Public Utilities Commission of Ohio v. United Fuel Gas Company/Dissent Black

by Felix Frankfurter

United States Supreme Court

317 U.S. 456

Public Utilities Commission of Ohio  v.  United Fuel Gas Company

 Argued: Dec. 8, 1942. --- Decided: Jan 11, 1943

Mr. Justice BLACK dissenting, with whom Mr. Justice DOUGLAS and Mr. Justice MURPHY concur.

As a result of this decision, delays incident to obtaining a federal injunction have made wholly futile the diligent efforts of the State of Ohio to fix reasonable gas rates for the people of Portsmouth, Ohio. ^[1] I cannot agree with the suggestion implied here that this results from any cause other than the unwarranted interposition by courts into the business of rate making. Cf. McCart v. Indianapolis Water Co., 302 U.S. 419, 435, 58 S.Ct. 324, 331, 82 L.Ed. 336. Here eight years after the Ohio Public Utilities Commission made United a party defendant in order to fix rates 'to be charged' by it, Ohio is told that United may keep any sum collected, no matter how unjust or unreasonable the rates charged may have been; and Ohio's citizens are denied the right to recoup possible losses because the Commission 'has not made the inquiry and the findings which must precede the establishment of new rates.' There is one reason, and only one reason, why the Commission has not made such inquiry and findings before any step could be taken toward establishing a final rate order, and even before a single witness could be heard, this federal injunction stopped the State Commission in its tracks. Had the Commission proceeded to make inquiry and findings in the face of the injunction it would have risked the possibility that its members, agents, and attorneys could have been seized and fined or imprisoned for contempt of court. Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A.,N.S., 932, 14 Ann.Cas. 764. If it be true, which I think dubious, that under Ohio law rates can never be fixed as of the date a proceeding begins even though delays are the consequence of improvident federal injunctions, such a legal situation makes it all the more essential that the court below should have abstained as a matter of 'equitable fitness or propriety', Prentis v. Atlantic Coast Line, 211 U.S. 210, 229, 29 S.Ct. 67, 71, 53 L.Ed. 150, from tying the Commission's hands and barring it from making the final order here held to be vital. To stop these proceedings at the threshold and thus bar all possible relief for the years during which the litigation crawled along its interminable course seems to me far less justifiable than the action condemned by this Court in Petroleum Exploration v. Public Service Commission, 304 U.S. 209, 58 S.Ct. 834, 82 L.Ed. 1294.

The federal action halting the Ohio rate making process since 1935 is justified wholly on the ground that the Natural Gas Act passed in 1938 bars regulation by Ohio of United's rates since 1938 while Ohio law is said to bar any regulation prior to 1938 because no final order has yet been made by the Public Utilities Commission. The Court refuses to hold categorically that Ohio law nullifies this order, asserting instead that Ohio law requires us to interpret the Commission's order as not attempting to lead to rate making for the period 1935-1938. This will doubtless prove some surprise to the Commission which made the order in question in 1935 and which has argued both here and below that the Natural Gas Act is irrelevant because it took effect subsequent to the period in which the Commission is now interested. Whether the Court considers that Ohio law bars the Commission from making a valid order, or whether it uses its knowledge of Ohio law to tell the Commission what the Commission has attempted, is immaterial-in either case we press our conception of Ohio law on the Ohioans. But the local law question has never been squarely decided in Ohio. That question is whether United can successfully, by taking full advantage of the delays of the federal judicial system, jockey the City of Portsmouth and the State of Ohio into such a position that no one can now determine what were reasonable rates for the period prior to 1938.

Reference to state cases and particularly to Great Miami Taxpayers Association v. Public Utilities Commission, 131 Ohio St. 285, 2 N.E.2d 777, does not solve this problem, for, in the first place, under the state law all appeals to the Ohio Supreme Court are explicitly conditioned upon the posting of bond by the utility to secure payment of any damage resulting from delay. Sec. 548, Ohio Statutes. Such security for which the state law provided should have been exacted by the lower court here, Inland Steel Co. v. United States, 306 U.S. 153, 156, 59 S.Ct. 415, 417, 83 L.Ed. 557; cf. United States v. Morgan, 307 U.S. 183, 197, 59 S.Ct. 795, 802, 83 L.Ed. 1211. 'It is especially fitting that equity exert its full strength in order to protect from loss a state which has been injured by reason of a suspension of enforcement of state laws imposed by equity itself.' Public Service Commission v. Brashear Freight Lines, 312 U.S. 621, 630, 61 S.Ct. 784, 789, 85 L.Ed. 1083. The Ohio Supreme Court might well conclude that this failure of the court below to require appropriate security justifies the Commission in establishing a rate for a period prior to 1938. In addition, the very fact that the State Public Utilities Commission and the legal representatives of the State of Ohio have vigorously fought this case for four years since the passage of the Natural Gas Act is indication that they at least do not suppose that the State is powerless to fix rates as of the date United was made a party defendant. We have been cited to no case in which the State Supreme Court has held that an injunction against rate proceedings must result in such inordinate returns as the respondent here may receive.

Under these circumstances our opinion as to the local law 'cannot escape being a forecast rather than a determination.' Railroad Commission v. Pullman Co., 312 U.S. 496, 499, 61 S.Ct. 643, 645, 85 L.Ed. 971. What was said by the Court there is equally applicable here: 'The last word on the meaning of Article 6445 of the Texas Civil Statutes, and therefore the last word on statutory authority of the Railroad Commission in this case, belongs neither to us nor to the district court but to the supreme court of Texas. * * * The reign of law is hardly promoted if an unnecessary ruling of a federal court is thus supplanted by a controlling decision of a state court.' ^[2] Here as there 'If there was no warrant in state law for the Commission's assumption of authority there is an end of the litigation; the constitutional issue does not arise.' Id., 312 U.S. 500, 501, 61 S.Ct. 645, 85 L.Ed. 971.

Even assuming, with the Court, that this delay in the judicial process bars the petitioners from the particular relief sought under local law, I still think we should hold that this injunction was improvidently granted. We are given as the bases of federal equity jurisdiction these propositions: The State order is on its face 'plainly invalid'; United will be put to considerable expense in complying with it; non-compliance will result in heavy penalties or in costly litigation. In my opinion none of these separately nor all taken together provide any ground for federal jurisdiction.

What has been said above concerning the necessity of allowing state courts to decide state law is in my view adequate answer to the argument that the order is 'plainly invalid.' Ohio law in this respect could be adequately interpreted and enforced in Ohio courts. In addition, I do not consider the order before us ripe for review. It is simply a declaration of status requiring nothing of United other than cooperation in exploration of the rate problem for the purpose of eventually setting United's rates, and is thus as properly outside the realm of review now as if this were 'an attempt to review a valuation made by the Interstate Commerce Commission which has no immediate legal effect although it may be the basis of a subsequent rate order.' Rochester Telephone Corp. v. United States, 307 U.S. 125, 129, 59 S.Ct. 754, 756, 83 L.Ed. 1147. In this respect, the instant case is identical with East Ohio Gas Co. v. Federal Power Commission, 6 Cir., 115 F.2d 385, 388. Unless the other grounds of alleged equitable jurisdiction take it outside the scope of the Rochester case, this is not the appropriate time for review.

We are told that United will be put to great expense by compliance with the Commission's order in that it must provide certain statistical data necessary so that the Commission may complete its study of the rate problem. It is not suggested that this cost in itself is any reason for enjoining the proceeding nor could it be unless Petroleum Exploration v. Public Service Commission, supra, 304 U.S. 220, 58 S.Ct. 840, 82 L.Ed. 1294, is to be overruled; but the special circumstance offered here is that Congress by passage of the Natural Gas Act sought to prevent such an expenditure. We are given no argument and cited to no legislative history indicating that Congress had any desire to preclude the states from protecting state consumers against unfair rates for the period prior to the passage of the federal Act.

I am not as sure as the majority of the Court that refusal of United to comply with the Commission's order will in fact subject it to heavy penalties. ^[3] But assuming that this order is backed by the penalty clause, the case should be governed by what we said recently in Petroleum Exploration v. Public Service Commission, supra, 304 U.S. 220, 58 S.Ct. 840, 82 L.Ed. 1294: 'No order has been entered fixing rates or regulating conduct. The necessity to expend for the investigation or to take the risk for noncompliance does not justify the injunction. It is not the sort of irreparable injury against which equity protects.' Cf. Dalton Adding Mach. Co. v. State Corporation Commission of Commonwealth of Virginia, 236 U.S. 699, 35 S.Ct. 480, 59 L.Ed. 797.

That United may be subjected to a course of litigation before its rights under the Ohio law are fully determined is the least of all reasons for this use of equity jurisdiction. The compelling consideration here is that 'Lawsuits also often prove to have been groundless; but no way has been discovered of relieving a defendant from the necessity of a trial to establish the fact.' Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 51, 58 S.Ct. 459, 464, 82 L.Ed. 638.

The judgment below should be reversed and the State of Ohio permitted to continue as best it can in view of the long delay caused by the unfortunate intervention of the federal courts.

Notes

1. The suggestion in the opinion of the Court that the State is free to continue its efforts to control the rate of the local company, portsmouth Gas, so long as it does not interfere with United, the company which supplies Portsmouth Gas, accords a privilege of little meaning. The price charged Portsmouth Gas by United is about 70% of the amount which the City Council considered a reasonable rate for Portsmouth Gas to charge. It is obvious that the Portsmouth Gas rate cannot be materially affected without in turn altering the United charge.
2. For other cases exemplifying this viewpoint see Watson v. Buck, 313 U.S. 387, 402, 61 S.Ct. 962, 967, 85 L.Ed. 1416, 136 A.L.R. 1426.
3. The penalty provisions of the Ohio statute, Secs. 614-64 and 65, are applicable where a rate or refund order is disobeyed, State ex rel. Ohio Bell Telephone Co. v. Court of Common Pleas, 128 Ohio St. 553, 555, 192 N.E. 787, but it may be that orders of the sort here involved are covered by Secs. 614-6 and 7, providing for the examination of records and the production of witnesses. If this is so, review may be obtained under Ohio practice without fear of penalty prior to a final judicial determination. See, e.g., Mouser v. Public Utilities Commission, 124 Ohio St. 425, 179 N.E. 133. We are cited to no cases which indicate which of these procedures governs this order.