Memphis Light, Gas & Water Division v. Craft

1978-05-01

Headline: Municipal utility must give clear notice and a chance to contest disputed bills before cutting essential service, making it harder for utilities to disconnect customers without an internal review.

Holding: The Court held that a city utility cannot cut off service without violating the Constitution unless customers receive notice of an internal dispute process and an opportunity to present complaints to a designated employee before termination.

Real World Impact:

Requires utilities to notify customers how to contest bills before disconnecting service.
Gives customers right to an internal review with a designated employee pre-cutoff.
Leaves damages suits open for customers wrongly cut off.

Topics: utility shutoffs, billing disputes, consumer rights, municipal services

Summary

Background

Homeowners Willie S. and Mary Craft sued the Memphis city utility after repeated disconnections for nonpayment caused by what turned out to be double billing from two meters. Mrs. Craft repeatedly tried to resolve the problem in person and by phone but did not receive a clear explanation or instructions for contesting the disputed charges. Lower courts split over whether the utility’s practices violated constitutional protections before the case reached the High Court.

Reasoning

The Court treated the Crafts’ right to continued utility service—so long as undisputed charges are paid—as a property interest protected by the Constitution’s guarantee of due process. Applying the Court’s usual balancing test, the majority held that due process requires reasonable notice that tells customers how to challenge a disputed bill and an opportunity to present the dispute to a designated employee before service is cut off. The Court affirmed the appellate ruling that the Crafts had been deprived of this notice and opportunity and therefore were denied due process.

Real world impact

After this decision, municipal utilities that act like state actors must provide customers clear information about internal procedures to contest bills and must offer an accessible pre-cutoff review by someone empowered to fix errors. The ruling recognizes the health and safety importance of continuous utility service and preserves the injured customer’s right to seek damages.

Dissents or concurrances

The dissent argued the utility’s existing notices and phone center were already adequate, warned the majority’s rule imposes burdensome administrative requirements, and viewed the decision as a policy choice rather than a clear constitutional necessity.