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FIRST EBENEZER BAPTIST CHURCH v. CONSOLIDATED EDIS

August 5, 1997

FIRST EBENEZER BAPTIST CHURCH, LaGREE BAPTIST CHURCH, CHRIST FELLOWSHIP BAPTIST CHURCH, GOOD SAMARITAN PENTACOSTAL CHURCH, NEW MT. ZION PENTECOSTAL CHURCH, BROWNSVILLE BAPTIST CHURCH, and all others similarly situated, Plaintiffs,
v.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Defendant.



The opinion of the court was delivered by: SCHWARTZ

 ALLEN G. SCHWARTZ, DISTRICT JUDGE:

 Section 76 ("§ 76") of the New York Public Service Law ("PSL") requires electric utilities in New York state to charge a lower "domestic" rate, rather than the higher "commercial" rate, to corporations or associations organized and conducted in good faith for religious purposes which use such electricity in connection with religious purposes.

 Plaintiffs Brownsville Community Baptist Church ("Brownsville Baptist"), New Mt. Zion Pentecostal Church ("New Mt. Zion"), Christ Fellowship Baptist Church ("Christ Fellowship"), Good Samaritan Pentecostal Church ("Good Samaritan") and LaGree Baptist Church ("LaGree") are predominantly African-American and Latino churches that claim that defendant Consolidated Edison Company of New York, Inc. ("Con Edison") denied them the preferential rate in violation of the Due Process and Equal Protection clauses of the Fourteenth Amendment to the United States Constitution and in violation of 42 U.S.C. §§ 1981 and 1983. Plaintiffs have also made various claims under New York state law. Before the Court are the parties' cross-motions for summary judgment and plaintiffs' motion for class certification. *fn1"

 For the reasons stated below, defendant's motion for summary judgment on plaintiffs' federal claims is granted, plaintiffs' motion for summary judgment is denied and plaintiffs' motion for class certification is denied as moot. The Court declines to exercise supplemental jurisdiction over plaintiffs' claims under New York state law.

 FACTUAL BACKGROUND

 I. PSL § 76 and Con Edison's Documentation Requirements

 As noted above, PSL § 76 requires utilities in New York state to charge religious organizations the same rate they charge domestic customers, rather than the higher "commercial" rate they normally charged to corporations. It provides in pertinent part:

 
No gas corporation, electric corporation or municipality shall, directly or indirectly, charge, demand, collect or receive from any corporation or association organized and conducted in good faith for religious purposes . . . a rate . . . for any gas or electric service utilized exclusively in connection with such religious purposes . . . greater than the rates or charges charged, demanded, collected or received by such gas corporation, electric corporation or municipality from domestic consumers . . .

 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.

 DISCUSSION

 I. Summary Judgment ...


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