Southern Bell Telephone & Telegraph Co. v. Louisiana Public Service Commission

HUTCHESON, Circuit Judge

(dissenting).

I find myself unable to agree with the majority opinion, either in regard to the result arrived at, or the- reasons advanced in support of it. The nature of the questions involved justifies, I think, a statement of my reasons. Boiled down, the controversy is over the validity of Act No. 20 of the Louisiana Legislature, Second Extraordinary Session 1934, requiring public service corporations to pay the expenses of rate examinations and two certificates of the Louisiana Public Service Commission purporting to have been issued to complainant under it.

On complainant’s part it is insisted: (1) That the act discriminatorily applies to corporations when, at least as to telephone exchanges, there are individual operators in the state. (2) That the certificates are invalid, because directing the assessments to be paid to the commission instead of, as the statute provides, to the persons the commission employed. (3) That the certificates are invalid, because not true in fact and in law, in that (a) the expenses certified were not incurred in an examination of plaintiff's affairs for the purpose of fixing and regulating its rates, but in connection with a lawsuit over them-; and (b) the amoupts *1061certified as due tlie various persons named are false and excessive.

Respondents have moved to dismiss on the grounds: (1) That the Johnson Amendment, 28 U.S.C.A. § 41, withdrawing jurisdiction from the District Courts of ordeis affecting rates chargeable by public utilities, deprives the Federal District Court of jurisdiction. (2) That the Johnson Act aside, there is no jurisdiction in equity, because the act complained of in providing for a plenary suit to test the reasonableness and legality of the commission’s orders and, for their suspension until finally adjudged valid, furnishes a complete and adequate remedy at law.

On the merits as to the act, respondents urge that it is not discriminatory, but equal in its terms: (a) Because in its intent and reach it includes all public services in the state, whether operated under corporate or company management; and (b) because if it can be limited in its application to public services operated under corporate management, it. does not work a discrimination against complainant whose great size and state-wide ramifications present problems in the examination of its affairs lor rate making wholly different front those presented by tlie very few and insignificant noncorporate exchanges.

On the merits as to the complaint against the orders, that they direct payment to the commission, instead of to the persons employed, respondents point out that the certificates have attached to them detailed statements of the amounts due and payable to each of the persons employed. that the statute provides that the corporation examined shall pay the amount so certified to those persons, and that complainant can completely satisfy the orders by doing so. They assert, therefore, that the point made against the orders is not a substantial one for equitable cognizance, but a mere quibbling pretext. Finally as to the claim that the certificates are false in fact, because concerned with expenses inclined not in an examination for the purpose of fixing and regulating rates, but in conned ion with court proceedings, and that the amounts due are falsely stated, respondents deny both of these claims and assert that they are prepared to and will show that the certificates are truly and lawfully made.

I agree with the majority that the Johnson Act invoked by respondents has no application to this case. The orders in question are, plainly not orders affecting rates chargeable by a public utility, jurisdiction over which is withdrawn by that act from the District Court.

I think it plain, however, that, the provision in section 2 of the questioned statute,1 for a plenary suit to test the reasonableness and legality of the certificates, furnishes a complete and adequate remedy at law and that suit in equity to enjoin may not be sustained. The suit provided for is a judicial one. It is not a mere continuation of administrative action, as in Porter v. Investors’ Syndicate, 286 U. S. 461, 52 S.Ct. 617, 76 L.Ed. 1226. Neither is it a special suit limited to a particular tribunal, as was the case in City Bank Farmers’ Trust Co. v. Schnader, 291 U.S. 24, 54 S.Ct. 259, 78 L.Ed. 628. The provision for suit is general, and under it plaintiff, a nonresident, has its election to file in either the state or the federal court. MacMillan v. Railroad Commission (D.C.) 51 F.(2d) 400; Reagan v. Farmers’ Loan & Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014; Chicot County v. Sherwood, 148 U.S. 529, 13 S.Ct. 695, 37 L.Ed. 546.

If this were the majority, instead of merely a dissenting, opinion, this view, that no equitable case is presented, would make unnecessary any further statement of views. The majority opinion, however, has affirmed jurisdiction, and has discussed and decided all of the contentions made. This obliges the dissenter, if he would do a thorough job of dissenting, to take up in order and discuss them too.

First, then, I cannot at all agree with the majority that “it would violate every principle of statutory construction” to hold that noncorporately operated exchanges are *1062within the intendment of the act. With deference, I think the conclusion of the majority opinion is drawn from its unsound premise, that “to hold that the act should be construed to include in its terms all public utilities however owned and operated, would be to attribute a secret, hidden, and indirect purpose to -the legislators.” I do ’ not think that such a purpose should be attributed to them. I do not think a holding that, since the character of the ownership, whether corporate or incorporate, was wholly immaterial to the ends the statute had in view, it should be assumed that the Legislature used the word “corporation” to present the characteristic, though not' definitive, form under which public services were conducted in Louisiana, would impute any secret intention to them. If, in an endeavor to arrive at the just and reasonable construction of the act, we focus our minds, as we must assume the Legislature did, not upon words, but upon the problem with which the act had to deal, and if, in focusing, we see that with the exception of a very few exchanges, insignificant in number, and infinitesimal in size, substantially all of the telephone companies in Louisiana are in corporate form, and presumptively, since there is no evidence to the contrary, all other kinds of public service and public utilities are in that form, it seems to me it is much more reasonable to treat the word “corporation” as a characterization, rather than a definition. Such a construction does not, it seems to me, impute to -the Legislature any “hidden, secret or indirect purpose.” It merely gives effect to the principal- apparent purpose of the Legislature to localize the costs of investigation. On the other hand the construction the majority opinion gives the act in overthrowing it necessarily imputes to the Legislature, I think, a secret, hidden, and indirect purpose to. punitively and unconstitutionally discriminate.

The general principles of construction seem to me to support the view of the statute for which respondents contend. It is uniformly held that unless the context requires a definitive, restrictive meaning wherever the word “person” is used in a statute, corporations will be held to be included. McKinley v. Wheeler, 130 U.S. 630, 9 S.Ct. 638, 32 L.Ed. 1048.

Van Dyke v. Geary, 244 U.S. 39, 37 S.Ct. 483, 61 L.Ed. 973, and the cases it cites, hold in effect that an act of this character will, wherever possible, that is, unless it clearly and plainly appears that a definite limitation is intended, and discrimination has thus resulted, be construed, not under canons of verbal nicety, but so as to give effect to its principal apparent purpose.

I think in the light ■ of that purpose, and of the evidence as to the overwhelmingly predominant character in Louisiana of the corporate form of public service, it is not an unreasonable, but a reasonable, construction of the act to hold that the words “company” and “corporation” were used in' it as characterizations, and not as definitions, and that it includes within its terms all public services and utilities, whether operated under corporate or non-corporate form.

But I regard this as immaterial, for I think it perfectly plain that if the statute be construed as limited to corporations, it works no discrimination of which plaintiff can complain. The protection of the Fourteenth Amendment against unequal laws is directed against not theoretical, but real discrimination. Where burdens are laid on one whose actual conditions are greatly different from others not so burdened, he or it cannot claim discrimination because those others, dis-similarly situated, are not subject to them. Where, as here, there are a very few small exchanges, none operated in the name of, but some owned by individuals, having from 100 to 300 subscribers, it seems quite unreasonable to me to say that a statute and orders of this kind, charging the expenses of rate examination against the Southern Bell Telephone Company, having exchanges aggregating 126,-000 subscribers, violates the Fourteenth Amendment because it does not in terms apply to these individually owned exchanges.

Constitutional law goes- upon the rule of right reason. It must be practically laid down and practically applied. Laws cannot be stricken down as discriminatory unless the discrimination plainly appears; that is, unless it appears that there is no basis on which reasonable minds could agree that classification was justly made. Whitney v. People of State of California, 274 U.S. 357, 47 S.Ct. 641, 71 L.Ed. 1095; Ft. Smith Lumber Co. v. Arkansas, 251 U.S. 532, 40 S.Ct. 304, 64 L.Ed. 396; Flor*1063ida Central & P. R. Co. v. Reynolds, 183 U.S. 471, 22 S.Ct. 176, 46 L.Ed. 283.

If the law had in terms imposed the expenses of investigation on large concerns, with complicated systems of accounting and method like that of complainant, and had also in terms expressly exempted small individually owned exchanges, with a few subscribers, it would clearly not have been discriminatory. This kind of law is sustained on the ground that it really takes nothing from the utility, for while the charges are primarily paid by it, they are figured in the rate base and ultimately paid by the public. They are sustained on the ground that expenses of this kind, which public regulation makes necessary, ought to be borne, not by the general public, but by those who receive the benefit of the service. Washington Ry. & E. Co. v. District of Columbia, 64 App.D.C. 235, 77 F.(2d) 366. The Legislature might well believe that the expenses of investigating an exchange of 100 or 300 subscribers would be so infinitesimal as that the general public might properly absorb it. It seems’ quite clear to me, then, that the case is not controlled by Quaker City Cab Co. v. Com. of Pennsylvania, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927, and Liggett Co. v. Baldridge, 278 U.S. 105, 49 S.Ct. 57, 73 L.Ed. 204, but by White River Lumber Company v. State of Arkansas, 279 U.S. 692, 49 S.Ct. 457, 73 L.Ed. 903. If the Legislature of Arkansas could justly make special provision for the collection of back taxes against corporations without making those provisions against individuals, it would seem clear to me that the Legislation of Louisiana could require the payment by complainant of rate investigation charges without making the same provision as to the very few small individually owned telephone exchanges. If plaintiff’s claim is that while its own situation is quite different from that of the individual owners, the law applies not only to it but to other corporately owned exchanges, some of which have as few or fewer subscribers than some of those individually owned, the short and sufficient answer is that plaintiff may not make such a claim. Under the Fourteenth Amendment each one affected by laws must complain for himself. If and when the commission undertakes to make a rate investigation in connection with any of the few small corporately owned exchanges, and charges them with the expenses of it, it will be time enough for the particular exchange affected to make its point that there is discrimination as between it and the individually owned exchanges. Plaintiff cannot use this supposititious situation and the'wrongs supposed to result from it, to strike the statute down. In my opinion, the statute as to plaintiff is clearly valid, and plaintiff is subject to reasonable requirements under it.

Coming to the orders themselves, I cannot at all agree with the majority opinion that they may be enjoined because they require payment of the amounts called for in them to the commission, and not, as the statute provides, to the persons performing the work. While I agree that in this direction the orders do not comply with the statute, the point is, I think, a mere quibble, since the accounts of each person on whose behalf the orders are made, are attached to the orders and payment to them would, under the statute, be a complete compliance with both statute and orders.

Finally, as to the conclusion of the majority on the merits of the orders that they were wrongly issued, not for expenses incurred in connection with a rate investigation, bnt for those incurred in a court trial, and that they do not truly state the facts as to the expenses actually incurred, it seems to me that the conclusion is reached on wholly insufficient data.

If jurisdiction to examine into the merits of the order is to be taken, it seems to me that the conclusion on the merits ought to be reserved until after they have been heard.

“Provided, however, that, should the corporation deem the amount oí the expenses so certified to be unreasonable or contrary to the provisions of this Act, it may, within fifteen days after the receipt of such certificate, take a rule in a court of competent jurisdiction against the Louisiana Public Service Commission, lo test the reasonableness and legality under this Act, of the amount of expenses certified to by the Louisiana Public Service Commission, which rule shall be tried by preference, and upon appeal shall be given preference in the Appellate Court, as provided by law for other State cases.”