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Judge hears banks' request to dismiss Flint water crisis-related lawsuit

steve carmody
Michigan Radio

A federal judge heard arguments Tuesday in a lawsuit  seeking damages for Flint residents from the banks that handled the bonds for the Karegnondi Water Authority pipeline (KWA).

Major banks (J.P. Morgan Chase, Wells Fargo and Stifel, Nicolaus & Company) helped underwrite the financing of the city’s share of the construction of the water pipeline from Lake Huron to Genesee County.

Plaintiffs’ attorneys argue without the bond financing to join the KWA, Flint would not have switched its water source to the Flint River. Improperly treated river water caused Flint’s water crisis.

Attorney Renner Walker contends the underwriters should have realized that if the switch to the Flint River were allowed to happen “people would be poisoned.”

“This is truly an extreme and unique set of facts,” Walker told U.S. District Judge Judith Levy during Tuesday’s hearing. 

But an attorney for the banks argues the banks were asked to line up financing for the pipeline and had nothing to do with Flint’s water plant. 

“There are many reasons to decline plaintiffs’ request that this court effectively invent a new type of liability for lenders and underwriters,” attorney Charlotte Taylor told the judge during Tuesday’s hearing.

The banks are asking for the lawsuit to be dismissed.

The case was filed last year and has largely been on the back burner while other Flint water civil lawsuits have made their way through the courts.

Banks are not part of a $641 million settlement of civil claims against the state of Michigan, the city of Flint and others, which Judge Levy is also overseeing. That case, involving more than 50,000 registered prospective plaintiffs, is pending final approval from Judge Levy. That's expected soon. 

On Tuesday, the judge promised to issue a decision in the banks case as fast as she can.

Steve Carmody has been a reporter for Michigan Public since 2005. Steve previously worked at public radio and television stations in Florida, Oklahoma and Kentucky, and also has extensive experience in commercial broadcasting.