Jackson v. Metropolitan Edison Co.

Supreme Court of the United States
419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974)

ELI5:

Rule of Law:

The actions of a heavily regulated private utility do not constitute state action for Fourteenth Amendment purposes unless there is a sufficiently close nexus between the state and the specific challenged action. Mere state regulation, monopoly status, or passive approval of a utility's internal policies is insufficient to establish this nexus.

Facts:

Until September 1970, Catherine Jackson had an electricity account in her name with Metropolitan Edison Co., which was terminated for nonpayment.
A new account for the same residence was opened in the name of James Dodson, another occupant.
In August 1971, Dodson moved out of the residence, and payments for electric service ceased.
On October 6, 1971, Metropolitan employees inquired about Dodson's whereabouts, and the next day informed Jackson that the meter had been tampered with.
Jackson denied knowledge of any tampering and requested that the account be transferred to her 12-year-old son.
On October 11, 1971, without further notice to Jackson, Metropolitan Edison employees disconnected the electric service to her home.

Procedural Posture:

Catherine Jackson filed suit against Metropolitan Edison Co. in the United States District Court for the Middle District of Pennsylvania under 42 U.S.C. § 1983.
The District Court granted Metropolitan's motion to dismiss the complaint on the ground that the termination of service did not constitute state action.
Jackson, as appellant, appealed the dismissal to the United States Court of Appeals for the Third Circuit.
The Court of Appeals affirmed the District Court's judgment, also finding an absence of state action.
The United States Supreme Court granted certiorari to review the judgment.

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Issue:

Does a privately owned utility company's termination of service, a practice included in a tariff filed with and not disapproved by a state regulatory commission, constitute 'state action' subject to the Fourteenth Amendment's Due Process Clause?

Opinions:

Majority - Justice Rehnquist

No. The termination of service by a privately owned utility does not constitute 'state action' for Fourteenth Amendment purposes. The inquiry must be whether there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action may be fairly treated as that of the State itself. Neither the utility's monopoly status, its performance of an essential public service, nor the State's extensive regulation converts its conduct into state action. The State's failure to disapprove a tariff provision allowing for such termination does not amount to state compulsion or encouragement; the initiative for the practice came from the utility, not the State. Therefore, Metropolitan's action was private conduct immune from the restrictions of the Fourteenth Amendment.

Dissenting - Justice Douglas

Yes. The utility's termination of service does constitute 'state action.' The Court should not examine each factor in isolation but must consider the aggregate of all relevant factors. In this case, the combination of a state-protected monopoly, the provision of an essential public service, and an extensive framework of state supervision and control demonstrates sufficient state involvement. The termination procedures were authorized by state law and made enforceable by the weight and authority of the State, making the utility's actions sufficiently intertwined with the state to be considered 'state action.'

Dissenting - Justice Marshall

Yes. The termination of service constitutes 'state action.' The Court's opinion takes a major step in repudiating prior authority by failing to properly weigh the combination of factors present: a state-sanctioned monopoly, an extensive pattern of cooperation between the utility and the state, and the provision of a service uniquely public in nature. Providing utility service is a 'public function' because the state invariably either provides it directly or permits private companies to act as state surrogates. The state utility commission's approval of the tariff containing the termination provision is sufficient to show state sanction of the practice, and the majority's new requirement that the state must have ordered the practice marks a sharp departure from precedent.

Dissenting - Justice Brennan

This dissent does not directly answer the Issue question on the merits. The case should be dismissed because no justiciable controversy existed between the parties. Under Pennsylvania law, petitioner Jackson ceased being a 'customer' entitled to service when her account was terminated in 1970 for nonpayment. The service disconnected in 1971 was under James Dodson's account. Therefore, Jackson lacked the requisite legal entitlement to continuous service to form the basis of her due process claim.

Analysis:

This case significantly narrowed the scope of the 'state action' doctrine under the Fourteenth Amendment. By establishing the 'close nexus' test, the Court required a direct link between the state and the specific challenged conduct, rather than just a general relationship between the state and the private entity. This decision makes it substantially more difficult to hold heavily regulated private entities, such as utilities, schools, and hospitals, liable for constitutional violations under 42 U.S.C. § 1983. It shifted the focus from the overall character of the entity to the source and nature of the specific policy being challenged.

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