Cytline, LLC v. Public Utility District No. 2 ( 2021 )

FILED
NOT FOR PUBLICATION
MAR 11 2021
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CYTLINE, LLC, a Delaware limited No. 20-35324
liability company; et al.,
D.C. No. 2:18-cv-00390-RMP
Plaintiffs-Appellants,
and MEMORANDUM*
CORSAIR INVESTMENTS WA, LLC, a
Washington limited liabiity company;
TELCO 214 WHOLESALE SOFTWARE,
INC., a Washington corporation,
Plaintiffs,
v.
PUBLIC UTILITY DISTRICT NO. 2 OF
GRANT COUNTY, WASHINGTON, a
Washington municipal corporation; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Washington
Rosanna Malouf Peterson, District Judge, Presiding
Argued and Submitted March 3, 2021
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Seattle, Washington
Before: RAWLINSON and BYBEE, Circuit Judges, and ENGLAND,** District
Judge.
Appellants (collectively, Cytline) appeal the district court’s grant of Public
Utility District # 2’s motion for summary judgment. Cytline challenges RS-17, a
new electricity rate class implemented by the Grant County Public Utility District
(Grant PUD). We have jurisdiction pursuant to 28 U.S.C. § 1291. We review a
grant of summary judgment de novo. L.F. v. Lake Wash. Sch. Dist. # 414, 947
F.3d 621, 625 (9th Cir. 2020). We affirm.
1. RS-17 does not violate the Dormant Commerce Clause. A state law
violates the Dormant Commerce Clause where it discriminates against out-of-state
entities in purpose or actual effect or where it excessively burdens interstate
commerce. See Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070,
1087–88 (9th Cir. 2013). RS-17 does not demonstrate intent to discriminate
against interstate commerce because it was enacted to address a sudden influx in
cryptocurrency requests for electricity. The rate also does not have a
discriminatory effect on interstate commerce because the electricity is only
provided to operations physically located in Grant County. Cf. New England
**
The Honorable Morrison C. England, Jr., Senior United States District
Judge for the Eastern District of California, sitting by designation.
2
Power Co. v. New Hampshire, 455 U.S. 331, 339 (1982). Finally, RS-17 does not
unduly burden interstate commerce merely because it affects businesses that
engage in interstate commerce or reduces profitability. See Great Atl. & Pac. Tea
Co. v. Cottrell, 424 U.S. 366, 371 (1976); see also Exxon Corp. v. Maryland, 437
U.S. 117, 127 (1978).
2. RS-17 does not violate substantive due process. Substantive due process
protects only interests recognized by the Constitution. See Shanks v. Dressel, 540
F.3d 1082, 1087 (9th Cir. 2008). Cytline’s claimed interests in its current
profitability, investments in Grant county, a nonarbitrary rate, and money generally
are not constitutionally protected interests. See Phillips v. Washington Legal
Foundation, 524 U.S. 156, 164 (1998) (finding only that Texas law recognized the
principal in a client trust account as a property interest); Penn Cent. Transp. Co. v.
City of New York, 438 U.S. 104, 131 (1978) (“[D]iminution in property value,
standing alone,” does not establish a taking.). Nor has RS-17 infringed on
Cytline’s ability to use its property for a particular purpose or to engage in its
chosen occupation. Moreover, the constitutional prohibition against
non-confiscatory rates applies only to public utilities subject to regulation, not
consumers. See Duquesne Light Co. v. Barasch, 488 U.S. 299, 307 (1989); In re
Permian Basin Area Rate Cases, 390 U.S. 747, 769–70 (1968).
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3. Adoption of RS-17 did not violate procedural due process. Procedural
due process is violated where a plaintiff has been (1) deprived of a protected
property interest and (2) denied “adequate procedural protections.” Brewster v. Bd.
of Educ. of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir. 1998).
Protected property interests may be created by state law. See Bd. of Regents v.
Roth, 408 U.S. 564, 577 (1972). Cytline has established a property interest
recognized by Washington law. Although Wash. Rev. Code § 54.24.080 does not
create a property interest in non-arbitrary rates, see Snohomish Cnty. PUD No. 1 v.
Broadview Television Co., 586 P.2d 851, 854 (Wash. 1978) (en banc), the district
court erred in finding that Cytline has no protected interest in a non-arbitrary rate.
Customers of public utilities in Washington have a due process right to non-
arbitrary rates, even though they do not have a right of participation in ratemaking
proceedings, which are not subject to procedural due process. See Earle M.
Jorgensen Co. v. City of Seattle, 665 P.2d 1328, 1332 (Wash. 1983) (en banc); see
also Prentis v. Atl. Coast Line Co., 211 U.S. 210, 226 (1908) (holding that
ratemaking is a legislative act not subject to procedural due process). However,
Cytline was afforded sufficient process here, including notice, eleven public
hearings, opportunities to comment, and meetings with Grant PUD staff.
Jorgensen, 655 P.2d at 1333 (Adequate “procedural safeguards may be provided
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by the administrative body.”).1
4. Section 20 of the Federal Power Act does not create a private right of
action for Cytline to challenge RS-17. Section 20, 16 U.S.C. § 813, requires that
rates charged by federal licensees be “reasonable, nondiscriminatory, and just to
the customer.” A statute implicitly creates a private right of action where it creates
both a private right and a private remedy. Alexander v. Sandoval, 532 U.S. 275,
286 (2001). Section 20 does not create a private right because it focuses on the
enforcement jurisdiction of the Federal Energy Regulatory Commission (FERC)
and regulated entities, not consumers. See UFCW Local 1500 Pension Fund v.
Mayer, 895 F.3d 695, 699 (9th Cir. 2018). Section 20 also creates no private
remedy because it is part of an express remedial scheme that includes a mechanism
for consumers to trigger FERC’s enforcement authority. 16 U.S.C. §§ 812–813;
Mayer, 895 F.3d at 699. The only remedy created by Section 20 is for regulated
entities, not consumers. 16 U.S.C. § 813.2AFFIRMED.
1
Because Cytline only raised its argument that RS-17 is void for vagueness
as a Washington state law claim over which the district court declined to exercise
jurisdiction, we do not address it on appeal. See Dodd v. Hood River Cnty., 59
F.3d 852, 863–64 (9th Cir. 1995).
2
Nor does 28 U.S.C. § 1331 “independently grant[]” us jurisdiction. Cytline
conflates a private right of action with subject matter jurisdiction. See Verizon
Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 642–43 (2002).
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