Holt v. Yonce

• Decision Date: 01 October 1973
• Docket Number: Civ. A. No. 73-910.
• Citation: 370 F. Supp. 374
• Court: U.S. District Court — District of South Carolina
• Parties: Grace HOLT et al., Plaintiffs, v. Henry G. YONCE, Individually and in official capacity as Chairman of the South Carolina Public Service Commission, et al., Defendants.

370 F. Supp. 374

Grace HOLT et al., Plaintiffs, v. Henry G. YONCE, Individually and in official capacity as Chairman of the South Carolina Public Service Commission, et al., Defendants.

Civ. A. No. 73-910.

United States District Court, D. South Carolina, Columbia Division.

Heard August 29, 1973.

Decided October 1, 1973.

Judgment Affirmed March 18, 1974.

Hemphill Pride, II, Tom Turnipseed, Columbia, S. C., Kenneth L. Holland, Camden, S. C., William M. Catoe, Jr., Kershaw, S. C., for plaintiffs.

William F. Austin, Columbia, S. C., for defendant Members of the S. C. Public Service Commission.

J. H. Fowles, Jr., Harry M. Lightsey, Jr., Columbia, S. C., Hubert E. Long, Lexington, S. C., James B. Richardson, Columbia, S. C., for defendant, S. C. Electric and Gas Co.

Before RUSSELL, Circuit Judge, and SIMONS and BLATT, District Judges.

Judgment Affirmed March 18, 1974. See 94 S.Ct. 1553.

OPINION AND ORDER

PER CURIAM:

This is an action challenging the constitutionality of certain statutes under which the defendant South Carolina Electric & Gas Company, hereinafter designated as S.C.E. & G., has put into effect a temporary rate increase for its electric and gas services. The procedure for implementing such temporary increase for public utilities selling electricity is codified in Sections 24-31 et seq., of the 1962 Code of Laws of South Carolina; the procedure for establishing such temporary increase for public utilities selling gas is codified in Sections 58-111 et seq., of the 1962 Code of Laws of South Carolina. Plaintiffs are customers of the defendant S.C.E. & G. and propose to represent themselves and other similarly situated customers whose gas and electric rates are being increased. Additionally, said plaintiffs propose to represent a sub-class of indigent persons who allegedly will be unable to pay any rate increase without depriving themselves of other absolute necessities of life. The individual defendants are members of the South Carolina Public Service Commission, hereinafter designated as P.S.C., the agency charged by the General Assembly of South Carolina with the supervision of public utilities furnishing the services here involved. On motion, and with consent of all counsel, the defendants designated as members of the Board of Directors of S.C.E.& G. have been dismissed from this action.

On May 24, 1973, S.C.E. & G. filed notice with P.S.C. of an increased schedule of rates to be charged by it for gas and electricity, said increased schedule to become effective on July 2, 1973. Thereafter, on May 30, 1973, P.S.C. issued its Order suspending the effective date of such rate increase until January 2, 1974. Further, P.S.C. ordered that a public hearing be held on October 3, 1973, at which time evidence would be received from S.C.E. & G. to support the proposed new rate schedule and, likewise, evidence would be received from any other person or persons supporting or opposing the proposed rate increase. On or about June 11, 1973, S.C.E. & G. gave notice to P. S.C. that it intended to place its new rates into effect on July 2, 1973, despite the Order suspending the same by P.S.C. As required by the statute allowing a utility to temporarily place into effect a suspended rate increase, S. C.E. & G. filed an undertaking with P.S.C. to insure the refund, with interest, of any charges collected under the revised schedule, but ultimately found by P.S.C. to be unreasonable. Before the increase could be effectuated, utility rates were, until August 12, 1973, frozen under the national economic policy, and P.S.C. was promptly advised by S.C.E. & G. that the new rates would not go into effect until August 13, 1973. The proposed undertaking by S.C.E. & G. was approved by P.S.C., as to its sufficiency only, on July 24, 1973, and on August 1, 1973, the present action was instituted.

Predicating jurisdiction of this court on 28 U.S.C. Sections 1343(3) and 1343 (4), plaintiffs seek injunctive relief and the convening of a three-judge court to declare unconstitutional Sections 24-38¹ and 58-115² of the aforesaid Code of Laws of South Carolina to the extent that these statutes allow the defendant S.C.E. & G., or any other similarly situated public utility, to put into effect a temporary rate increase, without any prior hearing to determine the "reasonableness" thereof³ by the filing of an undertaking, satisfactory to P.S.C. guaranteeing to repay all customers any part of the rate increase, with interest thereon, which is not thereafter approved by P.S.C. Plaintiffs allege that the practical effect of this procedure is to deprive indigent persons of electric and gas service, because this group will be unable to pay the increased cost of these essential services without depriving themselves of other more vital necessities of life. Thus, the plaintiffs contend that they are denied due process of law under the Fourteenth Amendment⁴ by the statutes noted above in that such statutes permit citizens to be deprived, without a hearing, of essential services to which they are rightfully and constitutionally entitled. In so arguing, the plaintiffs contend that an increase in the cost of electric and gas service without a prior hearing is constitutionally analogous, for due process purposes, to the termination of welfare benefits, garnishment of wages, suspension of a driver's license, and dispossession of personal property, without a prior hearing in each instance.

The single judge to whom this case was first referred denied plaintiffs' request for a temporary injunction to prevent the implementation of the scheduled temporary rate increase on the ground that the plaintiffs had failed to prove that there was a reasonable probability that they would succeed on the merits of this case.⁵ However, at the request of the single judge, a three-judge court was convened in accordance with 28 U.S.C., Sections 2281 and 2284.

Plaintiffs have brought this action pursuant to 42 U.S.C., Section 1983.⁶ In effectuating the proposed rate increase, S.C.E. & G. and the individual members of P.S.C. clearly acted under color of state law, and the rights contended to be infringed are among those secured by the Constitution. Thus, the prima facie requirements for a Section 1983 violation are alleged. Palmer v. Columbia Gas of Ohio, Inc., 479 F.2d 153, 161-165 (6 Cir., 1973).

The single issue of consequence presented to this court by the present case is whether these plaintiffs are entitled to a hearing prior to the implementation of the rate increase. It is on this basis that the plaintiffs press for a holding by this court that Sections 24-38 and 58-115 are unconstitutional because the procedure for a prior hearing which would fulfill due process requirements is not provided therein. The plaintiffs cite a number of recent cases which have extended the constitutional perimeter of the due process clause. These cases include Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971) (suspension of uninsured motorists drivers license); Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed. 2d 556 (1971) (repossession of household goods); Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) (termination of welfare benefits); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969) (garnishment of wages); and several recent district court opinions which have decided that a hearing must be provided prior to the termination of electric service to an individual consumer in order for such termination to comply with the due process clause of the Fourteenth Amendment. Stanford v. Gas Service Company, 346 F.Supp. 717 (D.C. Kan.1972); Lamb v. Hamblin, 57 F.R. D. 58 (D.C.Minn.1972); Bronson v. Consolidated Edison Co. of New York, Inc., 350 F.Supp. 443 (D.C.N.Y.1972); Palmer v. Columbia Gas Company of Ohio, 342 F.Supp. 241 (D.C.Ohio 1972), affd. 479 F.2d 153 (6 Cir., 1973); Davis v. Weir, 328 F.Supp. 317 (N.D.Ga. 1971). What the plaintiffs seek would require that this court analogize an increase in utility rates without a prior hearing to a termination of utility services without a prior hearing and, thus, hold that such increase constitutes a deprivation of property within the concept of the Fuentes-Sniadach line of cases noted above. To so hold would necessitate that this court extend Sniadach and its progeny to an uncharted point not supported by any cited authority. We refuse to sanction such an extension. Instead, we conclude that the instant case is controlled by the holding of the United States Supreme Court in the case of United Gas Pipeline Co. v. Memphis Light, Gas and Water Division, 358 U.S. 103, 79 S. Ct. 194, 3 L.Ed.2d 153 (1958). In that case, the United States Supreme Court upheld provisions of the Natural Gas Act⁷ which allow for temporary rate increases without a prior hearing, and which provisions are substantially similar to the challenged parts of the South Carolina statutes. While it is true that the rates under the Natural Gas Act cannot be unilaterally increased by the utility involved until five months have elapsed after filing notice of such proposed rate increase, whereas the South Carolina statutes provide for only thirty days notice prior to an increase, this technical variation is of no legal import. In the United States Gas Co. case, supra, the United States Supreme Court in affirming the right of an interstate gas utility to raise its rates ex parte in conformity with the Natural Gas Act, made the following apposite comments, starting at page 113 of 358 U.S., at page 200 of 79 S.Ct.:

"United, like the seller of an unregulated commodity, has the right in the first instance to change its rates as it will. . . . The Act comes into play as to rate changes only in (1) imposing upon the seller the procedural requirement of filing timely notice of charge, (2) giving the Commission authority to review such changes, and (3) authorizing the Commission, in the case of rates for

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