Federal Judge Dismisses Lawsuit Challenging Birmingham’s Regional Water Board

A federal judge in Birmingham has tossed out a lawsuit from two former Birmingham Water Works Board members that challenged the state intervention that reorganized the utility into a regional entity and removed the city’s dominance over the asset.

U.S. District Judge Anna Manasco Thursday dismissed the lawsuit filed by former board members William Muhammad and Brenda Lewis.

In court Thursday, Manasco grilled Attorney Calvin Grigsby on specifics before ruling from the bench. Monasco said the plantiffs’ desire to reverse the state legislation is not enough to carry the lawsuit.

“That alone is not the making of a sufficient complaint,” she said.

Monasco also said the plaintiffs lacked standing to bring the case because they could not show how they were specifically harmed by the new water board.

“The Muhammad plaintiffs have no injury in fact that has resulted from the state’s desire to restructure the board,” she said.

The lawsuit claimed the law signed by Gov. Kay Ivey in May 2025 violated the Fifth and Fourteenth Amendments that prohibits the government from taking public benefit corporations without due process. Birmingham attorneys Richard Rice and Johnathan Austin also represent Lewis and Muhammad in the lawsuit.

Both Muhammad and Lewis are also longtime Birmingham activists who have been critical of the board leadership – both when it was dominated by Birmingham members, and now that it is a regional entity.

The plaintiffs wanted Manasco to reverse action taken by the state legislature that changed what was then Birmingham Water Works Board into a regional entity controlled by suburban and members outside the city.

The utility has changed its name to reflect its new governance, becoming Central Alabama Water.

After the ruling, Muhammad said the case was dismissed on technicalities, not the facts.

“Sometimes when you come to court it seems like you’re on a different planet,” Muhammad said outside the courthouse. “We are disappointed because I can think of no other corporation that the state of Alabama has just come and taken over.”

Lawyers argued that if the state insists on taking over the utility, then Birmingham residents, like stockholders, should be paid for the change in ownership. They wanted the judge to order residents to either be paid for their loss of the utility or reverse the actions that created the new board.

The lawsuit also sought $1.7 billion, the estimated value of the utility. Muhammad said the case was not about the money but was an attempt to restore the utility.

“If they do this to us as a community then they can do it to anybody,” he said.

State intervention in 2025 was cheered by critics of the former Birmingham Water Works Board who complained for years about annual rate increases, poor customer service and alleged questionable spending.

On the other hand, opponents assailed the new board as unfair to Birmingham, punitive and even racist. Rather than remedying a problem, critics, including Grigsby, said the new managers have manufactured problems and abused employees.

Mansaco also heard arguments in an earlier federal lawsuit against the utility from Mayor Randall Woodfin and the city. That lawsuit also challenges the validity of the state’s action to change the water board. Monasco made no ruling in the Woodfin case.

Central Alabama Water General Counsel Shan Paden, in a statement to AL.com, welcomed Thursday’s decision.

“Central Alabama Water is pleased that U.S. District Judge Anna M. Manasco dismissed with prejudice Muhammad, et al. v. Waggoner, et al. at today’s hearing, thus ending this case,” Paden said. “We will respectfully wait on her ruling in Woodfin, et al. v. Ivey, et al. Because this is a pending legal matter, we will have no further comment at this time.”

Manasco’s ruling came months after she dismissed a motion from the plaintiffs to issue a temporary restraining order against state officials and Birmingham-area counties. At that time Manasco also directed plaintiffs’ lawyers to modify their lawsuit to answer specific questions about what they are requesting and from whom.

After the ruling Grigsby said the dismissal was not based on the facts, but was done because the judge asked specific questions that would take time to discover had the lawsuit been allowed to continue.

“She kept saying ‘precisely.’ What I tried to say to the judge is this was a multilayer conspiracy,” he said. “The judge threw the case out on the fact that we couldn’t allege precisely what each individual did.”

Grigsby said the legal team would review their options, including a possible appeal to the 11^th Circuit in Atlanta.