Home Telephone & Telegraph Co. v. City of Los Angeles

Supreme Court of the United States · 1913 · Federal Courts

Federal CourtsFourteenth AmendmentState actionFederal question jurisdictionMunicipal ordinancesstate actionmunicipal ordinancedue process

Facts

Home Telephone & Telegraph Co., a California corporation providing telephone service in Los Angeles, challenged a city ordinance establishing telephone rates for the year beginning July 1, 1911. The bill alleged that the city had authority under California law to fix telephone rates, but that the rates set were so unreasonably low that enforcing them would confiscate the company's property in violation of the Fourteenth Amendment's due process clause. The complaint included extensive allegations about the value of the company's property, expected returns under the challenged rates, and its prior experience operating under similar rates the previous year to demonstrate confiscation. The city responded with a plea to the jurisdiction, arguing that because California's own constitution also prohibited deprivation of property without due process, no federal jurisdiction existed until the state courts first determined whether the ordinance was authorized by the State.

Issue

Whether a federal court has jurisdiction to hear a Fourteenth Amendment challenge to a municipal rate ordinance when the plaintiff alleges that city officials, acting under state-conferred authority, are enforcing confiscatory rates, even though the same conduct would also presumptively violate the state constitution. More specifically, must a federal court wait for a state court to decide that the officials' acts are authorized by the State before treating them as state action under the Fourteenth Amendment?

Rule

When a state officer or other repository of state power, under an assertion of authority from the State, does an act that could only be done because of that authority and that act prima facie would violate the Fourteenth Amendment, federal judicial power may be invoked directly. The Fourteenth Amendment reaches not only acts fully authorized by the State, but also abuses or misuse of state-conferred power by officers or agents; therefore, inquiry into whether the State specifically authorized the wrong is irrelevant for purposes of federal jurisdiction and relief. The same principle applies to acts done under municipal ordinances enacted pursuant to state-conferred power.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakefront Transit Cable, a utility company in Cleveland, sues in federal court to enjoin Cleveland officials from enforcing a city ordinance that sharply caps the company's service rates. The complaint alleges the city was exercising rate-setting authority granted by Ohio law, that the rates are confiscatory under the Fourteenth Amendment, and that the Ohio Constitution also forbids deprivation of property without due process.

Which is the strongest argument that the federal court has subject-matter jurisdiction?

Explanation. A federal question exists when officials wielding authority conferred by the State threaten conduct that prima facie violates the Fourteenth Amendment. The majority rejected the view that federal jurisdiction disappears merely because the same conduct would also presumptively violate the state constitution. Nor must the plaintiff first obtain a state-court ruling. Acts under a municipal ordinance passed pursuant to state-conferred power qualify as state action for this purpose.