State of Montana v. Talen Montana, LLC et al

Filing 216

ORDERED: Defendant NorthWestern Corporation's Motion for Joinder of Necessary Party Under Fed. R. Civ. P. 19 (Doc. 192) is GRANTED. IT IS FURTHER ORDERED that the State of Montana is required to Amend its Pleading to name the United States as a party defendant under the Federal Quiet Title Act. The State will have 60 days to do so. Signed by Judge Dana L. Christensen on 2/12/2019. (HEG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
HELENA DIVISION

FILED
FEB 1 t: 2019

STATE OF MONTANA,
CV 16--35-H-DLC
Plaintiff,
vs.
ORDER
TALEN MONTANA, LLC, a
Delaware Limited Liability Company,
f/k/a PPL CORPORATION, d/b/a
NorthWestern Energy, a Delaware
Corporation,
Defendants.
NorthWestern Corporation and Talen (together Defendants) move the Court
to join the United States as a necessary party under Federal Rule of Civil
Procedure 19.
(Doc. 198).

(Doc. 192, 197).

The State of Montana opposes this motion.

The Court has read the parties briefs and conducted a lengthy hearing

on February 8, 2019.
In reaching its decision, the Court has an interest not only in arriving at the
right conclusion as a matter of law, but also in guiding this litigation efficiently.

See Fed. R. Civ. P. 1.

To the extent that the United States has an interest in this

case, the Court wants that interest developed sooner rather than later.

For the

reasons explained more fully below, the Court will grant the motion.

Because the

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parties are familiar with the facts of this case, they will only be stated as necessary
to understand this Court's Order.

ANALYSIS
Under Rule 19(a)(l), a party is necessary, andjoinder is required, if: (1) "in
that [party's] absence, the court cannot accord complete relief among existing
parties"; or (2) a party has an interest in the action and resolving the action in its
absence may as a practical matter impair or impede that party's ability to protect
that interest; or (3) if a party has an interest in the action and resolving the action in
its absence creates a substantial risk that failure to join the party may leave an
existing party subject to inconsistent obligations because of that interest. Fed. R.
Civ. P. 19(a)(l); Salt River Project Agr. Imp. & Power Dist. v. Lee, 672 F.3d 1176,
1179 (9th Cir. 2012).
Federal Rule 19 contemplates "entertaining the broadest possible scope of
action consistent with fairness to the parties; joinder of claims, parties and
remedies is strongly encouraged." United Mine Workers ofAm. v. Gibbs, 383
U.S. 715, 724 n.10 (1966). "Further, a court must protect the interests of the
parties not before it to avoid possible prejudicial effect; failure of a court to protect
those interests by joinder may amount to a violation of due process." R. J.
Williams Co. v. Fort BelknapHous. Auth., 92 F.R.D. 17, 21 (D. Mont. 1981).

Defendants argue that joinder of the United States is necessary under each of

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Rule 19's disjunctive requirements. Because this Court agrees that the United
States has an interest in the litigation that runs a substantial risk of subjecting
Defendants to incurring double or otherwise inconsistent obligations, the Court
will not address Defendants' other arguments.

I.

The United States Has a Legally Protected Interest in the Litigation
Rule 19 requires that a purported necessary party have a legally protected

interest in the pending litigation. Cachil Dehe Band of Wintun Indians ofthe
Colusa Indian Cmty. v. California, 547 F.3d 962,970 (9th Cir. 2008). "This
interest must be more than a financial stake, and more than speculation about a
future event." Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir. 1990)
(internal citations omitted). However, the interest itself need "merely be a
'claim'-that is, 'O]ust adjudication of claims requires that courts protect a party's
right to be heard and to participate in adjudication of a claimed interest, even if the
dispute is ultimately resolved to the detriment of that party."' White v. Univ. of
Calif., 765 F.3d 1010, 1029-30 (9th Cir. 2014) (quoting Shermoen v. United
States, 982 F.2d 1312, 1317 (9th Cir. 1992)). A legally sufficient claim is one
that is "nonfrivolous." Id. at 1030.
In Makah Indian Tribe, the Ninth Circuit found that a court's decision that
would effectively reallocate a fixed or limited resource required the participation of
absent neighboring tribes. 910 F.2d at 558. There, the Makah Tribe challenged

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"federal regulation allocat[ing] the ocean harvest of migrating Columbia River
salmon" where the regulation set lower harvest levels than those protected by
treaty. Id. at 556. The Makah Tribe, one of twenty-three tribes covered by the
treaty, challenged that the quotas imposed by regulation were unfair and violated
their treaty rights. Id. at 557. Because the district court determined that the tribe
was primarily seeking to reallocate harvest quotas, the district court sua sponte
determined that the absent tribes were "necessary" parties and dismissed the suit.
Id. The Tribe appealed, arguing that they only sought to enforce their own treaty
rights and to increase the overall harvest quotas, and therefore their claims would
not negatively impact any other tribe's interest. Id. However, the Ninth Circuit
sided with the lower court. Id. at 559. The court reasoned that because the
subject matter of the litigation was the allocation of salmon-which is a limited
resource-any decision with regard to the Tribe would necessarily reduce the
salmon available to other tribes. Id. Further, the court determined that those
interests were not adequately protected by the federal government to the extent
"those interests conflict among themselves." Id.
Here, Defendants argue that the United States has an interest in the outcome
of this litigation because it asserts ownership and has charged rent to NorthWestern
for its use of land that may be determined to be owned by the State in the course of
litigation. Defendants argue that the United States has asserted this interest in

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multiple ways, including participating as an amicus before the United States
Supreme Court.
The State of Montana asserts that the only interest the United States has
expressed in this litigation is the interest in advocating for a particular legal test
and observes that the United States has not sought to enter this litigation as a party
at any time during the now-sixteen years that this case has been pending. Further,
the State contends that it does not seek conflicting title to any federal land, and the
only question is whether various segments of the river were navigable at statehood.
(Doc. 204 at 10 13 n.5 (stating that because the sole issue during this stage of
litigation is whether certain segments of land passed to the State of Montana at
statehood under the equal footing doctrine "there is no dispute between Montana
and the United States[.]").) And, because the State plans to cooperate with the
federal government in answering this question, it posits that there is no conflict of
interest that would require the United States to join in the fray. 1
This final argument is not persuasive. While it is true that there is no
dispute over the proper legal standard, nor is there dispute over the outcome for
purpose of title in the event certain segments of waters are determined to be

1

This order is not intended to preclude cooperation between the State and the federal
government; in fact, cooperation is encouraged. The Court can envision a situation where
conflicting claims are identified, and written disclaimers negotiated and executed, leading to the
stipulated dismissal of the federal government.

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navigable, the question of navigability is a question of fact and the consequences
of that question will determine which of two sovereigns may charge rent to
NorthWestern for its use, enjoyment, and occupancy of that land. Here, as in
Makah Indian Tribe, the United States has an interest in this litigation because the
result will have the practical effect of allocating a fixed resource-title to landbetween two sovereigns.
While the Ninth Circuit cautions that a "mere financial stake" in the
outcome of litigation is not a sufficient interest to render a particular party
"necessary," the interest here is greater-the United States has an interest in the
rent that follows as a right of holding title to land, accompanied by the right to
issue permits and regulate NorthWestem' s use of various hydroelectric facilities.
While the State is correct that the Ninth Circuit instructs that a party's
awareness of litigation and demonstrated lack of interest over a period of time is
sufficient indication that the party has not "claimed" an interest in the subject
matter of litigation, United States v. Bowen, 172 F .3d 682, 689 (9th Cir. 1999), and
would be dispositive of the question here, such is not the case. The United States
has claimed an interest in this litigation by participating as an amicus before the
United States Supreme Court. While the State asserts that the interest pursued
was legal in nature and unrelated to the factual question at hand, it stands to reason
that the United States had an interest in the legal test because of the impact that test
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would have on its holdings as a landowner. Amicus Br. of United States, PPL

Montana, LLC v. State ofMontana, 2011 WL 394 7562, * 1 (2011) ("The United
States has a significant interest in the resolution of [the legal] question," because
"[t]he federal government owns riparian land throughout the Nation, including
along the three rivers whose navigability is at issue in this case").
Despite the State's argument that it does not claim title to federal land and
plans to "cooperate" with the federal government to determine the true title holder,
this does not adequately diminish the interest that the United States has in the
outcome of this litigation. As noted in White, the interest protected by Rule 19 is
the interest in participating in the process. The question of navigability at trial is
part of that adversarial process. If the United States is not present for that
process, its interests will not be served.

II.

The Failure to Join the United States Subjects Defendants to a
Substantial Risk of Incurring an Inconsistent Obligation
The State never argues that the Court's determination does not create the

potential for an inconsistent obligation. It would have trouble doing so, as the
inconsistent obligation arises under the equal footing doctrine. Under the equal
footing doctrine, a state gains title to those waters which were navigable at the time
of statehood, under a segment by segment analysis. PPL Montana, LLC v.

Montana, 565 U.S. 576, 591 (2012). Because the United States was the original

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landowner prior to statehood, land at issue here is either owned by the State or the
federal government, but it cannot be held by both. 2
Rather, the State of Montana seems to challenge that joinder is not required
at this step because the risk of an inconsistent obligation is not "substantial."
Specifically, the State argues: (1) it is not challenging federal title; (2) it plans to
cooperate with the federal government to determine whether certain segments of
the river were navigable at statehood; (3) the conflict, to the extent there is one, is
"vague and indefinite"; and (4) the Court should not prematurely determine that
the United States is a "necessary party" in the absence conflicting claims where
there are procedural mechanisms to handle such conflict if and when it arises.
The Court will take these arguments in tum.
The State's argument that it is not challenging federal title is a distinction
without a difference. The question is whether the waters were navigable.
Where there is room for disagreement on this point, the State's assertion of
navigability has title consequences that may impact the United State's holdings.
This argument is not well taken.
Second, the State's claim that it plans to cooperate with the federal

2

At oral argument, it was suggested that riparian landowners in the area may also have
conflicting interests with the State. However, their interests are not at stake in this litigation
because they are not charging NorthWestern any rent. Thus, the interests of any riparian owners
are immaterial to this analysis.

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government is a compelling justification that the risk of conflict may not be
"substantial," however its subsequent acknowledgment that the United States could
become a necessary party in the future implicitly recognizes its potential. The
question for the Court is whether the risk of conflict warrants the participation of
the United States in a formal capacity, sooner rather than later. This leads to the
State's third argument, that the risk is not significant, because if it were,
Defendants would have pointed to "actual evidence" of a conflict instead of "vague
and indefinite assertions." But this argument cuts both ways. Defendants claim
they are unable to specifically identify competing claims of navigability because
the State has not yet disclosed which segments of the river it believes were
navigable at statehood. While the Court appreciates the State's argument that the
extent of conflict may be "much ado about very little," the Court must do its best to
ascertain the extent of conflicting claims with the information it has before it. On
this point, the Court is persuaded by Talen's contention at oral argument that the
grounds under the hydroelectric dams are likely to be at issue and finds this to be
sufficient evidence of a "substantial risk" of inconsistent obligations in the event
the United States is absent from the litigation.
The State's final point has some appeal. This Court could wait until
discovery presents actual evidence that there are competing claims for title to add
the United States as a "necessary" party. The State further observes that in the
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event such a conflict arises, both sovereigns would have the opportunity to
disclaim any land at issue. Defendants respond that waiting for an "actual
conflict" is not required of Rule 19 and adding the United States later runs the risk
of further delaying this litigation.
Having considered this question at length, the Court concludes that the risk
of competing claims warrants the addition of the United States as a party defendant
at the earliest possible time. This case has been pending for 16 years. In the
interests promoting a "just, [and] speedy" resolution, the Court believes a small
delay now is preferable to the potential for protracted delays that will arise in the
event that the United States becomes a necessary party after significant discovery
has taken place.
Therefore, the Court will require the State to amend its pleadings and name
the United States as a party defendant under the Federal Quiet Title Act. 28
U.S.C. § 2409(a) (2018). In the event that the United States does not believe it
has an interest in the claims before the Court, it can move to dismiss itself at the
appropriate time.
Accordingly, IT IS ORDERED that Defendant NorthWestern Corporation's
Motion for Joinder of Necessary Party Under Fed. R. Civ. P. 19 (Doc. 192) is
GRANTED.
IT IS FURTHER ORDERED that the State of Montana is required to
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Amend its Pleading to name the United States as a party defendant under the
Federal Quiet Title Act.

The State will have 60 days to do so.

DATED this tz-#iday of February, 2019.

Dana L. Christensen, Chief Judge
United States District Court

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