Harper v. Public Service Com'n of Wva

• Decision Date: 24 January 2005
• Docket Number: No. 04-1444.,04-1444.
• Parties: James Allen HARPER, a resident and citizen of Ohio previously doing business as Southern Ohio Disposal; Southern Ohio Disposal LLC, an Ohio limited liability company, Plaintiffs-Appellants, v. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA; Edward H. Staats, in his official capacity as Chairman of the Public Service Commission of West Virginia; R. Michael Shaw, in his official capacity as Commissioner of the Public Service Commission of West Virginia; Martha Y. Walker, in her official capacity as Commissioner of the Public Service Commission of West Virginia, Defendants-Appellees, Stewart's Sanitation; Sunrise Sanitation Services, Incorporated; Tygarts Valley Sanitation, Incorporated; United Disposal Services, Incorporated; West Virginia Association Of Solid Waste Haulers And Recyclers; Bfi Waste Systems Of North America, Incorporated, Intervenors/Defendants-Appellees, and James D. Williams, in his official capacity as Chairman of the Public Service Commission of West Virginia; Charlotte R. Lane, in her official capacity as Commissioner of the Public Service Commission of West Virginia, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 348

396 F.3d 348

James Allen HARPER, a resident and citizen of Ohio previously doing business as Southern Ohio Disposal; Southern Ohio Disposal LLC, an Ohio limited liability company, Plaintiffs-Appellants, v. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA; Edward H. Staats, in his official capacity as Chairman of the Public Service Commission of West Virginia; R. Michael Shaw, in his official capacity as Commissioner of the Public Service Commission of West Virginia; Martha Y. Walker, in her official capacity as Commissioner of the Public Service Commission of West Virginia, Defendants-Appellees Stewart's Sanitation; Sunrise Sanitation Services, Incorporated; Tygarts Valley Sanitation, Incorporated; United Disposal Services, Incorporated; West Virginia Association Of Solid Waste Haulers And Recyclers; Bfi Waste Systems Of North America, Incorporated, Intervenors/Defendants-Appellees, and James D. Williams, in his official capacity as Chairman of the Public Service Commission of West Virginia; Charlotte R. Lane, in her official capacity as Commissioner of the Public Service Commission of West Virginia, Defendants.

No. 04-1444.

United States Court of Appeals, Fourth Circuit.

Argued: October 28, 2004.

Decided: January 24, 2005.

ARGUED: John Philip Melick, Jackson Kelly, P.L.L.C., Charleston, West Virginia, for Appellants. Webster J. Arceneaux, III, Lewis, Glasser, Casey & Rollins, P.L.L.C., Charleston, West Virginia, for Appellees. ON BRIEF: Brian C. Helmick, Jackson Kelly, P.L.L.C., Charleston, West Virginia, for Appellants. Martin J. Glasser, Lewis, Glasser, Casey & Rollins, P.L.L.C., Charleston, West Virginia; Leonard B. Knee, Eric Calvert, Bowles, Rice, Mcdavid, Graff & Love, P.L.L.C., Charleston, West Virginia; Richard E. Hitt, Franklin G. Crabtree, Public Service Commission, Charleston, West Virginia; Samuel F. Hanna, Charleston, West Virginia, for Appellees.

Before WILKINSON and WILLIAMS, Circuit Judges, and Glen E. CONRAD, United States District Judge for the Western District of Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge WILKINSON wrote the opinion, in which Judge WILLIAMS and Judge Conrad joined.

OPINION

WILKINSON, Circuit Judge:

In this case we consider the effect of the commerce power on a federal court's discretion to abstain under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). Southern Ohio Disposal LLC ("SOD"), an Ohio-based solid waste disposal service, contracted with customers in West Virginia to collect their garbage and dispose of it in Ohio. The Public Service Commission of West Virginia ("PSC") barred SOD from competing with waste removers whom the PSC effectively had licensed with an exclusive franchise. After the agency ruling, SOD brought suit in federal district court to enjoin the PSC from enforcing its order. SOD argued that the PSC order violated the Commerce Clause. The district court abstained under Younger.

We reverse. The values of comity and federalism protected by Younger are undeniably important. But the state interests at stake here do not fall among those the federal courts have repeatedly recognized as deserving of special respect and solicitude. Moreover, the federal interest asserted under the commerce power lies at the core of the commercial values protected by that clause, namely the promotion of robust trade and enterprise among the several states. This interest has been reaffirmed in this specific context by a panel of this court. See Medigen of Ky., Inc. v. Pub. Serv. Comm'n, 985 F.2d 164 (4th Cir.1993). We hold that the district court erred in abstaining from ruling on the significant Commerce Clause challenge raised in SOD's complaint, and we remand the case for a determination on the merits.

I.

Southern Ohio Disposal, an Ohio company owned by James Harper, removes solid waste from its customers in West Virginia. SOD's base is in Pomeroy, Ohio; trucks start there and, after collecting the refuse, return to Ohio to dispose of it.

West Virginia requires common carriers engaged in businesses like SOD's to obtain a "certificate of convenience and necessity" from the PSC. W. Va.Code Ann. § 24A-2-5(a) (Michie 2004). Without the certificate, it is "unlawful for any contract carrier by motor vehicle to operate" in West Virginia. Id. § 24A-3-3(a). But obtaining the certificate requires demonstrating that those who already are certified to provide service for a given geographic area are not "adequately serving the same territory." Id. In the absence of such a showing, the PSC "shall not grant such certificate" to any applicant. Id. § 24A-2-5(a).

It is undisputed by SOD's competitors that this arrangement gives those pre-existing waste haulers a monopoly over a given geographic area. And indeed West Virginia law states that one purpose of the regulation of common carriers is "prevent[ing] unnecessary multiplication of service" among them. Id. § 24A-2-3. This regulatory system applies to in-state competitors, but more importantly here, SOD — an out-of-state competitor — alleges that it erects barriers to interstate trade in solid waste hauling. It is this interstate effect that makes relevant the Commerce Clause.

SOD had no certificate and was therefore not in compliance with state law and PSC regulations.¹ One of SOD's competitors filed a complaint with the PSC against the Town of Mason, West Virginia, because the town had contracted with SOD. The competitor had been awarded the franchise for that area by the PSC. SOD was subsequently added to the complaint as a necessary party. SOD attempted to remove to federal court, but the district court found that under 28 U.S.C. § 1441(a) (2000), the PSC was not a state court and removal was therefore unavailable.

Initial proceedings before the Chief Administrative Law Judge for the PSC favored SOD. The ALJ found that the PSC's requirements violated the Commerce Clause. She recognized that the PSC had unsuccessfully defended very similar regulations in Medigen of Kentucky, Inc. v. Public Service Commission, 985 F.2d 164 (4th Cir.1993). Those regulations governed interstate transportation of medical waste; this court found them to violate the dormant Commerce Clause, even under the most deferential test of Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). Medigen concluded that the PSC had "restrict[ed] market entry" and in so doing had wrongfully limited the available service from which customers could choose, including interstate carriers. The court held that "West Virginia's goal of providing universal service at reasonable rates may well be a legitimate state purpose, but restricting market entry does not serve that purpose." Medigen, 985 F.2d at 167. Finding that Medigen foreclosed the similar regulations that impeded interstate transportation of solid waste, and concluding that none of the distinctions of Medigen urged by SOD's competitor were meaningful, the ALJ recommended that the complaint be dismissed.

The PSC, however, rejected this recommendation. It instead ordered SOD to "cease and desist from collecting solid waste in West Virginia until [it] first obtains a certificate" from the PSC. Although West Virginia law permitted filing a petition with the Supreme Court of Appeals within 30 days of the adverse decision, W. Va.Code Ann. §§ 24-5-1; 24A-8-1 (Michie 2004), SOD declined to do so. As the parties acknowledge, review by that court is discretionary.

Instead, SOD brought suit against the PSC in the U.S. District Court for the Southern District of West Virginia. A large group of other waste haulers — who had also intervened in the PSC proceedings — intervened as defendants. The magistrate judge found federal jurisdiction, but concluded that both Younger and Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), justified abstention. Harper v. Pub. Serv. Comm'n, 291 F.Supp.2d 443 (S.D.W.Va.2003).

SOD appealed the abstention order to this court. We review decisions to abstain under an abuse of discretion standard. Nivens v. Gilchrist, 319 F.3d 151, 153 (4th Cir.2003). In the interim, SOD asked us to enjoin PSC enforcement of the cease-and-desist order. We granted the injunction on July 28, 2004, and now reverse the district court's decision to abstain.

II.

Younger abstention originated as a doctrine requiring federal courts not to interfere with ongoing state criminal proceedings. See Younger, 401 U.S. at 46. The Supreme Court has since made clear, however, that it applies as well "to noncriminal judicial proceedings when important state interests are involved." Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982). Criminal proceedings are, perhaps, the most obvious example of the states' sovereign authority "to perform their separate functions in their separate ways." Younger, 401 U.S. at 44, 91 S.Ct. 746. But other state functions also lie at the heart of the states' identity under the Constitution. In Middlesex County, the Court listed three questions which must be answered in the affirmative for a case to merit abstention under Younger:

first, do [the state proceedings] constitute an ongoing state judicial proceeding; second, do the proceedings implicate important state interests; and third, is there an adequate opportunity in the state proceedings to raise constitutional challenges.

Middlesex County, 457 U.S. at 432, 102 S.Ct. 2515 (emphasis in original).

The parties do not dispute the third prong, and we accordingly assume that the PSC has shown that it provided an adequate opportunity to raise constitutional challenges. SOD and the PSC do disagree as to whether the PSC's order, and the availability of discretionary review by the Supreme Court of Appeals, constitute "ongoing judicial proceedings." We need not resolve this question, however, because we think that this case turns fundamentally on the second requirement —...