During the period 1965-1994, Con Edison charged religious customers the preferential domestic rate only if the customer first provided Con Edison with a (1) Certificate of Incorporation as a religious organization and (2) a New York State tax exempt certificate. There is no dispute that each of the plaintiff churches has a Certificate of Incorporation as a religious organization and a New York State tax exemption certificate. (See Exhibit to Defendant's Motion for Summary Judgment ("D. Ex.") B at 10-11 (LaGree), D. Ex. D at 9, 12 (Brownsville), D. Ex. E at 5-7 (New Mt. Zion), D. Ex. F at 69, 80 (Christ Fellowship), D. Ex. C at 13-16 (Good Samaritan)).
Although plaintiffs have the documents required to obtain the preferential rate, several of the plaintiff churches did not actually receive the preferential rate for extended periods. For example, plaintiff Brownsville Baptist was on the commercial rate from 1973 through 1995, plaintiff LaGree was on the commercial rate from 1975 to 1993, plaintiff Christ Fellowship was on the commercial rate from 1985 to 1993 and plaintiff Good Samaritan was on the commercial rate from 1975 to 1995. See Defendant's Counter 3(g) Statement at PP 11-14.
The plaintiff churches claim that they failed to obtain the preferential religious rate because Con Edison concealed from them the availability of this rate. See Third Amended Complaint at P 69. Con Edison disputes this charge and claims that, in failing to obtain the preferential religious rate, "either plaintiffs did not rely on what Con Edison told them or plaintiffs did not act with due diligence." See Defendant's Memorandum of Law in Support of Motion for Summary Judgment ("Def. Mem." at 21).
II. Con Edison's Outreach Program
In response to concerns that eligible churches might not be receiving the preferential rate, in 1991 and 1992 Con Edison conducted an "outreach" throughout its service territory informing commercial customers with "religious sounding" names of the religious rate and explaining how they could obtain the rate. In connection with this program, Con Edison selected 1,259 customer accounts for review, and, after eliminating approximately 500 in a pre-screening process, reviewed 728 accounts for eligibility and sent letters to 279 customers informing them of their possible eligibility for the special rate. (D. Ex. W). Plaintiffs Brownsville, Good Samaritan, and Christ Fellowship all received outreach letters during this period. (D. Ex. S, T and U).
III. The December 1994 Settlement
In December 1994, as a result of an investigation by the New York State Attorney General into allegations that certain religious customers were being denied the religious rate, Con Edison entered into an agreement with the State of New York pursuant to which it agreed to relax its procedures for verifying customer eligibility. (D. Ex. M). Specifically, Con Edison agreed to accept a copy of articles of incorporation as a religious corporation as verification of the customer's entitlement to the lower rate. (D. Ex. M P V). As part of the settlement, Con Edison also agreed to mail notices of the settlement to its customers, simplify its application form, provide employee training concerning the new documentation rule, and advertise the new eligibility rules through newspaper advertisements and radio commercials. (D. Ex. M P XII).
In 1995, also pursuant to the settlement with the Attorney General, Con Edison agreed to provide refunds with interest to religious customers who were wrongfully overcharged during the period 1988-1994. (See D. Ex. M at XIII). Accordingly, Con Edison provided plaintiffs Brownsville, LaGree, Christ Fellowship and Good Samaritan refunds from July, 1988 until the point at which they were placed on the religious rate, at 18% interest plus a 20% settlement adjustment. New Mt. Zion did not receive a refund because it had been on the religious rate since 1987.
IV. Plaintiffs' Claims
Plaintiffs now claim damages under both federal and state law, alleging that Con Edison used its documentation policy to conceal from minority churches the availability of the special religious rate and that the documentation requirements for obtaining the preferential rate unfairly burdened African-American and Latino churches.
Plaintiffs' federal claims allege deprivation of plaintiffs' right to contract under 42 U.S.C. § 1981 and denial of due process and equal protection under the Fourteenth Amendment in violation of 42 U.S.C. § 1983. Plaintiffs' state claims are for violation of P.S.L. § 76, violation of P.S.L. § 65 (prohibiting utilities from charging different rates to similarly situated corporations), common law fraud, negligent misrepresentation, money had and received and violation of New York General Business Law § 349.
Plaintiffs have moved for partial summary judgment with regard to their claims under the Fourteenth Amendment, PSL § 76 and money had and received. Plaintiffs have also moved for class certification pursuant to Federal Rule of Civil Procedure ("F.R.C.P.") 23. Defendant Con Edison has cross-moved for summary judgment on plaintiffs' federal claims.
I. Summary Judgment Standards
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In considering a motion for summary judgment, "all ambiguities must be resolved and all inferences drawn in favor of the party against whom summary judgment is sought." Gallo v. Prudential Residential Services, 22 F.3d 1219, 1223 (2nd Cir. 1994). "The trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them." Id. at 1224.
Having reviewed the evidence in this case in the light most favorable to plaintiffs, the Court concludes that plaintiffs' evidence fails to create a material issue of fact with regard to plaintiffs' federal claims.
II. Plaintiffs' Claim Under 42 U.S.C. § 1981
42 U.S.C. § 1981 (a) provides that:
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts . . . as is enjoyed by white citizens. . .
Plaintiffs claim that in implementing its documentation policy, Con Edison deliberately misinformed "predominantly African-American and Latino churches along with other racial and/or ethnic minority churches," and thus "denied the plaintiffs the ability to contract for the religious rate for electric service in violation of 42 U.S.C. Section 1981." Third Amended Complaint at P 44.
In order to succeed on a claim brought under Section 1981, plaintiff must prove a discriminatory purpose on the part of the defendant. See General Bldg. Contractors Ass'n v. Pennsylvania, 458 U.S. 375, 391, 73 L. Ed. 2d 835, 102 S. Ct. 3141 (1982) ("we conclude, therefore, that § 1981, like the Equal Protection Clause, can be violated only by purposeful discrimination"). Determining whether a defendant was motivated by an invidious discriminatory purpose "demands a sensitive inquiry into such circumstantial and direct evidence of intent as may be available." Village of Arlington Heights v. Metropolitan Hous. Dev. Corp., 429 U.S. 252, 264, 50 L. Ed. 2d 450, 97 S. Ct. 555 (1977). "Subjects of proper inquiry" include the impact of the defendant's actions, departures from the normal procedural sequence and a history of discriminatory actions. 97 S. Ct. at 562-65.
In the absence of direct evidence, plaintiffs attempt to prove discriminatory intent circumstantially by alleging that:
(a) Con Edison's documentation policy had a disparate impact on minority churches;