Memphis Light, Gas & Water Division et al. v. Craft et al.
436 U.S. 1 (1978)
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Rule of Law:
The Due Process Clause of the Fourteenth Amendment requires that a public utility, before terminating service to a customer for nonpayment, provide the customer with notice of a procedure for disputing a bill and an opportunity to present their complaint to a designated employee with the authority to resolve the matter.
Facts:
- Willie S. and Mary Craft moved into a Memphis residence in October 1972 that had two separate gas and electric meters from a previous use as a duplex.
- Based on information from the seller, the Crafts believed the second set of meters was inoperative.
- In 1973, Memphis Light, Gas and Water Division (MLG&W) began sending the Crafts two separate monthly utility bills, one in the name of Willie S. Craft and the other for Willie C. Craft.
- The Crafts hired a contractor to consolidate the meters, but the work was done improperly, and the double billing continued into January 1974.
- During this period of disputed double billing, MLG&W terminated the Crafts' utility service five times for nonpayment.
- On several occasions, Mrs. Craft visited MLG&W offices to resolve the billing issue but was unable to get a satisfactory explanation or clear instructions on how to formally dispute the charges with management.
Procedural Posture:
- Willie S. and Mary Craft, along with other customers, filed an action under 42 U.S.C. § 1983 in the U.S. District Court for the Western District of Tennessee against Memphis Light, Gas and Water Division (MLG&W) and several of its officers.
- The District Court, a trial court, refused to certify the plaintiffs' class action and entered judgment for the defendants (MLG&W).
- The Crafts (the appellants) appealed the decision to the U.S. Court of Appeals for the Sixth Circuit.
- The Court of Appeals affirmed the District Court's refusal to certify a class action but reversed the judgment for MLG&W (the appellees), holding that the utility's termination procedures did not comport with due process.
- MLG&W (the petitioners) sought and was granted a writ of certiorari by the U.S. Supreme Court to review the Court of Appeals' decision.
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Issue:
Does a municipal utility's termination of service for nonpayment, without providing a customer with adequate notice of a procedure to dispute a bill and an opportunity to be heard by an employee empowered to resolve the dispute, violate the Due Process Clause of the Fourteenth Amendment?
Opinions:
Majority - Justice Powell
Yes. A municipal utility's termination of service under these circumstances violates the Due Process Clause of the Fourteenth Amendment. Tennessee state law, which only permits utilities to terminate service 'for cause' (i.e., nonpayment of a just bill), creates a legitimate claim of entitlement to continued service, which is a property interest protected by the Fourteenth Amendment. Applying the Mathews v. Eldridge balancing test, the Court found the customer's interest in essential utility service is significant, the risk of erroneous deprivation from billing errors is not insubstantial, and the burden on the utility to provide an informal administrative remedy is low. The notice provided by MLG&W was constitutionally inadequate because, while it warned of termination, it failed to apprise the Crafts of a procedure to protest the disputed charges. Furthermore, due process requires an opportunity for an informal hearing where a customer can present their complaint to a designated employee empowered to resolve the dispute, an opportunity that was not made available to the Crafts.
Dissenting - Justice Stevens
No. The termination procedures employed by the utility division did not violate the Due Process Clause. The Court's holding confuses and trivializes the principle of due process. The termination notices provided a phone number for the information center, which is sufficient notice for a reasonable homeowner to know how to complain about a bill. The record shows that Mrs. Craft did, in fact, meet with utility employees, even if she was unsuccessful in persuading them. The available state law remedies, such as paying the bill and suing for a refund, provide adequate protection against erroneous deprivations. The Court's new rule is an unnecessary, paternalistic policy determination that creates trivial constitutional requirements for routine billing disputes.
Analysis:
This case firmly establishes that entitlements to government services, such as public utilities, can constitute 'property' interests protected by the Due Process Clause. It clarifies that procedural due process requires not only notice of a potential deprivation but also meaningful notice of the available procedures to challenge that deprivation. By mandating an accessible, informal administrative remedy prior to termination, the decision significantly strengthened procedural protections for individuals in their dealings with government-run entities, particularly in contexts involving essential services and small monetary disputes where formal litigation is impractical. This holding has had a broad impact on administrative law, influencing the procedures required for the termination of a wide range of government benefits and services.
