Court Opinion

ID: 5859666
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:14:52.69255+00
Date Added: 2024-06-11T08:44:23.467929
License: Public Domain

Asch, J.
(dissenting in part). I agree with Justice Kupferman “that the inaction of the PSC in its rule-making capacity affords an insufficient predicate to support a finding” of constitutional violation. As he points out in his opinion, “stricter scrutiny of State involvement will be applied in a case involving racial discrimination in housing like Shelley v Kraemer (334 US 1), cited by Special Term, than in cases only involving property rights.” There, the Supreme Court held that a private agreement to exclude persons of designated race or color from the use or occupancy of real estate for residential purposes did not run counter to the Fourteenth Amendment. The violation was in the fact that a State court, an official agency of the State, affirmatively enforced them. It would represent a considerable extension of the holding of that case for this court to decide that that inaction of the Public Service Commission (PSC) with respect to the exercise of its discretionary rule-making authority created a constitutional claim in the plaintiff against the agency.
It is with respect to plaintiff’s claim against Consolidated Edison Company of New York (Con Ed) that Justice Kupferman and I part company.
The court below held that the denial of utility service to Mrs. Montalvo constituted State action to which the due process clauses of the Federal and State Constitutions would be applicable (110 Misc 2d 24). I believe that the *400order and judgment should be affirmed with respect to Con Ed.
To invoke the protective mantle of the Constitution, increasingly, the courts are occluding the line between what constitutes “private” as compared with “State” action. (Compare, e.g., Civil Rights Cases, 109 US 3, with Burton v Wilmington Parking Auth., 365 US 715; Peterson v Greenville, 373 US 244; Lombard v Louisiana, 373 US 267; Griffin v Maryland, 378 US 130; Robinson v Florida, 378 US 153; Atlanta Motel v United States, 379 US 241.) The Supreme Court has gone so far as to condemn racial exclusion by a private restaurant which merely rented space in a public authority building (Burton v Wilmington Parking Auth., 365 US 715, supra). It is not necessary to take even such a leap in legal logic to reach the conclusion that the action by Consolidated Edison in this case constitutes “State action” and as a consequence is in violation of the Constitution. It is not necessary to go beyond judicial doctrine, established authority, or the facts set out in the record.
Whether privately owned public utilities are engaged in State action for this purpose has frequently turned on the answers to the following questions:
(1) How extensive is the State regulation? (See Palmer v Columbia Gas of Ohio, 479 F2d 153; Lucas v Wisconsin Elec. Power Co., 466 F2d 638);
(2) To what extent is the utility affected with the public interest? (Jackson v Metropolitan Edison Co., 419 US 345); and
(3) Is the utility a publicly franchised monopoly? (Public Utilities Comm. v Poliak, 343 US 451, 462.)
In Sharrock v Dell Buick-Cadillac (45 NY2d 152) the New York Court of Appeals enumerated the factors which, either in the aggregate or individually, can lead to a determination that there is significant State involvement, creating due process rights, in statutorily authorized private conduct. Those are: “the source of authority for the private action; whether the State is so entwined with the regulation of the private conduct as to constitute State activity; whether there is meaningful State participation *401in the activity; and whether there has been a delegation of what has traditionally been a State function to a private person” (supra, at p 158). The court further stated (p 160): “In contrast to the due process clause of the Fourteenth Amendment, which is phrased in terms of State deprivation of life, liberty or property, section 6 of article I of the New York Constitution guarantees that ‘[n]o person shall be deprived of life, liberty or property without due process of law.’ Conspicuously absent from the State Constitution is any language requiring State action before an individual may find refuge in its protections. That is not to say, of course, that the due process clause of the State Constitution eliminates the necessity of any State involvement in the objected to activity (see Stuart v Palmier, 74 NY 183, 188). Rather, the absence of any express State action language simply provides a basis to apply a more flexible State involvement requirement than is currently being imposed by the Supreme Court with respect to the Federal provision.” It must be noted that section 12 of the Transportation Corporations Law provides: “§ 12. Gas and electricity must be supplied on application * * * [U]pan written application of the owner or occupant of any building * * * and payment by him of all money due from him to the corporation, it shall supply gas or electricity as may be required for lighting such building”. It is apparent that the Transportation Corporations Law significantly altered the legal obligations of utility companies to prospective customers as they existed at common law in New York State. (See, e.g., United States Light & Heat Corp. v Niagara Falls Gas & Elec. Light Co., 47 F2d 567, 569; see, also, People ex rel. Cayuga Power Corp. v Public Serv. Comm., 226 NY 527, 532.)
Con Ed and the PSC both cite Jackson v Metropolitan Edison Co. (419 US 345). In that case, the court found that a service termination by a privately owned utility did not constitute State action even though the Pennsylvania utility was extensively regulated. The Supreme Court held that a business obligated\to serve the public is not deemed a State actor unless the- act under scrutiny involves the “exercise * * * of some power * * * traditionally associated with sovereignty” (419 US, at p 353).
*402Section 12 of the Transportation Corporations Law, however, delegated the power of dispute resolution to Con Ed. This is comparable to the situation in Sharrock (supra) where the Lien Law delegated to a garageman (a private individual) the exclusive power to resolve disputes by selling a car, without notice and hearing, on which the garageman had allegedly performed work and for which the customer was assertedly indebted. Section 12 of the Transportation Corporations Law gives a prospective customer a broad right to service upon compliance with certain preconditions (including the one relevant here — payment of all arrears owed) and imports to the utility itself the unilateral power to resolve such disputes by simply refusing service. In Jackson (supra) there was no State law comparable to section 12 of the Transportation Corporations Law mandating utility service upon application by a potential customer.
Special Term relied upon Bronson v Consolidated Edison Co. of N. Y. (350 F Supp 443). In that case, the District Court found that section 15 of the Transportation Corporations Law creates an entitlement to continued service, conditioned on the payment of current bills, and decided that due process applies to the determination of what bills are owing (supra, at pp 446-447). The appellants cite Taylor v Consolidated Edison Co. of N. Y. (552 F2d 39) as overruling Bronson. It must be noted, however, that in Taylor service had been terminated by reason of meter tampering, which was a subject not covered by section 15 of the Transportation Corporations Law. Appellants are also mistaken in equating this case with Jackson (supra). There was no statute comparable to section 12 of the Transportation Corporations Law involved in that case.
Section 12 of the Transportation Corporations Law substantially modified pre-existing common-law rights (cf. Taylor v Consolidated Edison Co. of N. Y., supra). Section 12 of the Transportation Corporations Law mandated that utilities were to provide utility service upon application of potential customers. An exceptio/h was made in the case of applicants owing arrears. The utilities (including Con Ed) were left to resolve any dispute involving arrearages unilaterally. The PSC did not promdligate regulations ensur*403ing notice and a hearing in regard to such disputes. There was, in effect, an abdication of State authority in regard to dispute resolution to Con Ed (see Sharrock v Dell Buick-Cadillac, supra; Bronson v Consolidated Edison Co. of N. Y., supra).
Section 12 of the Transportation Corporations Law also created a species of entitlement in regard to applications for utility service. Due process standards are applicable in regard to such entitlements (cf. Greenholtz v Nebraska Penal Inmates, 442 US 1).
The court below was correct in finding State action on the part of Con Ed and in determining that due process was violated. (Sharrock v Dell Buick-Cadillac, supra; Bronson v Consolidated Edison Co. of N. Y., supra.) Taylor and Jackson (supra) did not deal with the statutory situation present in this case.
Con Ed’s tariff did not permit it to withhold service unless it complied with the notice requirements of the PSC’s 16 NYCRR Part 143. This Con Ed did not do since it did not advise Ms. Montalvo of the review procedures to which she was entitled.
The PSC and Con Ed contend that the first two causes of action should have been dismissed as moot. They contend that the Home Energy Fair Practices Act, article 2 (§§ 30-50) of the Public Service Law, provides for the notice and review (§ 31, subd 2) denied Montalvo. But that section was enacted in 1981, effective October 19, 1981, and is not retroactive. Moreover, paragraph 72 of the complaint sets forth damage claims in regard to the first two causes of action (see Blye v Globe-Wernicke Realty Co., 33 NY2d 15).
The appellants contend that Montalvo should have exhausted administrative remedies. However, exhaustion of administrative remedies is not a prerequisite to standing under section 1983 of title 42 of the United States Code (Patsy v Florida Bd. of Regents, 457 US 496; see, also, Kovarsky v Brooklyn Union Gas Co., 279 NY 304, 313). Constitutional questions are for resolution by the courts (Weinberger v Salfi, 422 US 749, 765).
Accordingly, the order and judgment of the Supreme Court, New York County, entered March 29, 1982, which *404granted partial summary judgment in favor of plaintiff on the first two causes of action and denied motions by both defendants to dismiss, except for granting so much of the PSC’s motion as sought to dismiss the damage claim, but granted leave to renew the cause in the Court of Claims, should be modified, on the law and facts, to dismiss in their entirety plaintiff’s first two causes of action solely as against defendant PSC and to declare that no State action by said defendant PSC is present under the circumstances herein, and otherwise affirmed, without costs.
Sandler, Lynch and Milonas, JJ., concur with Kupferman, J. P.; Asch, J., dissents in part in an opinion.
Order and judgment (one paper), Supreme Court, New York County, entered on March 29, 1982, reversed, on the law, without costs and without disbursements, judgment entered dismissing in their entirety respondent’s first two causes of action, and a declaration made that no State action is present under the circumstances of this case.