Source: https://supreme.justia.com/cases/federal/us/436/1/
Timestamp: 2019-04-22 06:03:04+00:00

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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.
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. 436 U. S. 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. 436 U. S. 9-12.
3. Petitioners deprived respondents of an interest in property without due process of law. Pp. 436 U. S. 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. 436 U. S. 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. 436 U. S. 16-19.
particularly unsuited to resolve factual disputes typically involving sums too small to justify engaging counsel or bringing a lawsuit. Pp. 19-22.
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. 436 U. S. 22.
This is an action brought under 42 U.S.C. § 1983 by homeowners in Memphis, Tenn. seeking declaratory and injunctive relief and damages against a municipal utility and several of its officers and employees for termination of utility service allegedly without due process of law. 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. The Court of Appeals reversed in part. We granted certiorari to consider this constitutional question of importance in the operation of municipal utilities throughout the Nation.
Memphis Light, Gas and Water Division (MLG&W) [Footnote 1] is a division of the city of Memphis which provides utility service.
It is directed by a Board of Commissioners appointed by the City Council, and is subject to the ultimate control of the municipal government. As a municipal utility, MLG&W enjoys a statutory exemption from regulation by the state public service commission. Tenn.Code Ann. §§ 1306, 1317 (19,71).
Willie S. and Mary Craft, respondents here, [Footnote 2] reside at 1019 Alaska Street in Memphis. When the Crafts moved into their residence in October, 1972, they noticed that there were two separate gas and electric meters and only one water meter serving the premises. The residence had been used previously as a duplex. The Crafts assumed, on the basis of information from the seller, that the second set of meters was inoperative.
1974. During this period, the Crafts' utility service was terminated five times for nonpayment.
"On one occasion when Mrs. Craft was attempting to avert a utilities termination, after final notice, she called the defendant's offices and explained that she had paid a bill, but was given no satisfaction. The procedure for an opportunity to talk with management was not adequately explained to Mrs. Craft, although she repeatedly tried to get some explanation for the problems of two bills and possible duplicate charges."
"[n]one of the individual plaintiffs [was] deprived of [a] due process opportunity to be heard, nor did the circumstances indicate any substantial deprivation except in the possible instance of Mr. and Mrs. Craft."
incurred by [them] with respect to terminations which should have been unnecessary had effectual relief been afforded them as requested."
"provide more specific information about customer service locations and personnel available to work out extended payment plans or adjustments of accounts in genuine hardships or appropriate situations."
On appeal, the Court of Appeals for the Sixth Circuit affirmed the District Court's refusal to certify a class action, but held that the procedures accorded to the Crafts did not comport with due process. 534 F.2d 684 (1976).
On July 12, 1976, petitioners sought a writ of certiorari in this Court to determine (i) whether the termination policies of a municipal utility constitute "state action" under the Fourteenth Amendment; (ii) if so, whether a municipal utility's termination of service for nonpayment deprives a customer of "property" within the meaning of the Due Process Clause; and (iii) assuming "state action" and a "property" interest, whether MLG&W's procedures afforded due process of law in this case. [Footnote 6] On February 22, 1977, we granted certiorari. 429 U.S. 1090. We now affirm.
'case or controversy,' Richardson v. Ramirez, 418 U. S. 24 (1974). . . ."
Sosna v. Iowa, 419 U. S. 393, 419 U. S. 398 (1975).
As the case comes to us, the only remaining plaintiffs are respondents Willie S. and Mary Craft. Since the Court of Appeals affirmed the District Court's refusal to certify a class, the existence of a continuing "case or controversy" depends entirely on the claims of respondents. Cf. Sosna v. Iowa, supra at 419 U. S. 399, 419 U. S. 402. It appears that respondents no longer desire a hearing to resolve a continuing dispute over their bills, as the double-meter problem has been clarified during this litigation. [Footnote 7] Nor do respondents aver that there is a present threat of termination of service.
"An injunction can issue only after the plaintiff has established that the conduct sought to be enjoined is illegal and that the defendant, if not enjoined, will engage in such conduct."
United Transportation Union v. Michigan Bar, 401 U. S. 576, 401 U. S. 584 (1971). Respondents insist, however, that the case is not moot, because they seek damages and declaratory relief and because the dispute that occasioned this suit is "capable of repetition, yet evading review." Tr. of Oral Arg. 456.
validity of respondents' claim for damages, [Footnote 8] that claim is not so insubstantial or so clearly foreclosed by prior decisions that this case may not proceed.
The Fourteenth Amendment places procedural constraints on the actions of government that work a deprivation of interests enjoying the stature of "property" within the meaning of the Due Process Clause. Although the underlying substantive interest is created by "an independent source such as state law," federal constitutional law determines whether that interest rises to the level of a "legitimate claim of entitlement" protected by the Due Process Clause. Board of Regents v. Roth, 408 U. S. 564, 408 U. S. 577 (1972); Perry v. Sindermann, 408 U. S. 593, 408 U. S. 602 (1972).
The outcome of that inquiry is clear in this case. In defining a public utility's privilege to terminate for nonpayment of proper charges, Tennessee decisional law draws a line between utility bills that are the subject of a bona fide dispute and those that are not.
to the general rule exists when the customer has a bona fide dispute concerning the correctness of the bill. Steele v. Clinton Electric Light & Power Co., 12 Conn.180, 193 A. 613, 615 (1937); Annot., 112 A.L.R. 237, 241 (1938); see also 43 Am.Jur., Public Utilities and Services, Sec. 65; Annot., 28 A.L.R. 475 (1924). If the public utility discontinues service for nonpayment of a disputed amount, it does so at its peril, and if the public utility was wrong (e.g., customer overcharged), it is liable for damages. Sims v. Alabama Water Co., 205 Ala. 378, 87 So. 688, 690, 28 A.L.R. 461 (1920)."
assert a "legitimate claim of entitlement" within the protection of the Due Process Clause.
"An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections."
Mullane v. Central Hanover Trust Co., 339 U. S. 306, 339 U. S. 314 (1950) (citations omitted). The issue here is whether due process requires that a municipal utility notify the customer of the availability of an avenue of redress within the organization should he wish to contest a particular charge.
"If you are having difficulty paying your utility bill, bring your bill to our neighborhood credit counselors for assistance. Your utility bills may be paid here also."
"If you are having difficulty paying your utility bill and would like to discuss a utility payment plan, or if there is any dispute concerning the amount due, bring your bill to the office at . . . , or phone. . . ."
Id. at 688 n. 4.
Our decision in Mathews v. Eldridge, 424 U. S. 319 (1976), provides a framework of analysis for determining the "specific dictates of due process" in this case.
or substitute procedural requirement would entail."
Id. at 424 U. S. 334-335.
service after affording this opportunity and concluding that the amount billed was justly due.
The injunction remedy referred to by petitioners would not be an adequate substitute for a pre-termination review of the disputed bill with a designated employee. Many of the Court's decisions in this area have required additional procedures to further due process, notwithstanding the apparent availability of injunctive relief or recovery provisions. It was thought that such remedies were likely to be too bounded by procedural constraints and too susceptible of delay to provide an effective safeguard against an erroneous deprivation. [Footnote 26] These considerations are applicable in the utility termination context.
remedy, along the lines suggested above, constitutes the process that is "due."
Because of the failure to provide notice reasonably calculated to apprise respondents of the availability of an administrative procedure to consider their complaint of erroneous billing, and the failure to afford them an opportunity to present their complaint to a designated employee empowered to review disputed bills and rectify error, petitioners deprived respondents of an interest in property without due process of law.
Although MLG&W is listed as one of the petitioners, the District Court dismissed the action as to the utility itself because "a municipality or governmental unit standing in that capacity is not a person' within the meaning" of § 1983. Pet. for Cert. 43. The Court of Appeals did not disturb that determination, and respondents have not sought review of the point in this Court. The individual petitioners, who are sued in both their official and personal capacities, are the utility's president and general manager, vice-president, members of the Board of Commissioners, and two employees who have had responsibility for terminating utility services. They will be referred to throughout as either "MLG&W" or "petitioners."
Of those who brought the original action, only the Crafts remain. The parties have not sought review in this Court of the rulings made below with respect to the other plaintiffs.
The city service fee is a separate item on the regular utility bill, as required by municipal ordinance.
The District Court's conclusion was advanced with little explanation, other than a reference to MLG&W's credit extension program. In an earlier discussion, the opinion offered a description of the utility's procedures. First, the court listed the steps involved in a termination: (i) Approximately four days after a meter reading date, a bill is mailed to the service location or other address designated by the customer. The last day to pay the net amount would be approximately 20 days after the meter reading date. (ii) Approximately 24 days after the meters are read, a "final notice" is mailed stating that services will be disconnected within four days if no payment is received or other provision for payment is made. (iii) Electric service is then terminated by the meter reader, unless the customer assures him that payment is in the mail, shows a paid receipt, or explains that nonpayment was due to illness. If there is no communication prior to termination, the meter reader or serviceman is instructed to leave a cutoff notice giving information about restoration of service. (iv) Approximately five days after the electric service cutoff, the remaining services are terminated if the customer has not paid the bill or made other arrangements for payment. Pet. for Cert. 34-36.
The court also noted that, on or about March 1, 1973, MLG&W instituted an "extended payment plan." This generous program allows customers able to demonstrate financial hardship to pay only one-half of a past-due bill, with the balance to be paid in equal installments over the next three bills. The plaintiffs in this action were participants in the plan. Id. at 36.
"Credit counselors assist customers who have difficulty with payments or disputes concerning their bills with MLG&W. If those counselors cannot satisfy the customer, then the customer is referred to management personnel, generally, the chief clerk in the department; then the supervisor in credit and collection. In addition, a dissatisfied customer may appeal to the Board of Commissioners of MLG&W as to complaint regarding bills, service, termination of service or any other matter relating to the operation of the Division. A customer may, if he so desires, be accompanied by an appropriate representative. The billing of customers, the determination as to when a final notice is sent, and the termination of service [are] governed by policies, rules and regulations adopted and approved by the Board of Commissioners of MLG&W."
In its order filed on December 30, 1974, the court acknowledged that defendants had issued the recommended credit and "instituted some new procedures which will give more definitive and adequate notice to customers of possible or impending cut-off of services." Id. at 49. See n 16, infra.
Petitioners have abandoned their contention that "state action" is not present in this case. Brief for Petitioners 44.
"Not until after the action was filed were the Crafts able to discover that they continued to receive double computer billings because MLG&W failed to combine the two accounts properly (A. 146-150), or that, as a result of the double computer billings, MLG&W had overcharged them for gas service and city service fees."
"[o]f the balance claimed by MLG&W in March, 1974, some involved possible gas overcharges and double or duplicate billings with respect to city service fees."
Pet. for Cert. 39. Presumably, respondents also seek recovery for the loss of pay occasioned by Mrs. Craft's several visits to the offices of MLG&W "which should have been unnecessary had effectual relief been afforded them as requested." Id. at 46.
While not urging mootness, petitioners assert that their compliance with the District Court's recommendation that a $35 credit be issued to the Crafts removes any claim for damages from this case. We do not understand the District Court's suggestion to have been an award of damages. The validity of the damages claim is a matter for initial determination by the courts below.
Tennessee's formulation of a public utility's privilege to terminate service for nonpayment of an undisputed charge is in accord with the common law rule. See generally 64 Am.Jur.2d Public Utilities §§ 63-64 (1972); Annot., 112 A.L.R. 237, 241 (1938); Note, The Duty of a Public Utility to Render Adequate Service: Its Scope and Enforcement, 62 Colum.L.Rev. 312, 326 (1962).
Petitioners attempt to avoid the force of Trigg by referring to several Tennessee decisions which state the general rule that a utility may terminate service for nonpayment of undisputed charges or noncompliance with reasonable rules and regulations. These authorities, however, do not cast doubt upon the exception recognized in Trigg for a customer who tenders the undisputed amount, but withholds complete payment because of a bona fide dispute. See Patterson v. Chattanooga, 192 Tenn. 267, 241 S.W.2d 291 (1951); Farmer v. Nashville, 127 Tenn. 509, 156 S.W. 189 (1913); Jones v. Nashville, 109 Tenn. 560, 72 S.W. 985 (1903); Cruley v. Watauga Water Co., 99 Tenn. 420, 41 S.W. 1058 (1897); Watauga Water Co. v. Wolfe, 99 Tenn. 429, 41 S.W. 1060 (1897).
"[t]he tenant did not have to post security in order to remain in possession before a hearing; rather, he had to post security only in order to obtain a continuance of the hearing. . . . [T]he tenant was not deprived of his possessory interest even for one day without opportunity for a hearing."
Fuentes v. Shevin, 407 U. S. 67, 407 U. S. 85 n. 15 (1972) (emphasis in original) .
"the Court concluded that, because the employee could only be discharged for cause, he had a property interest which was entitled to constitutional protection."
Bishop v. Wood, 426 U. S. 341, 426 U. S. 345 n. 8 (1976). See Arnett v. Kennedy, supra at 416 U. S. 166 (POWELL, J., concurring in part); cf. Board of Regents v. Roth, 408 U. S. 564, 408 U. S. 578 (1972).
The Court of Appeals did refer to its earlier decision in Palmer v. Columbia Gas of Ohio, Inc., 479 F.2d 153 (1973), which approved a comprehensive remedy for a due process violation, including investigation of every communicated protest by a management official, provision of a hearing before such an official, and an opportunity to stay the termination upon the posting of an appropriate bond. Id. at 159-160, 168-169. These procedures were fashioned in response to findings, based on uncontradicted evidence, of hostility and arrogance on the part of the collection-oriented clerical employees, id. at 168. No such findings were made here, and the Court of Appeals' ruling did not purport to require a similar remedy in this case.
Respondents do request certain additional procedures: "an impartial decisionmaker," who may be a responsible company official; "the opportunity to present information and rebut the records presented"; and "a written decision," which apparently can be rendered after termination or payment. Tr. of Oral Arg. 28, 31; Brief for Respondents 31. As respondents have not cross-petitioned, cf. Strunk v. United States, 412 U. S. 434, 412 U. S. 437 (1973), we do not decide whether -- or under what circumstances -- any of these additional procedures may be appropriate. We do note that the magnitude of the numbers of complaints of overcharge would be a relevant factor in determining the appropriateness of more formal procedures than we approve in this case. The resolution of a disputed bill normally presents a limited factual issue susceptible of informal resolution.
We do not understand the District Court's reference to "an opportunity to talk with management" as implying necessarily that Mrs. Craft should have been given an opportunity to discuss her bills with corporate officers of MLG&W. Rather, the point was that Mrs. Craft was not informed of the opportunity to meet with designated personnel who were duly authorized to review disputed bills with complaining customers and to correct any errors.
Pet. for Cert. 39. William T. Mullen, secretary-treasurer of MLG&W, testified that the utility processed 33,000 "high bill" complaints in 1973. App. 130. He conceded, however, that no description of a dispute resolution process was ever distributed to the utility's customers, id. at 162-163, 176, and there is no indication in the record that a written account of such a procedure was accessible to customers who had complaints about their bills. Mrs. Craft's case reveals that the opportunity to invoke that procedure, if it existed at all, depended on the vagaries of "word of mouth referral," id. at 163.
See, e.g., Wolff v. McDonnell, 418 U. S. 539, 418 U. S. 564 (1974); Morrissey v. Brewer, 408 U. S. 471, 408 U. S. 486-487 (1972); In re Gault, 387 U. S. 1, 387 U. S. 33 (1967); Anti-Fascist Committee v. McGrath, 341 U. S. 123, 341 U. S. 171-172 (1951) (Frankfurter, J., concurring).
"Credit Counselors are available to clear up any questions, discuss disputed bills or to make any needed adjustments. There are supervisors and other management personnel available if you are not satisfied with the answers or solutions given by the Credit Counselors."
"maintain a set of rules and regulations regarding the adjustment of all complaints which may be made to the district concerning . . . the adjustment of bills,"
and that such rules "be posted or otherwise available for convenient inspection by customers and members of the public in the offices of the district. . . ." Tenn.Code Ann. § 6-2618(b) (Supp. 1977).
"[A] hearing, in its very essence, demands that he who is entitled to it shall have the right to support his allegations by argument, however brief, and, if need be, by proof, however informal."
Londoner v. Denver, 210 U. S. 373, 210 U. S. 386 (1908). The opportunity for informal consultation with designated personnel empowered to correct a mistaken determination constitutes a "due process hearing" in appropriate circumstances. See, e.g., Goss v. Lopez, 419 U. S. 565, 419 U. S. 581-584 (1975). See generally Friendly, "Some Kind of Hearing," 123 U.Pa.L.Rev. 1267 (1975).
In Goss v. Lopez, supra at 419 U. S. 568 n. 2, and 419 U. S. 583, the Court noted that an informal disciplinary procedure obtaining at the particular high school "was not followed in this case."
"duplicate and unnecessary charges made and expenses incurred by [them] with respect to terminations which should have been unnecessary had effectual relief been afforded them as requested."
"[T]he MLG&W notice fails to mention 'that a dispute concerning the amount due might be resolved through discussion with representatives of the company,'"
534 F.2d 684, 688 (1976), and "only warns the customer to pay or face termination." Id. at 688-689, and n. 4. And that the Court of Appeals found an absence of a constitutional hearing is the only sound way to read its statement that the utility "provides no avenue for customers who . . . dispute the existence of the liability (Crafts)." Id. at 689.
These findings are not undermined, as the dissent suggests, by Mrs. Craft's ability ultimately to glean some understanding of her billing problem after several, time-consuming trips to MLG&W's office -- in the District Court's words, after "she repeatedly tried to get some explanation for the problems of two bills aud possible duplicate charges." Nor are they placed in question by the fact that an employee of uncertain authority told Mrs. Craft, apparently without explanation or attempt at investigation, "[w]ell, you have to pay on the other" bill. App. 91. Fundamental fairness, not simply considerations of "courteous" treatment of customers, post at 436 U. S. 25 n. 7, informs the constitutional requirement of notice and the actual provision of a timely opportunity to meet with designated personnel who are duly authorized to review disputed bills and to correct any errors.
In recent years, Congress has been concerned by the problems of computer error. See, e.g., S.Rep. No. 93-278, p. 5 (1973) (billing errors in consumer credit transactions); Senate Committee on Government Operations, Problems Associated with Computer Technology in Federal Programs and Private Industry: Computer Abuses, 94th Cong., 2d Sess. (Comm.Print 1976).
See, e.g., Palmer v. Columbia Gas of Ohio, Inc., 479 F.2d at 158; Davis v. Weir, 497 F.2d 139, 142 (CA5 1974); Bronson v. Consolidated Edison Co. of New York, 350 F.Supp. 443, 448 n. 11 (SDNY 1972) (16% of the complaints investigated by New York Public Service Commission resulted in adjustments in favor of the customer).
Because petitioners provide for at least a 30-day period between the mailing of the bill and the actual termination of service, Brief for Petitioners 28, it is unlikely that the informal procedure required in this case will occasion material delay in payment. The public utility enjoys a broad discretion in the scheduling and structuring of this "hearing," provided that the customer is afforded adequate time for effective presentation of his complaint prior to termination.
This contention was advanced only obliquely in the Court of Appeals. Brief for Appellees in No. 75-1350 (CA6), p. 27.
In Ingraham, the Court held that "advance procedural safeguards" were not constitutionally required in the context of disciplinary paddling in the schools because the ability of the teacher to observe directly the infraction in question, the openness of the school environment, the visibility of the confrontation to other students and faculty, and the likelihood of parental reaction to unreasonable punishment, gave assurance that "the risk that a child will be paddled without cause is typically insignificant." 430 U.S. at 430 U. S. 677-678. Similarly, in Dixon v. Love, 431 U. S. 105, 431 U. S. 113 (1977), we held that an evidentiary hearing need not precede revocation of a driver's license based on repeated traffic offenses within the previous 10-year period, for "appellee had the opportunity for a full judicial hearing in connection with each of the traffic convictions on which the . . . decision was based."
Petitioners assert that they are under an obligation to provide nondiscriminatory service to their customers, and that continued provision of service to a delinquent customer pending an informal hearing would involve "discriminating against the ratepayer. . . ." Tr. of Oral Arg. 5.
It is far from clear that any material delay in payment will occur from an informal conference that can be scheduled well in advance of the date of termination, see n 22, supra. In any event, as is demonstrated by MLG&W's credit plan, see n 4, supra, delayed payment is not nonpayment, and there are means available to MLG&W to recover at least some of the costs of a hearing, see, e.g., App. 114, 117 (imposition of gross, rather than net, charges for late payment).
See, e.g., Goss v. Lopez, 419 U.S. at 419 U. S. 581-582, n. 10; North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U. S. 601, 419 U. S. 603, 419 U. S. 607 (1975); Fuentes v. Shevin, 407 U.S. at 407 U. S. 85, and n. 15; Sniadach v. Family Finance Corp., 395 U. S. 337, 395 U. S. 343 (1969) (Harlan, J., concurring); Bell v. Burson, 402 U. S. 535, 402 U. S. 536 (1971).
The dissent intimates that due process was satisfied in this case because "a customer can always avoid termination by the simple expedient of paying the disputed bill and claiming a refund. . . ." Post at 436 U. S. 28. This point ignores the predicament confronting many individuals who lack the means to pay additional, unanticipated utility expenses. Even under MLG&W's admirable credit procedures, the customer must make immediate payment of one-half of a disputed past due bill, with the balance to be paid in three equal installments, in addition to current charges. Contrary to the dissent's suggestion, this Court's decision in Lindsey v. Normet, 405 U. S. 56 (1972), did not uphold a procedure that conditioned a tenant's continued possession on payment of "the back rent, an obligation which he disputed." Post at 436 U. S. 29 n. 11. Under the procedure upheld in Lindsey, certain tenant defenses were excluded, but the landlord still had to prove nonpayment of rent due or a holding contrary to some covenant in the lease before the tenant could be deprived of possession. See 405 U.S. at 405 U. S. 65; n 10, supra.
This understanding informs the common law privilege of the utility to terminate service for nonpayment of just charges.
"An obvious reason [for the privilege] is that to limit the remedy of collection of compensation for the service to actions at law would be impracticable, as leading to an infinite number of actions to collect very small bills against scattered consumers, many of them mere renters and financially irresponsible."
Steele v. Clinton Electric Light & Power Co., 123 Conn.180, 184, 193 A. 613, 615 (1937); see Jones v. Nashville, 109 Tenn. at 560, 72 S.W. at 987.
As early as 1874, the Wisconsin Supreme Court held that the State Attorney General could obtain an injunction against a public utility threatening a wrongful termination because private persons would be unlikely to take action themselves to correct "the little wrongs which go so far to make up the measure of average prosperity of life." Attorney General v. Chicago & N.W. R. Co., 35 Wis. 425, 530-531.
MR JUSTICE STEVENS, with whom THE CHIEF JUSTICE and MR. JUSTICE REHNQUIST join, dissenting.
In my judgment, the Court's holding confuses and trivializes the principle that the State may not deprive any person of life, liberty, or property without due process of law. I have no quarrel with the Court's conclusion that, as a matter of Tennessee law, a customer has a legitimate claim of entitlement to continued utility services as long as the undisputed portions of his utility bills are paid. For that reason, a municipality may not terminate utility service without giving the customer a fair opportunity to avoid termination either by paying the bill or questioning its accuracy. I do not agree, however, that this record discloses any constitutional defect in the termination procedures employed by the Light, Gas and Water Division of the City of Memphis (Division).
opportunity to meet with an employee who had the authority to settle billing disputes. Ante at 436 U. S. 18. Whether we consider the evidence describing the unusual dispute between the Crafts and the Division, or the evidence concerning the general operation of the Division's collection procedures, I find no basis for concluding that either of the Court's criticisms is justified; its conclusion that a constitutional violation has been proved is truly extraordinary.
The District Court did not find that the Division's notice was defective in any respect, or that its regular practices were not adequate to handle the Crafts' unusual problems. The Crafts' dispute with the Division stemmed from the use of two sets of meters to measure utility consumption in different parts of the Crafts' home. Ante at 436 U. S. 4. The Crafts, believing they were being billed twice for the same utilities, did not pay on the second account. In fact, the two accounts were independent; because the Crafts refused to pay the balance on the second account, the Division terminated their service on several occasions. [Footnote 2/5] The District Court expressly found that the Division sent a final notice before each termination.
would not be sufficient to constitute fair notice. For example, if the notice describes a threatened loss which can only follow a prescheduled hearing, it must also inform the recipient of the time and place of the hearing. But I do not understand the Court to require municipal utilities to schedule a hearing before each termination notice is mailed. The Court seems to assume, as I do, that no hearing of any kind is necessary unless the customer has reason to believe he has been overcharged. Such a customer may protest his bill in either of two ways: he may communicate directly with the utility or he may seek relief in court. In this case, the Court finds the Division's notice constitutionally defective because it does not describe the former alternative.
The Division must "advise the customer of the availability of a procedure for protesting a proposed termination of utility service as unjustified." Ante at 436 U. S. 15. That advice is much less valuable to the customer than an explanation of the legal remedies that are available if a wrongful termination should occur. Yet the Court wisely avoids holding that the customer must be given that sort of legal advice. The advice the Court does require is wholly unnecessary in all but the most unusual situations. For a homeowner surely need not be told how to complain about an error in a utility bill; it is, of course, helpful to include the telephone number and office address in the termination notice, but our democratic government would cease to function if, as the Court seems to assume, our citizenry were unable to find such information on their own initiative. The Court's holding that the Division's notice was constitutionally defective rests on a paternalistic predicate that I cannot accept.
objection. Distinctions of this small magnitude are the appropriate concern of administrative rulemaking; they are too trivial to identify constitutional error.
In deciding that more process is due, the Court relies on two quite different hypothetical considerations. First, the Court stresses the fact that disconnection of water or heating "may threaten health and safety." Ante at 436 U. S. 18. Second, the Court discounts the value of the protection afforded by the available judicial remedies because the "factual disputes typically [involve] sums of money too small to justify engaging counsel or bringing a lawsuit." Ante at 436 U. S. 21. Neither of these examples is disclosed by this record. The Crafts' dispute involved only a relatively small amount, but they did obtain counsel, and thereafter they encountered no billing problems.
rare, if indeed it exists at all. [Footnote 2/12] When a true emergency does present a serious threat to health or safety, the customer will have ample motivation to take the important step of consulting counsel or filing suit even if the amount of his disputed bill is small. A potential loss of utility service sufficiently grievous to qualify as a constitutional deprivation can hardly be too petty to justify invoking the aid of counsel or the judiciary. Conversely, routine billing disputes too petty for the bench or the bar can hardly merit extraordinary constitutional protection.
Even if the customer does not consult counsel in a specific case, the potential damages remedy nevertheless provides far more significant protection against an unjustified termination than does the vague requirement of "some kind of hearing." Without the threat of damages liability for mistakes, the informal procedures required today would neither qualify the utility's ultimate power to enforce collection by terminating service nor deter the exercise of that power. On the other hand, even without specific informal procedures, the danger of substantial liability will, by itself, ensure careful attention to genuine customer disputes. The utility's potential liability therefore provides customers with real pre-termination protection even though damages may not be recovered until later.
by the record in this judicial proceeding, but rather is justified on the basis of hypothetical examples, information gleaned from cases not before us, and legislative reports. See ante at 436 U. S. 18 nn. 20 and 21. These justifications suggest that the Court's new rule is the product of a policy determination, rather than a traditional construction of the Constitution. As judges, we have experience in appraising the fairness of legal remedies and judicial proceedings, but we have no similar ability to balance the cost of scheduling thousands of billing conferences against the benefit of providing additional protection to the occasional customer who may be unable to forestall an unjustified termination.
It is an unfortunate fact that, when the State assesses taxes or operates a utility, it occasionally overcharges the citizen. It is also unfortunate that effective collection procedures sometimes require the citizen to pay an unjust charge in order to forestall a serious deprivation of property. But if the State has given the citizen fair notice and afforded him procedural redress which is entirely adequate when invoked by his lawyer, the demands of the Due Process Clause are satisfied. I do not believe the Constitution requires the State to employ procedures that are so simple that every lay person can always act effectively without the assistance of counsel.
During the six months from September, 1973, through February, 1974, there were 11,216 so-called delinquent cutoffs. App. 74.
The request to contact the credit department is contained in an enclosed "flyer," which also identifies the appropriate neighborhood location to be visited for credit assistance.
See 534 F.2d 684, 688 (CA6 1976).
App. 126 and 161. Information center employees may also refer customers who complain about a high bill to a special unit that sends investigators to check for possible leaks or defects in the meter. Id. at 178.
The trial judge evidently accepted the Division's claim that it was engaged in "split billing," rather than "double billing." The judge did express the "hope," as a matter of "simple equity," that the Division would issue a credit of $35 to cover duplicate and unnecessary charges and expenses incurred with respect to termination, but the amounts challenged by the Crafts as the result of "double billing" were considerably larger than $35. The reference to duplicate charges apparently concerns the $2.50 per month city service fee which was charged on each set of meters in the duplex until after they were consolidated. The unnecessary expense reference apparently covers both the time lost from work while Mrs. Craft was trying to straighten out their billing and the cost attributable to the termination. The District Court appears to have been persuaded that those costs could have been avoided if the Crafts had been given more help in the early stages of their dispute.
The District Court stated that the "procedure for an opportunity to talk with the management was not adequately explained to Mrs. Craft." The District Court was evaluating the Division's explanation of its procedures; the court's statement does not mean that Mrs. Craft never met with a responsible official able to resolve her dispute.
It is worth remembering that the Crafts' double-billing problem was eventually solved, and that the solution could only have been effected by a Division employee empowered to do so. Moreover, Mrs. Craft testified on direct examination that, after being cut off, she went to the Division's office with the record of her payments on one account. She was told that she had to pay on the other account as well. Id. at 91. In other words, an official of the Division did resolve the Crafts' dispute, correctly as it turned out. See n. 5, supra. The Division's procedures would not be unconstitutional even if we assumed that Division employees, like federal judges, are occasionally discourteous and occasionally make mistakes. The Due Process Clause does not guarantee a correct or a courteous resolution of every dispute.
It tells the customer that a cutoff is imminent and it allows the customer enough time to avoid a cutoff by paying under protest, by contacting the information center, or by beginning a legal action.
See nn. 6 and 7, supra.
A careful reading of the decision below and this Court's decision indicates that the Court has modified as well as affirmed the Sixth Circuit's view of procedural due process in a utility context. The Court of Appeals thought that this case was controlled by its earlier decision in Palmer v. Columbia Gas of Ohio, Inc., 479 F.2d 153 (1973). Palmer ordered that cutoff notices be delivered personally by utility servicemen or sent by certified mail, return receipt requested. Id. at 159 and 166-167. The notice had to tell customers about available credit programs, as well as possible dispute-resolving procedures. Ibid. The Palmer court also specified that the utility's hearing officer had to send -- by certified mail -- a written, individual response to every complaining customer before authorizing a cutoff. Id. at 159-160, n. 9, and 167-169. Although the Division's failure to observe these procedures was the foundation of the Court of Appeals' ruling below, the Court quite clearly does not approve the lower court's view that these procedures are constitutionally mandated.
If there is no constitutional objection to requiring a tenant to pay a disputed charge in order to retain possession of his home, I do not understand why there should be a more serious objection to requiring payment of a lesser charge in order to retain utility service. In Lindsey v. Normet, 405 U. S. 56, a tenant sought to defend a possessory action brought by his landlord for nonpayment of rent on the ground that the premises were uninhabitable, and therefore there was no obligation to pay the rent. State law did not permit such a defense in a possessory action. In order to litigate that particular dispute, the tenant had to bring his own action against the landlord. If the tenant had not in fact paid the disputed rent, the landlord would prevail in the possessory action. Thus, in order to retain possession while litigating the dispute, the tenant not only had to pay the accruing rent (a requirement upheld in Lindsey, supra at 405 U. S. 65), but also had to pay the back rent, an obligation which he disputed. If he did not pay the back rent, he would lose in the possessory action, and therefore would lose possession while he was prosecuting his own suit against the landlord. Thus, the Court sustained a procedure which required the payment of disputed charge in order to maintain the status quo while litigating the dispute.
Even the customer who is unable to pay his bill in full may forestall termination by a partial payment. Ante at 436 U. S. 5-6, n. 4. Perhaps this Court fashions its rule for the benefit of those customers who are unable to make even a partial payment. But if such persons cannot pay current, undisputed bills, their service may be terminated despite a bona fide dispute over a past bill; for no one has a constitutional right to free utility service.

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