Tennyson v. Gas Service Company

• Decision Date: 23 October 1973
• Docket Number: Civ. A. No. W-5084.
• Citation: 367 F. Supp. 102
• Parties: Wade TENNYSON et al., Plaintiffs, v. GAS SERVICE COMPANY and Kansas Gas and Electric Company, Defendants.
• Court: U.S. District Court — District of Kansas

367 F. Supp. 102

Wade TENNYSON et al., Plaintiffs, v. GAS SERVICE COMPANY and Kansas Gas and Electric Company, Defendants.

Civ. A. No. W-5084.

United States District Court, D. Kansas.

October 23, 1973.

Thomas A. Wood, Wichita, Kan., for plaintiffs.

Kassebaum & Rees, Wichita, Kan., Richard C. Byrd, Ottawa, Kan., Donal D. Guffey, Kansas City, Mo., for Gas Service Co.

Ralph Foster, Wichita, Kan., for Kansas Gas & Electric Co.

MEMORANDUM AND ORDER

THEIS, District Judge.

Through this class action, plaintiffs seek monetary, declaratory and injunctive relief from late charge assessments made by the defendants. Jurisdiction is premised on 28 U.S.C.A. § 1343(3), (4). Further, the Court is requested to exercise pendent jurisdiction over related claims arising under the Constitution of the State of Kansas and various Kansas statutes.

Both defendants, levy on their customers an additional charge for failure to pay within fifteen days of the billing date. On bills of less than $200.00, the present rate is 5%. Defendants label this assessment the "gross monthly bill;" however, the charge is separate and apart from the residential service rated, which is titled the "net monthly bill." Plaintiffs assert the late charge is actually an interest charge and is confiscatory and constitutes an appropriation of their property without due process of law in violation of the Fourth, Fifth and Fourteenth Amendments. Furthermore, since the rate on bills in excess of $200.00 is only 2%, and since defendants allegedly adopt arbitrary billing periods, plaintiffs contend the late charge arbitrarily discriminates against them and denies them equal protection under the law. In addition, plaintiffs state the late charges violate rights guaranteed them by the Kansas Bill of Rights and violate K.S.A. § 16-201 et seq., and K.S.A. § 66-107 et seq. They seek a declaratory judgment that the late charges are unreasonable, confiscatory and discriminatory in violation of the Fourth, Fifth and Fourteenth Amendments to the Constitution of the United States, and are further violative of Sections 1, 15 and 18 of the Bill of Rights of the Constitution of the State of Kansas and K.S.A. § 66-107 et seq.; and finally that the late charges are usurious and violate K.S.A. § 16-201 et seq. Plaintiffs also seek an injunction prohibiting future assessments and an accounting and reparation of all late charges assessed plaintiffs and members of their class during the past five years. Relief is sought under the provisions of 28 U.S.C.A. § 2201 and 42 U.S.C.A. § 1983.

Both defendants have moved to dismiss the action on the ground that the Court is without jurisdiction over the subject matter because the action falls within the provisions of the Johnson Act, 28 U.S.C.A. § 1342. The Gas Service Company moves to dismiss on the additional grounds that the complaint fails to state a claim under the Civil Rights Act and that the plaintiffs have failed to join an indispensable party, namely, the Kansas Corporation Commission. Having carefully examined the arguments and authorities submitted by the parties, the Court makes the following findings and orders.

JURISDICTION UNDER THE CIVIL RIGHTS ACT

It is contended by the Gas Service Company that the plaintiffs' complaint fails to state a claim for relief under the Civil Rights Act. Its contention is twofold: (1) neither of the defendants acted under color of state law, and (2) plaintiffs fail to allege facts constituting denial of a constitutional right. With respect to the assertion that neither defendant acted under color of state law, this Court, in Stanford v. Gas Service Company, 346 F.Supp. 717 (D.Kan.1972), has previously determined that public utilities which enjoy a complete monopoly on the supply of an essential commodity to citizens of this state, and whose rates, method of and right to do business, are solely under state control, act by or under color of state law for purposes of § 1983. See also Ihrke v. Northern States Power Co., 459 F.2d 566 (8th Cir. 1972); Bronson v. Consolidated Edison Co., 350 F.Supp. 443 (S.D.N.Y.1972), and Palmer v. Columbia Gas Co., 342 F.Supp. 241 (N.D. Ohio 1972). Likewise, the Court finds the plaintiffs' complaint alleges facts sufficient to meet the second requirement that there be a denial of a constitutional right.

Ever since the decision in Chicago, Milwaukee and St. Paul Ry. v. Minnesota, 134 U.S. 418, 10 S.Ct. 462, 33 L.Ed. 970 (1890), it has been settled that the action of a rate-setting body is subject to judicial review on the question of whether it results in confiscation and, therefore, deprivation of property without due process. A. & M. Brand Realty Corp. v. Woods, 93 F.Supp. 715 (D.D.C.1950). Thus, plaintiffs' assertion that the late charge is unreasonable and confiscatory suffices to allege denial of a constitutional right. Plaintiffs' claim that the late charges arbitrarily discriminate against them also suffices for purposes of § 1983. It is enough that they claim the disparity between the 5% rate on bills for less than $200.00, and the 2% rate on bills in excess of that figure, and the employment of arbitrary billing periods, are based on grounds unrelated to, or unreasonable in light of the statutory purpose, and arbitrarily discriminate against them. See Jefferson v. Hackney, 406 U.S. 535, 92 S.Ct. 1724, 32 L.Ed.2d 285 (1972); Bjarsch v. DiFalco, 300 F.Supp. 960 (S. D.N.Y.1969). Plaintiffs' complaint therefore meets the two requirements necessary to establish a claim under the Civil Rights Act, 42 U.S.C.A. § 1983. Adickes v. S. H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Endicott v. Van Petten, 330 F. Supp. 878 (D.Kan.1971).

JURISDICTION UNDER THE JOHNSON ACT

The provision in each defendants' rate schedule describing the late charge assessment is purported to have been approved by the Kansas Corporation Commission. The Gas Service Company asserts its late charge was included in the rate schedule approved by the Kansas Corporation Commission's order of February 21, 1968, in Docket No. 82,760-U. The Kansas Gas and Electric Company states its late charge assessment was included in the rate schedule approved by the Kansas Corporation Commission's order of June 28, 1972, in Docket No. 82,581-U. Since the late charge assessments have been approved by the Kansas Corporation Commission, defendants vigorously contend the Johnson Act proscribes the Court's jurisdiction. The Johnson Act, 28 U.S.C.A. § 1342, 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."

Having carefully considered the legislative history of the statute, the Court concludes that it was not intended to apply to all action challenging public utility rates approved by a state administrative agency, but instead was enacted for the single purpose of remedying the anomaly whereby a utility company could avail itself of both the state and federal courts simultaneously for the purpose of challenging a rate order.

During the latter decades of the Nineteenth Century and the early years of the Twentieth, many states undertook the regulation of rates charged by public utilities. See generally, "Comment, Limitation of Lower Federal Court Jurisdiction Over Public Utility Rate Cases," 44 Yale L.J. 119 (1934). At first, rates set by state legislatures were held not to be subject to judicial review, but in Chicago, Milwaukee and St. Paul Ry. Co. v. Minnesota, su...