Shrader v. Horton

• Decision Date: 22 May 1979
• Docket Number: Civ. A. No. 78-0081-A.
• Citation: 471 F. Supp. 1236
• Parties: Jerry SHRADER et al., Plaintiffs, v. A. W. HORTON, Jr., et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

471 F. Supp. 1236

Jerry SHRADER et al., Plaintiffs, v. A. W. HORTON, Jr., et al., Defendants.

Civ. A. No. 78-0081-A.

United States District Court, W. D. Virginia, Abingdon Division.

May 22, 1979.

S. Strother Smith, III, Smith, Robinson & Vinyard, Abingdon, Va., Z. Dale Christian, Bluefield, Va., for plaintiffs.

Roger W. Mullins, Atty. for the Commonwealth, Tazewell County, Tazewell, Va., for defendants.

MEMORANDUM OPINION

GLEN M. WILLIAMS, District Judge.

Plaintiffs Jerry Shrader and ninety-eight other citizens of the Abbs Valley Community, Tazewell County, Virginia, bring this action challenging a mandatory connection ordinance for a new public water system in the Boissevain-Abbs Valley area of Tazewell County. The named defendants are A. W. Horton, Jr., Richard I. Cooley, Walter Stapleton, John Martin, G. W. Edwards, Larry Smith, and Charles Gilmore, who are members of the Tazewell County Water and Sewer Authority, and defendants Ben L. Susman, Leslie Ballard, and William J. Hankins, who are members of the Tazewell County Board of Supervisors. The case is currently before this court on defendants' motion to dismiss, supported by defendants' memorandum of law. Plaintiffs have submitted an amended complaint and a memorandum of law in opposition to defendants' motion to dismiss.

This court has granted the Virginia State Board of Health's and the Virginia State Water Control Board's motion to intervene as party defendants pursuant to Fed.R. Civ.P. 24(a)(2).

I.

Plaintiffs' amended complaint sets forth the following allegations: Plaintiffs are either residents or landowners of Tazewell County, Virginia, in the Abbs Valley Community, who have for two or more years owned and operated their own individual or collectively approved water supply systems which have been approved by the State Water Authority as being sanitary and suitable for drinking. In many instances the plaintiffs have had to pay for their interest in their water supply, either directly by paying for construction of a water system or indirectly by paying the cost in the purchase price of their property. Often the cost of these systems has been several thousand dollars.

Plaintiffs further allege that the defendants, as members of the Tazewell County Water and Sewer Authority and the Tazewell County Board of Supervisors, plan to establish a public water system and run water lines adjacent to plaintiffs' property. Defendants, under the authority of Va.Code Ann. § 15.1-1261 (Repl.Vol.1973),¹ enacted an ordinance directing that landowners and others occupying land abutting on a street with a water line be required to hook on, and defendants notified plaintiffs that they would be required to connect to a proposed water system due for construction in the Boissevain-Abbs Valley communities. Plaintiffs would be required to pay an initial hookup fee and monthly assessments for water used thereafter.

Plaintiffs, objecting to the mandatory connection ordinance on the grounds that it is a discriminatory and unconstitutional taking of property without compensation and is a violation of the federal antitrust laws, ask this court for a permanent injunction enjoining the defendants from enforcing the offending ordinance unless the defendants proceed against plaintiffs under standard Virginia condemnation procedures. Plaintiffs also ask this court for a declaratory judgment setting forth plaintiffs' rights under the United States Constitution.

This court now turns to defendants' motion to dismiss, and each contention is discussed below.

II.

A. The Johnson Act

Defendants' first argument is that the Johnson Act, 28 U.S.C. § 1342, precludes this court from exercising jurisdiction of this case. The Act provides as follows:

"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.

Defendants contend that the Act establishes a "hands-off policy" by the federal district courts in matters dealing with the established legislative policy of a state's public utilities.

Plaintiffs assert that the Johnson Act is inapplicable, as the instant case does not involve the enjoining or restraining of "any order affecting rates chargeable by a public utility." Plaintiffs further contend that neither of the remaining four criteria of 28 U.S.C. § 1342 apply. An inspection of the Act's language reveals that the statute does not restrict the district court's jurisdiction unless the case before the court involves "any order affecting rates chargeable by a public utility." Therefore, the first issue that this court must resolve is whether defendants' proposed action in forcing plaintiffs to connect to the public water supply, under the authority of Va.Code Ann. § 15.1-1261 (Repl.Vol.1973), will be an "order affecting rates."

Defendants argue that requiring plaintiffs to connect to the public system will increase the number of public users and thereby reduce the costs of the system to those who use it; hence, it is an "order affecting rates." Plaintiffs counter by saying that this is not a sufficient basis for invoking the Johnson Act, as plaintiffs are not challenging in any way the rates for water charged by defendant; plaintiffs merely object to being forced to hook on to the public system and forego the use of their own supplies.

This court is persuaded by plaintiffs' argument. Congress enacted the Johnson Act as a measure to restrict federal injunctions against state orders setting rates for public utilities. See 17 Wright & Miller, Federal Practice and Procedure § 4236, p. 407 (1978); Annot. 28 A.L.R.Fed. 422 (1976). Congress' purpose was to channel normal rate litigation into the state courts while leaving the federal courts free in the exercise of their equity powers to relieve against arbitrary action. City of Meridian, Miss. v. Mississippi Valley Gas Co., 214 F.2d 525 (5th Cir. 1954). However, defendants' position that the connection ordinance is an "order affecting rates" is untenable. Plaintiffs have not challenged in any way the water rates that defendants propose to charge; plaintiffs object to the mandatory connection requirement.

Defendants' argument—that mandatory connection is an "order affecting rates" because the number of users will ultimately affect the monthly charge per user—proves too much, for other courts have refused to apply the Johnson Act even though the challenged activity of the state would ultimately bear on a rate charged the public. In Alabama Public Service Commission v. Southern Railway Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951), the railroad sued in federal district court to enjoin the members of the Alabama Public Service Commission and the Alabama Attorney General from enforcing a state statute prohibiting discontinuance of certain trains. The Commission had ordered the railroad to continue the rail service in the public interest, even though the railroad protested that its revenues on that particular service were falling far short of meeting expenses. The railroad, instead of following through on its state administrative remedies, brought an action in federal district court alleging that being required to operate the trains at a loss amounted to a confiscation of its property in violation of the Fourteenth Amendment's Due Process Clause.

The Supreme Court held that the district court should have dismissed the case on the grounds that comity required the railroad to pursue its state court remedies instead of turning to federal court. However, the Court wrote of the Johnson Act as follows:

"The Johnson Act, 48 Stat. 775 (1934), now 28 U.S.C. (Supp. III) § 1342, does not affect the result in this case. That Act deprived federal district courts of jurisdiction to enjoin enforcement of certain state administrative orders affecting public utility rates where `A plain, speedy and efficient remedy may be had in the courts of such State.' As the order of the Alabama Service Commission involved in this case is not one affecting appellee's rates, the Johnson Act is not applicable."

341 U.S. at 350, 71 S.Ct. at 769. (Emphasis supplied.)

The Court's language is at odds with defendants' argument, for surely the railroad's having to continue unprofitable rail service would ultimately bear on the rates charged the public in much the same way that the number of water users would affect the monthly water rate. Yet the Court plainly stated that the Johnson Act did not apply to the railroad case, and this court in ruling on defendants' motion to dismiss feels compelled to follow the Supreme Court's lead.

Other courts have reached decisions that require rejection of defendants' tenuous argument about an "order affecting rates." In Limuel v. Southern Union Gas Company, 378 F.Supp. 964 (W.D.Tex.1974), the consumers brought a Section 1983 action against a gas company challenging the company's termination of service for failure to pay bills. The court noted that the action was not one to enjoin the operation of "any order affecting rates" and therefore was outside the operation of 28 U.S.C. § 1342. 378 F.Supp. at 966. See also, Cody v. Union Electric Co., 545 F.2d 610 (8th Cir. 1976); United States v. Public Service Commission, 422 F.Supp. 676 (D.Md.1976).

Tennyson v. Gas Service Company, 506 F.2d 1135 (10th Cir. 1974), 28 A.L.R.Fed. 408 (1976), cited by defendants, is not controlling in this case. In Tennyson, a gas company imposed late charge assessments as an additional charge upon...