| Jackson v. Metropolitan Edison Co.
(No. 73-5845)
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| Syllabus
| Opinion
[ Rehnquist ] | Dissent
[ Douglas ] | Dissent
[ Brennan ] | Dissent
[ Marshall ] |
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Jackson v. Metropolitan Edison Co.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
MR. JUSTICE MARSHALL, dissenting.
I agree with my Brother BRENNAN that this case is a very poor vehicle for resolving the difficult and important questions presented today. The confusing sequence of events leading to the challenged termination makes it unclear whether petitioner has a property right under state law to the service she was receiving from the [p366] respondent company. Because these complexities would seriously hamper resolution of the merits of the case, I would dismiss the writ as improvidently granted. Since the Court has disposed of the case by finding no state action, however, I think it appropriate to register my dissent on that point.
I
The Metropolitan Edison Co. provides an essential public service to the people of York, Pa. It is the only entity, public or private, that is authorized to supply electric service to most of the community. As a part of its charter to the company, the State imposes extensive regulations, and it cooperates with the company in myriad ways. Additionally, the State has granted its approval to the company's mode of service termination -- the very conduct that is challenged here. Taking these factors together, I have no difficulty finding state action in this case. As the Court concluded in Burton v. Wilmington Parking Authority, 365 U.S. 715, 725 (1961), the State has sufficiently
insinuated itself into a position of interdependence with [the company] that it must be recognized as a joint participant in the challenged activity.
Our state action cases have repeatedly relied on several factors clearly presented by this case: a state-sanctioned monopoly; an extensive pattern of cooperation between the "private" entity and the State; and a service uniquely public in nature. Today the Court takes a major step in repudiating this line of authority, and adopts a stance that is bound to lead to mischief when applied to problems beyond the narrow sphere of due process objections to utility terminations.
A
When the State confers a monopoly on a group or organization, this Court has held that the organization assumes many of the obligations of the State. Railway [p367] Employes' Dept. v. Hanson, 351 U.S. 225 (1956). Even when the Court has not found state action based solely on the State's conferral of a monopoly, it has suggested that the monopoly factor weighs heavily in determining whether constitutional obligations can be imposed on formally private entities. See Steele v. Louisville & Nashville R. Co., 323 U.S. 192 (1944). Indeed, in Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 177 (1972), the Court was careful to point out that the Pennsylvania liquor licensing scheme "falls far short of conferring upon club licensees a monopoly in the dispensing of liquor in any given municipality or in the State as a whole."
The majority distinguishes this line of cases with a cryptic assertion that public utility companies are "natural monopolies." Ante at 351-352, n. 8. The theory behind the distinction appears to be that, since the State's purpose in regulating a natural monopoly is not to aid the company, but to prevent its charging monopoly prices, the State's involvement is somehow less significant for state action purposes. I cannot agree that so much should turn on so narrow a distinction. Initially, it is far from obvious that an electric company would not be subject to competition if the market were unimpeded by governmental restrictions. Certainly the "start-up" costs of initiating electric service are substantial, but the rewards available in a relatively inelastic market might well be sufficient under the right circumstances to attract competitive investment. Instead, the State has chosen to forbid the high profit margins that might invite private competition or increase pressure for state ownership and operation of electric power facilities.
The difficulty inherent in this kind of economic analysis counsels against excusing natural monopolies from the reach of state action principles. To invite inquiry into whether a particular state-sanctioned monopoly might have survived without the State's express approval [p368] grounds the analysis in hopeless speculation. Worse, this approach ignores important implications of the State's policy of utilizing private monopolies to provide electric service. Encompassed within this policy is the State's determination not to permit governmental competition with the selected private company, but to cooperate with and regulate the company in a multitude of ways to ensure that the company's service will be the functional equivalent of service provided by the State. [n1]
B
The pattern of cooperation between Metropolitan Edison and the State has led to significant state involvement in virtually every phase of the company's business. The majority, however, accepts the relevance of the State's regulatory scheme only to the extent that it demonstrates state support for the challenged termination procedure. Moreover, after concluding that the State in this case had not approved the company's termination procedures, the majority suggests that even state authorization and approval would not be sufficient: the State would apparently have to order the termination practice in question to satisfy the majority's state action test, see ante at 357. [p369]
I disagree with the majority's position on three separate grounds. First, the suggestion that the State would have to "put its own weight on the side of the proposed practice by ordering it" seems to me to mark a sharp departure from our previous State-action cases. From the Civil Rights Cases, 109 U.S. 3 (1883), to Moose Lodge, supra, we have consistently indicated that state authorization and approval of "private" conduct would support a finding of state action. [n2]
Second, I question the wisdom of giving such short shrift to the extensive interaction between the company and the State, and focusing solely on the extent of state support for the particular activity under challenge. In cases where the State's only significant involvement is through financial support or limited regulation of the private entity, it may be well to inquire whether the [p370] State's involvement suggests state approval of the objectionable conduct. See Powe v. Miles, 407 F.2d 73, 81 (CA2 1968); Grossner v. Trustees of Columbia University, 287 F.Supp. 535, 547-548 (SDNY 1968). But where the State has so thoroughly insinuated itself into the operations of the enterprise, it should not be fatal if the State has not affirmatively sanctioned the particular practice in question.
Finally, it seems to me, in any event, that the State has given its approval to Metropolitan Edison's termination procedures. The State Utility Commission approved a tariff provision under which the company reserved the right to discontinue its service on reasonable notice for nonpayment of bills.
The majority attempts to make something of the fact that the tariff provision was not challenged in the most recent Utility Commission hearings, and that it had apparently not been challenged before. But the provision had been included in a tariff required to be filed and approved by the State pursuant to statute. That it was not seriously questioned before approval does not mean that it was not approved. It suggests, instead, that the Commission was satisfied to permit the company to proceed in the termination area as it had done in the past. The majority's test puts potential plaintiffs in a difficult position: if the Commission approves the tariff without argument or a hearing, the State has not sufficiently demonstrated its approval and support for the company's practices. If, on the other hand, the State challenges the tariff provision on the ground, for example, that the "reasonable notice" does not meet the standards of fairness that it expects of the utility, then the State has not put its weight behind the termination procedure employed by the company, and again there is no state action. Apparently, authorization and approval would require the [p371] kind of hearing that was held in Pollak, where the Public Utilities Commission expressly stated that the bus company's installation of radios in buses and streetcars was not inconsistent with the public convenience, safety, and necessity. I am afraid that the majority has, in effect, restricted Pollak to its facts if it has not discarded it altogether. [n3]
C
The fact that the Metropolitan Edison Co. supplies an essential public service that is in many communities supplied by the government weighs more heavily for me than for the majority. The Court concedes that state action might be present if the activity in question were "traditionally associated with sovereignty," but it then undercuts that point by suggesting that a particular service is not a public function if the State in question has not required that it be governmentally operated. This reads the "public function" argument too narrowly. The whole point of the "public function" cases is to look behind the State's decision to provide public services through private parties. See Evans v. Newton, 382 U.S. 296"]382 U.S. 296 (1966); 382 U.S. 296 (1966); Terry v. Adams, 345 U.S. 461"]345 U.S. 461 (1953); 345 U.S. 461 (1953); Marsh v. Alabama, 326 U.S. 501 (1946). In my view, utility service is traditionally identified with the State through universal public regulation or ownership to a degree sufficient to render it a "public function." [p372]
I agree with the majority that it requires more than a finding that a particular business is "affected with the public interest" before constitutional burdens can be imposed on that business. But when the activity in question is of such public importance that the State invariably either provides the service itself or permits private companies to act as state surrogates in providing it, much more is involved than just a matter of public interest. In those cases, the State has determined that, if private companies wish to enter the field, they will have to surrender many of the prerogatives normally associated with private enterprise and behave in many ways like a governmental body. And when the State's regulatory scheme has gone that far, it seems entirely consistent to impose on the public utility the constitutional burdens normally reserved for the State.
Private parties performing functions affecting the public interest can often make a persuasive claim to be free of the constitutional requirements applicable to governmental institutions because of the value of preserving a private sector in which the opportunity for individual choice is maximized. See Evans v. Newton, supra, at 298; H. Friendly, The Dartmouth College Case and the Public-Private Penumbra (1969). Maintaining the private status of parochial schools, cited by the majority, advances just this value. In the due process area, a similar value of diversity may often be furthered by allowing various private institutions the flexibility to select procedures that fit their particular needs. See Wahba v. New York University, 492 F.2d 96, 102 (CA2), cert. denied, post, p. 874. But it is hard to imagine any such interests that are furthered by protecting privately owned public utility companies from meeting the constitutional standards that would apply if the companies were state owned. The values of pluralism and diversity are [p373] simply not relevant when the private company is the only electric company in town.
II
The majority's conclusion that there is no state action in this case is likely guided in part by its reluctance to impose on a utility company burdens that might ultimately hurt consumers more than they would help them. Elaborate hearings prior to termination might be quite expensive, and for a responsible company there might be relatively few cases in which such hearings would do any good. The solution to this problem, however, is to require only abbreviated pre-termination procedures for all utility companies, not to free the "private" companies to behave however they see fit. At least on occasion, utility companies have failed to demonstrate much sensitivity to the extreme importance of the service they render, and in some cities, the percentage of error in service termination is disturbingly high. See Palmer v. Columbia Gas Co. of Ohio, Inc., 342 F.Supp. 241, 243 (ND Ohio 1972) aff'd, 479 F.2d 153 (CA6 1973); Bronson v. Consolidated Edison Co., 350 F.Supp. 443, 448 (SDNY 1972). [n4] Accordingly, I think that, at the minimum, due process would require advance notice of a proposed termination with a clear indication that a responsible company official can readily be contacted to consider any claim of error
III
What is perhaps most troubling about the Court's opinion is that it would appear to apply to a broad range of claimed constitutional violations by the company. The Court has not adopted the notion, accepted elsewhere, that different standards should apply to state [p374] action analysis when different constitutional claims are presented. See Adickes v. S. H. Kress & Co., 398 U.S. 144, 190-191 (1970) (BRENNAN, J., concurring and dissenting); Grafton v. Brooklyn Law School, 478 F.2d 1137, 1142 (CA2 1973). Thus, the majority's analysis would seemingly apply as well to a company that refused to extend service to Negroes, welfare recipients, or any other group that the company preferred, for its own reasons, not to serve. I cannot believe that this Court would hold that the State's involvement with the utility company was not sufficient to impose upon the company an obligation to meet the constitutional mandate of nondiscrimination. Yet nothing in the analysis of the majority opinion suggests otherwise.
I dissent.
1. The State's regulatory pattern makes it amply clear that it expects utility companies to behave more like governmental entities than private corporations. The rates are fixed by the Public Utility Commission, as are the standards of service and the company's system of accounting. Pa.Stat.Ann., Tit. 66, §§ 1141, 1149, 1171, 1182, 1183, 1211 (1959). The character of the facilities is subject to state approval and continuing supervision, and the State also requires that the service "shall be reasonably continuous and without unreasonable interruptions or delay." § 1171. The certificate of public convenience confers certain eminent domain rights upon the company, § 1124 (Supp. 1974-1975), as well as the right of entry onto a customer's property to maintain and inspect its equipment. Pa. P.U.C. Electric Regulations, Rule 14D.
2. In the Civil Rights Cases, the Court suggested that state action might be found if the conduct in question were "sanctioned in some way by the State," 109 U.S. at 17. Later cases made it clear that the State's sanction did not need to be in the form of an affirmative command. McCabe v. Atchison, T. & S. F. R. Co., 235 U.S. 151 (1914); Nixon v. Condon, 286 U.S. 73 (1932); Public Utilities Comm'n v. Pollak, 343 U.S. 451 (1952). In Burton v. Wilmington Parking Authority, 365 U.S. 715, 725 (1961), the Court noted that, by its inaction, the State had "elected to place its power, property and prestige behind the admitted discrimination," although the State did not actually order the discrimination. See id. at 726-727 (STEWART, J., concurring). And in Reitman v. Mulke, 387 U.S. 369, 381 (1967), the Court based its "state action" ruling on the fact that the California constitutional provision "was intended to authorize, and does authorize, racial discrimination in the housing market." Even in Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 176-177 (1972), the Court suggested that, if the State's regulation had in any way fostered or encouraged racial discrimination, a state action finding might have been justified. Certainly this is a less rigid standard than the Court's requirement in this case that the Public Utility Commission be shown to have ordered the challenged conduct, not merely to have approved it.
3. I cannot accept the majority's characterization of Pollak as not necessarily deciding the state action question there presented. Ante at 356. Whatever doubt on that score may have been created by the original opinion has long since been resolved by this Court. See Evans v. Newton, 382 U.S. 296, 301 (1966); id. at 319-320 (Harlan, J., dissenting); Columbia Broadcasting System, Inc. v. Democratic National Committee, 412 U.S. 94, 119 (1973) (opinion of BURGER, C.J.); id. at 133 (STEWART, J., concurring).
4. In Bronson, Judge Tyler noted that the state utility commission had found that 16% of the complaints investigated resulted in adjustments in favor of the customer. 350 F.Supp. at 448 n. 11.