Cahill v. Public Service Commission

OPINION OF THE COURT Harvey, J. Petitioner is a customer of both respondent New York Telephone Company and intervenor Central Hudson Gas and Electric Corporation. In October 1984, he commenced the instant CPLR article 78 proceeding seeking an order directing respondents to cease the practice of passing along the cost of charitable contributions to customers. Petitioner also sought an order amending respondent Public Service Commission’s (PSC) June 22, 1984 rate order to eliminate the PSC’s recognition and authorization of New York Telephone’s practice of passing along the cost of its charitable contributions to its customers as part of the rates it was authorized to charge. Respondents elected not to interpose an answer, but rather moved for dismissal of the article 78 petition asserting objections in point of law (CPLR 7804 [f]). Respondents asserted that the court lacked jurisdiction since the subject matter [605] raised was within the exclusive purview of the PSC. Respondents also asserted that petitioner failed to exhaust administrative remedies and that the petition, which was predicated on a violation of petitioner’s rights as set forth in US Constitution 1st and 14th Amendments, failed to state a cause of action. Special Term denied respondents’ motion in all respects (128 Misc 2d 510). That court properly noted its jurisdiction to entertain an article 78 proceeding which raises claims of a violation of constitutional rights as a consequence of actions taken by public regulatory bodies (see, Consolidated Edison Co. v Public Serv. Commn., 447 US 530, 533; see also, Matter of Consolidated Edison Co. v Public Serv. Commn., 107 AD2d 73). Respondents contended as one of their objections in point of law that petitioner failed to state a cause of action for article 78 relief. Since respondents elected not to submit an answer prior to moving for dismissal of the petition by setting forth objections in point of law as provided for in CPLR 7804 (f), their motion is one in the form of a CPLR 3211 motion addressed to the pleadings (see, Matter of Nassau BOCES Cent. Council of Teachers v Board of Coop. Educ. Servs., 63 NY2d 100, 102-103; McLaughlin, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C7804:7, p 507). Examining the petition and accepting the facts alleged as true, and considering them in the light most favorable to petitioner, as we must, we find that the article 78 petition states a claim for relief (see, Matter of Board of Educ. v Allen, 32 AD2d 985). It is essential to the survival of this proceeding that the petition allege a violation of petitioner’s 1st Amendment rights by some "State action”. For, while the 14th Amendment provides protection of a citizen’s constitutional rights from encroachment by State Government action, it has no applicability to private discriminatory or wrongful conduct (Jackson v Metropolitan Edison Co., 419 US 345, 349-350). Petitioner states that the PSC established a policy in 1970 which permitted the utilities it regulates to pass along the cost of charitable donations to ratepayers. The PSC’s "prime function * * * as a regulatory body, is [in separating] those costs which should be borne by ratepayers from those which are properly chargeable to shareholders” (Rochester Gas & Elec. Corp. v Public Serv. Commn., 51 NY2d 823, 825, appeal dismissed 450 US 961). The PSC is a creation of the Legisla [606] ture (Public Service Law §§ 3, 4; see, Matter of Consolidated Edison Co. v Public Serv. Commn., 47 NY2d 94, 102, revd 447 US 530). By alleging that the PSC adopted a policy which permitted the costs of charitable donations to be passed along to ratepayers, petitioner has adequately stated the threshold claim of "State action” (Jackson v Metropolitan Edison Co., supra, pp 349-350). Petitioner goes on to allege in the article 78 petition that the policy promulgated by the PSC results in ratepayers’ funds being directed to a variety of charitable causes without any notice to, or input by, those individuals. Petitioner also contends that donations made to specific charities are violative of his religious beliefs. Petitioner’s claim for relief is that the PSC’s policy constitutes unlawful State action since it has the end result of compelling an individual ratepayer to indirectly support an organization whose philosophy the ratepayer opposes on religious or other personal grounds. Accepting petitioner’s allegations and construing them in his favor, we find that he has stated a cause of action which alleges a violation of his rights under US Constitution 1st and 14th Amendments (Torcaso v Watkins, 367 US 488; see, Wooley v Maynard, 430 US 705; see also, Abood v Detroit Bd. of Educ., 431 US 209). Respondents’ contention that petitioner has failed to exhaust his administrative remedies does not present a bar to the court’s entertaining the instant petition. Where, as here, a petitioner’s claim is based solely on a constitutional challenge, the exhaustion of administrative remedies requirement is inapplicable (Matter of Emery v LeFevre, 97 AD2d 931, 932). The proceeding is timely since the nature of the relief sought by petitioner is to address an alleged continuing violation of his constitutional rights (see, Matter of Burke v Sugarman, 35 NY2d 39, 45).