James v. Ball

613 F.2d 180, 28 Fed. R. Serv. 2d 520

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 12, 1979
• Docket: No. 76-1918
• Status: Published

Opinions

KENNEDY, Circuit Judge:

This appeal, from an action commenced in the District of Arizona, challenges the constitutionality of Arizona statutes which provide that voting in elections for directors of the Salt River Project Agricultural and Improvement and Power District (the District) is limited to landowners, with votes essentially apportioned to owned acreage. The appellants are citizens of Arizona residing within the geographical boundaries of the District. Each appellant either rents land or owns less than one acre of land within the District and is thus excluded from the voting franchise. The action was brought under 42 U.S.C. § 1983. The Arizona statutes challenged are Ariz. Rev.Stat. §§ 45-909 and 45-983.¹ The district court found those state statutes are consistent with the requirements of the fourteenth amendment and granted the District’s motion for summary judgment. We reverse that determination. The district court also denied certification of the suit as a class action, and as to that aspect of the case we affirm.

I. Facts

Under the Reclamation Act of 1902, the Federal Government and the State of Arizona established a joint project for storage and delivery of water in the Salt River Valley. The project was limited to agricultural lands within the physical boundaries of the project.

The Federal Government - built water storage and distribution facilities and hydroelectric facilities for the project. The Reclamation Act required that properties benefited by the project bear the costs of construction, and the Salt River Valley Waters Users’ Association was organized, under Arizona corporate law, to pay those costs. Only persons holding project land could belong to the Association; only Association members could receive water from the project. The Association’s obligations became pro rata liens on the lands of Association members.

By the 1930’s the Association found the costs of financing project facilities overly burdensome. To alleviate this problem, the Salt River Project Agricultural Improvement and Power District was established. The District qualified as a municipal corporation. The District’s bonds were eligible for tax-exempt status so that interest costs for the project were substantially reduced.

Under a 1937 agreement between the Association and the District, the Association agreed to continue to perform all obligations connected with the operation and maintenance of the project on behalf of the District. The Association also agreed to give title to project facilities to the District, subject only to whatever rights the federal government retained under the original transfer to the Association. The District agreed to provide whatever capital and operating funds the Association needed to operate project facilities. Pursuant to the 1937 agreement, the District now operates the water storage and distribution facilities. In addition the District generates electric power, and today the District is the second largest utility in Arizona. Ninety-eight percent of the District’s total revenues are derived from electricity operations.

Arizona statutes mandate the voting system for the District. The District is subdivided into ten electoral divisions, each of which elects one director and three council members. A president and vice-president are elected at large. Qualified electors have votes for these offices apportioned according to the amount of land they hold. In addition, qualified voters elect two at-large directors (to become four in 1980) on a per-person voting basis. The twelve-member Board of Directors and thirty-member Council administer the District.²

II. Equal Protection Claim

Since its decision in Reynolds v. Sims, 377 U.S. 533, 84 S.Ct. 1362, 12 l.Ed.2d 506 (1964), the Supreme Court has repeatedly applied the principle of one person-one vote, and it has invalidated restrictions on voter eligibility in many different types of elections. See Hill v. Stone, 421 U.S. 289, 95 S.Ct. 1637, 44 L.Ed.2d 172 (1975); City of Phoenix v. Kolodziejski, 399 U.S. 204, 90 S.Ct. 1990, 26 L.Ed.2d 523 (1970); Hadley v. Junior College District, 397 U.S. 50, 90 S.Ct. 791, 25 L.Ed.2d 45 (1970); Cipriano v. City of Houma, 395 U.S. 701, 89 S.Ct. 1897, 23 L.Ed.2d 647 (1969); Kramer v. Union Free School District, 395 U.S. 621, 89 S.Ct. 1886, 23 L.Ed.2d 583 (1969). The Court has on two occasions struck down laws that limit voting to landowners. City of Phoenix v. Kolodziejski, supra; Cipriano v. City of Houma, supra. In Salyer Land Co. v. Tulare Lake Basin Water Storage District, 410 U.S. 719, 93 S.Ct. 1224, 35 L.Ed.2d 659 (1973), however, the Supreme Court made an exception to Reynolds and upheld a state law which permitted only landowners to vote in an election to choose the directors of a water district. Because Salyer, and the companion case of Associated Enterprises, Inc. v. Toltec Watershed Improvement District, 410 U.S. 743, 93 S.Ct. 1237, 35 L.Ed.2d 675 (1973) (per curiam), are the only cases since Reynolds which permit this type of voter restriction, the arguments of the parties here focus largely on the applicability of Salyer to the case before us.

In Salyer, plaintiffs challenged the voting system for a water district that allowed only landowners to vote, with votes apportioned according to the assessed valuation of the land owned. The Supreme Court, after examining the nature of the service provided by the particular district, concluded that “by reason of its special limited purpose and of the disproportionate effect of its activities on landowners as a group,” 410 U.S. at 728, 93 S.Ct. at 1229, the water storage district fell within an exception to Reynolds.

Critical to an understanding of Salyer is the factual setting of the case. The water district consisted of 193,000 acres, all of it agricultural land, 85% farmed by one or another of four corporations. It had a total population of 77 residents. Assessments against landowners were the sole means of paying expenses of the District, so that landowners as a class bore the entire financial burden. Moreover, the reason for the District’s existence and continued operation was to provide water for farming, id. at 728, 93 S.Ct. 1224, and, as stressed by the Court, the primary effect of its operations was upon agricultural lands. Although the District had authority to undertake certain flood control activities, the Court found these powers were incident to the exercise of its primary functions of water storage and distribution. Id. at 728 n.8, 93 S.Ct. 1224 n.8. The Court specifically noted that the District provided “no other general public services such as schools, housing, transportation, utilities, roads, or anything else of the type ordinarily financed by a municipal body.” Id. at 728-29, 93 S.Ct. at 1230.

The case at hand is quite different. Although at one time the Salt River District did bear some similarities to the district in Salyer, today the size and nature of the projects of the District and the effect of its operations on all of the residents of Arizona are far more extensive than those of the district in Salyer. The Salt River District is engaged in far-reaching electric power operations. It is the second largest electric utility in the State of Arizona and services nearly a quarter million persons. The utility owns five hydroelectric facilities and four steam generating plants; it is a partial owner of three coal-fired steam generating facilities; and it is a participant in the Palo Verde nuclear plant.

The water operations of the Salt River District are also significantly more diverse than those in Salyer. The District is not concerned solely with providing water for agriculture. Its formerly rural area encompasses today eight Arizona municipalities, including major portions of Phoenix. About 25% of the total water delivered by the District goes to these cities for municipal uses, and an additional 15% of the district water is delivered for other nonagricultural uses, such as schools, parks, playgrounds, and subdivision purposes. In view of the broad scope and impact of its activities, the Salt River District cannot be characterized as having a special limited purpose.

Further, the activities of this District do not disproportionately affect landowners. Unlike Salyer, nearly 40% of the water delivered by the District is used and paid for in a manner unrelated to agriculture or landownership. As to the electric operations, nearly all the citizens in the District are vitally affected in ways unrelated to ownership of real property. As the Supreme Court stated in Cipriano v. City of Houma, 395 U.S. 701, 705, 89 S.Ct. 1897, 1900, 23 L.Ed.2d 647 (1969) (per curiam), “the operation of the utility systems — gas, water, and electric — affects virtually every resident of the city.” It is true that there are $290,000,000 of general obligation bonds outstanding that are secured by a lien on District lands. However, all the bonds have been serviced out of earnings of the District; and since 1973, all capital improvements have been financed entirely from bonds secured solely by a pledge of revenues. The earnings of the District have been sufficient to permit it to issue a total of $600,000,000 worth of revenue bonds, and these are all junior to the general obligation bonds. Ninety-eight percent of the District’s substantial revenues are produced by its electric utility operations. Thus, unlike Salyer, the financial burden of operating the District does not fall entirely or even primarily on landowners; it falls instead on the purchasers of electricity.

Appellees argue, nevertheless, that the operations of the District do have a disproportionate effect on landowners. Noting the profits from the sale of electricity are used to defray irrigation expenses, they compare the District to a private company which permits only stockholders to vote for the board of directors. The comparison fails, however. This is a public entity, not a private company. The District is a political subdivision of the State of Arizona with the legal status of a municipality. Ariz.Const., art. 13, § 7. It is entitled to all the immunities and exemptions granted municipalities. Moreover, the scale of the District’s operations simply does not permit the interpretation that the electric utility is a side venture that the District dabbles in to pick up a little extra money in order to benefit the landowners. The operation of the utility has taken on independent significance. In view of the magnitude of the electric utility operations and the large percentage of the water services which are used and paid for in a manner unrelated to land ownership, it would elevate form over substance to characterize the District as functioning solely for the benefit of landowners.

The Salyer Court, in analyzing whether the Tulare District had a “special limited purpose,” noted that the District did not exercise “normal governmental authority.” 410 U.S. at 729, 93 S.Ct. 1224, 35 L.Ed.2d 659. See Hadley v. Junior College District, 397 U.S. 50, 56, 90 S.Ct. 791, 25 L.Ed.2d 45 (1970); Avery v. Midland County, 390 U.S. 474, 485, 88 S.Ct. 1114, 20 L.Ed.2d 45 (1968). Appellees cite this language and argue that in this case neither the water nor the electric power activities of the District are governmental in nature. We cannot agree. While Salyer can be understood as holding that the provision of water for agriculture is not a governmental function, the water services provided by the Salt River District are not confined to agricultural uses.

With respect to the electric utility operations, appellees rely on Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974) as support for the proposition that the provision of electricity is not a governmental function. The question before us, however, is altogether different from the issue confronted in Jackson. There the issue was whether or not a privately owned utility was so closely regulated by the state that its actions were state actions under the fourteenth amendment. Salyer did not hold that the fourteenth amendment did not apply to the water district. The case assumed there was state action and dealt with the question of the requirements of the fourteenth amendment in that situation. The issue is not whether the Salt River District is a state entity, but whether, having made the decision to create the entity and provide for the election of its directors, the state can deny the electoral franchise to citizens whose economic interest and natural environment are vitally affected by the entity’s operations.³

Salyer suggests that for purposes of this type of inquiry, the operation of an electric utility is governmental in nature. In reaching its conclusion that the Tulare District did not exercise normal governmental authority, the Court specifically noted that the District provided “no other general public services such as schools, housing, transportation, utilities, roads, or anything else of the type ordinarily financed by a municipal body.” 410 U.S. at 728-29, 93 S.Ct. at 1230. This conclusion is further confirmed by Cipriano v. City of Houma, 395 U.S. 701, 89 S.Ct. 1897, 23 L.Ed.2d 647 (1969) (per curiam). There the Court concluded that the operation of a municipal utility system affected such a large percentage of the population that it was unconstitutional to permit only property taxpayers to vote in elections called to approve the issuance of revenue bonds by the utility.⁴

In this Court the District makes repeated reference to statutory and decisional authority indicating that the District’s principal purpose and obligation is to provide water to the lands within it. If this legal proposition is correct, then the district will no doubt comply with it or be subject to corrective actions by the courts or the Arizona legislature. It is not, however, an argument that justifies trying to skew the electoral system as an indirect way to produce that result. The electric utility operations of the District are so substantial in scope and are so closely interwoven with the water delivery functions of the District that it is not a special limited purpose district whose operations have a disproportionate effect on landowners as a class. The principle of one person-one vote cannot be abridged in these circumstances.

Implicit in appellees’ contention lies a legal assumption that is quite incorrect. It is, specifically, that disproportionate representation may be used to prevent electors who have a direct and substantial interest in a government entity’s operations from out-voting certain other electors who own land that constitutes part of the security for the entity’s financial structure. Disproportionate electoral representation, under this unstated but implicit rationale, serves as a safety device to protect property interests or expectations of landowners. We find no holding or intimation in any controlling Supreme Court decision that can support such a view. The rationale for departing from the one person-one vote standard is altogether different. It is that under certain conditions, of most narrow dimension, there may exist a state created entity, limited to operations with little effect on the general electorate and a substantially disproportionate effect on the interests of a discrete group permitted to vote. Salyer, 410 U.S. at 728-30, 93 S.Ct. 1224. If, on the other hand, the operations of a state entity affect a diverse group of citizens, the franchise cannot be restricted to exclude those who have an interest in the election. Hill v. Stone, 421 U.S. 289, 95 S.Ct. 1637 (1975); City of Phoenix v. Kolodziejski, 399 U.S. 204, 209, 90 S.Ct. 1990, 26 L.Ed.2d 523 (1970); Hadley v. Junior College District, 397 U.S. 50, 90 S.Ct. 791, 25 (1970); Kramer v. Union Free School District, 395 U.S. 621, 89 S.Ct. 1886, 23 L.Ed.2d 583 (1969); Cipriano v. City of Houma, 395 U.S. 701, 89 S.Ct. 1897, 23 L.Ed.2d 647 (1969) (per curiam).

III. Class Action Certification

Appellants argue that the district court erred in refusing to certify the suit as a class action. Appellants’ complaint, filed on July 28, 1975, stated that it was brought on behalf of the named plaintiffs and their respective classes under rule 23(b)(2) of the Federal Rules of Civil Procedure. A motion for certification was not filed, however, until February 24,1976, when appellants filed their motion for summary judgment. The district Court denied certification. We affirm its ruling in this respect.

The determination of class action status rests within the sound discretion of the district court. Montgomery v. Rumsfeld, 572 F.2d 250, 255 (9th Cir. 1978); Hornreich v. Plant Industries, Inc., 535 F.2d 550, 552 (9th Cir. 1976). Having reviewed the record, we cannot say that the district court abused its discretion. Here, the relief sought will, as a practical matter, produce the same result as formal class-wide relief. See Craft v. Memphis Light, Gas & Water Division, 534 F.2d 684, 686 (6th Cir. 1976), aff’d on other grounds, 436 U.S. 1, 98 S.Ct. 1554, 56 L.Ed.2d 30 (1977); Ihrke v. Northern States Power Co., 459 F.2d 566, 572, 93 S.Ct. 66, 34 L.Ed.2d 72 (8th Cir.), vacated and remanded to dismiss as moot, 409 U.S. 815, 93 S.Ct. 66, 34 L.Ed.2d 72 (1972). Accord, Carter v. Butz, 479 F.2d 1084, 1089 (3rd Cir.), cert. denied, 414 U.S. 1094, 94 S.Ct. 727, 38 L.Ed.2d 552 (1973). See also Mead v. Parker, 464 F.2d 1108, 1112 (9th Cir. 1972) (dictum). But see Fujishima v. Board of Educ., 460 F.2d 1355, 1360 (7th Cir. 1972). We are not unmindful of the benefits of a class action, see 3B Moore’s Federal Practice 123.40[3] at 23-296 n.9, but we conclude that in this case they would not be significant.

REVERSED in part, AFFIRMED in part.

1 . Section 45-909 provides:

No person shall be entitled to vote at any election held under the provisions of this chapter unless he possesses all the qualifications required of electors for state officers under the general elections laws, and is the owner of record of real property located within the boundaries of the district as o.f sixty days preceding a district election, and on which he has been assessed for county taxes .

Section 45-983 provides:

[E]ach landowner possessing the qualifications of an elector shall be entitled to cast one vote at all elections ... for each acre of land within the district owned by him. [E]ach landowner possessing the qualifications of an elector who owns less than one acre of land within the district shall be entitled to a fractional vote equal to the fraction of an acre owned by such elector.

After the district court rendered its decision, Ariz.Rev.Stat. §§ 45-909 & 45-983 were amended to read as quoted above. In reviewing the decision of the district court, we must look to the statute as it presently reads, not as it read at the time the district court rendered its decision. Fusari v. Steinberg, 419 U.S. 379, 387, 95 S.Ct. 533, 42 L.Ed.2d 521 (1975).

2 . The 1976 amendments to the statute added the at-large directors and fractional votes. Previously all voting was on a per-acre basis with a one-acre threshold requirement.

3 . In Niedner v. Salt River Project Agricultural Improvement & Power District, 121 Ariz. 331, 590 P.2d 447 (1979), the Arizona Supreme Court held that the District’s termination of an employee did not constitute state action implicating the fourteenth amendment. In the present case appellants do not challenge an action of the District. Rather, they contend that the Arizona statutes mandating the voting scheme of the District violate the fourteenth amendment. There can be no doubt that the enactment of those state statutes by the state government constitutes state action. Accordingly, we need not determine now if we would agree with the Arizona Supreme Court’s holding that the District’s acts do not involve state action.

4 . Subsequent to Jackson, the Supreme Court has cited and relied on Cipriano with no indication that its holding has been undercut by Jackson. Hill v. Stone, 421 U.S. 289, 296, 95 S.Ct. 1637, 44 L.Ed.2d 172 (1975).