APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA.
Van Dusen, Hunter and Garth, Circuit Judges.
This is an appeal from the judgment of the United States District Court for the Eastern District of Pennsylvania declaring unconstitutional certain provisions of the Pennsylvania Motor Vehicle Sales Finance Act ("MVSFA")*fn1 and the Pennsylvania Uniform Commercial Code ("UCC")*fn2 insofar as they permit creditors to repossess automobiles peaceably without resort to judicial process upon default by debtors.*fn3 This Court has jurisdiction pursuant to 28 U.S.C. §§ 2201 & 1291. We reverse.
This case was tried as a class action under the Civil Rights Act, 42 U.S.C. § 1983 & 28 U.S.C. § 1343 based upon the claim that the repossessions of automobiles subject to security interests were made under "color of . . . State law, statute, ordinance, regulation, custom or usage"*fn4 and in violation of due process because effected without notice and opportunity for a hearing.
Each of the named appellees financed the purchase of an automobile either through an installment sale contract or a loan agreement which required periodic payments over a specified period of time. Each named appellee had created a security interest in his automobile as collateral security for the indebtedness. The agreements provided that, in the event of default by an appellee, the creditor would have the right to retake the automobile, with or without judicial process -- a practice commonly referred to as self-help repossession.*fn5
The challenged statutes neither compel nor prohibit peaceable self-help repossession. Section 9-503 of the UCC, 12A Pa. Stat. § 9-503 provides:
"Unless otherwise agreed a secured party has on default the right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action."
Section 23 (A) of the MVSFA, 69 Pa. Stat. § 623 (A) provides:
"When the buyer shall be in default in the payment of any amount due under a motor vehicle installment sale contract or when the buyer has committed any other breach of contract, which is by the contract specifically made a ground for retaking the motor vehicle, the seller or any holder, who has lawfully acquired such contract, may retake possession thereof. Unless the motor vehicle can be retaken without breach of the peace, it shall be retaken by legal process, but nothing herein shall be construed to authorize a violation of the criminal law."
The district court found that there was sufficient state involvement to constitute "state action" and held that under Fuentes v. Shevin, 407 U.S. 67, 32 L. Ed. 2d 556, 92 S. Ct. 1983 (1972), lack of prior notice and an opportunity to be heard renders extra-judicial repossession unconstitutional. Since we believe that the requisite "state action" is not present and that therefore a cause of action under 42 U.S.C. § 1983 has not been alleged, we need not reach the due process issue.*fn6
It is well-settled that the fourteenth amendment applies only to actions of the "States" and not to actions which are "private." Under 42 U.S.C. § 1983, the "under color of state law" requirement is the same as the "state action" requirement of the fourteenth amendment. Adickes v. S. H. Kress & Co., 398 U.S. 144, 152 n. 7, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970); United States v. Price, 383 U.S. 787, 794-95 n. 7, 16 L. Ed. 2d 267, 86 S. Ct. 1152 (1966).*fn6a
Unlike pre-judgment seizures recently considered by the Supreme Court in which state action was clearly present,*fn7 the seizures complained of here were effected by private individuals without the aid of any state official. Therefore, absent direct state involvement by the State of Pennsylvania, appellees' claim of "state action" rests on one of two general theories: 1) by comprehensively regulating the field of automobile financing, without prohibiting the practice of self-help repossession, the State of Pennsylvania has become so involved and has so encouraged this private remedy that it becomes "state action," or 2) by allowing the practice of self-help repossession, ...