Petition for Writ of Certiorari — Particular Cleaners, Inc. v. Commonwealth Edison Co.

i- 14

No.

In the

Supreme Court of the United States

Ocroser Term, 1971

PARTICULAR CLEANERS, INC. and FRANCES ENTWISTLE,

Petitioners,

vB.

COMMONWEALTH EDISON COMPANY A

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SEVENTH CIRCUIT

GEORGE H. GERSTMAN WARREN P. LANDSMAN

NORMAN LETTVIN ROBERT L. LANDSMAN

135 South La Salle Street 77 West Washington Street

Chicago, Illinois 60603 Chicago, Illinois 60602

Counsel for Petitioners

May, 1972

UNITED STATES LAW PRINTING CO., CHICAGO, ILLINOIS 60618 (312) 525-6581

ae

TABLE OF CONTENTS

RCI TRE SED SOOO Ni NCS RD

CTI "te eee

Question Presented ooo cece.

Constitutional Provision, Statutes and Ordinance In-

i RE SEE EE ET ee a ee a

Statement of the Case . snes atti

Reasons for Granting the Writ

I. The Present Case Raises a Serious Constitu-

tion Question 2.0...

Il. Respondent’s Action is State Action

II. The Decision Below Conflicts With The Deci-

sions of Other Courts of Appeals As To The

Proper Interpretation of ‘‘State Action’’ By a

Public Electric Utility 2000.

EE ARE STR ana CF Ca ae

ARIES ERE TE a CSR aa PO A

a

CASES CITED

PAGE

Gas Light Company of Columbia v. Georgia Power

Company, 440 F.2d 1135 (5 Cir., 1971) .................. 9

Parker v. Brown, 317 U.S. 341 (1943) 8

Public Utilities Commission v. Pollak, 343 U.S. 451

IIIT |: sisisnsandcieinscgnonienbinninecneiseitasncatiiniinensvinasicaniisntesctiahibewonsnn 10

United States v. Classic, 313 U.S. 299 (1941) -.............. 8

Washington Gas Light Company v. Virginia Electric

and Power Company, 438 F.2d 248 (4 Cir., 1971) .... 8,9

CONSTITUTION

U. S. Constitution, Fourteenth Amendment, Section 1 ..2, Al

STATUTES AND ORDINANCE

> Mis iS TE A I i ssnsonitnhsoncaansscaenensnnie 2, Al

Title SB UHC. 6 19008) on... 2, Al

ner eee +e oo. 2, Al

Illinois Commerce Commission. General Order No.

EARNER RB PA SUERE Reet area aaa mmre tee een ee 2, A2

—

In the

Supreme Court of the United States

| OcrosBer Term, 1971

-_—

No.

PARTICULAR CLEANERS, INC. and FRANCES ENTWISTLE,

Petitioners,

Vs.

COMMONWEALTH EDISON COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SEVENTH CIRCUIT

Petitioners, Particular Cleaners, Inc. and Frances Ent-

wistle, respectfully pray that a writ of certiorari issue to

review the judgment entered on February 11, 1972 by the

United States Court of Appeals for the Seventh Gireuit

in its cause numbered 71-1349.

OPINIONS BELOW

The opinion of the Court of Appeals for the Seventh

Cireuit is not yet reported, but is printed in the Appendix

to this Petition at p. A9. The opinion of the District

Court for the Northern District of Illinois is not reported,

but is printed in the Appendix to this Petition at p. Al4.

“ ras 7 * +t 5 MG 4 7.

aha ie la a tea Pa NE aii Sa Oe orl SR ok CS UR oe PEAT SRA “RETSS

2

JURISDICTION

The judgment of the Court of Appeals was entered on

February 11, 1972 (App. p. A13),* and this Petition for

a Writ of Certiorari was filed within 90 days of that date.

The jurisdiction of this Court is invoked under 28 U.S.C.

§1254(1).

QUESTION PRESENTED

As to the Certiorari Policy: Should not the Supreme

Court resolve the existing conflict in principle between the

Fourth and Fifth Circuit Courts of Appeals on the one

hand, and the Seventh Circuit Court of Appeals on the

other hand, as to what action of a public electric utility

constitutes ‘‘state action’’?

On the Merits: Illinois Commerce Commission General

Order 172 (App. p. A2) permits public utilities (elec-

tric, gas, telephone, water and heating services) to collect

an advance security deposit from prospective customers.

Is arbitrary discrimination in the collection of security

deposits, by a public utility under color of Illinois Com-

merce Commission General Order 172, ‘‘state action’’ so

as to subject the public utility to provisions of the Civil

Rights Act?

CONSTITUTIONAL PROVISION, STATUTES

AND ORDINANCE INVOLVED

This case involves Section 1 of the Fourteenth Amend-

ment to the United States Constitution (App. p. Al);

Section 1983 of the Civil Rights Act (App. p. A1); Section

1343(3) of Title 28, United States Code (App. p. Al) ; and

Illinois Commerce Commission General Order 172 (App.

p. A2).

*“App. p. A ” refers to the cited page of the Appendix to

this Petition.

all 3

STATEMENT OF THE CASE

The class-action Complaint (App. p. A17) was filed

in the District Court on November 12, 1970 and alleges

the following facts:

Under color of an fllinois Commerce Commission regu-

lation, thousands of purchasers of electric service from

Defendant Commonwealth Edison Company are not re-

quired to pay a security deposit in order to receive electric

service, while on the other hand, thousands of purchasers

of electric service from Commonwealth Edison are arbi-

trarily and discriminatorily required to pay a security

deposit based upon unequal standards and policies arbi-

trarily dictated by Commonwealth Edison (App. p. A19).

Plaintiffs Particular Cleaners and Frances Entwistle are

two purchasers that Commonwealth Edison arbitrarily and

under color of an Illinois Commerce Commission regula-

tion, required to pay a security deposit in order to main-

tain electric service (App. pp. A19-A20),

Commonwealth Edison has a total monopoly on electric

service in the City of Chicago where Plaintiff Entwistle

resides and in the Village of Oak Park, Illinois where

Plaintiff Particular Cleaners has its principal place of

business (App. p. A20). Plaintiff Eutwistle is a *-male

of British citizenship and Plaintiff Particular Cleaners

is a dry cleaning establishment. Unless Commonwealth

Edison provides and sells electric service to Particular

Cleaners and F'rances Entwistle, they will be deprived of

obtaining and/or maintaining electric service (App. p.

A20).

ee

PMA RUT SMD RINT ea BN NOAA

—

Count I of the Complaint charges that Commonwealth

Edison’s arbitrary discrimination in requiring advance

security deposits under color of an Illinois Commerce Com-

mission regulation is contrary to the Fourteenth Ameu-

ment to the Constitution of the United States (App. p.

A20). Jurisdiction of Count I of the Complaint was

founded on 28 U.S.C, $1343.

In the District Court, Commonwealth Edison moved

to dismiss the Complaint on several grounds, one of

which was that Commonwealth Edison’s action in re-

quiring security deposits was not under color of any

state ordinance or regulation (was not ‘‘state action”’),

and therefore Commonwealth Edison alleged that it was

not subject to the Civil Rights Act (in particular, 42

U.S.C. $1983). The District Court granted Commonwealth

Edison’s motion to dismiss, holding that Commonwealth

Edison’s action in requiring security deposits is not ‘‘state

action’’ sufficient to satisfy 42 U.S.C. §1983 and permit

maintenance of the lawsuit (App. p. A16). The Court

of Appeals for the Seventh Circuit affirmed the District

Court’s dismissal of Petitioners’ Complaint (App. p. A13).

4

—

REASONS FOR GRANTING THE WRIT

I. The Present Case Raises A Serious Constitutional

Question.

Electricity is an absolute necessity of today’s life. With-

out electricity, Petitioner Particular Cleaners would be

unable to operate its dry cleaning establishment and Peti-

tioner Frances Entwistle would be unable, among other

things, to heat and light her home. Notwithstanding the

necessity of having electrical service, Commonwealth Edi-

son requires advance security deposits from some and not

others, using arbitrary and unreasonable discriminatory

standards. Typically those who are required to pay the

advance security deposit are those who have most difficulty

in paying it. The amount is variable, and as an example,

Particular Cleaners was required to pay $900.00 as an

advance security deposit.

Petitioners contend that every person has the equal right

to have electrical service, so long as the person pays for

it, But Commonwealth Edison arbitrarily denies that right

to some persons by requiring advance security deposits

from some, and not others. The security deposit require-

ments are not necessarily based on a person’s history with

paying Commonwealth Edison’s bills, but upon arbitrary

standards such as sex, residence location and race. Such

unreasonable discrimination, under color of a state ordi-

hance, is clearly violative of the Equal Protection Clause

of the Fourteenth Amendment to the United States Con-

stitution.

NE Ty LG AT VP TY SNORT Te NARI CE

6

Ii. Respondent’s Action Is State Action.

The Respondent, Commonwealth Edison Company, has

been granted a total monopoly in certain areas by the

State of Illinois. In effect, the State of Illinois decided

not to supply public electric service itself, but instead

permitted Commonwealth Edison to act as its agent. The

regulatory agency of Illinois, the Illinois Commerce Com-

mission, is empowered to regulate the policies of Common-

wealth Edison.

Although Commonwealth Edison is privately owned, its

security deposit requirements are pursuant to a state ordi-

nance, ICC General Order 172 (App. P. A2). The

intense contact of Commonwealth Edison and the State of

Illinois is evident from the facts that:

(1) Commonwealth Edison is subject to close regu-

lation by the Illinois Commerce Commission.

(2) The regulations of Commonwealth Edison filed

with the Illinois Commerce Commission are required to be

filed as a condition of Commonwealth Edison’s operation.

(3) Commonwealth Edison’s regulations must be ap-

proved by the Illinois Commerce Commission to be

effective.

(4) Commonwealth Edison is given a total monopoly

by the Illinois Commerce Commission.

(5) The Illinois Commerce Commission controls the

rates charged and the services offered by Commonwealth

Edison.

(6) The actions of Commonwealth Edison are subject

to review by the Illinois Commerce Commission.

=~"

7

In the Court of Appeals, Commonwealth Edison took the

position that it is a privately owned business carrying on

its own ‘‘normal business policies with regard to requiring

deposits and not state action.’’ However, it is improper

to consider Commonwealth Edison as a typical privately

owned business because of Commonwealth Edison’s intense

contact with the State of Illinois. Where the typical pri-

vately owned company is in open compe*tion with other

similar companies, Commonwealth Edison has a total mo-

nopoly imposed by state mandate, with its profit being

controlled by the state. A prospective purchaser of electri-

cal service cannot go elsewhere — he must purchase the

electrical service from Commonwealth Edison.

And the charging of advance security deposits in an

arbitrary manner to selected persons is not a normal,

internal business practice, such as giving employees

certain days off, ete. By arbitrarily selecting who

should pay a security deposit, and by arbitrarily selecting

the amount of the security deposit, Commonwealth Edison

can effectively prevent selected persons, through no fault

of such persons, from having electrical service.* Thus the

power to grant or not to grant electrical service, which is

given Commonwealth Edison by the State of Illinois, is

clearly a governmental function. This Court has stated

that ‘‘Misuse of power, possessed by virtue of state law

and made possible only because the wrongdoer is clothed

with the authority of state law, is action taken ‘under

* Clearly Particular Cleaners would be unable to commence busi-

ness without electrical service. Although it is undisputed that Edison

had no prior history of any collection problems with Particular

Cleaners and there were no debt judgments against Particular

Cleaners, Edison arbitrarily required Particular Cleaners to pay a

$900.00 security deposit in order to maintain its electrical service.

Such a requirement coupled with Particular Cleaners’ starting ex-

penses in business may have put it out of business.

Sa PIE NE OO LOE Te

~

color of’ state law.’’ United States v. Classic, 313 U.S. 299,

326; 85 L.Ed. 1368, 1383 (1941). This Court should resolve

the important question of whether Commonwealth Edison’s

action, in arbitrarily charging security deposits to some

and not others, is ‘‘state action’’ subjecting Commonwealth }

Edison to provisions of the Civil Rights Act.

III. The Decision Below Conflicts With The Decisions Of

Other Courts Of Appeals As To The Proper Interpreta-

tion Of “State Action” By A Public Electric Utility.

It is abundantly clear that had the present case been in

the Fourth or Fifth Circuits, a contrary decision would

have been reached. In those Circuits, it is seen that the

action of a public utility under a state regulatory agency’s

regulation, is ‘‘state action.’’

In Parker v. Brown, 317 U.S. 341 (1943), the Supreme

Court held that a marketing program instituted pursuant

to the California Agricultural Prorate Act was exempt

from the Sherman Act on the ground that the anti-com-

petitive actions involved there were the result of ‘‘state

action.’’ Thus the doctrine of Parker v. Brown is that the

antitrust laws are directed against individual action, not ;

‘«state action.’’ In other words, if a defendant can show

that his action is under color of state law (i.e., ‘state

action’), under Parker v. Brown he is immune from Fed-

eral antitrust laws.

The Court of Appeals for the Fourth Circuit and the

Court of Appeals for the Fifth Circuit have considered

whether certain practices of public utilities involve ‘‘state

action’? thereby making such public utilities immune from

antitrust attack under the Parker v. Brown doctrine. These

eases are Washington Gas Light Company v. Virginia

Electric and Power Company, 438 F.2d 248 (4 Cir., 1971)

a

9

and Gas Light Company of Columbus v. Georgia Power

Company, 440 F.2d 1135 (5 Cir., 1971). In both of these

eases, the respective Courts of Appeal held that the com-

plained-of practices by the defendants were ‘‘state action’’

and therefore exempt from the purview of Federal anti-

trust legislation under Parker v. Brown.

In Washington Gas Light Company v. Virginia Electric

and Power Company, the Court of Appeals stated (438

F.2d at 251-252) :

“‘The Virginia State Corporation Commission is

without question a proper state agency to qualify

under Parker. Section 155 of the Virginia State Con-

stitution makes explicit provision for the SCC giving

it the power, among other things, to prescribe utility

rates and, subject to the authority of the state legis-

lature, to regulate other non-specified corporate utility

activities. Sections of the Virginia Code provide a

detailed system of regulatory powers and procedures

whereby administrative action may be taken and re-

viewed with respect to ‘rates, tolls, charges, schedules’

ete.

“‘There can be no doubt. and in fact Washington

Gas Light does not argue to the contrary, that the

SCC is a regulatory arm of the state, possessing both

the authority and powers necessary to qualify under

Parker. * * * We think VEPCO’s promotional practices

were at all times within the ambit of regulation and

under the control of SCC, and we hold these practices

exempt from the application of the laws of antitrust

under the Parker doctrine.”’

In Gas Light Company of Columbus v. Georgia Power

Company, the Court of Appeals stated:

**The question presented is whether the court below

erred in holding that these rate schedules were the

products of state action, i.e., products of the Georgia

Public Service Commission, and as such, excluded from

—"

the proscription of the federal antitrust laws under

the teaching of Parker v. Brown, supra. (440 F.2d at

1138).

10

‘Our view is that the Parker exclusion applies to

the rates and practices of public utilities enjoying

monopoly status under state policy when their rates

and practices are subjected to meaningful regulation

and supervision by the state to the end that they are

the result of considered judgment of the state regu-

latory authority; here the Georgia Public Service

Commission.’’ (440 F.2d at 1140).

It can be seen that in the Fourth and Fifth Circuits,

practices of public utilities under the auspices of state

regulatory commissions are considered ‘‘state action’’

thereby immunizing such public utilities from antitrust

liability. In sharp contrast, in the present case the Seventh

Circuit holds that an action by public utility Commonwealth

Edison, which action is clearly under color of a specific state

ordinance and under the auspices of the Illinois Commerce

Commission, is not ‘‘state action.’’

This Court should not permit an electric utility in the

Seventh Circuit to successfully claim ‘‘individual action”’

and become immune from the civil rights laws, while at the

same time electric utilities in the Fourth and Fifth Circuits

successfully claim ‘state action’’ and become immune from

the antitrust laws. This important conflict in construction

of ‘‘state action’? between the Fourth and Fifth Circuits on

the one hand, and the Seventh Cireuit on the other hand,

should be resolved by this Court.

.

11

CONCLUSION

Commonwealth Edison is granted monopoly status by the

State of Illinois and security deposits are arbitrarily re-

quired from certain classifications of persons and com-

panies under color of Illinois Commerce Commission Gen-

eral Order 172. In such collection of security deposits,

Commonwealth Edison has the effective power to grant

or not to grant electrical ‘service, is cloaked with the au-

thority of the State, and its practices constitute ‘‘state

action.’’

The decision by the Court of Appeals for the Seventh

Cireuit, holding that Respondent’s action is not ‘‘state ac-

tion’, is contrary to the decisions that would have been

reached by the Courts of Appeals tor the Fourth and Fifth

Cireuits. For the reasons stated, a Writ of Certiorari

should issue to review the judgment and opinion of the

Court of Appeals for the Seventh Circuit.

Respectfully submitted,

Georce H. GrerstMan

Norman Lettvin

Warren P. LanpsMan

Rosert L. LanpsMan

Attorneys for Petitioners

LETTVIN AND GERSTMAN

135 South LaSalle Street

Chicago, Illinois 60603

Telephone: 641-3320

May, 1972

Al

APPENDIX

Constitution

United States Constitution, Fourteenth Amendment, Sec-

tion 1:

All persons born or naturalized in the United States,

and subject to the jurisdiction thereof, are citizens of

the United States and of the State wherein they re-

side. No State shall make or enforce any law which

shall abridge the privileges or immunities of citizens of

the United States; nor shall any State deprive any

person of life, liberty, or property, without due process

of law; nor deny to any person within its jurisdiction

the equal protection of the laws.

28 U.S.C. § 1843(3):

The district courts shall have original jurisdiction of

any civil action authorized by law to be commenced

by any person:

* * *

(3) To redress the deprivation, under color of any

State law, statute, ordinance, regulation, custom or

usage, of any right, privilege or immunity secured by

the Constitution of the United States or by any Act

of Congress providing for equal rights of citizens or of

all persons within the jurisdiction of the United States;

42 U.S.C. § 1983 (Civil Rights Act):

Every person who, under color of any statute, ordi-

nance, regulation, custom, or usage, of any State or

Territory, subjects, or causes to be subjected, any

citizen of the United States or other person within

the jurisdiction thereof to the deprivation of any

rights, privileges, or immunities secured by the Con-

stitution and laws, shall be liable to the party injured

in an action at law, suit in equity, or other proper

proceeding for redress.

i a ec ale oo a ae Bel a ig

: ie. ,

A2

STATE OF ILLINOIS

ILLINOIS COMMERCE COMMISSION

GENERAL ORDER 172—Revised

1. SCOPE AND APPLICATION

These rules shall apply to the establishment and main-

tenance of credit by customers using cooling, electric, gas,

heating, telephone, sewer or water service rendered by any

public utility which is defined as such by Section 10 of ‘‘ An

Act concerning public utilities,’ as amended, the handling

of customers’ deposits, discontinuance of such service for

nonpayment of bills or failure to establish or maintain

credit, and matters relating thereto.

2. THE SAVING CLAUSE

The adoption of these rules shall in no way preclude the

Commission from altering or amending them, in whole or

in part, or from requiring or authorizing rules containing

other provisions whenever it shall be deemed to the public

interest so to do. The requirements specified herein shall

not relieve any Utility of any statutory requirement, shall

not supersede any rules heretofore filed by any Utility with

the Commission and presently in effect, and shall not pre-

clude the application of other rules which may be filed with

the Commission by any Utility and permitted by the Com-

mission to become effective.

3. DEFINITION OF DELINQUENCY

A customer who has not paid his bill for service within

the prompt payment period will be considered delinquent.

Where the Utility allows no discount for prompt payment,

the customer will be considered delinquent if he has not paid

his bill within the time specified for payment in the Utility’s

rates or rules as filed with the Commission. If the Utility

a

has no rates or rules on file setting forth the time after

which the customer will be considered delinquent, the cus-

tomer will be considered delinquent if he has not paid his

bill within ten (10) days after the bill is mailed or delivered

by other means.

4. ESTABLISHMENT OF CREDIT

(a) Present Customers. If any present customer has

been delinquent in the payment of any two consecutive bills,

or has been delinquent three or more times within the pre-

ceding twelve months, or if the Utility has reasonable

grounds to believe that the customer is a questionable credit

risk, such customer may be required to make a cash deposit

in order to establish his credit. Payment by the customer

of delinquent bills will not of itself relieve the customer

from the obligation of establishing his credit with respect to

the account involved or with respect to any other account

in connection with the same or any other class of service

which the Utility may be providing such customer.

A2

(b) Applicants for Service. Before service is rendered,

every applicant for initial or additional service in addition

to complying with all other applicable’ rules and regulations,

may be required to establish credit. The applicant shall be

notified promptly of such requirement to prevent any un-

due delay in the furnishing of service. Service may be

denied as long as the applicant owes the Utility for service

of the same class (residential or business) previously fur-

nished to him at the same or another location. Any ap-

plicant who has not established his credit, as provided

under Rule 5, may be required before service is established

to (1) pay the service connection charge, if any; and (2)

make an advance payment on his service account in an

amount equal to an estimated periodic bill. An advance

payment shall not relieve the applicant of his responsi-

bility subsequently to fully establish his credit.

bs PERO MALIA DD B SENTATION E PSY MONIES. SEIS BARN AS LR EES

—

5. MEANS BY WHICH CUSTOMER OR APPLICANT

MAY ESTABLISH CREDIT

Any customer or applicant may establish his credit by

compliance with either of the following conditions:

A4

(a) If he shall furnish information as to his credit and

the Utility, after prudent investigation, shall reasonably

believe that he is entitled to credit.

(b) If he makes a cash deposit in accordance with the

requirements in Rule 6.

6. AMOUNT OF CASH DEPOSIT

(a) The amount of the cash deposit which may be re-

quired of a customer or applicant for the purpose of estab-

lishing his credit, as provided under Rule 5, shall not ex-

ceed his estimated bill figured at the gross rate for the class

of service involved for a periodic billing period plus forty-

five (45) days. The determination of a customer’s (as dis-

tinguished from an applicant’s) estimated bill shall be

based upon his prior or current use of the class of service

involved.

(b) The amount of the cash deposit may be adjusted on

the basis set forth in Rule 6, Paragraph (a), at the option

of the customer or the Utility at any time when the char-

acter or degree of the customer’s use of the service has

materially changed, or when it develops that the character

or degree of such use will materially change.

7. CONDITIONS UNDER WHICH DEPOSITS ARE

TO BE APPLIED OR REFUNDED

The Utility shall promptly refund the deposit (with in-

terest as set forth under Rule 8) and may require the sur-

render to the Utility of the receipt or certificate of deposit

properly endorsed, or delivery of a cancellation receipt for

the deposit:

-_

A5

(a) When the customer establishes credit by other means,

or

(b) When the service is discontinued and the bills there-

for are paid in full, or

(c) When the service is discontinued and there are

charges due the Utility for service to the customer, the cash

deposit plus interest will be applied to the charges, and the

balance remaining of the deposit and interest, if any, re-

turned to the customer. When the deposit is applied to the

liquidation of unpaid bills, the Utility shall mail, or de-

liver, to the customer a stateiuent showing the amount of

the original deposit including accrued interest, if any; the

amount of the unpaid bills liquidated by the deposit; and

the balance remaining due to either the customer or the

utility,

In either case and in any event, if there is a balance due

the customer wher the service is discontinued it shall then

be immediately due and payable to the customer without

demand or notice from him.

8. INTEREST TO BE PAID ON DEPOSITS

Interest at the rate of not less than seven percent (7%)

compounded annually shall be paid by the utility on all

deposits held (including accrued simple interest) and ac-

quired by the utility on or after January 1, 1970 for the

purpose of the customer establishing credit, effective Jan-

uary 1, 1970 but in no case shall interest be allowed for a

period extending beyond the date of refund or the date

service is terminated, whichever date is earlier.

9. PAYMENT OF INTEREST ACCRUALS

Interest accruing on cash deposits shall be computed and

prompt settlement made:

eerrneemnnesmeecnenemcT9) aeRECORNERA AES RE at.

A6

(a) By paying the amount of interest accrued on the

demand of the customer but not oftener than once in any

twelve months’ period, or

(b) By adding the amount to the deposit upon the re-

turn or application of the customer’s deposit as set forth

in Rule 7.

10. ISSUANCE OF RECEIPT OR CERTIFICATE

OF DEPOSIT

Concurrently with the receipt of a cash deposit by a

Utility from a customer under the provisions of these rules,

the Utility shall issue and deliver, to said customer, a re-

ceipt or certificate of deposit showing thereon (1) the date

thereof, (2) the name of the customer, (3) the address of

the premises served or to be served, (4) the service to be

furnished, (5) the amount of the deposit, (6) the rate of

interest to be paid thereon from said date, and (7) stating

that (a) the amount of the deposit, plus said interest, will

be refunded to the customer when credit has been estab-

lished to the satisfaction of the Utility, or may be applied

by the Utility at any time to the liquidation of unpaid bills

of the customer; (b) the balance, if any, remaining after

liquidation of unpaid bills to the date that service to the

customer is discontinued will be so refunded ; (c) said inter-

est will cease and terminate upon said date of discontinu-

ance; (d) any amount remaining on deposit when service

is discontinued shall be immediately payable to the cus-

tomer without demand by or notice from him; and (e) the

Utility will dispose of the balance of any deposit remaining

after the period set forth in the Illinois Uniform Disposi-

tion of Unclaimed Property Act, which period commences

with the date of termination of service, in accordance with

the provisions of said Act.

A7

11. DISCONTINUANCE OF SERVICE

Service may be discontinued by the Utility for failure of

a customer to establish credit, or to adjust his cash deposit,

or for nonpayment of a delinquent bill owed to the Utility

for the same class (residential or business) of service fur-

nished to him at the same or another location, but only

after the mailing or delivery by other means of a written

notice by the Utility of its intention to discontinue service.

Service may be discontinued by the Utility at the end of

the period established under the Utility’s rules as filed with

the Commission, but where the Utility has no such rules on

file, service shall not be discontinued until at least five (5)

days after the mailing or delivery of such written notice of

intention to discontinue service.

12. SERVICE RECONNECTION CHARGE

Where service has been discontinued pursuant to the

terms of the notice provided for in Rule 11 erein, the

Utility shall charge and collect the reconnection charge, if

any, set out in any rules, regulations or terms afd condi-

tions of service which may be filed by the Utility with the

Commission and permitted by the Commission to become

effective.

13. RECORDS OF DEPOSITS

Each Utility collecting cash deposits from its customers

shall maintain a complete record of each and every deposit

showing (a) the name of the customer; (b) address of the

premises served; (c) date and amount of original deposit

and any additional deposits; (d) date and amount of any

refund or application to unpaid bills: (e) the amount of

interest paid or credited with the date of payment or

SRS SR OS eg eRe *

A8

credit; and (f) the balance of each deposit, the Commis-

sion will require to be shown in each Utility’s annual re-

port the total amount remaining in its customer deposit

account.

14. FINAL DISPOSITION OF A DEPOSIT

* The Utility shall have the right to close its records with

reference to any unrefunded deposit and to destroy the

records and other data relating to such deposit when such

deposit has been disposed of in accordance with the pro-

visions of the Illinois Uniform Disposition of Unclaimed

Property Act.

*Note: This provision supplements the requirements of Para-

graph 37 of General Order 186; Paragraph 37 of General

Order 187; and Paragraph 37 of General Order 189.

A9

in the

Runited States Court of Appeals

For the Seventh Circuit

SepremBer Term, 1971 — January Session, 1972

No. 71-1349

ParticuLak CLEANERs, Inc. and FRANcEs ENTWISTLE,

Plaintiff s-A ppellants,

Vs.

CommMoNWEALTH Epison Company,

Defendant-Appellee.

Appeal from the United States District Court for the

Northern District of Dlinois. — No. 70-C-2831

Wau J. Lyxcu, Judge.

February 11, 1972

Before Hastrnes, Senior Circuit Judge, Kuey, Circuit

Judge, and Kerner", Circuit Judge.

* Judge Kerner heard oral argument, but did not participate in

the adoption of this opinion.

—

Hastines, Senior Circuit Judge. Plaintiffs Particular

Cleaners, Inc, an Illinois corporation, and Frances

Entwistle, a citizen of the United Kingdom residing in

Oak Park, Illinois, filed a so-called ‘‘civil rights”’ action

against defendant Commonwealth Edison Company

(Edison), a private Illinois corporation engaged in the

commercial distribution of electricity. The gravamen of

the complaint relates to Edison’s practice of requiring

a security deposit from certain customers, who cannot

otherwise show credit, prior to the commencement of

electrical service.

In substance, Count I of the complaint alleges that the

method used by Edison for determining which prospec-

tive customers will be required to pay the deposit is

arbitrary, capricious and discriminatory, and is violative

of plaintiffs’ rights secured by the Equal Protection Clause

of the Fourteenth Amendment of the Federal Constitution.

Plaintiffs seek to prosecute this cause as a class action

and apparently predicate their action under Title 42, U.S.

C.A. § 1983: and by reason thereof assert jurisdiction under

Title 28 U.S.C.A. § 1343(3)?

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1Ҥ 1983. Civil action for deprivation of rights. |

Every person who, under colcr of any statute, ordinance,

regulation, custom, or usage, of any State or Territory, sub-

jects, or causes to be subjected, any citizen of the United

States or other person within the jurisdiction thereof to

the deprivation of any rights, privileges, or immunities

secured by the Constitution and laws, shall be liable to the

party injured in an action at law, suit in equity, or other

proper proceeding for redress.”

2««¢ 1343. Civil rights and elective franchise

The district courts shall have original jurisdiction of any

an

Count II of the complaint is based on the claim that

Edison’s security deposit policies violate Section 38, Lil.

Rev. Stat., ch. 11134 (1969), which prohibits rate discrimi-

nation. The only jurisdiction of the federal district court

on this count was based on the theory of pendent juris-

diction.

The trial court dismissed both counts of the complaint

on Edison’s motion. Count I was dismissed on the ground

that Edison’s challenged security deposit requirement did

not coustitute state action sufficient to satisfy the juris-

dictional requirements of § 1983, supra. Since Count I was

dismissed, the trial court necessarily dismissed Count II,

there being no remaining pendent jurisdiction.

All

The primary question on this appeal is whether the

alleged discriminatory collection of security deposits by

Edison, authorized by General Order 172 — Revised

issued by the Illinois Commerce Commission, constitutes

conduct under color of state action that will subject it to

a civil rights action under § 1983, supra. Further, is the

disposition of this case controlled by Kadlec vy. Illinois Bell

Telephone Company, 7 Cir., 407 F.2d 624 ( 1969), cert.

denied, 396 U.S. 846, as the district court held?

General Order 172 — Revised provides, inter alia, for

the collection of limited security deposits from applicants

{footnote continued)

civil action authorized by law to be commenced by any

person :

**# @

(3) To redress the deprivation, under color of any State

law, statute, ordinances, regulation, custom or usage, of any

right, privilege or immunity secured by the Constitution of

the United States or by any Act of Congress providing for

equal rights of citizens or of all persons within the juris-

diction of the United States; ;

* # o*#

eg a AD SORT RN ORL DEL CBE IE PEI, TORE EGS BEE Pte IIE

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or customers seeking to use ‘‘cooling, electric, gas, heating,

telephone, sewer or water service rendered by any public

utility.”” The complaint does not challenge the propriety

of the action of the Illinois Commerce Commission or the

order itself. It complains of ‘‘the standards and policies

arbitrarily dictated by numerous representatives of”

Edison. The order in no way directs or orders the collec-

tion of any security deposits. It merely serves to limit

the power of public utilities to require deposits. There

is no allegation that a public utility could not require

such a deposit without this regulation. The decision to

require security deposits to insure credit and its applica-

tion of this policy in any particular case is strictly a

private management decision to be made by Edison in its

own normal business operation. Edison is neither the

State of Illinois nor an agency thereof. We fail to see

how the execution of these policies by Edison in the context

of the case before us could constitute state action.

In Kadlec v. Illinois Bell Telephone Company, supra,

we held that a telephone company’s discontinuance of

plaintiffs’ ‘‘Call-Pak’’ service pursuant to its own regula-

tions filed with state authorities did not amount to conduct

taken under color of state law and would not support

an action based on § 1983. Plaintiffs seek to distinguish

_ Kadlec from their case by claiming that in Kadlec it was

the public utility’s own regulation that was involved while

here the regulation was issued by the Illinois Commerce

Commission. We find this unpersuasive. As above pointed

out, the state did not act on its own regulation. Edison

executed its own policies, limited only by the state regula-

tion.

In the case at bar, the statute in no sense benefited from,

encouraged, requested or cooperated in the decision to

collect security deposits from plaintiffs. See Kadlec, at

626.

A13

Kadlec was followed in Martin v. Pacific Northwest

Bell Telephone Company, 9 Cir., 441 F.2d 1116 (1971),

cert. denied, 404 U.S. 873 (October 12, 1971), where the

court said at 1118: ‘‘The fact that a private corporation,

such as Pacific Bell, enjoys an economic monopoly which

is protected and regulated by the state does not necessarily

bring its every act within the purview of Section 1983.

** * [citing Kadlec] * * *. In this case, plaintiff’s allega-

tions at most concern Pacific Bell’s public service func-

tions; they neither show nor tend to show an intrusion

by the State into matters of Pacific Bell’s internal manage-

ment.’’? See Powe v. Miles, 2 Cir., 407 F.2d 73, 81 ( 1968) ;

and Lucas v. Wisconsin Electric Power Company, D.C.E.D.

Wis., 322 F.Supp. 337, 340 (1970).

We have considered cases cited by plaintiffs seeking

to distinguish Kadlec and find them inapposite to our

present consideration. Further, the parties have argued

other issues on appeal which were argued to the district

court but not reached by it in its decision. We do not

find it necessary to reach them here.

As was simply stated in Kadlec, at 626-27: ‘*Here, the

nexus between the state and defendant’s conduct was not

sufficient to maintain an action under § 1983.’’ And we

perceive no substantial difference between the state action

asserted in Kadlec and that asserted here.

We affirm the district court’s dismissal of appellants’

complaint.

AFFIRMED.

A true Copy:

Clerk of the United States Court of

Appeals for the Seventh Circuit.

ENS INCE IL A FN EAE EOI SIEGE LA CUT SF WS

—

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Al4

PARTICULAR CLEANERS, INC., an Illinois corpora-

tion, and FRANCES ENTWISTLE

Plaintiffs

vs.

COMMONWEALTH EDISON COMPANY, an Illinois

corporation

Defendant

MEMORANDUM OF DECISION

(Filed March 16, 1971)

Defendant, Commonwealth Edison, filed a motion to dis-

miss this cause of action for want of jurisdiction. The com-

plaint asserts a cause of action predicated on 42 U.S.C.

§ 1983. Jurisdiction, if it exists, obtains pursuant to 28

U.S.C. § 1343. The gravamen of the complaint concerns the

defendant’s practice of requiring a security of deposit from

certain customers prior to the commencement of electrical

service. The plaintiff alleges that the method used for

determining which prospective customers will be required

- to pay this deposit is arbitrary, capricious and discrimi-

natory, and accordingly inimical to rights secured by the

Equal Protection Clause of the fourteenth amendment.

The crucial strain of all complaints sounding under this

“provision of this reconstructionist civil rights statutes is

action taken under color of state law, or more prosaically

Al5

state action. Further, such state action is a necessary requi-

site for obtaining this court’s jurisdiction. Here the com-

plaint is not asserted against an acknowledged state officer

or agency. Rather the defendant is a private corporation.

However, the plaintiffs assert that this private corporation

is so circumscribed and protected by the state that its action

is in fact state action sufficient to satisfy the jurisdictional

requirements of 42 U.S.C. § 1983 and permit the mainte-

nance of this suit. “

At the outset it must be recognized that the mere regu-

lation of a business by a state is in itself insufficient to

satisfy the jurisdictional requisite of § 1983. Something

more than mere regulation is required.

In Kadlec v. Illinois Bell Telephone Co., 407 F.2d 624

(1969) a similar complaint was brought under § 1983. The

Court of Appeals of this circuit held that a motion to dis-

miss was properly granted. The court noted that the termi-

nation of a particular type of service that was the basis for

the complaint was precipitated by private economic reasons

and was pursuant to the company’s own regulations.

The court continued:

The only apparent state connection with the termina-

tion rests in the fact that defendant Company filed its

regulations with state authorities. The state in no

sense benefited from, encouraged, requested or co-

operated in this suspension of service.

The mere filing of these regulations with the state

neither clothed Illinois Bell with state authority nor

did it bring it under the aegis of the state. The § 1983

requirement of conduct taken under color of law ‘‘. . .

ean rarely be satisfied in the case of anyone other than

tL ORR LENS ROE RTPI SO TENE ese Meneea ap

REGIA EEE PEN BIS

a

a state official.’’ (cites omitted) Here the nexus be-

tween the state and defendant’s conduct is not sufi-

cient to maintain an action under § 1983. 407 F.2d 624,

626.

This court’s review of the complaint convinces us that

the requisite nexus does not exist in this matter. We

perceive no substantial difference between the state action

asserted in Kadlec (supra) and that asserted here. Accord-

ingly this court grants the defendant’s motion to dismiss

Count I of the Complaint. Further, since jurisdiction over

Count IL of the Complaint is predicated on a theory of

pendant jurisdiction that Count is also dismissed.

A16

Wiuuam J. Lynou

Judge, United States District Court

Dated: March 15, 1971

» a

IN THE UNITED STATES DISTRICT COURT

FOR THE

NortrHern District or ILuNots

Eastern Division

A17

PARTICULAR CLEANERS, INC., an Illinois Corpora-

tion, and FRANCES EN TWISTLE,

Plaintiffs,

vs.

COMMONWEALTH EDISON COMPAN Y, an Illinois

Corporation,

Defendant.

Civil Action — No. 700-2831

Class Action Complaint Jury Trial Demanded

COMPLAINT

(Filed November 12, 1970)

COUNT I

JURISDICTION

1, This Count I is a civil rights action arising under the

Fourteenth Amendment to the Constitution of the United

States. Jurisdiction is founded on the existence of a Fed-

eral question and U.S.C., Title 28, Section 1343.

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PARTIES AND VENUE

2. Plaintiff, PARTICULAR CLEANERS, INC., is a

corporation incorporated under the laws of the State of

Illinois having its principal place of business in this judicial

district. The Plaintiff, FRANCES ENTWISTLE, is an

individual residing in the State of Illinois. Defendant,

COMMONWEALTH EDISON COMPANY, is a corpora-

tion incorporated under the laws of the State of Illinois,

having its principal place of business in this judicial dis-

trict. Plaintiffs have purchased or offered to purchase

electric service sold by the Defendant named herein within

the period covered by this Complaint.

CLASS ACTION

3. Plaintiffs bring this action on behalf of themselves

and pursuant to Rule 23 of the Federal Rules of Civil Pro-

cedure in behalf and as representatives of the class of all

such purchasers or prospective purchasers in the State of

Illinois that have been required to pay a security deposit

to Defendant as a prerequisite to obtaining or maintaining

electric service. The class is so numerous that joinder of

all members is impracticable. Except as to the amount of

damages each member of the class has sustained, all other

questions of law and fact are common to the class. The

questions common to the class predominate over any ques-

tions affecting only individual members. This class action

is superior to other methods for the fair and efficient adjud-

ication of the controversy described herein. The named

Plaintiffs will fairly and adequately protect the interests

of the class. Defendant, COMMONWEALTH EDISON

COMPANY has acted on grounds generally applicable to

the class thereby making appropriate final injunctive relief

with respect to the class as a whole.

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VIOLATIONS COMPLAINED OF

4, Thousands of prospective purchasers of electric serv-

ice from Defendant, COMMONWEALTH EDISON COM-

PANY, are not required to pay a security deposit in order

to receive electric service. On the other hand, thousands

of prospective purchasers of electric service from Defen-

ant, COMMONWEALTH EDISON: COMPANY are arbi-

trarily and discriminatorily required to pay a security de-

posit based upon unequal and discriminatory standards

and policies arbitrarily dictated by numerous representa-

tives of Defendant, COMMONWEALTH EDISON COM-

PANY.

9. Plaintiff, PARTICULAR CLEANERS, INC., has

been and is currently a purchaser of electric service from

Defendant, COMMONWEALTH EDISON COMPANY,

within the State of Illinois since as early as October 1, 1970.

Plaintiff is not indebted to Defendant, COMMON-

WEALTH EDISON COMPANY, with respect to any bills

or charges for electric service purchased from Defendant,

COMMONWEALTH EDISON COMPANY.

6. Notwithstanding the fact that PARTICULAR

CLEANERS, INC. is not indebted to the Defendant, COM-

MONWEALTH EDISON COMPANY, said Defendant has,

under color of an Illinois Commerce Commission Regula-

tion, arbitrarily, capriciously and discriminatorily classified

Plaintiff, PARTICULAR CLEANERS, INC., as a deposit

purchaser of electric service whereby a deposit of approxi-

mately three times one month’s basic service is required in

order to maintain electric service at the corporation’s place

of business in Oak Park, Illinois. Such acts of Defendant

place Plaintiff, PARTICULAR CLEANERS, INC., at an

economic disadvantage using an instrumentality of the

State, and seriously interfere with Plaintiff’s ability to

commence and carry on its business, thereby resulting in

denial to the corporation of equal protection of the laws,

ME TOLIOE S/ AATI ARENAS, BE IRN ONT APRIL ETRY

A20

contrary to the Fourteenth Amendment to the Constitution

of the United States, and such discrimination is a violation

of Section 38, lll. Rev. Stat. 1969, ch. 1113.

7. Plaintiff, FRANCES ENTWISTLE, is a citizen of

the United Kingdom and is not indebted to the Defendant.

Notwithstanding the fact that the Plaintiff, FRANCES

ENTWISTLE, is not indebted to the Defendant, COM-

MONWEALTH EDISON COMPANY, said Defendant has,

under color of an Lilinois Commerce Commission Regula-

tion arbitrarily, capriciously and discriminatorily required

said Plaintiff to pay a security deposit as a prerequisite to

purchasing electric service at her residence in Chicago,

Illinois. Such acts of Defendant place Plaintiff, FRANCES

ENTWISTLE, at economic disadvantage using an instru-

mentality of the State, thereby resulticg in denial to her

of equal protection of the laws, contrary to the Fourteenth

Amendment to the Constitution of the United States and

such discrimination is a violation of [Sec. 38, Ill. Rev. Stat.

1969, ch. 111%4].* |

8. Defendant has a total monopoly on electric service |

in the City of Chicago, Illinois, where Plaintiff, FRANCES

ENTWISTLE, resides and PARTICULAR CLEANERS,

INC. in the Village of Oak Park, Illinois, where the Plain- '

tiff, PARTICULAR CLEANERS, Inc., has its principal

place of business.

9. Unless Defendant, COMMONWEALTH EDISON

COMPANY, provides and sells electric service to Plain-

tiffs, PARTICULAR CLEANERS, INC. and FRANCES

ENTWISTLE, said Plaintiffs will be deprived from ob-

taining and/or maintaining electric service.

® The bracketed portion was added by an Amendment filed

November 13, 1970.

-

10. Thousands of other purchasers or prospective pur-

chasers, not indebted to Defendant have, under color of an

Illinois Commerce Commission Regulation, arbitrarily,

eapriciously and discriminatorily been and will be required

to pay a security deposit to Defendant as a prerequisite to

purchasing electric service. Such acts place such other

persons at an economic disadvantage using an instrumen-

tality of the State, thereby resulting in the denial to persons

within the State of Illinois equal protection of the laws,

contrary to the Fourteenth Amendment to the Constitution

of the United States, and such acts violate Section 38, Til.

Rev. Stat. 1969, ch 11124.

11. The specific amounts of damage have not yet been

determined since such determination will require discovery

and analysis of Defendant's books and records. When these

amounts have been determined, Plaintiffs will seek leave

of Court to amend this Complaint to include such amounts.

12. Plaintiffs herein have been compelled to employ

attorneys to prosecute this suit and the attorneys for the

Plaintiffs are entitled to reasonable attorneys’ fees out of

a fund which this court is asked to establish by the col-

lection of the fund of deposits in the above-entitled cause.

The attorneys for Plaintiffs should be awarded reasonable

attorneys’ fees and costs and expenses incurred in this

proceeding.

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PRAYER FOR RELIEF

WHEREFORE, as to this Count 1, Plaintiffs pray

A. That the Court adjudge and decree that Defendant

has violated the civil rights of Plaintiffs and the acts done

in furtherance thereof, were and are in violation of the

Fourteenth Amendment to the Constitution of the United

States and of Section 38, Ill.Rev.Stat. 1969, ch 1112.

i.

B. That the Court determine that this action may be

maintained as a class action under Rule 23 of the Federal

Rules of Civil Procedure and that reasonable notice of this

action be given each member of the class represented by

Plaintiffs.

C. That the Court enjoin the Defendant from continuing

the unlawful practice as alleged in Count I of this Com-

plaint and order such other relief as may be necessary and

appropriate to dissipate the effect of Defendant’s unlawful

acts.

D. That the Court appoint a receiver to receive and

collect all deposits unlawfully required, charged and col-

lected by Defendant, COMMONWEALTH EDISON COM-

PANY, and to distribute said collected deposits to the

Plaintiffs of class named herein.

E. That the Court award to the attorneys for the Plain-

tiffs such reasonable and proper attorneys’ fees as the

Court deems appropriate.

F. Plaintiffs pray that the Court grant such other and

further relief as the Court shall deem just.

Warren P. Lanpsman

Warren P. Landsman

Rosert L. LanpsmMan

Robert L. Landsman

Warren P. Lanpsman and

Rosert L. LanpsmMan

Attorneys for Plaintiffs

77 W. Washington Street

Financial 6-0531

Of Counsel:

Lerrvin and GzersTman

135 South LaSalle Street

641-3320