The opinion of the court was delivered by: FULLAM
Plaintiffs in this action challenge certain policies and practices of the Philadelphia Gas Works (PGW) which, it is claimed, deprived plaintiffs and others similarly situated of their constitutional rights. Specifically, it is alleged that the defendants, individually and collectively, acting under color of state law, have violated, and continue to violate, the following constitutional rights of the plaintiffs: (1) their right to procedural due process, by terminating gas service without adequate notice and an opportunity for a prior evidentiary hearing; (2) their right to be secure in their persons and property, by unlawfully entering plaintiffs' homes for the purpose of shutting off gas service; and (3) their right to equal protection and due process, by enforcing security deposit policies which are arbitrary and capricious, and which discriminate against low-income gas consumers in the City of Philadelphia. In addition, plaintiffs assert various common law tort claims for invasion of privacy, and for intentional or reckless infliction of emotional and physical distress in connection with defendants' use of allegedly unfair and wrongful collection practices.
The Complaint asserts jurisdiction under the Civil Rights Act of 1871, 42 U.S.C. § 1983, pursuant to 28 U.S.C. § 1343(3), and general federal question jurisdiction under 28 U.S.C. § 1331; and plaintiffs have asked the Court to exercise pendent jurisdiction over their claims arising under the common law of Pennsylvania. The defendants, besides PGW,
are: The City of Philadelphia and the Philadelphia Gas Commission; the Philadelphia Facilities Management Corporation (a "private" non-profit corporation which manages PGW on behalf of the City); and the following individuals: the Mayor of Philadelphia, the members of the Philadelphia Gas Commission, and the Vice-President and members of the Board of Directors of the Philadelphia Facilities Management Corporation.
A hearing on plaintiffs' application for a temporary restraining order was held on November 16, 1973. Following that hearing, I entered an Order denying immediate injunctive relief. Thereafter, with the approval and encouragement of the Court, counsel for the parties worked out interim procedures for processing individual billing disputes between consumers and the utility, and agreed that this procedure would remain in effect pending final disposition of the lawsuit. Under this arrangement, in the case of a dispute as to the amount of, or liability for, a particular gas bill, PGW continues to supply gas service (or resumes service which was previously terminated for non-payment), pending adjustment or other disposition of the disputed claim through local legal procedures, provided the customer tenders a security deposit in an amount estimated to reflect current usage, and agrees to pay all future bills when due except in the case of obvious computer error.
To date, this interim procedure has been invoked satisfactorily in more than 140 instances. I have no hesitation in stating that it has been my hope that experience gained from implementation of this interim procedure might lead to an amicable adjustment of all of the outstanding disputes between the parties. Unfortunately, however, neither side appears willing to accept this temporary arrangement as a basis for a permanent solution to the problem, and both sides insist upon a judicial resolution of all of the legal issues presented by various pending motions.
Plaintiffs have filed a motion for certification as a class action under Rules 23(a) and 23(b)(2) of the Federal Rules of Civil Procedure. Defendants oppose class treatment and have, in addition, filed motions to dismiss the action pursuant to Rule 12, on the following grounds: (1) failure to state a claim upon which relief can be granted; (2) lack of subject matter jurisdiction; (3) abstention; and (4) the bar allegedly represented by the Johnson Act, 28 U.S.C. § 1342. With respect to plaintiffs' "Second Claim," concerning alleged unlawful entries into customers' homes, the defendants have moved in the alternative for summary judgment. In addition, both sides have briefed the merits of plaintiffs' "First Claim," concerning the requirements of procedural due process in termination of gas service, and have submitted affidavits, exhibits, and other materials outside the pleadings in support of their respective positions on this issue. Accordingly, despite the failure of either side to move formally for summary judgment on the First Claim, I intend not only to rule upon defendants' Rule 12 motions to dismiss that claim, but also to dispose of the claim on the merits. See 6 Moore's Federal Practice, para. 56.12, at 56-334, 338-39; Jennings v. Davis, 476 F.2d 1271 (8th Cir. 1973). Before ruling on the merits, however, I will give the parties an opportunity to file formal motions for summary judgment, supported by such additional briefs, affidavits, or other materials as they deem appropriate, and to request a hearing thereon, if desired. My strong impression is that there are no genuine issues of material fact to be tried concerning the First Claim; if either side persuades me otherwise, the First Claim will be scheduled promptly for trial.
I. Plaintiffs' Class Action Motion
Plaintiffs seek to maintain this action on behalf of three subclasses: The first includes all recipients of gas furnished by the defendants whose service has been terminated, or who are threatened with termination of service, for alleged non-payment of bills, without adequate notice and an opportunity for a pre-termination hearing. The second includes those persons who are unable to obtain gas service (or the restoration of previously terminated service) because of their financial inability to pay security deposits demanded by the defendants. The third, represented by the intervenor plaintiffs, includes those members of the first subclass who are not themselves direct customers of PGW but are tenants whose landlords are legally responsible for supplying gas, and whose service has been, or is in danger of being, terminated, without notice or a prior hearing, because of the landlord's alleged failure to pay PGW gas bills for those housing units.
The defendants have made several arguments in opposition to class certification as a whole, and have also raised a specific objection to the inclusion, as a subclass, of tenants who are not PGW customers. I will discuss these points in turn.
Relying upon Ihrke v. Northern States Power Co., 459 F.2d 566 (8th Cir.) vacated and dismissed as moot, 409 U.S. 815, 93 S. Ct. 66, 34 L. Ed. 2d 72 (1972), defendants argue that plaintiffs' claims are not typical of the claims of the class, and that plaintiffs will not fairly and adequately protect the interests of the class, because of the distinct possibility that many, perhaps most, of the members of the putative class are satisfied with the status quo. It is defendant's contention that most PGW customers would prefer not to run the risk of increases in gas rates which might become necessary to defray the additional expense of providing a pre-termination hearing procedure, as well as possible losses which might be incurred if the remedies sought by plaintiffs impaired the overall efficiency of PGW's collection efforts.
I find myself unable to agree with the reasoning of the Eighth Circuit in Ihrke. As stated by Professor Moore, the issue of typicalness "is not a subjective test, authorizing a judge to dismiss a class action based on a substantial legal claim where he thinks some members of the class may prefer to leave the violation of their rights unremedied." 3B Moore's Federal Practice para. 23.06-2, at p. 23-327. See Cottrell v. Virginia Elec. & Power Co., 62 F.R.D. 516 (E.D. Va. 1974); Koger v. Guarino, 412 F. Supp. 1375 (E.D. Pa. 1976) (Broderick, J.).
If there is a constitutional right to a pre-termination hearing, individual plaintiffs surely cannot be precluded from asserting such a right merely because a majority of their fellow customers might prefer not to have the right asserted. In determining whether the litigation asserting the existence of such a right may properly be maintained as a class action, the issue is merely whether the representative plaintiffs have demonstrated the probability of the existence of a sufficient number of persons similarly inclined and similarly situated to render the class action device the appropriate mechanism for obtaining a judicial determination of the rights alleged.
By defendants' own reckoning,
approximately 38,000 PGW customers each month are sent "shut-off" notices which threaten termination of gas service if their allegedly delinquent bills are not paid within six days of the date of the notice. Of these, most pay without further ado, but in the remaining cases -- about 20,000 per year -- gas service actually is terminated. Obviously, these cases are not uniform, but rather are shaded by individual circumstances; some customers claim to have paid the bill in question, while others contest the amount stated, or merely question a portion of the bill. Undoubtedly, too, there are those who simply deign not to pay an admittedly or obviously correct bill. Such distinctions among individual cases do not obviate the fact that the defendants' collection policies and practices operate uniformly against the entire class of persons whom plaintiffs seek to represent. Likewise, defendants' security deposit policies have a common impact on the proposed subclass of people who are unable to afford service. This is enough to support class certification under Rule 23(b)(2). Koger v. Guarino, 412 F. Supp. 1375, 1380 (E.D. Pa. 1976).
Finally, with respect to the proposed subclass of tenants, defendants argue that such persons should be excluded from the lawsuit because they are not, in fact, customers of PGW and do not pay (nor can they be forced by legal process to pay) PGW for the gas they consume. This is a curious argument, for on the face of the pleadings it is claimed that the defendants attempt to hold such tenants responsible for payment of utility bills by, among other things, threatening them with termination of service unless they pay all or part of their landlord's delinquent accounts, notwithstanding the fact that they have no contractual or legal obligation to do so. Certainly, tenants faced with this dilemma have an unassailable "interest" in contesting the defendants' termination and security deposit policies. Numerous decisions have recognized that persons whom a utility seeks to hold responsible for the allegedly unpaid bills of third parties have standing to challenge that practice on constitutional grounds. See, e.g., Craft v. Memphis Light, Gas & Water Div., 534 F.2d 684 (6th Cir. 1976) (denial of class treatment affirmed, but individual standing recognized); Davis v. Weir, 497 F.2d 139 (5th Cir. 1974) (class treatment affirmed for tenant subclass); Koger v. Guarino, 412 F. Supp. 1375 (E.D. Pa. 1976) (tenant subclass certified). I will follow these precedents and certify the tenant subclass proposed here.
In summary, I will grant the motion for class certification and permit the named plaintiffs to proceed on behalf of the three subclasses described above. Motions to narrow, strike, subdivide, or otherwise modify these subclasses may, of course, be filed at any time pursuant to Rule 23(c)(4).
II. The Utility Defendants' Motions to Dismiss
PGW and its managing agent, the Philadelphia Facilities Management Corporation (the "Utility Defendants") have moved to dismiss the Complaint for failure to state a claim and lack of subject matter jurisdiction. Specifically, they deny that they act "under color of state law," and assert that plaintiffs have no constitutionally protected "property interest" in gas service which would entitle them to seek relief under § 1983.
Discussion of these issues properly begins with consideration of the case of Jackson v. Metropolitan Edison Co., 483 F.2d 754 (3d Cir. 1973), aff'd, 419 U.S. 345, 42 L. Ed. 2d 477, 95 S. Ct. 449 (1974). Plaintiffs in Jackson asserted that they were deprived of property without due process of law by the actions of the defendant, a privately-owned electric utility company regulated by the Pennsylvania Public Utility Commission, in terminating electricity service for non-payment of bills without prior notice, and without providing a pre-termination hearing or other advance opportunity for resolving disputes about the correctness of the billing. The Third Circuit upheld dismissal of the action on three grounds: (1) the defendant was not acting under color of state law; (2) plaintiffs' interest in continued electric service was not a sufficient property right to merit constitutional protection; and (3) requiring plaintiffs, as a condition of receiving continued electricity service, to pay disputed bills and then obtain whatever adjustments were merited did not violate due process. The Supreme Court affirmed, solely on the "state action" ground, and expressly refrained from considering the other two grounds relied upon by the Third Circuit (419 U.S. at 348, ftn. 3).
In the present case, it is clear that the requisite "state action" is present.
As noted earlier, all of the real and personal property subsumed under the name "PGW" is owned by the City of Philadelphia. The Philadelphia Gas Commission, which is an arm of City government by virtue of Article III, §§ 3-100 and 3-309 of the City Charter, was created for the purpose of overseeing the general operations of PGW. The defendant Philadelphia Facilities Management Corporation (PFMC) operates PGW under contract dated December 29, 1972, "for the sole and exclusive benefit" of the City, pursuant to Philadelphia Ordinance No. 455 of the same date. PFMC's status as a private, non-profit corporation cannot disguise or dispell the City's pervasive and significant participation as a joint venturer in PGW operations, including its collection and deposit policies, which admittedly are designed, above all else, to generate income for the City. Burton v. Wilmington Parking Auth., 365 U.S. 715, 6 L. Ed. 2d 45, 81 S. Ct. 856 (1961). Thus, the Supreme Court decision in Jackson furnishes no support for the defense motions in the present case. Cf. Broderick v. Assoc. Hosp. Serv. of Phila., 536 F.2d 1 (3d Cir. 1976).
At issue, then, is the continuing vitality of the other two grounds relied upon by the Third Circuit in Jackson, namely that a utility customer's interest in continued service is not "property" entitled to constitutional protection and that, even if it were, post-payment/post-termination procedures for adjustment of billing disputes satisfy the requirements of due process. These alternative holdings, though not addressed by the Supreme Court, would seem clearly to be still binding upon this Court as constituting the law of this Circuit, unless the facts of the present case distinguish it from Jackson, or unless the opinions of the Supreme Court can be understood to express a contrary view.
On the latter point, it is clear that the three dissenting Justices in Jackson were of the view that termination of electric service amounted to a sufficient interference with "property" to trigger application of the due process clause; and it is clear that Justice Marshall, at least, was satisfied that most of the majority shared that view, and would have reversed the Third Circuit on that point if they had decided that issue. There is perhaps room, also, for the argument that if the majority had not been at least in doubt as to the correctness of the Court of Appeals decision on the "property" issue, the majority would have included it as an alternative or supplemental ground for its holding.
But I do not believe it is appropriate for a district court to depart from the law established for this Circuit on the basis of such slender and ambiguous evidence of what the Supreme Court's views might have been on the alternative grounds for decision in Jackson. The Court elected to express no opinion on those issues at that time, and none should be inferred from its silence.
The question then becomes whether Jackson, on its facts, controls the present case. Plaintiffs contend that it does not and argue, moreover, that decisions of the Supreme Court since Jackson have eroded its vitality with respect to issues other than "state action."
The striking factual distinction between Jackson and the present case is, of course, that the Utility Defendants here have acted "under color of state law." This dilutes, to some extent, the force of the Jackson analysis of the "property" issue as applied to the instant case, for both factors were clearly intertwined in that decision, 483 F.2d at 759. On balance, however, on the question of whether there is a constitutionally protected right to utility service, I believe that the present case cannot reasonably be distinguished. Unlike water -- which the Third Circuit conceded in Jackson to be indispensable to life and safety, 483 F.2d at 760 -- gas, as a general rule, is simply no more or less fundamental a service than electricity
-- which the Jackson court unequivocally declined to hold "essential."
Thus, I cannot follow the route of Koger v. Guarino, 412 F. Supp. 1375 (E.D. Pa. 1976), and hold the utility service here to be beyond the compass of Jackson.
I am persuaded, however, that the Supreme Court's recent decision in Goss v. Lopez, 419 U.S. 565, 42 L. Ed. 2d 725, 95 S. Ct. 729 (1975), effectively overturns the Third Circuit's statement in Jackson that there is no constitutionally protected right to continued utility service once that service has been furnished -- even if, as Jackson also ruled, there is no constitutional right to utility service in the first instance.
In Goss, the Supreme Court synthesized a line of earlier due process "entitlement" cases,
and analyzed in depth the constitutional ramifications flowing from a state or local government's decision voluntarily to furnish a service or benefit which it is not constitutionally obligated to provide. The plaintiffs in Goss were Ohio schoolchildren. They challenged the constitutionality of a local school board's practice of suspending students from school for 10 days or less without prior procedural safeguards. The defendants argued that "because there [was] no constitutional right to an education at public expense," 419 U.S. at 572, plaintiffs' education was not constitutionally protected and could be interrupted for disciplinary reasons without regard to the due process clause. The Supreme Court rejected this argument, and held that although the state was not constitutionally required to establish and maintain a public school system, its schoolchildren had a protected property interest in their education where, as in Ohio, state law extended that right by directing local authorities to provide free public education. Id. at 573. Justice White, speaking for the Court, explained:
. . . Having chosen to extend the right to an education to people of appellees' class generally, Ohio may not withdraw that right on grounds of misconduct, absent fundamentally fair procedures to determine whether the misconduct has occurred . . .
Although Ohio may not be constitutionally obligated to establish and maintain a public school system, it has nevertheless done so and has required its children to attend . . . The authority possessed by the State to prescribe and enforce standards of conduct in its schools although concededly broad, must be exercised consistently with constitutional safeguards. Among other things, the State is constrained to recognize a student's legitimate entitlement to a public education as a property interest which is protected by the Due Process Clause and ...