Cytline, LLC v. Public Utility District No. 2

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 11, 2021
• Docket: 20-35324
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAR 11 2021 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS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).

3 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

4 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. § 813.2

AFFIRMED.

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). 5