Indiana Supreme Court Holds That Veolia Not Entitled To Sovereign Immunity

It doesn't make up for the massive public rip off that occurred when former Mayor Bart Peterson and City-County Council President Beurt SerVaas engineered a purchase of the Indianapolis Water Company from NiSource at a grossly inflated price and then turned around and handed control of it to the French-owned company, Veolia, which saddled ratepayers with untold added costs occasioned by their poor management of the company and obscene management fees, but it's something. The Indiana Supreme Court ruled yesterday that Veolia was not entitled to claim sovereign immunity in a lawsuit filed by the owners of a Texas Roadhouse restaurant on the city's east side that burned to the ground in 2010 when firefighters struggled to find a working fire hydrant in the area. Under Veolia's management agreement with the city, the company was responsible for maintaining the fire hydrants, which the fire department found were all frozen when firefighters promptly responded to the fire call. Writing for a unanimous court, Justice Stephen David wrote:

. . . Because Veolia is a private entity that contracted with the City to provide a governmental service, it is not entitled to common law sovereign immunity on claims regarding the adequacy of the hydrants’ water supply.

We emphasize that our holding today does not in any way usurp the discretion and authority of the legislature. Since common law sovereign immunity is judge-made in nature, judges are responsible for its incremental development. “In the absence of a statutory directive or controlling case law, our decision rests heavily on the sort of policy considerations that have always been a part of the development of common law.” Among other factors, our consideration of Veolia’s profit motive and status as an autonomous entity has led us to conclude that Veolia is not entitled to common law sovereign immunity from liability for damages resulting from the hydrants’ inadequate water supply.

We hold that a private, for-profit company under the circumstances of this case is not entitled to common law sovereign immunity from liability for damages resulting from a fire that destroyed a Texas Roadhouse restaurant . . .

You may recall that Mayor Greg Ballard added insult to injury when he paid a $29 million break-up fee to Veolia for being a bad actor in a deal negotiated by the law firm that doubled as an attorney for the city and Veolia. The break-up fee was not disclosed at the time when Ryan Vaughn, then an attorney at the law firm of Barnes & Thornburg, rammed through the sale of the water company to Citizens Energy in his capacity as City-County Council president. This happened despite the fact that the city had neglected to properly administer the contract with Veolia, resulting in tens of millions of dollars in overpayments to the company that should have never been made according to analysts at the IURC. An employee of SerVaas' company and former City-County Council member, Carlton Curry, was hired to oversee the contract for the city. Thanks, Carlton. Oh, the great and lasting influence SerVaas had on this city.  Now watch lobbyists for all the government contractors who are increasingly taking control of state and local government services through privatization agreements run to the General Assembly to get legislation passed to shield them statutorily from liability.

Hat tip to Indiana Law Blog.