Jackson v. Metropolitan Edison Co. , 95 S. Ct. 449 ( 1974 )

MR. Justice Rehnquist

delivered the opinion of the Court.

Respondent Metropolitan Edison Co. is a privately owned and operated Pennsylvania corporation which holds a certificate of public convenience issued by the Pennsylvania Public Utility Commission empowering it to deliver electricity to a service area which includes the city of York, Pa. As a condition of holding its certificate, it is subject to extensive regulation by the Commission. Under a provision of its general tariff filed with the Commission, it has the right to discontinue service to any customer on reasonable notice of nonpayment of bills.¹

Petitioner Catherine Jackson is a resident of York, who has received electricity in the past from respondent. Until September 1970, petitioner received electric service to her home in York under an account with respondent in her own name. When her account was terminated because of asserted delinquency in payments due for service, a new account with respondent was opened in the name of one James Dodson, another occupant of the residence, and service to the residence was resumed. There is a dispute as to whether payments due under the Dodson account for services provided during this period were ever made. In August 1971, Dodson left the residence. Service continued thereafter but concededly no payments were made. Petitioner states that no bills were received during this period.

On October 6, 1971, employees of Metropolitan came to the residence and inquired as to Dodson’s present address. Petitioner stated that it was unknown.to her. On the following day, another employee visited the residence and informed petitioner that the meter had been tampered with so as not to register amounts used. She disclaimed knowledge of this and requested that the service account for her home be shifted from Dodson’s name to that of one Robert Jackson, later identified as her 12-year-old son. Four days later on October 11, 1971, without further notice to petitioner, Metropolitan employees disconnected her service.

Petitioner then filed suit against Metropolitan in the United States District Court for the Middle District of Pennsylvania under the Civil Rights Act of 1871, 42 U. S. C. § 1983, seeking damages for the termination and an injunction requiring Metropolitan to continue providing power to her residence until she had been afforded notice, a hearing, and an opportunity to pay any amounts found due. She urged that under state law she had an entitlement to reasonably continuous electrical service to her home ² and that Metropolitan’s termination of her service for alleged nonpayment, action allowed by a provision of its general tariff filed with the Commission, constituted “state action” depriving her of property in violation of the Fourteenth Amendment’s guarantee of due process of law.³

The District Court granted Metropolitan’s motion to dismiss petitioner’s complaint on the ground that the termination did not constitute state action and hence was not subject to judicial scrutiny under the Fourteenth Amendment.⁴ On appeál, the United States Court of Appeals for the Third Circuit affirmed, also finding an absence of state action.⁵ We granted certiorari to review this judgment.⁶

The Due Process Clause of the Fourteenth Amendment provides: “[N]or shall any State deprive any person of life, liberty, or property, without due process of law.” In 1883, this Court in the Civil Rights Cases, 109 U. S. 3, affirmed the essential dichotomy set forth in that Amendment between deprivation by the State, subject to scrutiny under its provisions, and private conduct, “however discriminatory or wrongful,” against which the Fourteenth Amendment offers no shield. Shelley v. Kraemer, 334 U. S. 1 (1948).

We have reiterated that distinction on more than one occasion since then. See, e. g., Evans v. Abney, 396 U. S. 435, 445 (1970); Moose Lodge No. 107 v. Irvis, 407 U. S. 163, 171-179 (1972). While the principle that private action is immune from the restrictions of the Fourteenth Amendment is well established and easily stated, the question whether particular conduct is “private,” on the one hand, or “state action,” on the other, frequently admits of no easy answer. Burton v. Wilmington Parking Authority, 365 U. S. 715, 723 (1961); Moose Lodge No. 107 v. Irvis, supra, at 172.

Here the action complained of was taken by a utility company which is privatély owned and operated, but which in many particulars of its business is subject to extensive state regulation. The mere fact that a business is subject to state regulation does not by itself convert its action into that of the State for purposes of the Fourteenth Amendment.⁷ 407 U. S., at 176-177. Nor does the fact that the regulation is extensive and detailed, as in the case of most public utilities, do so. Public Utilities Comm’n v. Poliak, 343 U. S. 451, 462 (1952). It may well be that acts of a heavily regulated utility with at least something of a governmentally protected monopoly will more readily be found to be “state” acts than will the acts of an entity lacking these characteristics. [But the inquiry must be whether there is a sufficiently"'dose nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself?] Moose Lodge No. 107, supra, at 176. The true nature of the State’s involvement may not be immediately obvious, and detailed inquiry may be required in order to determine whether the test is met. Burton v. Wilmington Parking Authority, supra.

Petitioner advances a series of contentions which, in her view, lead to the conclusion that this case should fall on the Burton side of the line drawn in the Civil Rights Cases, supra, rather than on the Moose Lodge side of that line. We find none of them persuasive.

Petitioner first argues that “state action” is present because of the monopoly status allegedly conferred upon Metropolitan by the State of Pennsylvania. As a factual matter, it may well be doubted that the State ever granted or guaranteed Metropolitan a monopoly.⁸ But assuming that it had, this fact is not determinative in considering whether Metropolitan’s termination of service to petitioner was “state action” for purposes of the Fourteenth Amendment. In Pollak, supra, where the Court dealt with the activities of the District of Columbia Transit Co., a congressionally established monopoly, we expressly disclaimed reliance on the monopoly status of the transit authority. 343 U. S., at 462. Similarly, although certain monopoly aspects were presented in Moose Lodge No. 107, supra, we found that the Lodge’s action was not subject to the provisions of the Fourteenth Amendment. In each of those cases, there was insufficient relationship between the challenged actions of the entities involved and their monopoly status. There is no indication of any greater connection here.

/^Petitioner next urges that state action is present because respondent provides an essential public service required to be supplied on a reasonably continuous basis by Pa. Stat. Ann., Tit. 66, § 1171 (1959), and hence performs a “public function.” We have, of course, found state action present in the exercise by a private entity of powers traditionally exclusively reserved to the State. See, e. g., Nixon v. Condon, 286 U. S. 73 (1932) (election); Terry v. Adams, 345 U. S. 461 (1953) (election); Marsh v. Alabama, 326 U. S. 501 (1946) (company town); Evans v. Newton, 382 U. S. 296 (1966) (municipal park). If we were dealing with the exercise by Metropolitan of some power delegated to it by the State which is traditionally associated with sovereignty, such as eminent domain, our case would be quite a different one. But while the Pennsylvania statute imposes an obligation to furnish service on regulated utilities, it imposes no such obligation on the State. The Pennsylvania courts have rejected the contention that the furnishing of utility services is either a state function or a municipal duty. Girard Life Insurance Co. v. City of Philadelphia, 88 Pa. 393 (1879); Baily v. Philadelphia, 184 Pa. 594, 39 A. 494 (1898).

¿Perhaps in recognition of the fact that the supplying of utility service is not traditionally the exclusive prerogative of the State, petitioner invites the expansion of the doctrine of this limited line of cases into a broad principle that all businesses “affected with the public interest” are state actors in all their actions.

We decline the invitation for reasons stated long ago in Nebbia v. New York, 291 U. S. 502 (1934), in the course of rejecting a substantive due process attack on state legislation:

“It is clear that there is no closed class or category of businesses affected with a public interest . . . . The phrase 'affected with a public interest’ can, in the nature of things, mean no more than that an industry, for adequate reason, is subject to control for the public good. In several of the decisions of this court wherein the expressions 'affected with a public interest,’ and 'clothed with a public use,’ have been brought forward as the criteria ... it has been admitted that they are not susceptible of definition and form an unsatisfactory test. . . .” Id., at 536.

See, e. g., Tyson & Brother v. Banton, 273 U. S. 418, 451 (1927) (Stone, J., dissenting).

Doctors, optometrists, lawyers, Metropolitan, and Nebbia’s upstate New York grocery selling a quart of milk are all in regulated businesses, providing arguably essential goods and services, “affected with a public interest.” We do not believe that such a status converts their every action, absent more, into that of the State.⁹

We also reject the notion that Metropolitan’s termination is state action because the State “has specifically authorized and approved” the termination practice. In the instant case, Metropolitan filed with the Public Utility Commission a general tariff — a provision of which states Metropolitan’s right to terminate service for nonpayment.¹⁰ This provision has appeared in Metropolitan’s previously filed tariffs for many years and has never been the subject of a hearing or other scrutiny by the Commission.¹¹ Although the Commission did hold hearings on portions of Metropolitan’s general tariff relating to a general rate increase, it never even considered the reinsertion of this provision in the newly'filed general tariff.¹² The provision became effective 60 days after filing when not disapproved by the Commission¹³

As a threshold matter, it is less than clear under state law that Metropolitan was even required to file this provision as part of its tariff or that the Commission would have had the power to disapprove it.¹⁴ The District Court observed that the sole connection of the Commission with this regulation was Metropolitan’s simple notice filing with the Commission and the lack of any Commission action to prohibit it.¹⁵

The case most heavily relied on by petitioner is Public Utilities Comm’n v. Pollak, supra. There the Court dealt with the contention that Capital Transit’s installation of a piped music system on its buses violated the First Amendment rights of the bus riders. It is not entirely clear whether the Court alternatively held that Capital Transit’s action was action of the “State” for First Amendment purposes, or whether it merely assumed, arguendo, that it was and went on to resolve the First Amendment question adversely to the bus riders.¹⁶ In either event, the nature of the state involvement there was quite different than it is here. The District of Columbia Public Utilities Commission, on its own motion, commenced an investigation of the effects of the piped music, and after a full hearing concluded not only that Capital Transit’s practices were “not inconsistent with public convenience, comfort, and safety,” 81 P. U. R. (N. S.) 122, 126 (1950), but also that the practice “in fact, through the creation of better will among passengers, . . . tends to improve the conditions under which the public ride.” Ibid. Here, on the other hand, there was no such imprimatur placed on the practice of Metropolitan about which petitioner complains. The nature of governmental regulation of private utilities is such that a utility may frequently be required by the state regulatory scheme to obtain approval for practices a business regulated in less detail would be free to institute without any approval from a regulatory body. Approval by a state utility commission of such a request from a regulated utility, where the commission has not put its own weight on the side of the proposed practice by ordering it, does not transmute a practice initiated by the utility and approved by the commission into “state action.” At most, the Commission’s failure to overturn this practice amounted to no more than a determination that a Pennsylvania utility was authorized to employ such a practice if it so desired. Respondent’s exercise of the choice allowed by state law where the initiative comes from it and not from the State,¹⁷ does not make its action in doing so “state action” for purposes of the Fourteenth Amendment.

We also find absent in the instant case the symbiotic relationship presented in Burton v. Wilmington Parking Authority, 365 U. S. 715 (1961). There where a private lessee, who practiced racial discrimination, leased space for a restaurant from a state parking authority in a publicly owned building, the Court held that the State had so far insinuated itself into a position of interdependence with the restaurant that it was a joint participant in the enterprise. Id., at 725. We cautioned, however, that while “a multitude of relationships might appear to some to fall within the Amendment’s embrace,” differences in circumstances beget differences in law, limiting the actual holding to lessees of public property. Id., at 726.

Metropolitan is a privately owned corporation, and it does not lease its facilities from the State of Pennsylvania. It alone is responsible for the provision of power to its customers. In common with all corporations of the State it pays taxes to the State, and it is subject to a form of extensive regulation by the State in a way that most other business enterprises are not. But this was. likewise true of the appellant club in Moose Lodge No. 107 v. Irvis, supra, where we said:

“However detailed this type of regulation may be in some particulars, it cannot be said to in any way foster or encourage racial discrimination. Nor can it be said to make the State in any realistic sense a partner or even a joint venturer in the club’s enterprise.” 407 U. S., at 176-177.'

All of petitioner’s arguments taken together show no more than that Metropolitan was a heavily regulated, privately owned utility, enjoying at least a partial monopoly in the providing of electrical service within its territory, and that it elected to terminate service to petitioner in a manner which the Pennsylvania Public Utility Commission found permissible under state law. Under our decision this is not sufficient to connect the State of Pennsylvania with respondent’s action so as to make the latter’s conduct attributable to the State for purposes of the Fourteenth Amendment.

We conclude that the State of Pennsylvania is not sufficiently connected with respondent’s action in terminating petitioner’s service so as to make respondent’s conduct in so doing attributable to the State for purposes of the Fourteenth Amendment. We therefore have no occasion to decide whether petitioner’s claim to continued service was “property” for purposes of that Amendment, or whether “due process of law” would require a State taking similar action to accord petitioner the procedural rights for which she contends. The judgment of the Court of Appeals for the Third Circuit is therefore

Affirmed.

1 Metropolitan Edison Company Electrical Tariff, Electric Pa. P. TJ. C. No. 41, Rule 15. This portion of Metropolitan’s general tariff, filed with the Utility Commission under the notice-filing requirement of Pa. Stat. Ann., Tit. 66, § 1142 (1959) (since the general tariff involved a rate increase), provides in pertinent part:

“(15) — Cause for discontinuance of service.

“Company reserves the right to discontinue its service on reasonable notice and to remove its equipment in case of nonpayment of bill. ...”

Its filed tariff also gives it the right to terminate service for fraud or for tampering with a meter but Metropolitan did not seek to assert these grounds below.

2 The basis for this claimed entitlement is Pa. Stat. Ann., Tit. 66, § 1171 (1959), providing in part:

“Every public utility shall furnish and maintain adequate, efficient, safe, and reasonable service and facilities .... Such service also shall be reasonably continuous and without unreasonable interruptions or delay....”

Mrs. Jackson finds in this provision a state-law entitlement to continuing utility service to her residence. She reasons that under the Due Process Clause of the Fourteenth Amendment she cannot be deprived of this entitlement to utility service without adequate notice and a hearing before an impartial body: until these are completed, her service must continue. Because of our conclusion on the threshold question of state action, we do not reach questions relating to the existence of a property interest or of what procedural guarantees the Fourteenth Amendment would require if a property interest were found to exist.

Mr. Justice Brennan, dissenting, post, at 364, concludes that there is no justiciable controversy between petitioner and respondent because whatever entitlement to service petitioner had was previously terminated by respondent in accordance with its tariff. We do not believe this to be any less a determination of the merits of the action than is our conclusion that whatever deprivation she may have suffered was not caused by the State. Issues of whether a claimed entitlement is “property” within the meaning of the Due Process Clause, Board of Regents v. Roth, 408 U. S. 564 (1972), and whether if so its deprivation was consistent with due process, see Arnett v. Kennedy, 416 U. S. 134 (1974), are themselves constitutional questions which we find no occasion to reach in this case.

3 Section 1 of the Fourteenth Amendment provides in part:

"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State déprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

4 The decision is reported at 348 F. Supp. 954 (1972).

5 The decision is reported at 483 F. 2d 754 (1973).

6 415 U. S. 912 (1974). Compare Kadlec v. Illinois Bell Telephone Co., 407 F. 2d 624 (CA7), cert. denied, 396 U. S. 646 (1969); Lucas v. Wisconsin Electric Power Co., 466 F. 2d 638 (CA7 1972), cert. denied, 409 U. S. 1114 (1973), with Palmer v. Columbia Gas of Ohio, Inc., 479 F. 2d 153 (CA6 1973), modified in Turner v. Impala Motors, 503 F. 2d 607 (CA6 1974). Cf. Ihrke v. Northern States Power Co., 459 F. 2d 566 (CA8), vacated as moot, 409 U. S. 815 (1972).

7 Enterprises subject to the same regulatory system as Metropolitan are enumerated in the definition of “public utility” contained in Pa. Stat. Ann., Tit. 66, § 1102 (17) (1959 and Supp. 1974-1975). Included in this definition are all companies engaged in providing gas, power, or water; all common carriers, pipeline companies, telephone and telegraph companies, sewage collection and disposal companies; and corporations affiliated with any company engaging in such activities. Among some of the enterprises held subject to this regulatory scheme are freight forwarding and storage companies (Highway Freight Co. v. Public Service Comm’n, 108 Pa. Super. 178, 164 A. 835 (1933)), real estate developers who, incident to their business, provide water services (Sayre Land. Co. v. Pennsylvania Public Utility Comm’n, 21 D. & C. 2d 469 (1959)), and individually owned taxicabs. Pennsylvania Public Utility Comm’n v. Israel, 356 Pa. 400, 52 A. 2d 317 (1947). In Philadelphia Rural Transit Co. v. Philadelphia, 309 Pa. 84, 93, 159 A. 861, 864 (1932), the court estimated that there were 26 distinct types of enterprises subject to this regulatory system, and a fair reading of Pennsylvania law indicates a substantial expansion of included enterprises since that case. The incidents of regulation do not appear materially different between enterprises. If the mere existence of this regulatory scheme made Metropolitan’s action that of the State, then presumably the actions of a lone Philadelphia cab driver could also be fairly treated as those of the State of Pennsylvania.

8 It is provided in Pa. Stat. Ann., Tit. 66, § 1121 (Supp. 1974-1975), that issuance of a certificate of public convenience is a prerequisite for engaging in the utility business in Pennsylvania. The requirements for obtaining such a certificate are described in Pa. Stat. Ann., Tit. 66, §§ 1122,1123 (1959 and Supp. 1974-1975). There is nothing in either Metropolitan’s certificate or in the statutes under which it was issued indicating that the State has granted or guaranteed to Metropolitan monopoly status. In fact Metropolitan does face competition within portions of its service area from another private utility company and from municipal utility companies. Metropolitan was organized in 1874, 39 years before Pennsylvania’s adoption of its first utility regulatory scheme in 1913. . There is no indication that it faced any greater competition in 1912 than today. As. petitioner admits, such public utility companies are natural monopolies created by the economic forces of high threshold capital requirements and virtually unlimited economy of scale. Burdick, The Origin of the Peculiar Duties of Public Service Companies, 11 Col. L. Rev. 514 (1911); H. Trachsel, Public Utility Regulation 7-8, 52 (1947). Regulation was superimposed on such natural monopolies as a substitute for competition and not to eliminate it:

‘The primary object of the Public Utility Law is not to establish monopolies or to guarantee the security of investments in public service corporations, but to serve the interests of the public.” Highway Express Lines, Inc. v. Pennsylvania Public Utility Comm’n, 195 Pa. Super. 92, 100, 169 A. 2d 798, 802 (1961); cf. Pottsville Union Traction Co. v. Public Service Comm’n, 67 Pa. Super. 301, 304 (1917).

9 The argument has been impliedly rejected by this Court on a number of occasions. See, e. g., Civil Rights Cases, 109 U. S. 3, 8 (1883). It is difficult to imagine a regulated activity more essential or more “clothed with the public interest” than the maintenance of schools, yet wre stated in Evans v. Newton, 382 U. S. 296, 300 (1966):

"The range of governmental activities is broad and varied, and the fact that government has engaged in a particular activity does not necessarily mean that an individual entrepreneur or manager of the same kind of undertaking suffers the same constitutional inhibitions. While a State may not segregate public schools so as to exclude one or more religious groups, those sects may maintain their own parochial educational systems.”

10 See n. 1, supra. The same provision appeared in all of Metropolitan’s prior general tariffs. The sole reason for substituting the new general tariff, which contains all the terms and conditions of Metropolitan’s service, was to procure a rate increase. This was the sole change between Metropolitan’s Electrical Tariff No. 41 and its predecessor.

11 Petitioner does not contest the fact that Metropolitan had this right at common law before the advent- of regulation. Brief for Petitioner 31.

12 Petitioner concedes that the hearing was solely devoted to the question of the proposed rate increase. Id., at 30.

13 See Pa. Stat. Ann., Tit. 66, § 1148 (1959); Pa. P. U. C. Tariff Regulations, § II, “Public Notice of Tariff Changes.” These provisions-specify that utility companies must give 60 days’ notice to the public before changing their rules filed in their general tariff. Since Pa. Stat. Ann., Tit. 66, § 1171 (1959), provides that “[s]ub-ject to . . . the regulations or orders of ■ the commission, every public utility may have reasonable rules and regulations governing the conditions under which it shall be required to render service,” the Commission arguably had the power to disapprove utility rules. There is no evidence that it has ever even considered the provision in question. When the 60-day notice period passed, the provisions became effective.

14 Pennsylvania. P. U. C. Tariff Regulations, § VIII, “Discount for Prompt Payment and Penalties for Delayed Payment of Bills,” is the only authority cited for a state-imposed requirement that Metropolitan file its termination provision as part of its general tariff. This section requires the filing of “penalties” imposed upon customers for failures to pay bills promptly. Respondent argues that this applies only to monetary penalties. There is no Pennsylvania case law on the question.

15 “The only apparent state involvement with the activity complained of here is in Tariff Reg. VIII of the Pennsylvania P. U. C_ [T]he purpose of Tariff Reg. VIII is to insure that public utilities inform their patrons of any possible penalty for failing to pay their bills. As in Kadlec, defendant here acted pursuant to its own regulations and out of a purely private, economic motive. No state official participated in the practice complained of, nor is it alleged that the state requested or co-operated' in the suspension of service.” 348 F. Supp., at 958.

16 See 343 U. S., at 462. At one point the Court states:

“We find in the reasoning of the court below a sufficiently close relation between the Federal Goveriynent and the radio service to make it necessary for us to consider thise Amendments.” Ibid.

Later, the opinion states:

. "We, therefore, find it appropriate to examine into what restriction, if any, the First and Fifth Amendments place upon the Federal Government . . . assuming that the action of Capital Transit . . . amounts to sufficient Federal Government action to make the First and Fifth Amendments applicable thereto.” Id., at 462-463. (Emphasis added.)

The Court then went on to find no constitutional violation in the challenged action.

17 As in Moose Lodge No. 107 v. Irvis, 407 U. S. 163, 173 (1972), there is no suggestion in this record that the Pennsylvania Public Utility Commission intended either overtly or covertly to encourage the practice. See n. 15, supra.