MLGW Lawsuit: Aquifer Fight, Smart Meters, and Bill Spikes

Lawsuits involving Memphis Light, Gas and Water span a U.S. Supreme Court fight over aquifer water, a wave of smart meter billing disputes, employment discrimination and retaliation claims, a pension denial appeal, a serious personal injury case on Interstate 240, and eminent domain takings. Some have been decided, some settled quietly, and some remain unresolved in the public record. What follows is a rundown of the MLGW lawsuits that have shaped the utility’s legal exposure and, in several instances, its customers’ bills.

Mississippi v. Tennessee and the Aquifer Fight

The largest case in MLGW’s history was an interstate water dispute that ended at the Supreme Court. Mississippi sued Tennessee, the City of Memphis, and MLGW, arguing that the utility’s more than 160 wells were pulling billions of gallons of groundwater northward from beneath Mississippi through a “cone of depression” in the Middle Claiborne Aquifer. The state sought at least $615 million in damages.¹

A 2005 federal district court version of the case was dismissed because Tennessee could only be sued in the Supreme Court’s original jurisdiction. Mississippi refiled directly with the Supreme Court in 2014, and the Court accepted the case in 2015. Mississippi built its claim on absolute sovereign ownership of the groundwater under its territory and expressly declined to seek equitable apportionment, the doctrine typically used to divide shared interstate waters.²³

On November 22, 2021, the Court unanimously ruled against Mississippi. It held that the Middle Claiborne Aquifer is an interstate resource subject to equitable apportionment, just like an interstate river. Because Mississippi had disclaimed that remedy and never sought leave to amend, the Court dismissed the case. The justices acknowledged that MLGW pumping does draw water from under Mississippi, but noted that groundwater in the aquifer naturally flows toward Memphis and the Mississippi River regardless of pumping.³²

The ruling left open the possibility of a negotiated water-sharing compact between the two states, though no such talks have been reported.² Ratepayers felt the cost of the litigation before it ended: MLGW water rates rose 22%, averaging about $3.21 more per month, to cover defense costs.⁴

Smart Meter Failures and Customer Billing Disputes

Starting in 2023, MLGW disclosed widespread malfunctions in the smart meters it began rolling out in 2013. A faulty internal component in gas meters and frozen LCD screens in water meters caused devices to register zero usage or fail to transmit data. Tens of thousands of customers went months without accurate bills.⁵

At the peak, nearly 40,000 accounts were affected. MLGW asked those customers to estimate usage and pay while accounts were under review. When true consumption data was recovered, many customers received bills much larger than they had expected. By mid-October 2024, the affected count had fallen below 3,000, but complaints continued.⁶

Former judge Donna Fields received a bill for $66,266 after months without any bills. MLGW attributed the situation to the meter issues and later corrected her bill.⁷

MLGW’s policy split affected customers into two groups. Those whose meters never recorded usage were treated as new customers and owed nothing for the gap. Those whose meters recorded usage but did not transmit it were billed once the readings were recovered.⁵ Customers described the line between the two groups as arbitrary, and some said their bills still looked wrong after going through the formal dispute process.⁶ MLGW said it had spent at least $8 million on the failures and expected to spend another $1 million on parts and labor, with little expectation of a full refund from the meter manufacturer.

The Winter 2026 Bill Spike Complaints

A separate wave of customer complaints followed extreme cold in January 2026. The average bill jumped from $248 in January to about $394 in February, driven by roughly 60% more gas use and 20% more electricity use during the storm. Natural gas prices spiked at the same time, and because 44% of electricity generation during the event relied on natural gas, electric bills climbed too.⁸

Some customers reported bills over $1,000, including people who said they had been away from home during the storm. President and CEO Doug McGowen said MLGW had warned customers ahead of time and had saved about $15 million by buying natural gas at lower summer prices, which he said kept bills 20 to 30 percent lower than they otherwise would have been. At a March 2026 meeting, McGowen described how the utility investigates disputed bills: verifying meter accuracy, comparing usage to historical patterns, and dispatching technicians. One customer’s spike was traced to a malfunctioning blower motor inside the residence rather than a utility error.⁸⁹ MLGW paused disconnections for two weeks during the cold snap and offered payment plans, including its PowerPay program.

Employment Discrimination and Retaliation Cases

In February 2014, the EEOC sued MLGW in the U.S. District Court for the Western District of Tennessee, alleging that the utility violated the Age Discrimination in Employment Act when it declined to promote Carlos Phifer, then 57, to a computer operations specialist role. The EEOC said Phifer was the most qualified candidate and was passed over for a younger, less qualified applicant.¹⁰

Court filings alleged that an MLGW manager pressured the hiring panel toward the younger candidate, asked Phifer about his retirement plans, and said the utility was “looking for young blood with new ideas.” In July 2015, the court denied MLGW’s motion for summary judgment, finding genuine disputes of material fact.¹¹ The final outcome is not reflected in the available record.

In a separate case, former employee Naseen Sharif-Mitchell sued MLGW alleging race and age discrimination, retaliation for union grievances, and failure to provide reasonable accommodations under the Americans with Disabilities Act after an on-the-job foot injury. The court granted summary judgment to MLGW in March 2023.¹²

Paschall v. MLGW Pension Board

Steve Paschall was terminated by MLGW in July 2016 and did not apply for pension benefits at that time. In 2022, he filed two retirement applications seeking benefits retroactive to his termination date. The MLGW pension board accepted his second application and began paying benefits from the date it was filed but refused to make them retroactive to 2016.¹³

Shelby County Chancery Court found the board’s denial of Paschall’s first application “arbitrary and capricious” and ordered benefits to begin from the date that first application was filed. The chancery court also agreed with the board that the pension plan did not allow benefits reaching back to 2016. In March 2026, the Tennessee Court of Appeals affirmed.¹³

The I-240 Utility Pole Injury Suit

In May 2019, 25-year-old Samuel Butler was driving on Interstate 240 near Lamar Avenue when his vehicle slid into the median and struck an 80-foot, 800-pound metal utility pole that had been left lying on the ground. The pole pierced the vehicle and hit Butler in the head. He was hospitalized in critical condition and needed emergency brain surgery.¹⁴

Butler’s family, represented by attorneys including Curt Tanner, sued in Shelby County Circuit Court, alleging MLGW was reckless and negligent for failing to maintain a safe roadway and leaving a downed pole in the median without warning. MLGW said it had no record of the pole being on the ground before the crash.¹⁴¹⁵ A final verdict or settlement is not reflected in the available record.

Eminent Domain Actions

MLGW holds condemnation authority under the Memphis City Charter and has used it in court. In 2017, the utility filed a condemnation suit against Loeb Realty Co. to acquire three vacant acres at East Parkway and Circle Avenue for a new customer service office, offering $170,000.¹⁶

An earlier condemnation case reached the Tennessee Court of Appeals in 2012. MLGW sought easements across three parcels at Canada Road and Highway 70 to relocate utility poles displaced by a road-widening project. The trial court sided with the landowners, ruling the taking unnecessary because the poles could have gone within existing state right-of-way. The appeals court reversed, holding that the trial court had improperly second-guessed MLGW’s engineering judgment and that the decision was neither arbitrary nor capricious. The court also noted that a private easement would protect ratepayers from paying to relocate the poles if the road were widened again.¹⁷

1
FindLaw. Mississippi v. Tennessee, 143 Orig.
2
Protect Our Aquifer. SCOTUS: Mississippi v. Tennessee
3
U.S. Supreme Court. Mississippi v. Tennessee, No. 143, Orig.
4
Tennessee Bar Association. Water-Rights Lawsuit Results in MLGW Rate Increase
5
Action News 5. MLGW President Makes Updates on Faulty Smart Meters
6
WREG. Customers Say Utilities Jumped After MLGW Bills Were Delayed
7
WREG. Former Judge Objects to $66,000 Utility Bill From MLGW
8
WREG. MLGW Warned Customers Utility Bill Spike Was Coming, CEO Says
9
Local Memphis. MLGW President Says Utility Investigates High Bill Complaints
10
EEOC. EEOC Sues Memphis Light, Gas and Water for Age Discrimination
11
U.S. District Court, W.D. Tenn. EEOC v. Memphis Light, Gas and Water, No. 14-cv-2143-TMP
12
vLex. Sharif-Mitchell v. Memphis Light, Gas and Water
13
Tennessee Courts. Steve Paschall v. Pension Board of the Memphis Light Gas and Water Division
14
WREG. Family Sues MLGW After Pole Impales Car on I-240
15
Cory Watson Attorneys. Cory Watson Attorneys Files Suit Against Memphis Light, Gas and Water
16
Commercial Appeal. MLGW Sues Loeb for Land to Build Branch on East Parkway
17
Justia. City of Memphis v. Tandy J. Gilliland Family, LLC