connect Bluefield to a larger main
and to turn over to Bluefield the billing apparatus of its water service in the
2
7 U.S.C. § 1926(b). “All of the courts that have reviewed § 1926(b) acknowledge that
is provisions should be given a liberal interpretation that protects water associations indebted
to the [Farmers Home Administration] from municipal encroachment.” Bell Arthur Water
Corp. v. Greenville Util. Comm’n, 972 F. Supp. 951, 959 (E.D.N.C. 1997).
3
No. 08-60648
eastern service area, while continuing to provide water as before, with Bluefield
billing the customers formerly billed by Starkville.3 Starkville timely appealed.
II
The conditions of preliminary injunctive relief guide, indeed largely
dictate, our decision in this case. “To be entitled to a preliminary injunction, the
applicant must show (1) a substantial likelihood that he will prevail on the
merits, (2) a substantial threat that he will suffer irreparable injury if the
injunction is not granted, (3) his threatened injury outweighs the threatened
harm to the party whom he seeks to enjoin, and (4) granting the preliminary
injunction will not disserve the public interest. We have cautioned repeatedly
that a preliminary injunction is an extraordinary remedy which should not be
granted unless the party seeking it has ‘clearly carried the burden of persuasion’
on all four requirements.”4
Our review is deferential: “A district court’s determination as to each of
the elements required for a preliminary injunction are mixed questions of fact
and law, the facts of which this Court leaves undisturbed unless clearly
erroneous. Conclusions of law made with respect to denial of a preliminary
3
“Starkville shall immediately designate Bluefield as the customer of Starkville at each
such water meter where Starkville has heretofore been furnishing retail water service to
customers within Bluefield’s service area through meters owned by Starkville. . . . Starkville
shall bill Bluefield at its water rates presently charged to customers at each meter. Then
Bluefield shall pay Starkville for services rendered to it and may bill the customers previously
served by Starkville at Bluefield’s existing retail rates . . . .” The injunction also prohibits
Starkville from serving new customers or setting new meters or mains in the eastern service
area. These parts of the injunction have not been appealed so we do not pass judgment on
them, although the district court may choose to fashion relief on these scores as appropriate.
4
Lake Charles Diesel, Inc. v. Gen. Motors Corp., 328 F.3d 192, 195-96 (5th Cir. 2003).
4
No. 08-60648
injunction are reviewed de novo. The ultimate decision for or against issuing a
preliminary injunction is reviewed under an abuse of discretion standard.”5
We are convinced that the district court erred as to one wing of the granted
injunctive relief, namely requiring Starkville to turn over billing and customer
relations to Bluefield. There is nothing to suggest that harm suffered between
the time of suit and the time of ultimate decision in this case would seriously
prejudice Bluefield’s opportunity for full recovery, so there is no irreparable
injury—in traditional terms of equity, the remedy at law is adequate. That is,
any harm is financial, and monetary compensation will make Bluefield whole if
Bluefield prevails on the merits. True, courts have granted injunctive relief to
protect rural providers’ interest in serving their certificated areas,6 and the
grant of relief to allow Bluefield’s to serve the eastern service area may
ultimately be appropriate here. But at this stage in the proceedings, given the
long service by Starkville of these customers with no complaint from Bluefield,
and the lack of irreparable harm to Bluefield, granting this preliminary relief
was an abuse of discretion.
By contrast, we are persuaded that the district court acted within its
discretion to require Starkville to supply water to Bluefield via a 12-inch main.
The district court rightly credited the argument that the risk of an overload to
Bluefield’s water supply could seriously damage both Bluefield’s and the public’s
interest, and contrary to Starkville’s strenuous objections, there is at least a
5
Guy Carpenter & Co. v. Provenzale, 334 F.3d 459, 463 (5th Cir. 2003) (internal
citations omitted).
6
See North Alamo Water Supply Corp. v. City of San Juan, Texas, 90 F.3d 910, 916-18
(5th Cir. 1996).
5
No. 08-60648
“substantial likelihood” that Bluefield’s ultimate claim under the Water
Purchase Contract will prevail.7
Having reached these conclusions, we decline to explore the parties’
manifold additional claims and arguments, ranging from federal jurisdiction to
the interpretation of the Farm and Rural Development Act to the application of
the doctrine of laches. The undeveloped record provides no occasion to decide
these disputes, and we leave them for development by the district court. Federal
jurisdiction, including supplementary jurisdiction over the state law contract
dispute, on this record has been sufficiently invoked for the purposes of this
ruling.8
We AFFIRM the district court’s preliminary injunction insofar as it
requires Starkville to supply water via a 12-inch pipe, we REVERSE the
injunction insofar as it requires altered billing and payment structures to the
Starkville customers in the eastern service area, and we REMAND this case for
further proceedings.
7
The contract includes the following language: “the Seller will, at all times, operate
and maintain its system in an efficient manner and will take such actions as necessary to
furnish the Purchaser with quantities of water required by the Purchaser.” This is sufficient
to support Bluefield’s claim, to at least a “substantial likelihood” standard. We express no
opinion as to the ultimate outcome of this dispute.
8
“The question under section 1367(a) is whether the supplemental claims are so related
to the original claims that they form part of the same case or controversy, or in other words,
that they ‘derive from a common nucleus of operative fact.’” Mendoza v. Murphy, 532 F.3d 342,
346 (5th Cir. 2008) (quoting United Mine Workers of Amer. v. Gibbs, 383 U.S. 715, 725 (1966)).
The district court may examine again the question of supplementary jurisdiction and whether
it ought exercise it as the federal and state claims gain focus with the progress of the case.
6