The United States District Court for the Southern District of
Indiana recently found that the Due Process Clause of the United
States Constitution's Fourteenth Amendment required an Indiana
municipal water utility to provide an opportunity to interpose a
formal request to be heard before disconnecting utility service.
The Due Process Clause of the Fourteenth Amendment prohibits a
state from depriving "any person of life, liberty, or
property, without the due process of law."
The Court found that an implied contract existed between the
municipality and the utility customer which gave rise to a
protected property interest in continued water service. Because the
customer believed she was in full compliance with her payment
obligations, the municipal utility could not terminate service
"at will." The protected property interest required the
municipality to provide the customer written notice of a procedure
for protesting a proposed termination of utility services as
unjustified before disconnecting the customer. A delinquent card
including only a municipally telephone number was insufficient
notice because it failed to describe the protest procedure. The
protest procedure must provide some meaningful way to be heard
prior to a decision that will affect the customer's interest in
important and substantial ways.
This is the first instance we are aware of in Indiana imposing
such a due process requirement on a municipal utility. The decision
appears to permit class action lawsuits and requests for
attorneys' fees of customers denied this due process.
Municipalities operating utilities should review their rules and
regulations to determine (1) if they give rise to an implied
contract that cannot be terminated at will and (2) if their due
process procedures are adequate.
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