Respondents Brief — Memphis Light, Gas & Water Div. v. Craft

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IN THE | » viet’

Supreme Court of the Anited States ~

OCTOBER TERM, 1977 JUL g i977

No. 76-39 MICHAL BOSAK, J8.,CLERK

_ e

MEMPHIS LIGHT, GAS AND WATER DIVISION, ez. ai.,

Petitioners,

WILLIE S. CRAFT and MARY CRAFT,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SIXTH CIRCUIT

BRIEF FOR RESPONDENTS

THOMAS M. DANIEL

MEMPHIS & SHELBY COUNTY

LEGAL SERVICES

ASSOCIATION

325 Dermon Building

46 North Third Street

Memphis, Tennessee 38103

(901) 526-8210

Counsel for Respondents

RICHARD ALPERT

ALAN DAVIS

ELLIOT TAUBMAN

NATIONAL CONSUMER

LAW CENTER, INC.

Eleven Beacon Street

Boston, Massachusetts 02108

BRUCE MAYOR

NEIGHBORHOOD LEGAL

SERVICES

524 Albany Avenue

Hartford, Connecticut 06112

On the brief

Washington. 0.C. @ CLB PUBLISHERS e LAW PRINTING CO. e (202) 393-0625

(i)

TABLE OF CONTENTS

Page

ADDITIONAL STATUTORY PROVISIONS

OPED 0.n060606ccsdsndisendonasonactnanioneseuuanees l

QUESTIONS PRESENTED ......ccccccccccccsccccecccees l

SUPPLEMENT TO PETITIONERS’ STATE-

RES CG CEs MED ons dseoveccédcncnduuscccteccoreset 2

SUMMARY OF ARGUMENT ............ 6.66 cc cee eeee 6

REE © 00 bndededetdadviunadasestistasdvesonessusien 8

I. RESPONDENTS HAVE A PROTECTED

PROPERTY INTEREST IN THE RECEIPT

OF WATER, GAS AND ELECTRICITY

SERVICE FROM PETITIONERS ................. 8

II. RESPONDENTS ARE ENTITLED TO-

ADEQUATE NOTICE AND HEARING

PRIOR TO BEING DEPRIVED OF THEIR

PROTECTED INTEREST IN WATER, GAS

AND ELECTRICITY SERVICE .................. 15

A. MLG&W’s Notice Is Not Reasonably Calcu-

lated To Inform A Customer Of The Method

Pe SE OEE. ddcueesecdesedsccvcescces: 15

B. The Complete Lack of Hearing Procedures

For The Resolution of Disputes Violates Due

PE cckdnddenidndaondsnsscnsdctsecevessees« 17

C. Analysis of the Competing Interests Requires a

Meaningful Hearing Prior to Termination of

BE ponatbualt nnneddadaeeGieasdeenivnseess< 19

1. Deprivation of Water, Gas and Electricity

REE cba cecueucuanesbacecees« 20

2. The Risk Of Erroneous Deprivation Is

Substantial And Procedural Safeguards

Will Avoid Unwarranted Injury ............. 21

3. The Administrative Burden of Additional

Termination Procedures is Minimal, and

Memphis Has an Interest in Avoiding

Erroneous Terminations ..................-. 24

Pr rere r orl Pr PePPTTTTTTTTLT TTT Ti ee 32

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APPENDIX -

A. Analysis of Termination Regulations By

ee ie edad bneeedeadvereteceus la

B. Relevant Statutory Provisions ..............++++: lb

TABLE OF AUTHORITIES

Cases:

Allen v. Dept. of Public Utilities, Civ. No. 403-72-R

Cee Te i tt euhweneedeoets 24

Armstrong v. Manzo, 380 U.S. 545 (1965)............... 15,31

Arnold v. Carolina Power & Light Co., 168 S.C. 163, 167

ee ee cae eeekeaoene 12

Avery v. Midland County, 390 U.S. 474 (1968)............. 8

Babcock v. Schaffhauser, Civ. No. 15, 300 (D. Conn.

es suseeeunne 24

Bell v. Burson, 402 U.S. 535 (1971) ...............55. passim

Bishop v. Wood, 426 U.S. 341 (1976).................2005. 9

Board of Regents v. Roth, 408 U.S. 564 (1972) ........ 8,13,18

Boddie v. Connecticut, 401 U.S. 371 (1971)............... 9,29

Bronson v. Consolidated Edison Co. of New York, 350 F.

SS Es DUPED co vcccucconccccseccs 16,22,23,27

Cantor v. Detroit Edison Co., 428 U.S. 579

eel ee Reo 6 ane ee sec eeetecennessones 29

Chandler Investment Co. v. Whitehaven Utility Dist. of

Shelby County, 44 Tenn. App. 1, 311 S.W.2d 603

(1957), cert. denied, March 4, 1958..................05. 1!

Colgrove v. Cleveland Dept. of Public Utilities, Civ. No.

ee I coc cdcuvesascscavesccenss 24

Condosta v. Vermont Elec. Cooperative, 400 F. Supp.

ne ea ueeeedueseeneeeee 27

Connell v. Higgenbotham, 403 U.S. 207 (1971).............. 10

Cottrell v. Virginia Elec. & Power Co., 62 F.R.D. 516

ee se end cide ebdesehbebdde beonnds 27

Craft v. Memphis Light, Gas & Water Division, 534 F.2d

DP ccubndedkaseetes s+ 06usenesbecbecdsseds passim

(iii)

Page

Crumley v. Watauga Water Co., 99 Tenn. 420, 41 S.W.

ad Leceenbindinuicbbecasesenesesenees passim

Davis v. Weir, 328 F. Supp. 317 (N.D. Ga. 1971), affd.,

497 F.2d 139 (Sth Cir. 1974)............... 14,16,20,23,27

Dawes v. Philadelphia Gas Works, 421 F. Supp. 806

NI a iia eae ain id nae ecgeain 27

Dent v. West Virginia, 129 U.S. 114 (1889) ................ 9

Dixon v. Love, US. _, 45 US.L.W. 4447

ST dnd a déudnbnaagl biG delsndabiibbieewbaioaed 8,18,19,26

Donnelly v. City of Eureka, 399 F. Supp. 64 (D. Kan

Dis ddebiimhibsbedtedkbeseheateehsbtadudtneesnes 27

Elrod v. Burns, 427 U.S. 347 (1976)..............0.2000eee 10

Farmer v. Nashville, 127 Tenn. 509, 156 S.W. 189

DE idnniibdbiniiinttacenttnmanandinddeklion 6,10,11,12,13

F.P.C. v. Hope Natural Gas Co., 320 U.S. 591

Dt ecidiehidiide didestarsneehecadbesnaseteweneeu 29

F.P.C. v. United Gas Pipeline Co., 386 U.S. 237

Ph .tieiebdinadieesvaeirenestkdndeseennewenhasenke 29

Fuentes v. Shevin, 407 U.S. 67 (1972) .................. a a

Goldberg v. Kelly, 397 U.S. 254 (1970)........... 7,8,10,21,30

Goss v. Lopez, 419 U.S. 565 (1975)..............0005. passim

Griffin v. Illinois, 351 U.S. 12 (1956) ................. 15,18,28

Hattell v. Public Service Co., 350 F. Supp. 240 (D. Colo.

DU Luvddtadsscknesdieeteheededeedesandnweucaenueses 27

Ingraham v. Wright, 97 S. Ct. 1401 (1977) .............. 19,28

Jackson v. Metropolitan Edison Co., 419 US.

I the See eek ee cou eedadbaieadenceshe 8,27

Joint Anti-Facicist Refugee Committee v. McGrath, 341

a a 18

Jones v. Portland, 245 U.S. 217 (1917)..................5.. 20

Koger v. Guarino, 412 F. Supp. 1375 (E.D. Pa. 1976),

aff'd. on opinion below, ___ F.2d (3rd Cir.

1977) 14,20,23,27

Ce a

Lamb v. Hamblin, 57 F.R.D. 58 (D. Minn.

SPUN akebis beusedcdnndsvenuduaseuadasdicesaceees 14,20,27

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Page

Limuel v. Southern Union Gas Co., 378 F. Supp. 964

(W.D. Tex. 1974). ......cc cece cccce cece eecccneneeeeees 27

Londoner v. Denver, 210 U.S. 373 (1908) ...........--5055: 31

Lucas v. Wisconsin Electric Power Co., 466 F.2d 638

(7th Cir. 1972) cert. den., 409 U.S. 1114

CIO sack cpcscccbccesscccccncsescgeeesescoescoces 28,29

McMormick v. Dept. of Water, Civ. No. C 73-797-4

(N.D. Ohio 1974) ........ 0. cece eee eee eee ence eee eeeee 24

Mathews v. Eldridge, 424 U.S. 319 (1976)..........+--- passim

Mathiew v. Brehm, Civ. No. 74-1521 (E.D.

i CED cc nckcdectcnchscdpeveredesdsncsnceséetessces 24

Meachum v. Fano, 427 U.S. 215 (1976)...........-+555- 14,28

Miller v. Roswell Gas & Electric Co., 22 N.M. 594, 166

De GOTT GREED cccccccacccccccccsecccccdcccesssevcoces 12

Mississippi Power Co. v. Cochran, 167 Miss. 705, 147

“= [ eaaeererrerrrrrriy tre Tit t ttt tet 12

Mobile Electric Co. v. Nelson, 209 Ala. 554, 96 So. 713

SEE, cccosbvncvccuscsecduesgsacéeccsdbacesceuseseoene 12

Monroe v. Pape, 365 U.S. 167 (1961)........6.- see eee ee ees 8

Morrissey v. Brewer, 408 U.S. 471 (1972).....-.--++++- passim

Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

BO COT oc ccc ccccccccccesbeccccccnccccsccsce 7,15,16,30

North Georgia Finishing Co. v. Di-Chem, Inc., 419 U.S.

BE EN ci cccccchadsaneaevesessnsvbediscencends passim

Opp Cotton Mills v. Administrator, 312 U.S.

BN IED occ vcvicccceccidcoccccocesscoccccsscsscccess 21

Ortwein v. Schwab, 410 U.S. 656 (1973) ...........00-eeee 29

Otter Tail Power Co. v. United States, 410 U.S. 366

RN cc cgacundsabenccescrsddessencbtnicisenceoocese 29

Palmer v. Columbia Gas Co., 342 F. Supp. 241 (N.D.

Ohio 1972), affd., 479 F.2d 153 (6th Cir.

RE RE errr rege err et TT eter Tt Tt 20

Palmer v. Columbia Gas Co., 479 F.2d 153 (6th Cir.

SN tt anes sénanhanuaaseeheenwaeaed 7,16,22,23,27

Patterson v. City of Chattanooga, 192 Tenn. 267, 241

kh » 7. | | Pe errrrrr Tre rrr errr 12

(v)

Page

Paul v. Davis, 424 U.S. 693 (1976)...................... 6,8,9

Perry v. Sindermann, 408 U.S. 593 (1972).............. passim

Randolph v. St. Joseph Gas Co., 250 S.W. 642 (Mo. App.

DP Sh dnéhadkdedentssandehedtauisicauedsie cities 12

Roe v. Wade, 410 U.S. 113 (1973) ........ 00. cece cece 4

Schware v. Board of Bar Examiners, 353 U.S. 232

Peete sdvibncndanuhaabadsaurieddenmelandacosscaddas 9,10

Re Mary Silvia (Mass. D.P.U. Oct. 1976) .................. 20

Smith v. Organization of Foster Families for Equality and

Reform, _.. U.S. ____—,_ 45 ~U.S.L.W. 4638

PE sidie cbcbcssndeudeuaasidaekdiddikadesces 18,19,27

PEE aNdwddudwindnunaenunseounatedsadaiec eased 21,30

Southwestern Gas & Electric Co. v. Stanley, 123 Tex.

SOG, Ce CMe GE GS co cnccccccvcccccccsccencccces 12

Stanley v. Illinois, 405 U.S. 645 (1972) ...............2005. 30

Stanford v. Gas Service Co., 346 F. Supp. 717 (D. Kan.

BONE s 4d 6kedy cbes CadetebiRabniaeeciitedckekikc 14,20

Steele v. Clinton Electric Light & Power Co., 123

Conn. 180, 193 A. 613 (1937).........000 0000000. 12,13

Taylor v. Hayes, 418 U.S. 488 (1974)......0 0000000... eee, 28

Tinker v. Des Moines School Dist., 393 U.S. 503

Ps 64406 denanuuaveducebeudiedacaknebecusieckeans 28

Re Transcontinental Gas Pipeline, 16 P.U.R. 4th 423,

Se ee i asad adie ba cincineddtans veces cca 20

Trigg v. Middle Tennesse Electric Membership Corp.,

533 S.W.2d 730 (Tenn. App. 1975), cert. denied,

Sey WU Ps Nidtceneccnnuddcsecas ccaacabesce passim

United States v. Kras, 409 U.S. 434 (1973)................. 29

United States v. New Orleans Public Services, Inc., 533

Pe er En HUI I hh ik dahon d dcueuwihvcanduane 29

‘ Watauga Water Co. v. Wolfe, 99 Tenn. 429, 41 S.W.

Na Ws Fa yu4d OekGaendkdbscuknnnsaeeciceene 11,30

Wiikerson v. City of Jacksonville, Pov. L. Rep. (CCH)

eee GE A I oo ini ac cence codcuuvececes 24

(vi)

Page

Winchester v. Kentucky Utilities Co., 182 Ky. 144, 206

nr r,t cen eeekenkadaseneosenes 12

Wisconsin v. Constantineau, 400 U.S. 433

ER SURES 1 AEE Pht GR ne a ee eee 8,9,10,18

Wolff v. McDonnell, 418 U.S. 539 (1974)........ 7,10,14,15,17

Constitutional Provisions, Statutes, and Ordinances:

oo ia cobs daneedeanseesuesens passim

Fair Credit Billing Act, 15 U.S.C. §§1661 et

0 ACESS EAS 2 REE AES Ee AO eo Te 22

Ae i a cee ee yao bre ceuseneudwe 2

Fairbanks, Alas. Ordinance No. 3576 (1977)................ 24

Memphis, Tenn. Code § §32-102 et seq..................4.. 14

Memphis, Tenn. Code § §51-111 et seq.................. 20,27

pe 6

occu neebeueeseneaceeees 6

Other Sources:

43 AM JUR, Public Utilities and Services, §65 ............. 13

is ee ED anc cvccceceevscccccecencucues 13

Se GR, I IED sco cccccvesntccceeseeeses 12,13

Electric Funds Transfer Systems: A Symposium, 25

ee EE, cv dvvawabesousedcesveseoss 21

Grar Jury Report Pursuant to § 190.85 of the Criminal

kt cocedure Law of the State of New York (Schen-

ee Ok ee 20

Index and Tenth Selected Bibliography on Computers

and the Law, 5 Rutg. J. Computers & Law 505

PP UUscscech REL EheaaRsheeeateSeed chs 6cesceesess 22

Law and Technology Symposium, 52 Chi-Kent L. Rev.

hc Kelis duted. Uaektsadh ehh eeds Vaueess 21-22

Medical Data Privacy: Automated Interference with

Contractual Relations, 25 Buffalo L. Rev. 491

MICE Dies ehe nd cos eed ees seu henieentsseeese ses 21

Monagham, Of Liberty and Property, 62 Cornell L. Rev.

Dies eau cakes eRe aNdENeeerevsionss 10

(vii)

National Commission on Electric Fund Transfers, EFT

and the Public Interest (1977)................5055-

Proposed Standards and Billing Practices for Residentiai

Utility Service, 6 Pa. Bull. 2989, Docket No.

7T6PRMO-10 (Dec. 4, 1976). ........ ccc cece eee eees

Report of the Michigan Public Service Commission on the

Utility Company Survey of Consumer Standards and

Billing Practices of Electrical and Gas Residential

ED CUTE cece cevecccentccericcceseseceteuces

Senate Committee on Government Operations, Problems

Associated with Computer Technology in Federal

Programs and Private Industry: Computer Abuses,

94th Cong. 2nd Sess. 50 (1976) ..............0005.

Senate Committee on Government Operations, Staff

Study on Computer Security in Federal Programs,

95th Cong. Ist Sess. 5-6 (1976) ................05.

Senate Rep. No. 93-278, 93d Cong., Ist Sess. 5

Van Alstyne, Cracks in ““The New Property,” 62 Cornell

Se Og WT ert

“ee ee

PR tence

IN THE .

Supreme Court of the Anited States

OCTOBER TERM, 1977

No. 76-39

MEMPHIS LIGHT, GAS AND WATER DIVISION, ez. ai.,

Petitioners,

WILLIE S. CRAFT and MARY CRAFT,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SIXTH CIRCUIT

BRIEF FOR RESPONDENTS

ADDITIONAL STATUTORY PROVISIONS INVOLVED

Pertinent provisions of the Tennessee Code Annotated and the

Memphis Code of Ordinances, which were not included in

Petitioners’ Brief are set forth in Appendix B, attached hereto.

QUESTIONS PRESENTED

1. Whether water, gas and electricity service which a

municipally owned utility company has a legal duty under state

law to provide is a property interest protected by the Due

Process Clause of the Fourteenth Amendment?

2. Whether a procedure for termination of water, gas and

electricity service which provides neither notice of the oppor-

tunity to be heard nor any opportunity to be heard is con-

sistent with the Due Process Clause of the Fourteenth Amend-

ment?

SUPPLEMENT TO PETITIONERS’

STATEMENT OF THE CASE

This action was brought by five plaintiffs | under the Civil

Rights Act, 42 U.S.C. Section 1983, seeking damages,

declaratory and injunctive relief against a municipal utility,

alleging that their water, gas and electricity service had been

terminated without due process of law as required by the

Fourteenth Amendment to the United States Constitution. 2

(A.3-18). |

The District Court found that the Memphis Light, Gas and

Water Division and the other defendants 3 (hereinafter referred

to collectively as MLG&W) had not violated the plaintiffs’ due

process rights and dismissed the action. (Opinion and Order

' The suit was filed as a class action pursuant to Fed. R. Civ. P. 23(b)(2).

The District Court refused to certify the cause as a class action (App. B to

Petition for Certiorari, 42), and this holding was affirmed by the Court of

Appeals. Craft v. Memphis Light, Gas and Water Division, 534 F.2d 684,

686 (6th Cir. 1976).

2 Plaintiffs also challenged the right of Memphis Light, Gas and Water

Division to refuse to initiate service to a person because of an outstanding bill

owed by another person at the address where service is sought. Plaintiffs were

ultimately successful in this claim, Craft v. Memphis Light, Gas and Water

Division, supra, 534 F.2d at 689-90, and no review of this part of the Court of

Appeals decision was sought.

3 The individual defendants are Calvin Henze, President of Memphis Light,

Gas and Water Division; Henry J. Winkelman, Vice-President; Eliot

Whittington, Commissioner, Robert S. Bowers, Commissioner, Patricia Shaw,

Commissioner. Clyde Brown and C.R. Tennen, employees of M.L.G.&W.

who effected the termination of utility service to the plaintiffs on one or more

occasions, were made defendants in the Amended Complaint filed August 29,

1974.

attached to Petition for Certiorari as App. B, 33-49.) However,

the District Court did suggest certain changes in the termination

procedure of MLG&W “to improve the procedure used in

terminating utility services for non-payment and with respect to

negotiating disputes and difficulties about the outstanding

amount of bills.” (App. B to Petition for Certiorari, 48).

The Court of Appeals reversed the decision of the District

Court in so far as it held that the Crafts had been afforded due

process and remanded the case to determiiie ihe specific process

due. Craft v. Memphis Light, Gas & Water Division, 534 F.2d

684 (6th Cir. 1974). The Court of Appeals affirmed that portion

of the District Court decision which held no due process

violation as to Sarah Parks but reversed the lower court finding

of no equal protection violation as to Ida Bell Holmes. Since no

review was sought in this Court concerning that portion of the

decision concerning Holmes and Parks, only the holding of the

Court of Appeals concerning Mr. and Mrs. Willie S. Craft is

presently before the Court. 4

Mr. and Mrs. Willie S. Craft, homeowners in Memphis, had

their water and other utility services cut off five times by

MLG&W between June, 1973 and the filing of this suit in

February 1974. (App. B to Petition for Certiorari, 38). The first

time, when only their water service was terminated, Mrs. Craft

took a day off work and went to the main office of MLG&W,

where she stayed the entire day attempting to ascertain the

reason for the termination. Because the matter was not resolved

the first day, Mrs. Craft returned the following morning in a

further attempt to have her water service restored. The matter

again was not resolved, and the Craft family was without water

service for a week before service was restored. (A.86-87).

Shortly after the water problem was resolved, the Crafts began

to receive two computer billings each month fom MLG&W,

4One of the original plaintiffs, Annie Sue Funzie, did not participate in the

trial or the appeal below because, by stipulation of counsel for both parties, her

utilities had been terminated for failure to pay a correct and undisputed utility

bill.

each containing charges for gas and electricity service. (A.89,

33-35). One computer bill was in the name of Willie S. Craft and

the other in the name of Willie C. Craft. Over a period of several

months, all the Crafts’ utility services were terminated at least

four times. The employee of MLG&W effecting the terminations

did not personally contact the Crafts or any other person in the

home prior to making the terminations. (App. B to Petition for

Certiorari, 38). When service was terminated, Mrs. Craft visited

the office of MLG&W to learn the reason for the double

computer billings and the terminations of service. Each time she

was unsuccessful. On at least three of these visits, Mrs. Craft

took off time from work and spent the entire day in MLG&W’s

offices. (App. B to Petition for Certiorari, 38; A.93).

The District Court specifically found that “all during the time

of these disputes, Mr. and Mrs. Craft made good faith efforts to

pay for their utilities as well as to straighten out their problems.”

(App. B to Petition for Certiorari, 39). Despite this, the Crafts

were met with hostility from MLG&W employees. For example,

on one occasion Mrs. Craft called MLG&W’s offices to explain

that she had paid the bill that MLG&W claimed was still

outstanding, but an MLG&W employee told her she must “pay

it again” to avert the threatened termination. (A.103-4). On

another occasion, Mrs. Craft was cursed by an MLG&W

employee. Jd. MLG&W’s employees also refused to identify

themselves or disclose to Mrs. Craft the names of any

supervisors to contact. (A.97).

’ The Crafts finally were told by MLG&W that the reason for

the double computer billing each month was that they had two

gas meters and two electric meters at their house. Although the

Crafts were aware of the two meters, they thought one set was

closed off. At the suggestion of MLG&W, the Crafts then paid

$152.20 to have one set of meters removed. Nevertheless, the

Crafts continued to receive double computer billings for two

months after the extra meters were removed. (A.94; App. B to

Petition for Certiorari, 38).

Not until after this 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. 5 (A.171).

When MLG&W’s computer determines that payment is not

received for utility service, the computer sends a form notice to

the customer, stating that service will be disconnected if the

amount listed as due is not paid by 5:00 P.M. on the date listed.

(Def. Ex. 7; A.42, 136). With the notice is one of two “flyers’’.©

The first, sent to 40% of MLG&W’s customers given final

notice, informs customers solely of the availability of community

credit counseling procedures to help a customer “having

difficulty paying” the bill. It does not inform the customer of any

steps to take to resolve a disputed bill. The second flyer, sent

only to areas not accommodated by community credit counseling

Stations, possibly mentions that the customer may bring the bill

to an MLG&W office if there is a dispute. Craft v. MLG&W,

supra, 534 F.2d at 688 n.47 The Court of Appeals refused to

find that the Crafts were sent this second flyer. 8 Jd.

Memphis Light, Gas & Water Division, a municipal utility,

has “no established procedure for resolution of disputes” with its

customers, Jd. at 689, either before or after the termination of

service. Nor has MLG&W any written policies concerning

resolution of disputes. Furthermore, no agency provides any

5 The city service fee is a separate item on the regular utility bill as specified

by the City of Memphis Code, Section 19-14.

6 See Craft v. MLG&W, supra, 534 F.2d at 688 n.4.

7 Although MLG&W’s witness quoted one of their “flyers” as giving

information concerning resolution of disputes (A.137), the flyers that he

introduced into evidence contained no language about dispute resolution. (Def.

Ex. 9(a) and 9(b); A.45, 137).

8 MLG&W failed to introduce evidence at trial to show whether the Craft’s

resided in a geographic area not served by community credit counseling

stations. Mrs. Craft testified at trial that she did not receive the second flyer, or

any other notice of termination. (A.102-3).

complaint resolution procedures for disputes with MLG&W.

The Tennessee Public Service Commission has no jurisdiction

over municipal utilities. Tenn. Code Ann. §6-1306, 1317.

A customer who has a dispute with MLG&W may seek to

resolve the matter by complaining to MLG&W’s employees, as

did Mrs. Craft. But this is left entirely to the initiative of the

customer, and there is no established procedure to be followed.

(A.162-3). The only way a customer even would know with

whom to talk is by word of mouth referral. (A.163). As the Court

of Appeals noted, the Secretary-Treasurer of MLG&W at first

refused to acknowledge at the trial that any customer could have

a bona fide dispute, although later in the trial tie acknowledged

there could be customer disputes in extremely limited circum-

stances. Craft v. MLG&W, supra, 534 F.2d at 689 & n.7;

(Tr.226-9) (A.164).

Although MLG&W does have a well defined extended

payment plan for those having difficulty paying an admitted

liability, this “‘provides no avenue for customers who . . . dispute

the existence of the liability.” Craft v. MLG&W, supra, 534

F.2d at 689.

SUMMARY OF ARGUMENT

Water, gas and electricity service from a municipally owned

utility is a property interest protected by the Due Process Clause

of the Fourteenth Amendment. Protected property interests

include a “‘variety of interests which are difficult of definition”,

Paul v. Davis, 424 U.S. 693, 710 (1976), and they are defined

and determined by any of several sources, including state law.

Goss v. Lopez, 419 U.S. 565 (1975).

Tennessee common law establishes that the Crafts have a

property interest in the continued receipt of water and other vital

utility services. Customers of a utility have a “legal right” under

Tennessee law to continued service and the utility has a “legal

duty” to supply it. Crumley v. Watauga Water Co., 99 Tenn.

420, 41 S.W. 1058 (1897); Farmer v. Nashville, 127 Tenn.

509, 156 S.W. 189 (1912). Although a recipient of utility

service may be required to comply with reasonable regulations of

a public utility, including payment of a justly imposed bill, a

customer’s service cannot be terminated lawfully where a bona

fide dispute exists. Trigg v. Middle Tennessee Electric

Membership Corp., 533 S.W.2d 730 (Tenn. App. 1975), cert.

den., March 15, 1976.

Since the Crafts have a property interest in the continued

receipt of water, gas and electricity, ‘‘the question remains, what

process is due”. Morrissey v. Brewer, 408 U.S. 471, 481

(1972). MLG&W’s termination procedures lack even the

minimum due process requirements of notice and an opportunity

to be heard. Mullane v. Central Hanover Bank & Trust Co.,

339 U.S. 306, 313 (1950); Wolff v. McDonnell, 418 U.S. 539,

557-8 (1974). The notice form used by MLG&W .-is not

reasonably calculated to inform the consumer of any method for

disputing a contested bill, nor does MLG&W or any agency

provide any hearing procedure for the resolution of disputes

either before or after termination of service.

Determination of the specific requirements of due process

requires analysis of the various interests at stake. Mathews v.

Eldridge, 424 U.S. 319 (1976). The severity of deprivation of

water and other services, the great risk of erroneous deprivation,

and MLG&W’s minimal interest in prompt payment and

minimal administrative burden require MLG&W to provide

timely notice adequately informing the customer of the reasons

for the termination and the steps to take to resolve a dispute

concerning the bill and to provide a hearing prior to termination.

Palmer v. Columbia Gas Co., 479 F.2d 153 (6th Cir. 1973).

The hearing should include the right to present information and

rebut the records presented to support the proposed termination,

the right to an impartial decision maker and a written decision.

Goldberg v. Kelly, 397 U.S. 254 (1970).

ARGUMENT

RESPONDENTS HAVE A_ PROTECTED

PROPERTY INTEREST IN THE RECEIPT OF

WATER, GAS AND ELECTRICITY SERVICE

FROM PETITIONERS.

This Court consistently has held that property interests

protected by the Due Process Clause of the Fourteenth

Amendment from arbitrary governmental deprivation 9 consist of

more than the “actual ownership of real estate, chattels or

money”, Board of Regents v. Roth, 408 U.S. 564, 572 (1972),

and include a “variety of interests which are difficult of

definition.” Paul v. Davis, 424 U.S. 693, 710 (1976). See

Dixon v. Love, ___ U.S. ____ , 45 U.S.L.W. 4447 (1977) and

Bell v. Burson, 402 U.S. 535 (1971) (driver’s license); Mathews

v. Eldridge, 424 U.S. 319 (1976) and Goldberg v. Kelly, 397

U.S. 254 (1970) (welfare benefits); Goss v. Lopez, 419 U.S.

566 (1975) (pubiic school education); North Georgia Finishing

Co. v. Di-Chem, Inc., 419 U.S. 601 (1975) (possessory interest

in chattel goods); Perry v. Sindermann, 408 U.S. 593 (1972)

(contract of employment at state university); Wisconsin v.

Constantineau, 400 U.S. 433 (1971) (right to purchase liquor).

To determine whether an interest is protected by the Due

Process Clause, the Court has directed the inquiry to various

possible sources of protection, such as specific guarantees of the

Bill of Rights incorporated into the Fourteenth Amendment, see

Monroe v. Pape, 365 U.S. 167 (1961) (unreasonable search and

seizure violative of the Fourteenth Amendment); Paul v. Davis,

® Since MLG&W is municipally owned and operated (App. B to Petition for

Certiorari, 38), its conduct of terminating the Crafts’ utilities constitutes state

action or action under color of state law. Avery v. Midland County, 390 U.S.

474, 479-80 (1968). Thus, this case raises the issues specifically reserved by

the Court in Jackson v. Metropolitan Edison Co., 419 U.S. 345, 359 (1974).

424 U.S. 693, 710 n.5 (1976); or the “core values” of liberty,

see Morrissey v. Brewer, 408 U.S. 471, 482 (1972) (interest in

continued parole); or those rights “ ‘fundamental’ or ‘implicit in

the concept of ordered liberty.’”’ Roe v. Wade, 410 U.S. 113,

152 (1973) (woman’s decision to terminate pregnancy); see

Boddie v. Connecticut, 401 U.S. 371, 374-7 (1971) (indigent’s

right of access to courts to dissolve marriage).

This Court also has held that state law can be a source of

protected interests. For example, in Goss v. Lopez, supra, 419

U.S. at 572-3, the Court, finding a protected property interest in

public school attendance, stated, “Protected interests in property

are normally ‘not created by the Constitution. Rather they are

created and their dimensions defined’ by an independent source

such as state statutes or rules entitling the citizen to certain

benefits.” The specific aspect of state law creating the protected

interest may be a statute or regulation, see Goss v. Lopez, supra

(right to attend public school); an ordinance, cf. Bishop v. Wood,

426 U.S. 341 (1976) (public employment); a contract, express

or implied, see Perry v. Sindermann, supra (employment at state

university); a policy or practice, see Perry v. Sindermann, supra,

408 U.S. at 603; or the state common law, see North Georgia

Finishing Co. v. Di-Chem, Inc., supra; Boddie v. Connecticut,

supra, 401 U.S. at 375. Thus, a right or status recognized by

State law is subject to the protection of the Due Process Clause.

Paul v. Davis, supra, 424 U.S. at 711.

The state law need not explicitly grant the specific protected

interest as long as it creates a reasonable expectation, or

“legitimate claim of entitlement”, to the property or liberty. See

Perry v. Sindermann, supra (implied contract); Morrissey v.

Brewer, supra, 408 U.S. at 479 (parolee’s continued entitlement

to liberty “implicit” in parole system); see also Bell v.

Burson, supra (no express right to continued enjoyment of a

driver’s license); Wisconsin v. Constantineau, supra (property

interest exists in purchasing liquor absent express authority);

Schware v. Board of Bar Examiners, 353 U.S. 232 (1957) (no

express right to practice law); Dent v. West Virginia, 129 U.S.

114 (1889) (no express right to practice medicine). That the

expectation or entiliement is a “privilege” rather than a “right” is

not relevant. E.g., Elrod v. Burns, 427 U.S. 347, 361 (1976);

see generally Van Alstyne, Cracks in “The New Property”, 62

Cornell Law Rev. 445, 445-8 (1977).

Similarly, that the entitlement is not unconditional has

uniformly been assumed to be no bar to protected status where

the person’s interest is more than a unilateral expectation or

abstract need or desire. See, e.g., Mathews v. Eldridge, supra

and Goldberg v. Kelly, supra (no right to welfare benefits absent

eligibility); Goss v. Lopez, supra (no right to continuous free

public education if less than 6 years old, more than 21 years old,

or where misconduct exists); Wolff v. McDonnell, 418 U.S. 539

(1974) (no right to good time credits where there is flagrant or

serious misconduct); Bell v. Burson, supra (no right to driver’s

license if under age, if unable to pass driver’s test, or if uninsured

and unable to post security after involvement in accident);

Connell v. Higgenbotham, 403 U.S. 207 (1971) (no right to

continued public employment where misconduct exists); Wis-

consin y. Constantineau, supra (no right to purchase liquor if

under age or if dangerous to peace of community); Schware v.

Board of Bar Examiners, supra (no right to practice law if bad

moral character or lacking in proficiency in the law). See also

Monagham, Of Liberty and Property, 62 Cornell L. Rev. 405,

440-41 (1977).

Tennessee common law creates in the Crafts “‘a legitimate

claim of entitlement” to continued receipt of water, gas and

electricity service from MLG&W. See Farmer v. Nashville, 127

Tenn. 509, 156 S.W. 189 (1912); Crumley v. Watauga Water

Co., 99 Tenn. 420, 41 S.W. 1058 (1897); Trigg v. Middle

Tennessee Electric Membership Corp., 533 S.W.2d 730, 733

(Tenn. App. 1975), cert. den., March 15, 1976.

The Tennessee Supreme Court held in Crumley that

customers of the water company had a “present legal right’’ to

water service. 99 Tenn. at 427. The water company had

accepted Crumley’s note for his past due obligation for water

previously furnished. After a short period of not taking the

company’s water, Crumley requested resumption of water

Service and tendered the regular rates. The water company

refused to provide service until Crumley actually paid in full his

past due bill. The Tennessee Supreme Court held that the

company had breached its legal duty toward Crumley by refusing

to provide water since it already had accepted his credit for past

indebtedness. Jd. at 423. As the Court reasoned:

There are exceptions to the general rule that a person

engaged in business may, at his election, and without good

reason, refuse to deal with some other person. These

exceptions embrace . . . gas companies, electric light

companies, and water companies, and are based upon the

public nature of the business done by such persons. Being

engaged in public business under public grants, they are

charged with public duties.

Id. at 422-3.

Similarly, in Farmer v. Nashville, supra, a tenant brought suit

against the City of Nashville because of the latter’s refusal to

provide water service to his home. The city had terminated

service based on a previous tenant’s unpaid bill charged to the

owner. The city maintained that its by-law permitted termination

for non-payment of the water bill by the property owner to whom

the service was provided. The Tennessee Supreme Court,

however, finding for the tenant, held that the city utility was

“charged with the public duty of furnishing water to all the

inhabitants of the city,” 127 Tenn. at 515, and that its by-law

was “unjust, unreasonable, and unauthorized by...[its! charter,

and is therefore void.” Id. at 518. Accord, Watauga Water Co.

v. Wolfe, 99 Tenn. 428, 430-31, 41 S.W. 1060, 1061 (1897);

Trigg v. Middle Tennessee Electric Membership Corp., supra,

533 S.W.2d at 733.

Furthermore, Tennessee law provides that a utility, having

extended service to an area, has no right to withdraw service

from customers in that area on the ground that it had no

obligation to provide service in the first instance. Chandler Inv.

Co. v. Whitehaven Utility Dist. of Shelby County, 44 Tenn.

App. 1, 21, 311 S.W.2d 603, 612 (1957), cert. den., March 4,

1958. Thus, since utility service has been extended by

MLG&W, the Crafts have a legitimate claim of entitlement to

the service and it cannot be revoked arbitrarily.

MLG&W relies on Patterson v. City of Chattanooga, 192

Tenn. 267, 241 S.W.2d 291 (1951) to contend that it has no

legal duty to continue service to customers who do not pay the

full charges MLG&W claims is due. Petitioners’ Brief at 25.

They thus assert an unrestricted right to terminate service during

a dispute over a bill even where the customer makes good faith

efforts to both resolve the dispute and pay the undisputed portion

of the bill. Jd. at 29-31.

But Patterson does not support this contention. It held only,

and quite properly, that utility customers have no property nght

in continued utility service where there is an undisputed non-

payment of a prop<: bill and the utility has adopted reasonable

regulations permittiug termination in such circumstances. Pat-

terson v. City of Chattanooga, supra, 192 Tenn. at 276, 241

S.W.2d at 296. This holding is entirely consistent with Farmer,

Crumley and Trigg. Indeed, the Court in Patterson cites Farmer

with approval, Jd., and does not purport in any way to overrule

its seminal decision in Crumley.

As in Farmer, Crumley and unlike Patterson, this case does

not involve non-payment of an undisputed proper bill. The

Crafts’ water and other services were terminated because of a

bona fide, indeed valid, dispute and despite the Crafts’ good faith

efforts to resolve the dispute promptly. It is the common law of

Tennessee, as in other jurisdictions without exception, !0 that it

is unreasonable and unlawful for a utility to terminate service

where a bona fide dispute exists.

10 See, e.g., Mobile Electric Co. v. Nelson, 209 Ala. 554, 96 So. 713 (1923);

Steele v. Clinton Electric Light & Power Co., 123 Conn. 180, :93 A. 613

(1937); Winchester v. Kentucky Utilities Co., 182 Ky. 144, 206 S.W. 296

(1929); Mississippi Power Co. v. Cochran, 167 Miss. 705, 147 So. 473

(1933); Randolph v. St. Joseph Gas Co., 250 S.W. 642 (Mo. App. 1923);

Miller v. Roswell Gas & Electric Co., 22 N.M. 594, 166 P. 1177 (1917);

Amold v. Carolina Power & Light Co., 168 S.C. 163, 167 S.E. 234 (1933);

Southwestern Gas & Electric Co. v. Stanley, 123 Tex. 157, 70 S.W.2d 413

(1934); Annot., 112 A.L.R. 237 (1938).

A company supplying electricity to the public has the

right to cut off service to a customer for nonpayment of a

just service bill and the company may adopt a rule to that

effect. Annot. 112 A.L.R. 237 (1938). An exception 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., 123 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).

Trigg v. Middle Tenn. Electric Membership Corp., supra, 533

S.W.2d at 733.

Because of the utility’s natural monopoly and public duty, the

utility is so constrained even if it adopts a rule or regulation

permitting termination despite the dispute:

We are aware that defendant’s rules and regulations,

which plaintiffs agreed to obey, require payment whether or

not a bill is received by a customer. In our view however,

this rule does not resolve the conflict that arises when a

customer, who is willing to and does pay a certain portion of

the bill, disputes the amount due. A public utility should not

be able to coerce a customer to pay a disputed bill.

(emphasis added)

Id. See also Crumley v. Watauga Water Co., supra, 99 Tenn. at

427. Like the utility in Trigg, MLG&W’s regulation permitting

termination of service for non-payment does not “resolve the

conflict” in favor of MLG&W where there is a bona fide dispute.

Thus, under Tennessee law MLG&W is under a “legal duty”’ to

provide, and the Crafts have a “legal right” to receive, water and

other services. Farmer vy. Nashville, supra; Crumley v.

Watauga Water Co., supra.

The common law right to utility service particularly requires

due process protection because of the extent of the deprivation

involved. Whether the interest is protected from arbitrary

deprivation by the Due Process Clause depends generally on its

“nature” rather than “weight”, Board of Regents v. Roth, supra,

408 U.S. at 571, but the extent of deprivation also may be

relevant. See Morrissey v. Brewer, supra, 408 U.S. at 481

(“grievous loss” of parole revocation); cf Meachum v. Fano,

427 U.S. 215, 235 (1976) (Stevens, J., dissenting) (“grievous

loss”); Goss v. Lopez, supra, 419 U.S. at 742-3 (Powell, J.,

dissenting) (“serious or significant infringement’’).

Deprivation of water is deprivation of “‘an absolute necessity

of life”. Davis v. Weir, 328 F. Supp. 317, 321 (N.D. Ga. 1971),

aff'd, 497 F.2d 139 (Sth Cir. 1974). Particularly in urban areas,

such as where the Crafts reside in Memphis, water from the

utility is “indispensible to life and health”. Koger v. Guarino,

412 F. Supp. 1375, 1388 (E.D. Pa. 1976), affd on opinion

below, F.2d _____ (3rd Cir. 1977); see also Lamb vy.

Hamblin, 57 F.R.D. 58, 60 (D. Minn. 1972) and discussion at

18, infra. There are no alternatives in urban areas, as in rural

regions, of streams or lakes. !! Thus customers of MLG&W,

like the Crafts, are entirely dependent on the utility for life-

sustaining water. Termination of gas and electricity service in

conjunction with water termination may be even more grievous,

particularly in winter, when death by freezing can occur quickly.

See Stanford v. Gas Service Co., 346 F. Supp. 717 (D. Kan.

1972), and discussion at p. 19, infra.

In sum, the Crafts’ legal right under Tennessee law to receive

water, gas and electricity from MLG&W is a property interest

protected by the Due Process Clause of the Fourteenth

Amendment. Wolff v. McDonnell, supra; Morrissey v. Brewer,

supra; Perry v. Sindermann, supra; Bell v. Burson, supra.

~ While the digging of a well is not prohibited outright in Memphis, it is

subject to extensive regulations and procedures making it entirely infeasible for

an individual urban homeowner. See City of Memphis Code § 32-102 et. seq.

RESPONDENTS ARE ENTITLED TO

ADEQUATE NOTICE AND HEARING

PRIOR TO BEING DEPRIVED OF THEIR

PROTECTED INTEREST IN WATER, GAS

AND ELECTRICITY SERVICE.

Since the Crafts possess a protected property interest in

continued water, gas and electricity service, their utility service

cannot be terminated by MLG&W without due process of law.

See, Mathews v. Eldridge, supra; Wolff v. McDonnell, supra;

North Georgia Finishing Co. v. Di-Chem, Inc., supra; Perry v.

Sindermann, supra. However, “the question remains what

process is due’. Morrissey v. Brewer, supra, 408 U.S. at 481.

Although “‘[d]ue process is perhaps the least frozen concept in

our law,” Griffin v. Illinois, 351 U.S. 12, 20-21 (1955)

(Frankfurter, J., concurring), this Court consistently has held that

adequate process encompasses at a minimum the right to notice

and an opportunity to be heard, Mullane v. Central Hanover

Bank & Trust Co., 339 U.S. 306, 313 (1960), and that these

rights “‘must be granted at a meaningful time and in a meaningful

manner.” Armstrong v. Manzo, 380 U.S. 545, 552 (1965).

A.MLG& W’s Notice Is Not Reasonably Calculated To

— A Customer Of The Method For Disputing A

ill. -

The notice used by MLG&W is constitutionally defective

because it fails to adequately inform customers how they can

dispute a bill. This Court has said:

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

afforded them an opportunity to present their objections.

Mullane v. Central Hanover Bank & Trust Co., supra, 339

U.S. at 314.

The computer notice sent to the Crafts was not reasonably

calculated to inform them of how to present their objection.

Designed solely to aid those unable to pay their bill, the notice fails

to mention any possible procedures for dispute resolution.

Accompanying the notice is one of two flyers. The first flyer, sent

to 40% of all customers sent final notice, also fails to mention any

procedures for dispute resolution. The second flyer, sent to

customers in only some areas, may refer to a procedure for

resolving a dispute, '? but the Court of Appeals refused to find that

the Crafts were sent this flyer. Craft v. Memphis Light, Gas &

Water Division, supra, 534 F.2d at 688 n.4. As the Court of

Appeals found in summing up the inadequacies of MLG&W’s

notice procedure:

Constitutionally sufficient ‘shut-off notice . . . [must]

provide the customer with the information he needs to

quickly and intelligently take available steps to prevent the

threatened termination of service.’ [Palmer v. Columbia

Gas, 479 F.2d 153, 166 (6th Cir. 1973)]. Yet the MLG& W

“final notice” no better informs customers, like the Crafts,

who dispute the underlying liability than the constitutionally

deficient notice in Palmer. Like the Columbia Gas notice

therein, the MLG&W notice fails to mention “that a dispute

concerning the amount due might be resolved through

discussion with representatives of the company.” Nor did the

notice, at least prior to the opinion of the district court, inform

the customer that “‘[c]redit [c]ounselors are available to clear

up any questions, [to] discuss disputed bills or to make any

needed adjustments.” [Citation and footnote omitted.] Like

the Columbia Gas notice, the MLG&W notice only warns

the customer to pay or face termination. See Davis v. Weir,

359 F. Supp. 1023, 1026 (N.D.Ga. 1973); Bronson, supra,

350 F. Supp. at 450.

Id., at 687-89.

"MLG&W changed its notice in response to a suggestion by the District

Court. However, the amended notice fails to make any reference to procedures

for resolving a dispute. See Craft v. MLG&W, supra, 534 F.2d at 688 n.5.

"See footnote 7, supra.

The procedures followed by MLG&W’s service personnel

actually effecting the termination are also completely inadequate

for customers with disputed bills. MLG&W’s witness testified

that service personnel are instructed to “‘attempt” a personal

contact prior to termination by knocking on the customer’s door.

(A. 112). But as “se District Court found, the Crafts never

received such personal notice, (App. B. to Petition for Certiorari,

38), and in fact such attempts are unsuccessful nearly one half the

time. (A. 191). Even if personal contact were made, service

personnel are authorized to postpone the termination only if there

is an illness in the family or if the customer states that full payment

is in the mail. (A. 112). They have no authority to postpone where

a customer, like the Crafts, contests a bill. Craft v. MLG&W,

supra, 534 F.2d at 689.

In sum, MLG&W relies on three inadequate procedures to

satisfy the notice requirement of due process: (1) a final notice

that contains no indication of how a miscalculated bill might be

questioned, challenged and corrected; (2) a reference to a

procedure for dispute resolution contained in a “flyer” sent to

customers in only some geographic areas but not sent to the Crafts;

and (3) the possibility of personal contact by service personnel

who cannot postpone termination for persons, like the Crafts,

disputing a bill.

While these procedures may be adequate constitutionally for

those unable to pay their bill, that issue is not before this Court.

The issue here is whether the notice was reasonably calculated to

inform the Crafts of the procedures for disputing a bill. The

procedures are wholly inadequate for this purpose.

B. The Complete Lack of Hearing Procedures For The

Resolution of Disputes Violates Due Process

The procedural due process decisions of this Court have

“consistently held that some kind of hearing is required at some

time before a person is finally deprived of his property interests.”

Wolff v. McDonnell, supra, 418 U.S. at 557-558 (emphasis

added). E.g., Smith v. Organization of Foster Families,

U.S.— ,45 U.S.L.W. 4638, 4646 (June 13, 1977); Mathews v.

Eldridge, supra, 424 U.S. at 333; North Georgia Finishing Co. v.

Di-Chem, Inc., supra, 419 U.S. at 606; Goss v. Lopez, supra,

419 U.S. at 578; Board of Regents v. Roth, supra, 408 U.S. at

568-70; Bell v. Burson, supra, 402 U.S. at 542; Wisconsin v.

Constantineau, supra, 400 U.S. at 437.

Neither MLG&W nor any administrative agency has any

hearing procedures for the resolution of customer disputes, either

before or after termination. In fact, MLG&W’s Secretary-

Treasurer was reluctant to admit that a customer could ever have a

bona fide dispute. Craft v. MLG&W, supra, 534 F.2d at 689 &

n.7. The Crafts were terminated on a least five separate occasions.

Yet, they were forced to bring this action to ascertain the reasons

for termination. Mary Craft lost at least five full days from work to

go to MLG&W’s office in a vain effort to learn why her family was

left without water and other services. (A. 93).

This is not a case where extensive procedures are provided but

the time or sufficiency of the hearing procedures is in issue.

Compare with Smith v. Organization of Foster Families, supra,

45 U.S.L.W. at 4639-42 (extensive statutory procedures); Dixon

v. Love, supra, 45 U.S.L.W. at 4448-49 (full post-deprivation

hearing on license suspension plus full judicial hearing on each

conviction); Mathews v. Eldridge, supra, 424 U.S. at 335-40

(““elaborate”’ post-termination proceedings).

Rather this case involves a complete lack of hearing procedures

for resolving disputes. This case, therefore, is similar to other

decisions of this Court where the absence of any hearing procedure

was found to be violative of procedural due process. See, e.g.,

Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S.

123, 149 (1951) (Frankfurter, J., concurring) and cases cited

therein; Perry v. Sindermann, supra; Morrissey v. Brewer, supra.

MLG&W cites its procedure for arranging extended payment

as proof of adequate hearing procedures. The extended payment

plan, however, is not meaningful to customers, like the Crafts, who

are ready and willing to pay what they actually owe, but dispute

the amount of the bills. As the Court of Appeals found, the

extended payment plan “provides no avenue for customers

who . . . dispute the existence of the liability.” Craft v. MLG& W,

supra, 534 F.2d at 689.

C.Analysis of the Competing Interests Requires a

Meaningful Hearing Prior to Termination of

Service.

Recently, this Court has articulated a standard for considering

the pertinent interests to determine the type and nature of a hearing

required by due process. In Mathews v. Eldridge, the Court

stated:

{O]jur prior decisions indicate that identification of the

specific dictates of due process generally requires

consideration of three distinct factors: first, the private

interest that will be affected by the official action; second, the

risk of an erroneous deprivation of such interest through the

procedures used, and the probable value, if any, of auditional

or substitute procedural safeguards; and finally, the

Government’s interest, including the function involved and

the fiscal and administrative burdens that the additional or

substitute procedural requirement would entail.

424 U.S. at 334-5; see Smith v. Organization of Foster Families

for Equality and Reform, supra, 45 U.S.L.W. at 4646; Dixon v.

Love, supra, 45 U.S.L.W. at 4449; Ingraham vy. Wright, ___

U.S. ___., 97 S. Ct. 1401, 1414-15 (1977); see also Goss v.

Lopez, supra, 419 U.S. at 579.

Analysis of these three factors shows that the Crafts have

suffered a grievous deprivation; the risk of erroneous deprivation is

substantial; and MLG&W and the City of Memphis will suffer

little harm and actually may benefit from imposition of hearing

requirements.

1. Deprivation of Water, Gas and Electricity Service is

Severe.

Water is an absolute necessity of life. Koger v. Guarino, supra;

Davis v. Weir, supra. It is necessary for nourishment, personal

hygiene and sewage disposal. A home without access to water is

unfit for human habitation. See City of Memphis Code §51-111

et. seq. The absence of water can cause disease and death and is a

clear public safety hazard. As one district court observed:

“Termination of water service inflicts hardships on the consumer

that transcend the deprivation of other protected interests”. Lamb

v. Hamblin, supra, 57 F.R.D. at 61.

While water is unique for human life, the loss of electricity and

gas also can threaten life, health and safety. Early found to be a

“indispensible necessity of life,” Jones v. Portland, 245 U.S. 217,

223 (1917), electricity runs oil and coal burners, refrigerates food,

and lights homes. Termination of electricity can shut off home life

support systems. '* Elderly people have died when their furnaces

could not function for lack of electricity. See, e.g., Grand Jury

Report Pursuant to Section 190.85 of the Criminal Procedure

Law of the State of New York (Schenectedy Cty., N.Y. June 21,

1974).

Gas similarly is used for heat in many homes, and its absence

can be threatening to life. As one court noted in comparing loss of

gas with loss of welfare benefits: “A person can freeze to death or

die of pneumonia much more quickly than he can starve to death.”

Palmer v. Columbia Gas Co., 342 F. Supp. 241, 244 (N.D.Ohio

1972), aff'd, 479 F.2d 153 (6th Cir. 1973). See also Stanford v.

Gas Service Co., supra, 346 F. Supp. at 719-20 (gas for heating is

“necessary to sustain life’’); Re Transcontinental Gas Pipeline,

16 P.U.R.4th 423, 451 (F.P.C. 1976) (mandatory cessation of

‘*A case documented in the Massachusetts Department of Public Utilities

involves a child whose life depended on an electric breathing system. Her mother

allegedly owed an electric bill. With knowledge of the situation, the company

attempted termination. Fortunately for the child, termination mistakenly was

effected of her aunt's electric service. Re Mary Silva (Mass. D.P.U. Oct. 1976).

gas service held unacceptable because of “potential dangers . . . of

human suffering”).

Thus, the cumulative consequences of water, gas and electricity

termination are potentially catastrophic, depriving the customer of

“‘the very means by which to live.” Goldberg v. Kelly, supra, 397

U.S. at 264. It constitutes a deprivation far more serious and

immediate than the loss of welfare benefits, Jd.; wages, Sniadach

v. Family Finance Co., 395 U.S. 337 (1969); driver’s license,

Bell v. Burson, supra; possession of personal property, North

Georgia Finishing Co. v. Di-Chem, Inc., supra; and the monetary

loss resulting from paying higher wages, Opp Cotton Mills v.

Administrator, 312 U.S. 126 (1940), all of which require

substantial procedural protections.

The power to terminate water and other vital services is the

power to coerce. See Crumley v. Watauga Water Co., supra, 99

Tenn. at 427, 41 S.W. at 1060; Trigg v. Middle Tenn. Electric

Membership Corp., supra, 533 S.W.2d at 733. Procedural

protections for Memphis residents, like the Crafts, are essential to

shielcé them from the severe consequences of arbitrary government

termination of vital services.

2. The Risk Of Erroneous Deprivation Is Substantial And

Procedurai Safeguards Will Avoid Unwarranted Injury.

In large governmental entities like MLG&W, the problem of

computer and human error is significant. MLG&W, involved in

multitudinous transactions with the public, bills hundreds of

thousands of customers monthly by computer. (A. 73). Computer

transactions now affect the individual in most aspects of daily life.

See, e.g., Senate Committee on Government Operations, Staff

Study on Computer Security in Federal Programs, 95th Cong..

1st Sess. 5-6 (1977) (computers used pervasively in government);

Electronic Funds Transfer Systems: A Symposium, 25 Cath.

U.L. Rev. 687 (1976) (financial matters); Medical Data Privacy:

Automated Interference With Contractual Relations, 25 Buff. L.

Rev. 491 (1976) (medical profession); Law and Technology

Symposium, 52 Chi-Kent L. Rev. 545 (1976) (legal profession);

see generally Index and Tenth Selected Bibliography On

Computers and the Law, 5 Rutg. J. Computers & Law 505

(1976). While computers clearly benefit all by magnifying

capabilities, they also magnify mistakes. “Computer error’’ is

fearsome and has prompted considerable response, including

comprehensive legislation, see Fair Credit Billing Act, 15 U.S.C.

§ §1661, et seq., and a voluminous report by a national

commission. See National Commission on Electronic Fund

Transfers, EFT and the Public Interest (1977). The legislative

history to the Fair Credit Billing Act, describing the dangers of

computer error, cites a Minneapolis study that found that one of

three Minneapolis residents had been subjected to “computer

error”. S. Rep. No. 93-278, 93d Cong., Ist Sess. 5 (1973). AU.S.

Senate study found federal government computer errors of

“hundreds of millions of dollars a year’, Senate Committee on

Government Operations, Problems Associated With Computer

Technology in Federal Programs and Private Industry:

Computer Abuses, 94th Cong., 2d Sess. 50 (1976), and cited, for

example, a 24% error rate in SSI computer checks in 1975, Id. at

425, an allegedly erroneous election result caused by “computer

error’, Jd. at 433, and various natural occurrences and man-made

problems affecting computer reliability. Jd. at 427 (“Error is a

Terror’).

The incidence of computer error by utilities brought several

federal courts to comment on the “Orwellian nightmare of

computer control which breaks down through mechanical and

prog:ammers’ failures and errors’. Bronson v. Consolidated

Edison Co. of New York, 350 F. Supp. 443, 444 (S.D.N.Y.

1972); see also Palmer v. Columbia Gas, supra, 479 F.2d at 158.

The risk of error by computer is substantial, not because of its

inherent unreliability, but because of the ease of replicating one

error a thousandfold and the difficulty of resolving a problem with

an impersonal machine.

The reported utility cases reveal a variety of both computer and

human errors. Examples include improper late billing, Trigg v.

Tennessee Electric Membership Corp., supra; billing one person

for the utility use of another, Palmer v. Columbia Gas, supra;

billing the tenant for the landlord’s bill, Davis v. Weir, 497 F.2d

139 (Sth Cir. 1974); Koger v. Guarino, supra; refusing to

investigate gas leaks until large bills result, Palmer, supra; failure

to investigate excessive use of utilities resulting from the landlord’s

theft of utility services, Bronson, supra; Palmer, supra; and the

instant case of double billings.

These reported cases do not represent isolated mistakes. For

example, in Bronson, supra, the court noted that the New York

Public Service Commission had found that 16% of all complaints

investigated resulted in adjustments in favor of the customer. 350

F. Supp. at 448 n.1’ The magnitude of such utility errors

undoubtedly has ptovided impetus for many states and

municipalities to adopt regulations such as those noted in

Appendix A to this brief.

Furthermore, computer and human error are not the only

reasons ior imposing procedural requirements on MLG&W. "

MLG&W has exhibited a callous, injurious attitude toward their

customers, exemplified by the Crafts’ experience. Although the

District Court found that the Crafts had a valid dispute with

MLG&W and made good faith efforts to resolve the problem,

Mrs. Craft was cursed by an MLG& W employee, told to pay her

bill twice, and was refused the names of any supervisors to contact

to discuss the dispute. (A. 97, 103-4).

The high incidence of error and the callous attitude of some

MLG&W employees demonstrate the need for notice and prior

hearing to resolve disputes. Such procedural safeguards are

necessary to provide customers with protection against unwar-

ranted terminations based solely upon computer determinations.

'*In addition to the specific erroneous charges found by the District Court in

the Crafts’ case, there are at least two other issues not discussed. One related to

the “‘net-gross”’ billing which is found in the form reprinted in the decision below

as Exhibit 7,534 F.2d at 688. Where a disputed bill is carried forward into a new

billing period, the Crafts would always be paying the “gross” amount which

includes a late payment penalty. Also, if the Crafts were billed erroneously as if

they were two customers instead of one, they would fail to get any quantity

discount which MLG&W provided.

3. The Administrative Burden of Additional Termination

Procedures is Minimal, and Memphis Has An Interest In

Avoiding Erroneous Terminations.

Numerous states and municipalities have adopted customer

service regulations '° providing substantial procedural safeguards

prior to termination. As described in Appendix A to this brief,

Public Utility Commissions in 15 states'’ have adopted

regulations with substantial provisions for notice and hearings

before utility termination. Such regulations typically require

notice periods of several days; notice of procedural rights,

including prior hearing rights; access to company records; an

impartial oral hearing of some kind; and a written decision. Some

regulations place the emphasis on hearings within the utilities

while others place this responsibility in the regulatory

commissions. In all cases there is the ultimate possibility of a full

evidentiary hearing before an impartial regulatory body. This is in

sharp contrast to MLG&W procedures which provide no hearing

rights, either before or after termination.

The adoption and continued viability of these regulations

demonstrate that minimum procedures are not at all burdensome.

For example, although Michigan has one of the most

comprehensive customer service regulations, a recent report by

the Michigan Public Service Commission found that the

‘The term “customer service regulations” describes both utility and

regulatory practices relating to termination, security depasits, metering, billing,

and late payment charges.

"Connecticut, Indiana, Massachusetts, Maine, Michigan, Minnesota,

Missouri, New Hampshire, New Jersey, New York, Rhode Island, South

Carolina, Vermont, Washington, and Wisconsin. Fairbanks, Alaska recently

adopted extensive regulations. Fairbanks Ordinance No. 3576 (1977). In

addition, various municipalities have adopted regulations by consent decree See

McMormick vy. Dept. of Water, Civ. No. C 73-797-4 (N.D. Ohio 1974);

Colgrove v. Cleveland Dept. of Public Utilities, Civ. No. 74-1007 (N.D. Ohio

1974); Mathiew v. Brehm, Civ. No. 74-1521 (E.D. La. 1974); Allen v. Dept. of

Public Utilities, Civ. No. 403-72-R (E.D. Va. 1973); Wilkerson v. City of

Jacksonville, CCH Pov. L. Rep. 917,442 (M.D. Fla. 1973); Babcock v.

Schaffhauser, Civ. No. 15,300 (D. Conn. 1972), as amended 1976).

regulations have been a nominal burden on utility companies and

have had no impact on bad debt. The key findings of the report are:

[I]mplementation of the Consumer Standards and Billing

Practices has been beneficial to utility customers in the state

of Michigan in that they have afforded both the customer and

the utility a better understanding of each other and a

tolerance for each other’s problems.

The following specific conclusions were drawn:

1. The combined total costs for implementation (as

opposed to recurring expenses) of the Billing Practices Rules

could not be accurately estimated. . . . If total expenses of

implementation were $5 million, the cost would be

approximately $1 per customer. . . . The recurring costs

associated with the Billing Practices Rules are believed to be

negligible.

2. The Billing Practices had no appreciable negative

influence on uncollectable expense and bad debt estimates

in spite of the fact that some companies routinely failed to

collect accounts within the time frames permitted by the

rules, that Michigan’s economy was depressed during the

period covered by this study and that deposits were virtually

eliminated by the Billing Practices Rules.

3. The minimum standards in the Billing Practices are

being implemented by all companies. Several companies

allow customers more time to pay their bills than is required

by the Billing Practices Rules.

4. The mecical emergency provision has been invoked on

very few occasions. Company apprehensions of misuse of

this provision have proven groundless.

5. The most difficult area for transition was the hearings

and appeals provision. Subsequent to implementation of the

Billing Practices, the utilities experienced costs and

personnel requirements that have been far less than

projected levels.

6. Continuing costs associated with administration of the

rules are less than anticipated. (emphasis added)

Report of the Public Services Commission on the Utility

Company Survey of Consumer Standards and Billing Practices

of Electrical and Gas Residential Service (Nov. 29, 1976) at 1-2.

One obvious reason for the negligible costs of such regulations is

that the hearing usually will not involve witnesses or evidence

other than the utility’s records and the customer’s wn story.

Billing disputes typically do not require expert testimony, difficult

judgments on fault, misconduct or motive, or any balancing of

interests.

Nor does the government have a strong interest in immediate

termination. In fact, the government’s interest coincides with the

Crafts’ and other MLG&W customers’ in avoiding erroneous

deprivation.

MLG&W cites its fiscal obligation to all Memphis citizens to

justify the lack of procedural protections. However, the possibly

delayed payment'* is not non-payment, particularly since the

customer must pay all past and current undisputed charges or face

the effective coercion of immediate termination. (A. 76). See

Trigg v. Middle Tenn. Electric Membership Corp., supra;

Crumley v. Watauga Water Co., supra. As the Michigan Public

Service Commission report, supra, documents, even extensive

regulations have “no appreciable negative influence on

uncollectable expense and bad debt statements”’. Significantly,

MLG&W can recover any losses occasioned by delayed payment

through the imposition of late charges (A. 114, 117), application

of the deposit (A. 117), or by filing suit.

Fiscal integrity obviously is important for a utility; yet

MLG&W cannot cite any evidence that procedural protections

may impair its ability to collect proper bills or have any significant

effect on its financial resources. Indeed, the only evidence is to the

contrary. See Report of the |Michigan| Public Services

Commission, etc., supra. This minimal government interest is

contrasted with the strong state interest of removing dangerous

drivers from the highways, Dixon v. Love, supra, or protecting the

'SIt is questionable whether any additional delay need result from adoption of

procedural protections. Petitioners’ regulations currently provide a delay of at

least thirty days from billing to termination for non-payment. See Petitioners’

Brief at 28. Notice and hearing within this period will occasion no further delay.

interests of foster children, Smith v. Organization of Foster

_ Families, supra.

Indeed, termination regulations way well enhance MLG& W’s

financial situation. The Pennsylvania Public Utilities Com-

mission, in proposing extensive new regulations, stated:

It is anticipated that by implementing these regulations the

Commission will be able to deal more expeditiously with

consumer complaints, and in the long run, reduce ad-

ministrative and carrying costs for affected utilities.

Proposed Standards and Billing Practices for Residential Utility

Service, 6 Pa. Bull. 2989, Docket No. 76-PRMD-10 (Dec. 4,

1976). In addition, the City of Memphis has a clear interest in

avoiding erroneous terminations which may precipitate public

health problems from lack of water or illness and death from lack

of heat. See City of Memphis Code §51-111, et seq.

Based on the severe deprivation, high risk of error, and absence

of strong governmental interest, the Crafts are entitled to adequate

notice and a meaningful hearing before an impartial decision-

maker prior to termination of service. They do not seek the full

panoply of rights provided by public utility commissions in

numerous states, see App. A to this brief, but only those rights

necessary to prevent egregious and harmful error. All federal

district courts and courts of appeal finding a protected property

interest in utility service are in agreement on the minimum due

process requirements of adequate notice and hearing prior to

termination. See Craft v. MLG& W, supra; Palmer v. Columbia

Gas Co., supra; Koger v. Guarino, supra; Davis v. Weir, supra;

Dawes v. Philadelphia Gas Works, 421 F. Supp. 806 (E.D. Pa.

1976); Donnelly v. City of Eureka, 399 F. Supp. 64 (D. Kan.

1975); Condosta v. Vermont Elec. Cooperative, 400 F. Supp.

358 (D. Vt. 1975); Cottrell v. Virginia Elec. & Power Co., 62

F.R.D.516(E.D. Va. 1974); Limuel v. Southern Union Gas Co.,

378 F. Supp. 964 (W.D. Tex. 1974); Hattell v. Public Service

Co., 350 F. Supp. 240 (D. Colo. 1972); Bronson v. Consolidated

Edison Co. af New York, supra; Lamb v. Hamblin, supra;

Stanford v. Gas Service Co., supra; but cf Jackson v.

Metropolitan Edison Co., 483 F.2d 754 (3rd Cir. 1973), aff'd,

419 U.S. 345 (1974) (dicta, no state action); Lucas v. Wisconsin

Elec. Power [o., 466 F.2d 638 (7th Cir. 1972), cert. den., 409

U.S. 1114 (1973) (same).

MLG&W would have the Court disregard the traditional prior

notice and hearing rule. Without any balancing of the interests

articulated in Mathews v. Eldridge, supra, MLG&W suggests

that the “common law remedies” of injunction prior to

termination, suit for damages for wrongful termination, and

payment under protest are sufficient to satisfy due process.

The common law remedies can be constitutionally adequate in

certain specific contexts, such as where strong historical and

institutional considerations weigh heavily compared to a minor

private interest and a small risk of error. For example, in

Ingraham v. Wright, supra, an action challenging public school

corporal punishment, this Court noted that corporal punishment of

public school children was “rooted in history”, Jd. at 1418, and

critical to maintaining the discipline and order necessary for

proper functioning of the institution. Jd. at 1418; see also Taylor v.

Hayes, 418 U.S. 488 (1974) (trial court may punish

contemptuous conduct without notice and hearing wheie

necessary to maintain order). For these reasons, and because the

risk of erroneous deprivation was slight, Ingraham v. Wright,

supra, 97 S. Ct. at 1418, the Court was reluctant to become

immersed in the daily operation of the public schools or interfere

with the necessarily broad discretionary authority vested in local

school officials. Jd. at 1418; see also Tinker v. Des Moines

School Dist., 393 U.S. 503, 507 (1969); cf Goss v. Lopez, supra,

419 U.S. at 589-91 (Powell, J., dissenting). '°

In contrast, utilities are natural monopolies with public duties

and are subjected to extensive control and regulation intended to

protect the public from the arbitrary exercise of monopoly

'’The Court's reluctance to substitute its judgment for that of local school

officials is similar to its reluctance to interfere in the daily operation of a prison.

See Meachum v. Fano, 427 U.S. 215 (1976).

29 |

power. *”° See, e.g., F.P.C. v. Hope Natural Gas Co., 320 U.S. 591

_ (1943). Because the relationship between a utility and its

customers is not one of continuing personal supervision, courts

have not hesitated to decide issues affecting internal utility

management. See, e.g., F.P.C. v. United Gas Pipeline Co., 386

U.S. 237 (1967) (accounting methods for rate determination);

United States v. New Orleans Public Service, Inc., 553 F.2d 459

(Sth Cir. 1977) (utility’s monopoly status permits imposition of

Executive Order No. 11246 requiring equal opportunity

obligation and permitting inspection of books, even absent

consent). In particular, this Court increasingly has become active

in curbing the abuse of the monopoly position by public utilities.

See Cantor v. Detroit Edison Co., 428 U.S. 579 (1976); Otter

Tail Power Co. v. United States, 410 U.S. 366 (1972).

The “common law remedies” also may be adequate con-

stitutionally where the deprivation is not as severe as termination

of water, gas and electricity, the remedies supplement existing

administrative procedures, and the party is not entirely

government owned. Cf Lucas v. Wisconsin Electric Power Co.,

supra, a pre-Eldridge case not involving a balancing of interests,

where a privately owned electric utility was regulated by the state

public utility commission with its own complaint resolution

procedures.

Here, however, MLG&W is a municipally-owned utility

providing life-sustaining utility service to Memphis residents, has

no hearing procedure either prior to or after termination, is not

subject to regulation by, or hearing procedures of, a public utility

°In general, the Court has indicated more process is due where, as in this case,

the state has a monopoly in the services it renders. Compare Boddie v.

Connecticut, 408 U.S. 371 (1971) (filing fee requirement for divorce violated

due process for indigents where state monopolizes means for legally dissolving

marriages) with United States v. Kras, 409 U.S. 434, 443-446 (1973) (filing fee

requirement for bankruptcy petition not violative of due process since debtor has

alternatives) and Ortwein v. Schwab, 410 U.S. 656, 659-660 (1973) (no due

process violation for filing fee in appeal from adverse welfare decision since

welfare recipient had hearing not conditioned on payment of fee).

commission to review its excesses, has no procedure for

minimizing computer billing errors, and has only a minimal

interest in prompt payment.

Furthermore, the purported ““common law remedies” cited by

MLG&W are not adequate in Tennessee. The Tennessee courts

consistently have held that a utility customer may not be required

to pay a disputed bill as a condition of continued service. Crumley

v. Watauga Water Co., supra; Trigg v. Middle Tenn. Electric

Membership Corp., supra. Thus, payment under protest is

considered an inadequate remedy under Tennessee law. Nor can

suit for damages for wrongful termination be considered adequate

for residential termination, because the danger to health cannot be

evaluated monetarily. See Stanley v. Illinois, 405 U.S. 645, 647

(1972) (custody proceedings violated equal protection for unwed

father even though custody could have been regained later by

adoption); compare with North Georgia Finishing Co. v. Di-

Chem, Inc., supra; Fuentes v. Shevin, 407 U.S. 67 (1972), and

Sniadach v. Family Finance Co., supra (although deprivation of

money and personal property is susceptible to monetary

evaluation and suit for conversion was available, procedures

violated due process). Similarly, this Court consistently has held

procedures violative of due process despite the apparent

availability of injunctive relief. See, e.g., North Georgia Finishing

Co. v. Di-Chem, Inc., supra; Perry v. Sindermann, supra; Bell v.

Burson, supra; Goldberg v. Kelly, supra.

Thus, the Crafts submit that the following procedures are the

minimum required by due process. The notice should fully and

clearly apprise the customer of the utility’s proposed action and

the reason therefor, the procedures available to the customer to

dispute the bill, and the time in which the customer must act to

‘ avoid termination. See Mullane v. Central Hanover Bank &

Trust Co., supra, 339 U.S. at 306. Also, to be meaningful the

notice must permit adequate time for the customer to investigate

and respond. /d.

A customer disputing the bill should be allowed a reasonable

time to contact MLG& W about the matter. During this time, his

utilities should not be terminated, and if contact is made within this

a ee ee cornet Ce

period, and the dispute not resolved, utility services should be

continued pending resolution of the dispute. If the customer does

not contact MLG&W during this reasonable period, his utilities

may be terminated without further notice.

After notice, if the dispute is not resolved in an initial meeting

with an MLG&W supervisor, such as the Superintendent of

Credit and Collections, the Supervisor of Credit and Collections,

or the Chief Clerk of the Credit Department, a hearing of some

kind is necessary. The hearing, to be “meaningful”, Armstrong v.

Manzo, supra, should have three basic requirements in the utility

context: 1) an impartial decision maker, 2) the opportunity to

present information and rebut the records presented; and 3) a

written decision.

While the impartial decision maker may be an employee of the

City of Memphis or an independent third party, the decision maker

must be truly independent and have sufficient authority to resolve

the dispute in the customer’s favor. The decision maker’s

independence and authority are particularly important since there

is no statute or regulation under Tennessee law authorizing an

appeal.

The actual “hearing” could be informal. However, it must

provide the customer the opportunity to present information in

support of his position. As stated by the Court in Londoner v.

Denver, 210 U.S. 373, 386 (1908), a case involving the due

process requirements for municipal tax assessments, “‘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.”

The opportunity to rebut MLG&W’s records is particularly

necessary since a computer makes the determination. These

records must be presented to the decision maker and also made

available to the customer in an intelligible form. Otherwise, the

customer will have no meaningful way of disputing the computer’s

conclusion or knowing its calculations.

Finally, a written decision is important to avoid subsequent

disputes based on the same errors. The “decision” may be merely

a brief written notice of decision, but it should specifically address

the substance of the dispute.

CONCLUSION

Respondents respectfully request that this Court affirm the

decision of the Court of Appeals for the Sixth Circuit and hold that

Respondents’ interest in water, gas and electricity service from

Petitioners is protected by the Due Process Clause of the

Fourteenth Amendment.

Respondents further request that this Court find Petitioners’

procedures for resolving disputes insufficient to satisfy due

process. Respondents suggest that the minimum elements of due

process include adequate notice and a meaningful hearing before

an impartial decision-maker prior to termination, the opportunity

to present information and rebut the records presented, and a

written decision.

Respectfully submited,

THOMAS M. DANIEL

Memphis & Shelby County

Legal Services Association

325 Dermon Building

46 North Third Street

On The Brief: Memphis, Tennessee 38103

RICHARD H. ALPERT Counsel for Respondents

ALAN DAVIS

ELLIOT TAUBMAN

National Consumer Law Center,

Inc.

11 Beacon Street

Boston, Massachusetts 02108

BRUCE MAYOR

Neighborhood Legal Services

524 Albany Avenue

Hartford, Connecticut 06112

~ ll

APPENDIX A

ANALYSIS OF TERMINATION REGULATIONS

BY STATE

L UTILITIES MAY NOT TERMINATE WHILE

COMPLAINT IS PENDING BEFORE THE UTILITY

OR THE STATE REGULATORY AGENCY

State

Connecticut

Illinois

Indiana

Maine

Massachusetts

Michigan

Minnesota

Missouri

New Hampshire

New Jersey

New York

Rhode Island

Washington

Wisconsin

Regulation

P.U.C. §16-3-100(B)(3)(b)

LC.C. §16

P.S.C. Rule 16.1(C)(1)

P.U.C. §6(A)

D.P.U. §2-1

P.S.C.R. 460.2164(y)

P.S.C. §303(d); §298(b)(4)

P.S.C. Rule 40(d)

Rev. Stat. Ann. 363-B:2 II

N.J.A.C. 14:407-2f

Electric-P.S.C. § 143.8(a)

Gas-P.S.C. §275.8(a)

Water-P.S.C. §531.8(a)

P.U.C. §6

W.A.C. 480-100-07 1(2)(g)(4)

P.S.C. 113-132(1)(c)

Il. NOTICE OF TERMINATION MUST INCLUDE:

A. Statement of Right of Informal Review with Utility

Illinois

Indiana*

Michigan

New Hampshire

New Jersey

L.C.C. Appendix II

P.S.C. Rule 16.2

P.S.C.R. 460.2164(f)

Rev. Stat. Ann. 363-B:1 I

N.J.A.C. 14:3-7.12(2)

*Incorporated in Stateme . of Customer Rights

State Regulation

New York Electric-P.S.C. §143.3(iv)

Gas-P.S.C. §275.2(iv)

Water-P.S.C. §531.2(iv)

Rhode Island P.U.C. §4(c)(4)

Washington W.A.C. 480-100-071(2)(b)

B. Right to Request Hearing with State Regulatory Agency

Indiana* P.S.C. Rule 16.2

Massachusetts D.P.U. §2.3

Maine P.U.C. §3(E)

Michigan P.S.C.R. 460.2164(f)

New Hampshire _ Rev. Stat. Ann. 363-B:1 I

New Jersey N.J.A.C. 14:3-7.12(1)

Rhode Island . P.U.C. §4

C. Statement of Action Needed to Avoid Termination

Illinois LC.C. §15

Indiana P.S.C. Rule 16(E\{2)

Maine P.U.C. §3(B)

Massachusetts D.P.U. §2.3

Michigan P.S.C.R. 460.2164

Minnesota P.S.C. 300(e)

Missouri P.S.C. Rule 35

New Hampshire _ Rev. Stat. Ann. 363-B:1 I

New York Electricity-P.S.C. § 143.2

Gas-P.S.C. §275.2

Water-P.S.C. §531.2

Rhode Island P.U.C. §4(c)(2).

Washington W.A.C. 480-100-071(2)(b)

Wisconsin P.S.C. 113-132(9\(c)

*Incorporated in Statement of Customer Rights

State Regulation

D. Statement That Service May Not Be Terminated Pending

Resolution of Dispute

Indiana* P.S.C. Rule 16.2

Connecticut* P.U.C. 16-3-100(c)(1)

Maire P.U.C. §3(E\(vi)

Massachusetts* D.P.U. §2.3

Michigan P.S.C.R. 460.2164(h)

Minnesota* P.U.C. 16-3-100(c)(1)

New Hampshire* Rev. Stat. Ann. 363-B:1 I

Il. UTILITY MUST INVESTIGATE AND ATTEMPT

TO RESOLVE DISPUTE

Connecticut P.U.C. 16-3-100(c)(4)

Illinois LC.C. §15

Indiana P.S.C. Rule 16.1(A)(2)

Maine P.U.C. §6(A)

Massachusetts D.P.U. §2.4(1)

Michigan P.S.C.R. 460.2142

Minnesota P.S.C. 303(a)

Missouri P.S.C. Rule 25(a), 26, 40

New Hampshire _ Rev. Stat. Ann. 363-B:2:I

New Jersey N.J.A.C. 14:407-2f

New York Electric-P.S.C. § 143.8(a)

Gas-P.S.C. §275.8(a)

Water-P.S.C. §531.8(a)

Rhode Island P.U.C. §5(a)

Washington W.A.C. 480-100-096(1)

Wisconsin P.S.C. 113.132(1)(c)

IV. PENDING RESOLUTION OF DISPUTE UTILITY

MUST INFORM CUSTOMER OF RIGHT TO

APPEAL TO STATE REGULATORY AGENCY

Connecticut P.U.C. 16-3-100(c)(4)

Illinois LC.C. §20

*Incorporated in Statement of Customer Rights

State Regulation

Indiana P.S.C. Rule 16.1(A)(3)

Maine P.U.C. §6(B)

Massachusetts D.P.U. §2.4(1)

Michigan P.S.C.R. 460.2169(8)(a)

New Hampshire _ Rev. Stat. Ann. 363-B:2 III

New York Electric-P.S.C. § 143.8(b)

Gas-P.S.C. §275.8(b)

Water-P.S.C. §531.8(b)

Rhode Island P.U.C. §6

Washington W.A.C. 480-100-096(3)

Wisconsin P.S.C. 113.132(1)(d)

V. RESULT OF HEARING WITH UTILITY MUST BE

IN WRITING

Connecticut P.U.C. 16-3-100(c)(4)

Indiana P.S.C. Rule 16.1(A)(2)

Massachusetts D.P.U. §2.4

Michigan P.S.C.R. 460.2169(9)

Missouri P.S.C. Rule 42(b)

New York Electric-P.S.C. §143.8(b)

Gas-P.S.C. §275.8(b)

Water-P.S.C. §531.8(b)

APPENDIX B

Tenn. Code Ann.

6-1306. Exemption from utilities regulation.—It shall not be

necessary for any municipality, proceedings under this chapter, to

obtain any certificate of convenience or necessity, franchise,

license, permit, or other authorization from any bureau, board,

commission or other like instrumentality of the state in order to

acquire, construct, purchase, reconstruct, improve, better, extend,

maintain and operate any public works.

6-1317. Exemption from utilities commission.—No re-

quirements or provisions of this chapter shall be construed so as to

deprive any municipality issuing bonds pursuant hereto of the

exemption heretofore granted to municipalities from the

jurisdiction of the public service commission.

Code of Ordinances, City of Memphis:

Article V. Basic Facilities

DIVISION 1. REQUIRED FACILITIES

Sec. 51-111. Compliance with division.

No person shall occupy as owner-occupant, or let to another for

occupancy, any dwelling unit for the purpose of living, sleeping,

cooking or eating therein which does not comply with the

requirements of this division. (Ord. No. 1724, §400.0, 3-22-66)

Sec. 51-112. Sanitary facilities.

(a) Generally. The minimum sanitary facilites specified in this

section shall be supplied and maintained in sanitary and safe

working condition. Be

(b) Water closet. Every dwelling unit shall contain within its

walls a room, separate from the habitable rooms, which affords

privacy and which is equipped with a water closet. Entry to such

room shall be from within the unit only.

which shall be in close proximity to the water closet.

(d) Bathtub or shower. Every dwelling unit shall contain a

room which affords privacy to a person in the room and which is

equipped with a bathtub or shower.

(e) Kitchen sink. Every dwelling unit shall contain a kitchen

sink apart from the lavatory required by subsection (c).

(Ord. No. 1724, § §401.0—401.4, 3-22-66; Ord. No. 25, §16,

7 .

ap note—Ord. No. 25, §16, amended §51-112(b) by adding the

last sentence thereto.

Sec. 51-113. Water and sewer system.

Every kitchen sink, lavatory basin, bathtub or shower and water

closet required under the provisions of section 51-112 shall be

properly connected to either a public water and sewer system or to

an approved private water and sewer system. All sinks, lavatories,

bathtubs and showers shall be supplied with hot and cold running

water. (Ord. No. 1724, §402.0, 3-22-66)

Sec. 51-114. Water heating facilities.

(a) Every dwelling unit shall be supplied with water heating

facilities which are installed in an approved manner, properly

maintained, and properly connected with hot water lines to the

dah ahh OO. X ‘ a

fixtures required to be supplied with hot water under section 51-

113. Water heating facilities shall be capable of heating water to

such a temperature as to permit an adequate amount of water to be

drawn at every required kitchen sink, lavatory basin, bathtub,

shower, and laundry facility or other similar units, at a

temperature of not less than one hundred thirty (130) degrees

Fahrenheit at any time needed.

(b) Every water heating facility shall be installed and shall

operate in accordance with the requirements of the building code

and the air pollution control ordinances* of the city. (Ord. No.

1724, § §402.1, 403.1, 3-22-66)

Sec. 51-115. Heating facilities.

(a) Every dwelling and multi-family dwelling shall have

provisions for heating facilities. The owner of the heating facilities

shall be required to see that they are properly installed, safely

maintained and in good working condition, and that they are

capable of safely and adequately heating all habitable rooms,

bathrooms and toilet rooms located therein.

(b) Every heating facility shall be installed and shall operate in

accordance with the requirements of the building code and the air

pollution control ordinances* of the city. (Ord. No. 1724,

§ $403.0, 403.1, 3-22-26; Ord. No. 25, §17, 10-10-67)

Amendment note—Ord. No. 25, §17, amended $51-115(a) which prior to

’ amendment designated the temperature to which the heating facilities should be

capable of heating the rooms therein listed.

*Cross reference—Air pollution, Ch. 3.

Sec. 32-103. Well digger’s permit.

No person shall engage in drilling, boring, digging or otherwise

constructing or repairing wells in the city without a permit from the

department of health. Such permit shall be granted by the health

department to any person upon application properly approved by

the health officer, and such permit shall be in force and effect for

one (1) year from the date of its issuance. The health officer shall

have the power and it shall be his duty to revoke any permit issued

where it is made to appear that the provisions of this article have

been violated by the person engaged in well construction. The

holder of such permit shall, after such revocation, have the right of

appeal to the board of commissioners. (Code 1949, §1242)

Sec. 32-104. Permit to operate and maintain private supply.

(a) No person shall operate or maintain a private water supply

until a permit therefor has been issued by the department of health,

which permits shall not be valid for longer than one year and may

be renewed at the expiration thereof upon payment of the fees

hereinafter set out. All permits shall be in writing. Such permit

may be revoked by the health officer upon the violation by the

holder of any of the terms of this article, or in any emergency when,

in the judgment of the health officer, the continued operation of the

private water supply will be a public health menace. The holder of

such permit, after such revocation, shall have the right of appeal to

the board of commissioners.

(b) The yearly permit to operate or maintain a private water

supply shall not be issued until an inspection fee is paid each year

to the department of health. A fee of one hundred dollars

($100.00) shall be paid by the owner of one private water supply

well, whether shallow, deep, abandoned or condemned. An

additional charge of twenty-five dollars ($25.00) shall be paid for

each additional well whether operating or not. The fee shall be due

and payable on or before January 31 of each year. (Code 1949,

§ §1239, 1240; Ord. No. 352, §1, 12-31-68)

Sec. 32-105. Approval of plans and specifications for private

supply.

Before work is commenced on the construction of any new well

or private water supply, or any additions, alterations or changes,

including cross connections, treatment, settling and storage tanks,

aerators, wells, suction lines and any other part of such private

water supply listed in any regulations adopted by the department

of health, complete plans and specifications, accompanied by such

pertinent data as may be required, shall be submitted, by the owner

or his agent, to the department of health, and no part of the work

shall be commenced until the department has given its written

approval. (Code 1949, §1241)

Sec. 32-106. Approval of plans and specifications for sewer

work on property served by private supply.

Before any work is commenced on the construction of any

sewers, sewage treatment plants, or any part of the sewerage

system constructed underground, or any additions, alterations or

major changes to an existing sewerage system on private property

on which there is a private water supply, complete plans and

specifications, accompanied by such pertinent data as may be

required, shall be submitted by the owner or his agent to the

department of health, and no part of the work shall be commenced

until the department of health has given its written approval;

provided, that this does not include changes and repairs to

plumbing in buildings and above the ground which is controlled by

the plumbing inspector of the city. (Code 1949, §1243)

Sec. 32-107. Location, construction and operation of private

supplies.

All private water supplies shall be properly located, constructed

and operated, and be of an approved quality. (Code 1949, § 1245)

Sec. 32-108. Inspection of private supplies.

All private water supplies shall be open for inspection at all

times by the health officer or the light, gas and water division.

(Code 1949, §1245)

generally.

All wells shall be located, constructed and operated in

accordance with the rules and regulations adopted by the

department of health, and the water shall be of a safe, sanitary

quality.

No well shall be located close enough to any existing or

proposed well of the light, gas and water division of the city to

materially affect the static head of water from the underground

strata of any such well or proposed well of the public supply. (Code

1949, §1244)

Sec. 32-110. Location of wells in street, alley or public piace.

No well shall be located in a street, alley or public place without

a permit from the board of commissioners.

Any person making application for a permit to construct a well

in any street, alley, or other public place shall be required, as a

condition precedent to the issuance of such permit, to agree that if

at any time subsequent to the construction of such well it shall

become necessary for the city to use such street, alley, or other

public place, for any public purpose, such person shall, within

ninety (90) days after the receipt of notice from the city, abandon,

dismantle, and fill such well, at his own expense. (Code 1949,

§ 1244)

Sec. 32-111. Filling of abandoned or condemned wells.

The health department may order the owner to fill up any

abandoned or condemned well. (Code 1949, § 1244)

Cross reference—Open and uncovered wells prohibited, § 22-20.

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.