Opinion ID: 1694090
Heading Depth: 1
Heading Rank: 5

Heading: was there a due process violation?

Text: This case was brought solely on the contention that Miss. Code Ann. § 77-3-39 violated the due process provision of Article 3, Section 14 of the Mississippi Constitution. Counsel for Mrs. Goudy were astute enough to eschew any claim that the statute violated the 14th Amendment to the U.S. Constitution, because there is a formidable array of authority to the contrary. This likewise enabled the chancellor to escape giving any consideration to the 14th Amendment. He held there was a difference between our state constitution and the federal, and because of this different burden placed upon the utilities and the Commission under our state constitution, the statute was unconstitutional. This reasoning is fallacious. Ordinarily, we might be able to terminate this discussion by demonstrating the fallacy of the contention that somehow there is a difference between the due process provision of the Mississippi and the United States Constitutions. This, however, is a blind trail and does not address the really important due process question that bothers every Justice on this Court. The central question is: does this statutory authority permitting a utility company to raise the rates it is going to charge in the future, and prior to a hearing determining what constitutes a fair and reasonable rate, violate due process? Due process has been addressed by courts in so many different ways and defined in so many situations, it would take a lifetime just to read the cases. There is nothing mysterious about the term, however. To most of us its central meaning simply is even handed fairness in legal proceedings. Going further, at first blush it would appear that there is very good authority from the United States Supreme Court itself that the above question would have to be answered in the affirmative. In Fuentes v. Shevin, 407 U.S. 67, 32 L.Ed.2d 556, 92 S.Ct. 1983, cited in the dissenting opinion, replevin statutes in Florida and Pennsylvania were declared to be violative of the Fourteenth Amendment because they permitted plaintiffs in replevin actions to have personal property seized and delivered to them upon making affidavit and a bond, but prior to any adversary hearing. And, in Armstrong v. Manzo, 380 U.S. 545, 85 S.Ct. 1187, 14 L.Ed.2d 62, the Supreme Court nullified an adoption proceeding in a Texas state court under a statute which, under certain circumstances, authorized an adoption hearing and judgment without the natural father being personally served. Not only every lawyer, but most citizens are aware that no court can, under our Constitutions, take away property or valuable rights from any person without giving him fair notice and an opportunity to be heard. [4] Under our state law consumers are entitled to fair and reasonable rates from utility companies. It may well be asked then: is it not unfair and violative of due process notions to permit a utility company to announce a raise in future rates without first having it determined by a commission or court, or both, that this proposed new rate is fair and reasonable? This question goes to the very heart of the matter, and must be answered. A utility company states that beginning one month from this date it is going to increase its monthly charge. Should I be required to pay this increase when there is a possibility that it will later be determined in legal proceedings that part or all of the increase is unreasonable? Or, should the utility company be prevented from increasing its rate in any amount until it has been determined in a commission hearing and on appeal through the courts that its proposed increase is reasonable and fair? This is the balancing of rights with which we are faced. The consumer has the unquestioned right under our law that the rates he is charged by a monopoly will be fair and reasonable. On the other hand, the utility has the unquestioned right under our law to receive a fair and reasonable return for the services it renders. Both the consumer and the utility unquestionably have valuable, imbedded rights under our law. [5] We thus have a scale. On one side is the fair and reasonable rate to which the consumer is entitled, and on the other side the fair and reasonable return to which the utility is entitled. We attempt through our public service commission to keep this scale evenly balanced. Yet, it is an economic impossibility that this scale at all times be evenly balanced. It is impractical, illusory to suppose that, given the economic conditions, the variables in the costs of running a multimillion dollar business enterprise such as a utility, there will not be periods of time when the scale is tilted one way or another. The utility company is a profit making enterprise, run by businessmen, and no doubt will seek to charge the rate it thinks the traffic will bear. And, it must, at a minimum, receive enough to enable it to render efficient and continuous service. Finally, we can agree that permitting a utility company to put a proposed rate increase into effect under bond can possibly result in a financial windfall to the utility. This comes about by the company charging the increased rate over a period of time, sometimes as much as two years, with the court finally determining at least a part, perhaps even all, of the proposed increase was unreasonable. The company is then obligated to refund the increase plus the legal rate of interest to the consumer. On the other hand, it has saved itself from having to borrow money at a much higher rate of interest, or perhaps invested reserves at a higher rate of interest, which otherwise would have been spent in operating costs. Let us look at the other side of the coin. What happens if the law tells the utility it can make no rate increase until the proposal has run its course through the Commission and appellate courts? And, it is finally determined that a part or perhaps all of the proposed increase was indeed fair and reasonable? For the year or two this matter is pending in litigation, the utility company has been deprived of its right to a fair return on its investment, with possibly no hope of receiving those rates it would have charged in the interim. Would this pass a constitutional muster? Even if it were constitutional, would this necessarily be in the public interest? The company is going to have to get its money somewhere at greater expense and some time or another it is going to get it back through increased rates. The state has cost the company more in the interim, with the consumer eventually having to pay more than he otherwise would be paying, when the matter is finally settled. Aside from this, if our law is to prohibit an increase in rates until the legal proceedings are terminated, we will force utility companies to petition the Commission two or three years, or more, before a proposed rate increase, and we are going to have litigation based on speculation years into the future. And, one rate case will not be settled until there is another. In fact, we may have a single utility company with a series of proposed rate increases before the Commission and our courts at the same time. This could present an unsuperable burden upon the Commission, our courts, and the taxpayers. It may very well be more practical and fair in the final analysis to permit utilities to increase their rates on a relatively short notice, and our Commission can examine economic conditions as they presently exist, or will exist in the near future, and not as experts think and argue they will exist in some distant future. The Legislature in its wisdom may modify the law. The Legislature might decide to do more than simply require a refund plus legal interest on an increase later determined to be unreasonable. It could exact a stiffer penalty if a utility put an increase into effect more than ultimately found to be reasonable. It might even make it a crime on the part of the utility's officers and directors if the rate were found to amount to extortion. [6] But, these matters should be left solely with the Legislative branch of our government, which is capable of balancing the equities, the fairness and the practical problem faced. Courts are not equipped to do so. A decision on our part that no statute can be passed which permits a utility to raise rates prior to final hearing would put a straight-jacket on the Legislature we might all rue. [7] Thus far I have only attempted to give what to me are practical observations about this troublesome problem. Fortunately, the due process concept as expressed by our Courts in this state and elsewhere do not require a knee jerk reaction to Fuentes. We are authorized to recognize there can be differences in construing what does and does not violate due process, according to the circumstances. Justice Roy Noble Lee has covered the difference in his opinion so ably, I will not repeat what he has stated. We must first bear in mind that Miss. Code Ann. § 77-3-39 is a law affected with the public interest. The U.S. Supreme Court, speaking of the due process protection in a Federal proceeding under the Fifth Amendment, stated the following in Cafeteria Workers v. McElroy, 367 U.S. 886, p. 895, 81 S.Ct. 1743, p. 1748, 6 L.Ed.2d 1230, p. 1236: The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation... . Due process, unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances. It is compounded of history, reason, the past course of decisions ... This Court stated in Mississippi Tax Commission v. Flora Drug Co., 167 Miss. 1, 148 So. 373 (1933), p. 376: In passing upon an act of the Legislature to promote the public interest, we must allow a wide latitude, remembering that members of the Legislature may be more familiar with the situations and conditions. The Legislature has the power to make investigations and give painstaking consideration to the results thereof. In Albritton v. City of Winona, 181 Miss. 75, 178 So. 799 (1938), p. 805, we stated: The due process clauses of our constitutions must not be construed so as to put the state and federal governments into a straight-jacket and prevent them from adapting life to the continuous change in social and economic conditions. The history of the regulation of public utilities reveals the 1956 Act, from which Miss. Code Ann. § 77-3-39 and related sections are codified, is a restriction, not an expansion, of long settled rights of public utilities. The right of the consumer to reasonable rates from a utility exists under the common law, and aside from any statute. At the same time the public utility had the right to fix the charges it deemed reasonable. It was incumbent on the consumer to take the matter to court, and if the charge were found to be unreasonable, reparation would be awarded. See: Arizona Grocery Company v. Atchison, Topeka & Santa Fe Ry., 284 U.S. 370, 52 S.Ct. 183, 76 L.Ed. 369 (1931). And, in that case, speaking of the authority of the Interstate Commerce Commission, the Court states, 284 U.S. p. 384, 52 S.Ct. p. 184: That Act did not take from the carriers their power to initiate rates; that is the power in the first instance to fix rates, or to increase or to reduce them. In United Gas Pipe Line Company v. Memphis Light, Gas & Water Division, 358 U.S. 103, 79 S.Ct. 194, 3 L.Ed.2d 153 (1958), the U.S. Supreme Court held the initial rate-making and rate-changing power of natural gas companies remained undefined and unaffected by the Natural Gas Act and, like the seller of an unregulated commodity, having the right in the first instance to change its rates as it will. The Act came into play as to rate changes only in (1) imposing upon the seller the procedural requirement of filing timely notice of any proposed change, (2) giving the Federal Power Commission authority to review such change, and (3) authorizing the commission to suspend the new rates for a five-month period, and thereafter to require the posting of a refund bond pending a determination of the lawfulness of the rates as changed. Section 10, Chapter 372, Laws 1956 (§§ 77-3-37, 77-3-39) imposes the same kind of restriction upon a state regulated utility. The Act first requires that the utility, in order to make a rate change, must give the Commission at least 30 days prior notice of its proposed rate change. The Commission is then required to give the public notice of the proposed rate change. After giving the Commission notice, the utility is authorized to make the rate change unless there is a complaint filed, or the Commission on its own initiative directs a hearing concerning the lawfulness of the rate. Pending such hearing the Commission may suspend the operation of the proposed increase, that is, stop the increase going into effect, but not for a period longer than 90 days, with the further authority of the Commission to extend this 90-day period not to exceed six months from and after the date of the original notice from the utility. If the Commission by order suspends the operation of the proposed increase, the utility has the right to file a bond in a reasonable amount, approved by the Commission, which will authorize the utility to go ahead and put its rate increase into effect on the date it originally proposed (which must be at least 30 days after the first notice to the Commission), pending final outcome of the hearing. If the final order following the hearings is unfavorable to the utility, it has the right of appeal to the Chancery Court of the First Judicial District of Hinds County, under Section 26 of the Act (§ 77-3-67). Upon appeal, and pending its review, the Chancery Court, under Section 27 of the Act (§ 77-3-69) has the authority to suspend the final order of the Commission and permit the utility to continue charging the increased rate upon filing with the Court a reasonable bond, approved by the Court. After review by the Chancery Court, appeal may then be taken to this Court. No further bond is required to keep the increased rate in effect pending appeal in this Court, unless application therefor is made. Section 28 of the Act, Miss. Code Ann. § 77-3-71. The above statutory procedure was scrupulously followed in each of the three rate cases. Can this Court say that this procedure beyond all reasonable doubt was beyond the power of the Legislature to enact? Our Legislature, following a procedure almost identical to the Federal government, and other states throughout this nation, undoubtedly determined the procedure enacted for Mississippi was fair and reasonable. [8] Sellers v. Iowa Power & Light Company, 372 F. Supp. 1169 (1974) is quite persuasive on the due process question raised in this case. That case addressed the identical question we have, and the Court found, after weighing the interests of the consumer, the utility, and the public, there was no deprivation of any due process right. In conclusion, conceding for this discussion that having a right to a reasonable rate is a valuable right, it is certainly not a constitutional right, but a right which the Legislature may give or take away at any legislative session. Having this power, should we not concede to this body the power to decide the manner in which the right shall be accorded? Answering the initial question: I have a right (given me now by statute) to ultimate determination that the rate a utility charges is reasonable. But, when I walk in the electric company office at the first of the month to pay my bill, I have no right to have it legally predetermined that the amount I am required to pay for the month is fair and reasonable. [9]