Flint residents seeking damages from the water crisis are accusing three investment banks of aiding in the exposure of tens of thousands of residents to toxic water when the city switched its water source more than six years ago.
Filed on behalf of 2,600 children in federal court in Detroit on Wednesday, the lawsuit against JPMorgan Chase & Co., Wells Fargo, and Stifel, Nicolaus & Co. claims that by financing the city of Flint’s participation in a $220 million municipal bond sale for the construction of a new water pipeline, the banks knowingly put Flint on a path to rely on the corrosive Flint River as a temporary water source and an ill-equipped water plant to treat the water.
“All three knew 100% that if they participated in the bond sale, children would get hurt, children would be brain damaged and people’s lives would forever be changed,” said Corey Stern, a lawyer at Levy Konigsberg LLP who filed the lawsuit.
“But rather than doing the right thing, the ethical thing, the moral thing, they participated with government defendants in creating that situation for the kids in Flint because of the money that they stood to earn.”
The plaintiffs are seeking monetary damages, a potential award that Stern values could be worth at least $2 billion.
Wednesday’s filing comes after Flint residents joined several other water crisis lawsuits that brought pressure and led to a $600 million settlement two months ago with the state of Michigan for its role in the public health disaster that potentially exposed thousands of children to toxic levels of lead.
According to Stern, the case is centered on children younger than age 19 due to the level of damage he believes children incurred and because of statute of limitations laws in Michigan that allow minors to file claims that accrued when they were children until they reach the age of 19.
JPMorgan Chase declined to comment. Wells Fargo and Stifel, Nicolaus & Co. couldn’t be immediately reached for comment Wednesday.
Flint’s water crisis began in April 2014 when the city began using the Flint River as a temporary water source in order to cut costs so that it could upgrade its water treatment plant and connect to the new water pipeline once it was built. For decades, the city purchased already treated water from the Detroit Water and Sewerage Department, but it terminated the relationship in April 2013 after deciding to enter into a long-term customer contract with the Karegnondi Water Authority.
The bonds at the center of the lawsuit were issued in spring 2014 by the KWA, backed by Genesee County and Flint, to pay for the construction of a $300 million pipeline from Lake Huron in Sanilac County that would carry water 70-miles inland to Genesee County and the city of Flint. The water authority was formed by officials in Genesee, Sanilac and Lapeer Counties several years prior with the intent…