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New York PSC Says Federal Court Lacks Jurisdiction To Hear Lawsuit Filed By Jane Doe Customer Against Low-Income ESCO Service Ban, Says Suit An Impermissible Re-litigation Of Issues

September 25, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The New York PSC moved to dismiss a lawsuit which had been filed in federal court by a low-income ESCO customer against the PSC concerning the PSC's order prohibiting ESCOs from serving assistance program participant (APP) customers, as the PSC said that the federal court lacks jurisdiction, and that collateral estoppel bars the suit's claims

See background on the suit here

In its motion to dismiss, filed in the United States District Court for Northern District Of New York, the PSC said of the suit, "This effort to re-litigate issues already pending in State Court and deny protections to low-income customers should be rejected and this complaint dismissed."

"As an initial matter, this court lacks subject matter jurisdiction. Plaintiff’s attempt to name the Commission and Commissioners fails under the Eleventh Amendment. Further, the Johnson Act, 28 USC §1342, precludes federal constitutional challenges to the PSC use of ratemaking authority upheld by the Appellate Division," the PSC said in its motion to dismiss

"The Eleventh Amendment immunity and the State’s broader general sovereign immunity bar suits in federal court against states or their agencies -- unless Congress abrogates the state’s sovereign immunity or the state unambiguously waives its immunity by consent. Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 98-101, 106 (1984); College Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 670 (1999); Brown v. New York, 975 F. Supp. 2d 209, 221-222 (N.D.N.Y. 2013). The PSC is the decision-making body of the New York State Department of Public Service (NYSDPS), which is an agency of the sovereign State of New York. See N.Y. Pub. Serv. Law §§ 3, 4. The State of New York does not consent to jurisdiction here, nor has Congress abrogated the State’s immunity. States are not 'persons' within the meaning of 42 U.S.C. § 1983, and § 1983 does not abrogate Eleventh Amendment immunity," the PSC said in its motion to dismiss

The PSC said in its motion that the Johnson Act, codified at 28 U.S.C. §1342, deprives District Courts of subject matter jurisdiction to adjudicate Constitutional challenges to State administrative orders affecting public utility rates.

The PSC said in its motion that the December 2016 APP prohibition order affects public utility rates, implicating the Johnson Act, as the PSC noted that the New York State Appellate Division recently found that broad PSC rate "jurisdiction that enabled it to allow ESCOS [sic] access to utility systems . . . allows it to impose limitations on ESCO rates as a condition to continued access."

"Consequently, the December 2016 Order managing the pricing practices of ESCOs affects public utility rates. Its ultimate aim is to ensure that low-income electric and gas customers are not overcharged for those essential services. It accomplishes this end by prohibiting ESCO sales to such customers – unless the ESCO commits not to exceed utility benchmark prices. Thus, the Order is, for all intents and purposes, a rate cap," the PSC said in its motion to dismiss

The PSC also said in its motion that the December 2016 APP order does not interfere with interstate commerce, as federal law recognizes that retail sales of gas and electricity are not in interstate commerce.

"Plaintiff’s claims against the Commissioners premised on New York State statutes or its Constitution must also be dismissed for lack of subject matter jurisdiction because 'the Eleventh Amendment bars adjudication of pendent state law claims against non-consenting state defendants in federal court,' Raygor v Regents of the Univ. of Minn., 534 U.S. 533, 540-41 (2002), including state officials sued in their official capacity based on state law," the PSC said in its motion to dismiss

"If the Court proceeds beyond the jurisdictional hurdles, then collateral estoppel bars all of Plaintiff’s claims that repeat those rejected by Albany County Supreme Court, since BlueRock is in privity with Ms. Doe. Further, the statute of limitations also bars all state law claims since Plaintiff did not challenge the PSC decision within four months," the PSC said in its motion to dismiss

"Plaintiff has also sought to proceed anonymously without permission of this Court, and has not claimed she has a month-to-month contract for which the Commission has precluded renewal," the PSC said in its motion to dismiss

"And, finally, Plaintiff’s claims all fail to state causes of action. Low-income customers are not a protected class and the Commission rationally protected those vulnerable customers before continuing its examination of steps to protect all residential and small commercial customers. State courts already have rejected claims that the PSC lacks jurisdiction to control ESCO access to utility systems or that there are property rights to such access. The PSC’s December 2016 order does not change the terms of existing contracts in violation of the Contract, Takings, and Due Process Clauses or New York General Business Law (GBL) §349-d(6). Finally, privacy protections do not preclude protecting low-income customers from ESCO overcharges by directing utilities to tell ESCOs those customers are no longer to be overcharged," the PSC said in its motion to dismiss

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