Pudlik v. Public Service Company of Colorado, Civ. No. 5927.

• Decision Date: 15 October 1958
• Docket Number: Civ. No. 5927.
• Citation: 166 F. Supp. 921
• Parties: John J. PUDLIK, on behalf of himself and all other residents of the City of Boulder, Colorado, Plaintiff, v. PUBLIC SERVICE COMPANY OF COLORADO, a public service corporation, City of Boulder, a municipal corporation, Leo C. Riethmayer, Mayor of the City of Boulder, Frank S. Henderson, Ralph C. Horton, John P. Thompson and Joseph F. Nigro, Defendants.
• Court: U.S. District Court — District of Colorado

166 F. Supp. 921

John J. PUDLIK, on behalf of himself and all other residents of the City of Boulder, Colorado, Plaintiff, v. PUBLIC SERVICE COMPANY OF COLORADO, a public service corporation, City of Boulder, a municipal corporation, Leo C. Riethmayer, Mayor of the City of Boulder, Frank S. Henderson, Ralph C. Horton, John P. Thompson and Joseph F. Nigro, Defendants.

Civ. No. 5927.

United States District Court District of Colorado.

October 15, 1958.

James H. Snyder, Denver, Colo., for plaintiff.

Lee, Bryans, Kelly & Stansfield and Bryant G. O'Donnell, Denver, Colo., for Public Service Co. of Colorado and Frank S. Henderson.

John R. Mack, and Guy A. Hollenbeck, Boulder, Colo., for City of Boulder and Leo C. Riethmayer, Mayor of City of Boulder.

Duke W. Dunbar, Frank E. Hickey and Henry E. Zarlengo, Denver, Colo., for Ralph C. Horton, John P. Thompson and Joseph F. Nigro.

ARRAJ, District Judge.

This case is before the Court on the following motions of the respective defendants:

Motion of Public Service Company of Colorado to dismiss for failure to state a claim, and

Motion to dismiss by said company for lack of jurisdiction of the subject matter.

Motion of the City of Boulder to dismiss: (1) For failure to state a claim, (2) For lack of jurisdiction of the subject matter, and (3) Failure of plaintiff to seek remedies afforded him under the State Constitution, laws and ordinances.

Motion of defendant Leo C. Riethmayer, Mayor of the City of Boulder, to dismiss: (1) For lack of jurisdiction of the subject matter, (2) Failure of plaintiff to seek remedies afforded him under the State Constitution, laws and ordinances, and (3) For failure to state a claim.

Motions of defendant Frank S. Henderson to dismiss: For failure to state a claim, and for lack of jurisdiction of the subject matter.

Motion of defendants Ralph C. Horton, John P. Thompson and Joseph F. Nigro to dismiss on the grounds: (1) That complaint fails to state a claim against them, (2) That the Court lacks jurisdiction because the amount in actual controversy is less than $3,000.

Supplemental motion of defendant City of Boulder on the ground that the issues between plaintiff and it are now moot, and

Supplemental motion of defendant Riethmayer, Mayor of the City of Boulder, on the ground that issues between plaintiff and him are now moot.

This is a class action by the named plaintiff on behalf of himself and other residents of the City of Boulder against the defendants seeking preliminary and permanent injunction and damages. Plaintiff alleges that the defendant Henderson is the agent, servant or employe of the Public Service Company of Colorado in charge of its operations in the City of Boulder and that the defendants Ralph C. Horton, John P. Thompson and Joseph F. Nigro are the members of the Public Utilities Commission of the State of Colorado.

The complaint alleges, in substance, that in April of 1949, the City of Boulder granted defendant Public Service Company of Colorado a 20-year franchise contract for the purpose of furnishing gas and gas service, electricity and electric service and transportation and transportation service to the City of Boulder and its residents; and that in August of 1956, pursuant to a later ordinance, the Public Service Company increased the rate of fare for bus transportation service and that in November of 1957, the said company again increased the fare for bus transportation service and varied the operating schedules provided for in the original franchise contract.

The complaint charges no violations of the provisions of the franchise contract relating to the gas and electric services therein provided for.

The complaint also alleges that the defendants Ralph C. Horton, John P. Thompson and Joseph F. Nigro, acting as members of the Public Utilities Commission of the State of Colorado, authorized the excess rates and are now holding hearings on application of defendant utility company for further rate increases and for other variations in the operating schedules. Plaintiff claims that these acts violated the due process and equal protection clauses of the 14th Amendment, impairs the obligation of a contract and violates the Civil Rights Act. He seeks redress in the form of injunction against all of the parties and damages against the defendant Public Service Company of Colorado.

Jurisdiction is claimed by virtue of the provisions of 28 U.S.C.A. § 1343(3), and there appears to be no claim of diversity of citizenship.

The supplemental motions to dismiss of defendants City of Boulder and Leo C. Riethmayer, Mayor of the City of Boulder, set out that the provisions of the ordinance adopted by the City of Boulder in 1957, of which plaintiff complains in his complaint were repealed in May of 1958 and consequently the issues between the parties are moot. It is noted that the complaint in this action was filed January 16, 1958.

Due to the complexity of the issues raised herein, the major issues will first be discussed generally; following this, reference will be made to the specific defendants.

The first issue is whether plaintiff has stated a cause of action under Article I, Section 10 of the Constitution. It is clear that a municipal ordinance constitutes state action within this clause. As stated by the Supreme Court in Northern Pacific Railway Company v. State of Minnesota ex rel. City of Duluth, 1908, 208 U.S. 583, 590, 28 S.Ct. 341, 343, 52 L.Ed. 630:

"It is no longer open to question that municipal legislation passed under supposed legislative authority from the State is within the prohibition of the Federal Constitution and void if it impairs the obligation of contracts. Mercantile Trust & Deposit Company of Baltimore v. City of Columbus, 203 U.S. 311-320, 27 S.Ct. 83, 51 L.Ed. 198, and cases there cited."

See also, Home Telephone & Telegraph Co. v. City of Los Angeles, 1913, 227 U.S. 278, 33 S.Ct. 312, 57 L.Ed. 510.

It is also generally accepted that a franchise in the form of an ordinance may be a contract, and within the terms of this clause of the Constitution. See City of Cleveland v. Cleveland City Ry. Co., 1904, 194 U.S. 517, 534-536, 24 S.Ct. 756, 48 L.Ed. 1102, where this question was specifically considered and the ordinances there involved were held to be contracts between the city and the company. There are many reported cases involving similar situations to the one at bar, i.e. where municipal ordinances were challenged as impairing the obligation of a contract created by a prior ordinance; and for purposes of stating a cause of action, have been held to be sufficient if plaintiff alleges a contract, and that the obligation of that contract is being impaired by a municipal ordinance. In Northern Pacific Railway Company v. State of Minnesota ex rel. City of Duluth, supra, 208 U.S. at page 590, 28 S.Ct. at page 343, a case arising through the state courts, the Supreme Court stated,

"If the plaintiff in error set up a claim of contract upon substantial grounds and with allegations showing an impairment of its obligation by state or municipal legislation, a case was presented which might be brought to this court in event such legislation was upheld."

Following these cases, this Court is of the opinion that a cause of action under Article I, Section 10, of the Constitution is stated in plaintiff's complaint. The validity and construction of the franchise ordinance and the matter of whether or not it was impaired are issues going to the merits, which the Court is not called upon to decide in determining the validity of a motion to dismiss; therefore, these questions are reserved for trial on the merits.

Having stated a cause of action, the next issue then is whether this Court has jurisdiction of that cause of action. Plaintiff claims jurisdiction by virtue of 28 U.S.C.A. § 1343(3), which section provides:

"The district courts shall have original jurisdiction of any civil action authorized by law to be commenced by any person: * * * (3) To redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States."

Although the language of this section is extremely broad, it undoubtedly was designed to give the federal courts jurisdiction of those causes of action created by the Civil Rights Act, 42 U.S.C.A. § 1981 et seq., of which this section was originally a part. Hague v. Committee for Industrial Organization, 1939, 307 U.S. 496, 507-514, 59 S.Ct. 954, 83 L.Ed. 1423; Douglas v. City of Jeannette, 1943, 319 U.S. 157, 161, 63 S.Ct. 882, 87 L.Ed. 1324. Consequently, unless plaintiff's cause of action is one created by the Civil Rights Act, this section does not give this Court jurisdiction; and although plaintiff has alleged that he has a cause of action under 42 U.S.C.A. § 1983, the decisions rendered under that section suggest that it was not intended to cover situations such as the one at bar. That section was intended to cover only the rights, privileges and immunities secured by the 14th Amendment to the Constitution, Downie v. Powers, 10 Cir., 1951, 193 F.2d 760. That does not include the right guaranteed by Article I, Section 10, of the Constitution. Therefore, there is no jurisdiction by virtue of 28 U.S.C.A. § 1343 (3).

If jurisdiction exists in this case, then it must exist by virtue of 28 U.S. C.A. § 1331, which, at the time this suit was commenced, gave district courts original jurisdiction in civil actions,

"* * * wherein the matter in controversy exceeds the sum or value of $3,000, exclusive of interest and costs, and arises under the Constitution, laws or treaties of the United States."

In the arguments on these motions, and in the briefs submitted by the parties, it appears that the major point of dispute was whether a federal...