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87. How should the court rule?
The resident sued the company in an appropriate court, asking for injunctive relief and damages. The resident claimed only that he had been deprived of property without due process of law in violation of the Fourteenth Amendment.
After it had operated the water system for a year, the company determined that a city resident had fallen three months behind in the payment of his water bill. The company terminated the resident's water service on the basis of a company policy that provides for the summary termination of service to customers who fall more than two months behind in the payment of their bills. The policy does not provide customers an opportunity for a hearing before the termination of service.
For many years, a city owned and operated a reservoir that supplied the city's residents with water. Based on a finding that private entities were more efficient operators of such facilities than public entities, the city sold the reservoir to a privately owned company. The city council granted the company a non-exclusive franchise to supply water to residents of the city.
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B is incorrect. Here, the facts do not indicate that the resident was actually in arrears. Also, the purpose of a due process hearing would be to determine whether the resident was in arrears, but the lack of state action means the resident is not entitled to a hearing.
C is incorrect. Private entities performing a public function are state actors only if the function is traditionally an exclusive governmental service or one that involves inherently governmental powers such as incarceration. Supplying water does not satisfy either of these requirements.
D is incorrect. Receipt of a public franchise is not enough to make a company a state actor. To satisfy the «state action» requirement, the state must be «significantly involved» in the action of the private entity.