Turnage v. Britton

29 F.4th 232

Ray C. TURNAGE, on behalf of themselves and all others similarly situated; Reverend D. Franklin Browne, on behalf of themselves and all others similarly situated; Dennis D. Henderson, on behalf of themselves and all others similarly situated; Carlos Wilson, on behalf of themselves and all others similarly situated; Fred Burns, on behalf of themselves and all others similarly situated; Charles Bartley, on behalf of themselves and all others similarly situated; Clarence Magee, on behalf of themselves and all others similarly situated; Linda Patrick-Crafton, on behalf of themselves and all others similarly situated; Barbara Young, on behalf of themselves and all others similarly situated; Juanita J. Griggs, on behalf of themselves and all others similarly situated; Chernise Seaphus, on behalf of themselves and all others similarly situated; Mount Carmel Baptist Church; Pinebelt Community Services, Incorporated; Hall-Fairley Mortuary ; Deborah Delgado, Plaintiffs—Appellants,

v.Sam BRITTON, Mississippi Public Service Commissioner; Cecil Brown, Mississippi Public Service Commissioner; Brandon Presley, Mississippi Public Service Commissioner; Mississippi Power Company, Defendants—Appellees.

No. 21-60130

United States Court of Appeals, Fifth Circuit.

FILED March 21, 2022

David Daniel O'Donnell, Esq., Clayton O'Donnell, P.L.L.C., Oxford, MS, Ellis Turnage, Turnage Law Office, Cleveland, MS, for Plaintiffs-Appellants.

Justin Lee Matheny, Esq., Office of the Attorney General for the State of Mississippi, Jackson, MS, for Defendants-Appellees Sam Britton, Cecil Brown, Brandon Presley.

Jonathan Paul Dyal, Esq., Leo Ernest Manuel, Balch & Bingham, L.L.P., Gulfport, MS, Jason Brent Tompkins, Balch & Bingham, L.L.P., Birmingham, AL, for Defendant-Appellee Mississippi Power Company.

Before Dennis, Higginson, and Costa, Circuit Judges.

Gregg Costa, Circuit Judge:

In 2015, the Supreme Court of Mississippi ordered an electric utility to refund the money it had collected from customers under a faulty rate order. In this federal sequel to that state-court lawsuit, ratepayers contend that an erroneous calculation of the interest on their refunds shorted them millions of dollars in the aggregate.

This appeal raises two jurisdictional questions and one merits question. We agree with the district court that sovereign immunity bars the ratepayers' claims against the Mississippi Public Service Commissioners. We also agree that the Johnson Act does not preclude federal jurisdiction over the claims against the utility. On the merits, however, we disagree with the accrual date the district court used in dismissing the case on limitations grounds.

I.

This dispute traces back to a rate increase the Mississippi Public Service Commission approved almost a decade ago. To allow Mississippi Power Company¹ to raise more than $330 million to construct a power plant in Kemper County, the Commission authorized the utility to increase its rates by 15% in 2013 and an additional 3% in 2014.

The Supreme Court of Mississippi invalidated the rate increase. In addition to finding that the Commission exceeded its authority in blessing the rate hike, it concluded that the Commission and Mississippi Power violated ratepayers' due process rights. Miss. Power Co., Inc. v. Miss. Pub. Serv. Comm'n , 168 So. 3d 905, 912, 916 (Miss. 2015). The supreme court ordered Mississippi Power to refund the unauthorized charges. Id. at 916.

Under state law, the utility was required to refund the excess to customers "in full, including interest at the lawful rate." MISS. CODE ANN. § 77-3-39(12). Mississippi's lawful interest rate is "eight percent (8%) per annum, calculated according to the actuarial method." Id. § 75-17-1(1).

Mississippi Power submitted a proposed refund plan to the Commission on July 21, 2015, which the Commission approved on August 6th.

Mississippi Power began issuing refund checks on November 6, 2015 and mailed out the final batch of checks on December 4, 2015. Ratepayers who did not elect to receive a refund check received a credit on their utility bill instead. The refund program formally ended on May 27, 2016, when an independent auditor confirmed that all refunds had been distributed or were otherwise accounted for.

At some point before the checks issued, some ratepayers commissioned economist Mark A. Cohen to compare the interest they would receive under the refund plan to the interest guaranteed by statute. On August 13, 2016, Cohen informed them that he believed that Mississippi Power had shorted them more than ten million dollars. Although the plan purports to use an interest rate higher than the statutory 8%, Cohen contends that the plaintiffs received less than they were owed using either rate. This discrepancy may be due to how the refund plan compounded interest.

On November 21, 2018, more than two years after receiving Cohen's report, individual and institutional electricity customers filed a putative class action against Mississippi Power and the three Mississippi Public Service Commissioners in their official capacities. The ratepayers brought claims under state law, as well as section 1983 claims under the Due Process Clause and the Takings Clause.

The district court dismissed the claims against the Commissioners and Mississippi Power in separate orders. It first held that sovereign immunity barred the ratepayers' claims against the Commissioners. In a second order, the district court determined that the Johnson Act, 28 U.S.C. § 1342, did not deprive it of subject matter jurisdiction over the remaining federal claims but then dismissed the federal claims against Mississippi Power as time-barred. Finally, the court declined to exercise supplemental jurisdiction over the remaining state law claims based on the Class Action Fairness Act's home state exception and dismissed them without prejudice. The ratepayers timely appeal all of these rulings except the without-prejudice dismissal of the state law claims.

II.

As we must, we first address the jurisdictional issues. Ramming v. United States , 281 F.3d 158, 161 (5th Cir. 2001).

A.

Recognizing "the problems of federalism inherent in making one sovereign appear against its will in the courts of the other," the Eleventh Amendment and general principles of sovereign immunity prohibit federal courts from hearing certain lawsuits against the states. Pennhurst State Sch. & Hosp. v. Halderman , 465 U.S. 89, 100, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) (quoting Emps. v. Miss. Pub. Health & Welfare Dep't , 411 U.S. 279, 294 (1973) (Marshall, J., concurring)); see also Allen v. Cooper , ––– U.S. ––––, 140 S. Ct. 994, 1000, 206 L.Ed.2d 291 (2020) (recognizing that although the text of Eleventh Amendment "applies only if the plaintiff is not a citizen of the defendant State," the amendment reflects a broader immunity principle inherent in the federal system). Commissioners Bailey, Maxwell, and Presley invoke this sovereign immunity.

Although sovereign immunity bars most suits against states and their agencies in federal court, it is not absolute. City of Austin v. Paxton , 943 F.3d 993, 997 (5th Cir. 2019). It does not apply when the state consents to suit or when Congress abrogates the state's immunity. Id. Additionally, under Ex parte Young , 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), sovereign immunity does not bar suits against state officers for prospective declaratory or injunctive relief because officers act as private persons "stripped of [their] official clothing" when they violate federal law. K.P. v. LeBlanc , 627 F.3d 115, 124 (5th Cir. 2010). Congress has not abrogated the states' immunity from section 1983 claims and Mississippi has not consented to suit, so federal jurisdiction over the Commissioners turns on Young .

The Young exception to state sovereign immunity applies when the party invoking it establishes three criteria. First, the complaint "must name individual state officials as defendants in their official capacities." Raj v. La. State Univ. , 714 F.3d 322, 328 (5th Cir. 2013). Second, the complaint must allege an ongoing violation of federal law. Verizon Md., Inc. v. Pub. Serv. Comm'n of Md. , 535 U.S. 635, 645, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002). And finally, the complaint must seek prospective relief. Id.

The complaint easily satisfies Young 's first requirement. The Public Service Commissioners are state officials ordinarily shielded by sovereign immunity. Gulf Park Water Co., Inc. v. Miss. Dep't of Env'tl Quality , 59 F.3d 1241, 1241, 1995 WL 413105 (5th Cir. 1995) (unpublished). And they are sued in their official capacities.

The ratepayers stumble at Young 's second requirement. Young does not apply when the injurious conduct occurred "at one time or over a period of time in the past." Corn v. Miss. Dep't of Pub. Safety , 954 F.3d 268, 275 (5th Cir. 2020) (citing Papasan v. Allain , 478 U.S. 265, 278, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ). When there is no ongoing violation of federal law, Young jurisdiction is not needed to prevent state officials from "employ[ing] the Eleventh Amendment as a means of avoiding compliance with federal law."

P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc. , 506 U.S. 139, 146, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993).

The conduct that the ratepayers complain of is not ongoing. They argue that "enforcement of the Kemper Refund Plan and its improper [interest calculation method]" deprives them of their rights under the Takings and Due Process Clauses. But as the district court correctly pointed out, neither the Commission nor Mississippi Power have taken any action to administer or enforce the refund plan in years. Mississippi Power issued the final batch of refund checks to customers in December 2015 and the refund program formally ended after the May 2016 audit. Just last year, we found no continuing illegality when the investigation and administrative proceedings "forming the basis of the allegations ... [we]re completed." Spec's Fam....