Marshall County Board of Education v. Marshall County Gas District

JOHNSON, Senior Circuit Judge,

dissenting:

I dissent. The plaintiffs appeal from the district court’s order dismissing their claims brought pursuant to 42 U.S.C. § 1983 alleging (1) a violation of their rights to equal protection, (2) a taking of their property without just compensation, and (3) a violation of their rights to substantive due process. Although I agree with the majority that the plaintiffs’ complaint fails to state a cognizable substantive due process claim because the plaintiffs do not have a property interest in the proceeds of the Series 1989 Bonds, the complaint clearly states cognizable equal protection and takings claims. Because the complaint states a claim for which relief may be granted, I would remand the case to the district court for a determination of whether the Johnson Act prevents the federal courts from exercising jurisdiction over this case.

I. The Complaint States a Cognizable Claim

A. Takings claim

The plaintiffs’ takings claim is that the District took their property in the form of higher rates without providing a corresponding benefit. This allegation states a claim under the Takings Clause for which relief may be granted.

In determining whether the taking of money constitutes an unconstitutional taking, the Supreme Court has examined the taking against a standard of reasonableness. See United States v. Sperry Corp, 493 U.S. 52, 62 , 110 S.Ct. 387, 395 , 107 L.Ed.2d 290 (1989). The amount taken is reasonable if it is a “fair approximation of the costs of benefits supplied.” Massachusetts v. United States, 435 U.S. 444 , 463 n. 19, 98 S.Ct. 1153 , 1165 n. 19, 55 L.Ed.2d 403 (1978). Thus, to state a takings claim, the plaintiffs’ complaint must allege that the rates charged are unreasonable. The majority holds that the plaintiffs have failed to state a claim because “[t]he complaint does not allege that the rates are unreasonable.” The majority is incorrect. The complaint states that the distribution of the proceeds of the Series 1989 Bonds to the Member Municipalities resulted in the District “fixing and establishing rates for gas and gas service higher than would have been reasonable.” Complaint ¶ 32 (emphasis added). Accordingly, the plaintiffs have stated a takings claim.

B. Equal protection claim

The plaintiffs’ equal protection claim is that the District impermissibly distinguished between rate-payers living within the Member Municipalities and rate-payers living outside the Member Municipalities — although all customers of the District share equally in paying for the bond issue, the revenue realized from the bond issue flows only to those customers who reside in the Member Municipalities. This allegation states a claim under the Equal Protection Clause for which relief may be granted.

“The Equal Protection Clause ‘is essentially a direction that all persons similarly situated should be treated alike.’ ” Spence v. Zimmerman, 873 F.2d 256, 258 (11th Cir.1989) (quoting City of Cleburne v. Cleburne Living Center, Inc., 473 U.S. 432, 439 , 105 S.Ct. 3249, 3254 , 87 L.Ed.2d 313 (1985)). “When a state distributes benefits unequally, the distinctions it makes are subject to scrutiny under the Equal Protection Clause of the fourteenth amendment.” Zobel v. Williams, 457 U.S. 55, 61 , 102 S.Ct. 2309, 2313 , 72 L.Ed.2d 672 (1982). See Hooper v. Bernalil *1178 lo County Assessor, 472 U.S. 612, 618 , 105 S.Ct. 2862, 2866 , 86 L.Ed.2d 487 (1985) (plaintiffs’ challenge to tax exemption for veterans states equal protection claim); Town of Ball v. Rapides Parish Police Jury, 746 F.2d 1049, 1057-58 (5th Cir.1984) (plaintiffs’ challenge to distribution of tax revenues states equal protection claim). Thus, the Plaintiffs’ claim that benefits are being distributed unequally should not have been dismissed for failure to state a claim.

II. Johnson Act

Although the plaintiffs’ complaint does state a claim, the Johnson Act may deprive the district court of jurisdiction to entertain the complaint. The plaintiffs’ suit is essentially one challenging the rate charged by the District for services, and as this Court has previously noted, “the Johnson Act has been broadly construed to prohibit federal court actions that indirectly as well as directly affect rate orders.” Carlin Communication, Inc. v. Southern Bell Tel. & Tel. Co., 802 F.2d 1352, 1356 (11th Cir.1986).

The majority relies on the broad sweep of the Johnson Act for its alternate holding that even if the plaintiffs had stated a claim, their claim should be heard in state court. In reaching this alternate holding, the majority ignores the plain language of the Act. For the Johnson Act to apply, the District’s order increasing its rates must have been preceded by reasonable notice and hearing. 28 U.S.C. § 1342 (3). In this case, there is a question as to whether the District gave any notice at all prior to the rate increase, much less whether it gave reasonable notice.

Whether the District gave reasonable notice is a jurisdictional fact, which this Court reviews under the clearly erroneous standard. Lawrence v. Dunbar, 919 F.2d 1525, 1530 (11th Cir.1990). See Nucor Corp. v. Nebraska Public Power Dist., 891 F.2d 1343, 1347 (8th Cir.1989) (reviewing reasonableness of Johnson Act notice for clear error), cert. denied, 498 U.S. 813 , 111 S.Ct. 50 , 112 L.Ed.2d 26 (1990). Unfortunately, there is no factual finding to review in this case because the district court declined to reach the question of whether it had jurisdiction under the Johnson Act. When jurisdiction turns on a factual finding, the relevant facts must first be found by the trial court. See Registration Control Systems, Inc. v. Compusystems, Inc., 922 F.2d 805, 808 (Fed.Cir.1990). Therefor, I would remand this case to the district court for a factual finding as to whether notice of the rate increase was reasonable.