ANR Pipeline Co. v. Michigan Public Service Com'n

• Decision Date: 10 September 1984
• Docket Number: No. G84-438 CA 5.,G84-438 CA 5.
• Citation: 608 F. Supp. 43
• Parties: ANR PIPELINE COMPANY and ANR Storage Company, Plaintiffs, v. The MICHIGAN PUBLIC SERVICE COMMISSION, Defendant.
• Court: U.S. District Court — Western District of Michigan

608 F. Supp. 43

ANR PIPELINE COMPANY and ANR Storage Company, Plaintiffs, v. The MICHIGAN PUBLIC SERVICE COMMISSION, Defendant.

No. G84-438 CA 5.

United States District Court, W.D. Michigan, S.D.

September 10, 1984.

COPYRIGHT MATERIAL OMITTED

Mika, Meyers, Beckett & Jones by John C. Jones, Grand Rapids, Mich., for plaintiffs.

Frank J. Kelley, Atty. Gen. by Don L. Keskey, R. Philip Brown and Jeffrey S. Fishman, Lansing, Mich., for defendant.

OPINION RE MOTION TO DISMISS AND MOTION TO AMEND

HILLMAN, District Judge.

This is an action under 42 U.S.C. § 1983 against the Michigan Public Service Commission (MPSC), an administrative body of the State of Michigan. Plaintiffs challenge the constitutionality of the State regulatory scheme which charges the MPSC with regulating the sale of securities by the plaintiffs, and request a declaratory judgment that the regulatory plan is unconstitutional. The matter is now before the court on plaintiffs' motion to amend, and MPSC's motion to dismiss, pursuant to Fed.R.Civ.P. 12.

Plaintiffs in this case, ANR Pipeline Co. and ANR Storage Co., engage in the purchase, transmission, storage and sale of natural gas. As natural gas companies, both are subject to regulation by the Federal Energy Regulatory Commission. Among the methods for raising capital employed by plaintiffs include the issuance of stock and long term bonds. Therefore, plaintiffs are also regulated by the Securities and Exchange Commission.

At the state level, plaintiffs are subject to the regulation of the MPSC. Under M.C.L.A. § 460.1, et seq., the MPSC has a broad range of regulatory powers over public utility companies operating in Michigan. Under M.C.L.A. § 460.301, the MPSC regulates the issuance and sale of securities by public utility companies. Plaintiffs have filed this action challenging the constitutionality of the state regulatory scheme. Although plaintiffs do not have a proposed public offering on file with either the SEC or MPSC, the MPSC has consistently exercised its jurisdiction over plaintiffs.

MOTION TO AMEND

Plaintiffs have moved to amend the complaint to add the three commissioners of the MPSC as individual defendants.

Rule 15(a) of the Federal Rules of Civil Procedure provides that after service of a responsive pleading, a party may amend his pleading only by leave of court or by written consent of the adverse party. Rule 15 goes on to state that "leave shall be freely given when justice so requires." Since plaintiffs' amended complaint seeks to add additional parties, Rule 21 is also applicable. It provides that, "parties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just."

In addition, a pleading may be amended once as a matter of course at any time before a responsive pleading is served. Fed.R.Civ.P. 15(a). A motion to dismiss, such as the one here, is not a responsive pleading within the meaning of the rules. Hanraty v. Ostertag, 470 F.2d 1096 (10th Cir.1972). The complaint was filed on April 25, 1984. The motion to amend was filed less than one month later, on May 21, 1984. There has been no unreasonable delay. Nor have defendants cited any prejudice that would result if the motion is granted. Accordingly, plaintiffs' motion to amend the complaint to add the individual commissioners as defendants is granted.

MOTION TO DISMISS

Defendant MPSC raises several arguments in support of its motion to dismiss. First MPSC argues that the court may not grant the relief requested under 42 U.S.C. § 1983 because neither plaintiffs nor defendant are "persons." Second, MPSC argues that it is immune from suit in federal court under the eleventh amendment to the United States Constitution. Third, MPSC argues that plaintiffs have not made a claim cognizable under 42 U.S.C. § 1983. Fourth, MPSC contends that principles of federalism and comity demand that the court abstain from hearing this case. Finally, MPSC contends that plaintiffs have failed to establish a case or controversy.

A

42 U.S.C. § 1983 provides:

"Every person who, under color of any statute ... of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person ... to the deprivation of any rights ... secured by the Constitution and laws shall be liable ... in an action at law, or suit in equity ...."

MPSC argues that, since section 1983 refers only to "persons" or "citizens," plaintiffs may not sue under section 1983, nor may the MPSC be a section 1983 defendant. The Supreme Court, in Grosjean v. American Press Co., 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed. 660 (1936), held that "a corporation is a `person' within the meaning of the equal protection and due process of law clauses." Id. at 244, 56 S.Ct. at 446. Federal courts dealing with corporate claims under section 1983 have consistently concluded that a corporation is an "other person" for section 1983 as long as the corporation is suing in its own right. In Monell v. New York City, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), the Court held that a municipal corporation was a person within the meaning of the civil rights statutes. The Court noted: "... it is well understood that corporations should be treated as natural persons for virtually all purposes of constitutional and statutory analysis." Id. at 687, 98 S.Ct. at 2034.

The case of Hague v. Committee for Industrial Organization, 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423 (1938), cited by the MPSC in its brief, in support of its position that corporations are not persons, is inapplicable here. In Hague, the Court merely held that a corporation is not a citizen and, therefore, may not bring suit under the privileges and immunities clause. Id. at 514, 59 S.Ct. at 963. Nothing in Hague compels the conclusion that a corporation is not a person for the purposes of section 1983. Indeed, almost every lower court which has considered the question has concluded, following Grosjean, that a corporation may bring an action under section 1983. Cf. Raymond Motor Transport v. Rice, 417 F.Supp. 1352 (W.D.Wisc.1976), rev'd on other grounds, 434 U.S. 429, 98 S.Ct. 787, 54 L.Ed.2d 664 (1977). Gentry v. Howard, 365 F.Supp. 567 (W.D.La.1973); Mini Cinema 16 of Fort Dodge v. Habbab, 326 F.Supp. 1162 (N.D.Ind.1970). It is clear then that the fact that ANR Pipeline and ANR Storage are corporations is not a bar to their section 1983 claims.

However, the MPSC's argument that it is not a section 1983 defendant is correct. The eleventh amendment to the Constitution provides:

"The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or subjects of any Foreign State."

Eleventh amendment immunity extends not only to the state, but also to state agencies. See Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed. 662 (1974). The Supreme Court recently had occasion to consider eleventh amendment immunity in Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). In Pennhurst, the Court noted:

"This Court's decisions thus establish that `an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of another state.' Employees of Dept. of Public Health & Welfare, supra, 411 U.S. 279, at 280, 93 S.Ct. 1614, at 1616 36 L.Ed.2d 251 (1973). There may be a question, however, whether a particular suit in fact is a suit against a State. It is clear, of course, that in the absence of consent a suit in which the State or one of its agencies or departments is named as the defendant is proscribed by the Eleventh Amendment. See, e.g., Florida Department of Health v. Florida Nursing Home Assn, 450 U.S. 147, 101 S.Ct. 1032, 67 L.Ed.2d 132 (1981) (per curiam); Alabama v. Pugh, 438 U.S. 781, 98 S.Ct. 3057, 57 L.Ed.2d 1114 (1978) (per curiam). This jurisdictional bar applies regardless of the nature of the relief sought. See, e.g., Missouri v. Fiske, 290 U.S. 18, 27, 54 S.Ct. 18, 21, 78 L.Ed. 145 (1933) (`Expressly applying to suits in equity as well as at law, the Amendment necessarily embraces demands for the enforcement of equitable rights and the prosecution of equitable remedies when these are asserted and prosecuted by an individual against a State')."

Id., 104 S.Ct. at 908. In Alabama v. Pugh, cited by the Court above, and more recently, in Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979), the Supreme Court expressly held that the eleventh amendment is a jurisdictional bar to a section 1983 action against a state. Moreover, there can be little doubt that the MPSC, as an integral state agency, is entitled to the same immunity as the state itself. See Pennhurst, supra; Dagnall v. Gegenheimer, 645 F.2d 2 (5th Cir.1981); Savage v. Pennsylvania, 475 F.Supp. 524 (E.D.Pa.1979); Usury v. La. Dept. of Hwys, 459 F.Supp. 56 (E.D.La.1978).¹ Therefore the 1983 claims against the MPSC are dismissed.

However, the fact that the MPSC itself is immune from suit under section 1983 does not require dismissal of the entire suit. The addition of the individual commissioners as defendants adds parties who do not enjoy the same eleventh amendment immunity as the MPSC. It is well settled that:

"There is an important exception to this general rule of eleventh amendment immunity; a suit challenging the constitutionality of a state official's action is not one against the State. This was the holding in Ex parte Young, 209 US 123, 52 LEd 714, 28 S Ct 441 (1908), in which a federal court enjoined the Attorney General of the State of Minnesota from bringing a suit to enforce a state statute that allegedly violated the Fourteenth Amendment. This Court held that the Eleventh Amendment did not prohibit issuance of this injunction. The theory of the case was that an unconstitutional

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