In January 2008, a canal that was more than 100 years old burst in northern Nevada. The rushing waters sent a two-foot swell coursing through nearby Fernley, much to the dismay and hazard of the small community’s residents. Almost 600 homes were flooded, and their occupants had to be evacuated.

Many who narrowly escaped harm yet lost their properties sued the Truckee-Carson Irrigation District, or TCID. The U.S. Bureau of Reclamation, or USBR, only needed around two months to determine that TCID failed to prevent vermin from burrowing through the embankment and creating a 50-foot high weakness. News sources also said this wasn’t the first sign of problems; a 1996 flood swamped 60 homes in an eerily-similar fashion. Given that the evidence seemed so stacked against TCID, the real question is why the class-action suit was only settled with an $18.1-million payment in April 2016, eight long years after the incident.

Understanding the Fernley Suit

TCID, the city of Fernley and Lyon County were sued over their negligent management soon after the incident. Fernley, the county and insurance companies paid around 600 victims a total of $10 million dollars in 2012.

TCID, however, balked at paying. Why was this possible? A judge may have opened the gates with his original decree that the U.S. Justice Department take part in the settlement negotiations.

Although USBR actually owned the canal, federal lawyers resisted getting involved. In addition to maintaining that TCID’s management made it responsible, the Justice Department expressed concern with TCID’s plan to fund settlement payments using USBR-owned property as collateral. Knowing their proposition was off the table, the TCID board didn’t sign the initial agreement. Eventually, the judge was forced to retract his decision and admit the ruling was incomplete.

Key Takeaways

At no point during the proceedings was it unclear that TCID was primarily responsible. The fact that USBR had even warned the board of potential problems in advance may have given the government the grounds it needed to distance itself from the matter. If there’s anything to learn from this, it’s that the structure of a lawsuit and who it targets have just as much of an impact on its resolution as factors like who was actually at fault or the amount the plaintiffs request.