Memphis Light, Gas & Water DIV. v. Craft, 436 U.S. 1 (1978)

Memphis Light, Gas & Water Division v. Craft

No. 76-39

Argued November 2, 1977
Decided May 1, 1978
436 U.S. 1

CERTIORARI TO THE UNITES STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

Because of two separate sets of gas and electric meters in their newly purchased house, respondents, for about a year after moving in, received separate monthly bills for each set of meters from a municipal utility. During this period, respondents’ utility service was terminated five times for nonpayment of bills. Despite respondent wife’s good faith efforts to determine the cause of the "double billing," she was unable to obtain a satisfactory explanation or any suggestion for further recourse from the utility’s employees. Each bill contained a "final notice" stating that payment was overdue and that service would be discontinued if payment was not made by a certain date, but did not apprise respondents of the availability of a procedure for discussing their dispute with designated personnel who were authorized to review disputed bills and to correct any errors. Respondents brought a class action in Federal District Court under 42 U.S.C. § 1983, seeking declaratory and injunctive relief and damages against the utility and several of its officers and employees for terminations of utility service allegedly without due process of law. After refusing to certify the action as a class action, the District Court determined that respondents’ claim of entitlement to continued utility service did not implicate a "property" interest protected by the Fourteenth Amendment, and that, in any event, the utility’s termination procedures comported with due process. While affirming the District Court’s refusal to certify a class action, the Court of Appeals held that the procedures accorded to respondents did not comport with due process.

Held:

1. Although respondents, as the only remaining plaintiffs, apparently no longer desire a hearing to resolve a continuing dispute over their bills, the double-billing problem having been clarified during this litigation, and do not aver that there is a present threat of termination of service, their claim for actual and punitive damages arising from the terminations of service saves their cause from the bar of mootness. Pp. 7-9.

2. Under applicable Tennessee decisional law, which draws a line between utility bills that are the subject of a bona fide dispute and those that are not, a utility may not terminate service "at will" but only "for cause," and hence respondents assert a "legitimate claim of entitlement" within the protection of the Due Process Clause of the Fourteenth Amendment. Pp. 9-12.

3. Petitioners deprived respondents of an interest in property without due process of law. Pp. 12-22.

(a) Notice in a case of this kind does not comport with constitutional requirements when it does not advise the customer of the availability of an administrative procedure for protesting a threatened termination of utility services as unjustified, and since no such notice was given respondents, despite "good faith efforts" on their part, they were not accorded due notice. Pp. 13-15.

(b) Due process requires, at a minimum, the provision of an opportunity for presenting to designated personnel empowered to rectify error a customer’s complaint that he is being overcharged or charged for services not rendered, and here such a procedure was not made available to respondents. The customer’s interest in not having services terminated is self-evident, the risk of erroneous deprivation of services is not insubstantial, and the utility’s interests are not incompatible with affording the notice and procedure described above. Mathews v. Eldridge, 424 U.S. 319. Pp. 16-19.

(c) The available common law remedies of a pre-termination injunction, a post-termination suit for damages, and a post-payment action for a refund do not suffice to cure the inadequacy in petitioner utility’s procedures. The cessation of essential utility services for any appreciable time works a uniquely final deprivation, and judicial remedies are particularly unsuited to resolve factual disputes typically involving sums too small to justify engaging counsel or bringing a lawsuit. Pp. 19-22.

534 F.2d 684, affirmed.

POWELL, J., delivered the opinion of the Court, in which BRENNAN, STEWART, WHITE, MARSHALL, and BLACKMUN, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BURGER, C.J., and REHNQUIST, J., joined, post, p. 22.