Brooks v. Sulphur Springs Valley Elec. Co-op., 90-16113

• Decision Date: 11 December 1991
• Docket Number: No. 90-16113,90-16113
• Citation: 951 F.2d 1050
• Parties: Sidney BROOKS, Plaintiff-Appellant, v. SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE, Arizona Corporation Commission, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1050

951 F.2d 1050

Sidney BROOKS, Plaintiff-Appellant, v. SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE, Arizona Corporation Commission, Defendants-Appellees.

No. 90-16113.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 8, 1991.

Decided Dec. 11, 1991.

Sidney Brooks, pro se.

Catherine M. Stewart, Desens & Hitchcock, Bisbee, Ariz., for defendant-appellee Sulphur Springs Valley Elec. Co-op.

Janice M. Alward, Arizona Corp. Com'n, Phoenix, Ariz., for defendant-appellee Arizona Corp. Com'n.

Appeal from the United States District Court for the District of Arizona.

Before PREGERSON, FERGUSON and O'SCANNLAIN, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

This appeal marks the latest battle in Sidney Brooks' long-running campaign against a $6.50 monthly service availability charge imposed on him by Sulphur Springs Valley Electric Cooperative ("SSVEC") with the approval of the Arizona Corporation Commission ("the Commission"). Brooks appeals pro se from a district court order granting summary judgment in favor of SSVEC and the Commission.

I

On November 18, 1976, Brooks signed a contract with SSVEC for the extension of electric service to his home. Pursuant to the contract, SSVEC built an extension line to Brooks' home, charging Brooks a portion of the construction cost. The contract also called for a monthly service availability charge of $6.50 per month, subject to future adjustment if additional customers connected to the extension line. The service availability charge was calculated according to SSVEC's Tariff 4.17(b), which was authorized by the Commission on November 1, 1976, and reauthorized on June 21, 1982.

Brooks fired the first salvo of his campaign in 1984, when he challenged Tariff 4.17(b) in a complaint filed with the Commission. The Commission dismissed the complaint on the grounds that, under Arizona law, individual customers may not challenge the reasonableness of utility rates. Brooks v. Sulphur Springs Valley Elec. Coop., Ariz. Corp. Comm'n Decision No. 54862 (1986). Undeterred, Brooks convinced twenty-four other SSVEC customers to join his complaint, and filed again. The Commission dismissed this second complaint on the merits. Brooks v. Sulphur Springs Valley Elec. Coop., Ariz. Corp. Comm'n Decision No. 55398 (1987).

In 1988, when SSVEC filed an application for a rate increase, the Commission allowed Brooks to intervene. Following hearings, the Commission granted the rate increase, but ordered SSVEC to amend Tariff 4.17(b) to reduce the service availability charge. Application of Sulphur Springs Valley Elec. Coop., Ariz. Corp. Comm'n Decision No. 56100 (1988). SSVEC, with the concurrence of the Commission, applied this change only to extensions added after the decision. Four months after Decision 56100 was rendered, Brooks filed an action in Arizona Justice Court against SSVEC, contending that Decision 56100 required SSVEC to reduce his service availability charge. The Justice Court dismissed for lack of subject matter jurisdiction.

Finally, on December 26, 1989, Brooks filed the present action in federal court. In his complaint, Brooks alleged that Tariff 4.17(b) violates the Equal Protection Clause of the Fourteenth Amendment. Brooks requested that the court order SSVEC to cease charging its customers under Tariff 4.17(b) and to refund all monies collected under the Tariff. The district court granted appellees' motion for summary judgment, ruling that it lacked jurisdiction under the Eleventh Amendment and the Johnson Act. Brooks, who has represented himself throughout these proceedings, timely appealed.

II

The Eleventh Amendment prohibits federal courts from hearing suits brought against an unconsenting state. Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 100, 104 S.Ct. 900, 907, 79 L.Ed.2d 67 (1984); Southern Pacific Transp. Co. v. City of Los Angeles, 922 F.2d 498, 508 (9th Cir.1990). Though its language might suggest otherwise, the Eleventh Amendment has long been construed to extend to suits brought against a state by its own citizens, as well as by citizens of other states. Austin v. State Indus. Ins. Sys., 939 F.2d 676, 677 (9th Cir.1991); Papasan v. Allain, 478 U.S. 265, 276, 106 S.Ct. 2932, 2939, 92 L.Ed.2d 209 (1986); Hans v. Louisiana, 134 U.S. 1, 15, 10 S.Ct. 504, 507, 33 L.Ed. 842 (1890). The Eleventh Amendment's jurisdictional bar covers suits naming state agencies and departments as defendants, and applies whether the relief sought is legal or equitable in nature. ¹ Pennhurst, 465 U.S. at 100, 104 S.Ct. at 907.

The test employed in this circuit for determining if a state agency is immune from suit under the Eleventh Amendment was announced in Mitchell v. Los Angeles Community College Dist., 861 F.2d 198, 201 (9th Cir.), cert. denied, 490 U.S. 1081, 109 S.Ct. 2102, 104 L.Ed.2d 663 (1989). The Commission clearly meets this test. A money judgment against the Commission would be satisfied out of state funds. See Ariz.Rev.Stat.Ann. §§ 40-108, 40-109. The Commission performs central governmental functions, see Ariz. const. art. XV, and is authorized to undertake enforcement actions in the name of the state, see Ariz.Rev.Stat.Ann. § 40-422 (1985). The Commission does not have independent corporate status or the power to take property in its own name. As an integral state agency, the Commission is shielded from suit by the Eleventh Amendment. We therefore affirm the grant of summary judgment in favor of the Commission.

SSVEC, however, is not entitled to Eleventh Amendment immunity. SSVEC is not a state agency; rather, it is an independent, non-profit public service corporation subject to regulation by the Commission. None of the Mitchell factors weighs in favor of granting SSVEC immunity. A damage award against SSVEC would not be paid from the state treasury. SSVEC performs no essential governmental function, has independent corporate status, may sue and be sued in its own name, and may take and hold property in its own name. See Ariz.Rev.Stat.Ann. § 10-757 (1990). The Eleventh Amendment does not bar the claim against SSVEC.

III

A

The district court also held that it lacked jurisdiction under the Johnson Act, which provides:

The district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision, where:

(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; and,

(2) The order does not interfere with interstate commerce; and,

(3) The order has been made after reasonable notice and hearing; and,

(4) A plain, speedy and efficient remedy may be had in the courts of such State.

28 U.S.C. § 1342 (1988).

The Ninth Circuit has never directly confronted the question of the Johnson Act's applicability to actions for declaratory relief or compensatory damages. Several other circuits have broadly construed the Act's jurisdictional bar "to oust federal courts of jurisdiction over all challenges affecting rates." Miller v. New York State Pub. Serv. Comm'n, 807 F.2d 28, 31 (2d Cir.1986). See also Hanna Mining Co. v. Minnesota Power & Light Co., 739 F.2d 1368, 1370 (8th Cir.1984); Tennyson v. Gas Serv. Co., 506 F.2d 1135, 1139 (10th Cir.1974). No circuit court of appeals has held the Act inapplicable to actions affecting state-approved rates when the relief sought is declaratory or compensatory, rather than injunctive.

The legislative history of the Act supports a broad interpretation. See Miller, 807 F.2d at 32-33. Although the primary evil the Act sought to remedy was the issuance of injunctions by federal courts against enforcement of state rate orders, legislators were also more generally concerned with protecting the authority of states "to perform their proper functions in the supervision and fixing of rates, without interference of Federal law." 78 Cong.Rec. 8324 (1934) (statement of Rep. Mapes). See also id. at 8331 (statement of Rep. Hughes) ("It is vitally important ... that a State in its governmental proceedings, in these controls, be free from interference from the Federal Government upon the grounds of violation of the provisions of the Federal Constitution until the final action of the State, through its highest judicial tribunal, demonstrates an appeal to Federal power for the protection of a constitutional right is necessary."). Legislators on both sides of the debate spoke of the Act as completely withdrawing rate cases from federal jurisdiction. See id. at 8328 (statement of Rep. Lewis); id. at 8340 (statement of Rep. Cochran).

Furthermore, allowing federal courts to hear actions for non-injunctive relief in state rate cases would "render the [Johnson Act] a nullity." Miller, 807 F.2d at 33. Disgruntled rate-payers could march into state court armed with a federal judgment granting declaratory relief or monetary damages and, using the doctrine of collateral estoppel, demand injunctive relief. Congress did not intend to withdraw from federal courts the power to enjoin state rate orders directly but leave undisturbed the power to do so indirectly.

We therefore agree with the other circuits that have considered this issue. We hold that the Johnson Act precludes federal court jurisdiction over all suits affecting state-approved utility rates, including actions seeking declaratory relief and compensatory damages.

B

All four conditions specified in the statute must be met for the Johnson Act to deprive federal courts of jurisdiction. Hawaiian Tel. Co. v. Public Utils. Comm'n, 827 F.2d 1264, 1273 (9th Cir.1987), cert. denied, 487 U.S. 1218, 108 S.Ct. 2870, 101 L.Ed.2d 906 (1988). The first two conditions are clearly satisfied. Brooks challenges the Tariff solely on the grounds of repugnance to the Constitution. No one contends that the Tariff interferes with interstate commerce. Brooks...