Martin A. Schwartz

The great majority of §1983 claims are asserted against state officials, local officials, and municipalities. A lesser but still substantial number of §1983 claims are asserted against private entities based upon their involvement with state or local government. When a private entity is sued under §1983 a court must determine whether the entity's contested conduct constitutes state action.

Last term, in Manhattan Community Access Corp. v. Halleck, 139 S. Ct. 1921 (2019), a sharply divided Supreme Court held that a private nonprofit corporation designated by the City of New York to operate public access cable television channels was not engaged in state action. As a result, the corporation was not subject to the limitations of the First Amendment Free-Speech Clause.

Justice Bret Kavanaugh wrote the opinion for the court, joined by Chief Justice Roberts, and Justices Thomas, Alito, and Gorsuch. Justice Sonia Sotomayor wrote the dissenting opinion, joined by Justices Ginsburg, Breyer, and Kagan. The justices thus split along strictly ideological lines.

Background

Time Warner (which now goes by the name Charter) operates a cable-television system in Manhattan. New York law required Time Warner to designate some channels for public access. The state law allows the public access channels to be operated by the cable operator, by the city, or by a private entity designated by the city. The city designated Manhattan Neighborhood Network (MNN), a private nonprofit corporation, to operate Time Warner's public access channels in Manhattan.

Dee Halleck and Jesus Papoleto Melendez made a film about MNN's alleged neglect of East Harlem. It was aired on a MNN public access channel. Halleck and Melendez became embroiled in disputes with MNN. MNN suspended Halleck and Melendez from its public access channels.

Halleck and Melendez sued MNN in federal court under §1983 claiming that the suspension violated their rights under the First Amendment Free Speech Clause, which is incorporated into the Due Process Clause of the Fourteenth Amendment. The critical issue was whether MNN's suspension of Halleck and Melendez constituted state action.

State Action

State action is a "threshold" high-stakes issue. The Fourteenth Amendment "nor shall any state" language limits the equal protection and due process clauses of the Fourteenth Amendment to "state action," which usually means the actions of state and local government. The Fourteenth Amendment, including the various Bill of Rights incorporated into the Due Process Clause, does not apply to the actions of purely private parties. Section 1983 was enacted primarily to provide a federal remedy for enforcing the Fourteenth Amendment and is limited to action under color of state law. It too does not reach purely private action.

The Supreme Court's holding that MNN was not engaged in state action means that it can operate free of the restraints of the Fourteenth Amendment, including the Free-Speech Clause. "[T]he Free-Speech Clause prohibits only governmental abridgment of speech [; it] does not prohibit private abridgment of speech." Halleck, 139 S. Ct. at 1298.

Intertwining of Sectors

American society, however, does not divide neatly into governmental and private spheres. Much of the private sector has important involvements and connections with state and local government. One way an intertwining of the governmental and private sectors comes about is from government outsourcing a function to a private entity which, in return for governmental funding, carries out the function pursuant to contractual and regulatory specifications.

The question arises whether the actions of such an "outsourced" private entity should be treated as state action, rendering the entity subject to the commands of the Fourteenth Amendment, or as private action beyond the reaches of the Fourteenth Amendment. There is no "one-size-fits-all" answer to this question. It depends on the nature of the outsourced function, the specific incidents of the relationship between the government and private entity, and the government's involvement with the specific contested activity.

When one considers the nature and stakes of the state action issue, it is not difficult to see why the justices in Halleck split along strict ideological lines. The majority said that "the state action doctrine enforces a critical boundary between the government and the individual and thereby protects a robust sphere of individual liberty," namely, the private sector's freedom from Fourteenth Amendment restraints. 139 S. Ct. at 1934. But this "robust sphere of individual liberty" comes at a substantial price, namely, parties who are left without Fourteenth Amendment protection, in Halleck, without free-speech protection. That is no small matter!

Public Function Doctrine

Supreme Court decisions have employed a number of tests to determine whether a private entity's involvement with the government justifies the conclusion that the entity was engaged in state action. 139 S.Ct. at 1928 (referring to public function, compulsion, and joint action tests). The plaintiffs in Halleck relied primarily on the "public function" doctrine.

In Jackson v. Metropolitan Edison Co., 419 U.S. 345, 352 (1974), the Supreme Court said that a private entity engages in state action "when it exercises powers traditionally exclusively reserved for the state." The Jackson court's "exclusively" requirement is the "kicker" that invariably defeats the plaintiff's public function argument. It is not sufficient that the government exercised the function in the past, or presently does, or that the function serves the public interest. Halleck, 139 S. Ct. at 1928-29.

The court in Halleck cited a line of Supreme Court decisions finding the carrying out of important functions not state action because they are not exclusively governmental functions. These functions include: running athletic associations; operating nursing homes; providing special education; resolving private disputes; and supplying electricity. Id. at 1929 (citing decisions). For rare Supreme Court findings of state action under the public function doctrine, see, e.g., Terry v. Adams, 345 U.S. 461 (1953) (electoral function); Marsh v. Alabama, 326 U.S. 501 (1946) (company owned town). Note that Marsh and Terry were decided pre-Jackson.

The court in Halleck added the operation of public access cable channels to its "does not satisfy the public function doctrine" list. Because these channels have been operated by both private and governmental entities, it is not a traditionally exclusively governmental function.

The plaintiffs 'attempt to recharacterize the function more broadly to "the operation of a public forum for speech" did not save the day. 139 S. Ct. at 1930. The court recognized that when the government provides a forum for speech, it "may be constrained" by the Free-Speech Clause, for example, from engaging in viewpoint discrimination. Id. But "[p]roviding some kind of forum for speech is not an activity that only governmental entities have performed." Id. When a private entity provides a forum for speech, it is "not ordinarily constrained" by the Free-Speech Clause because it is not engaged in state action. Id.

The court in Halleck relied upon its decision in Hudgens v. NLRB, 424 U.S. 507 (1976) that a privately owned and operated shopping center was not engaged in state action. Hudgens rejected the notion that the modern-day shopping center is analogous to the company owned town in Marsh v. Alabama.

The decision in Halleck that private speech forums are not state actors frees them from the limitations of the Free Speech Clause. "If the rule were otherwise, all private property owners and private lessees who open their property for speech would lose the ability to exercise what they deem to be appropriate editorial discretion within that open forum." 139 S. Ct. at 1930-31. Fair enough! But this leaves plaintiffs like Halleck and Melendez without any free-speech protection.

Under firmly established Supreme Court state action law, the facts that MNN had been effectively granted a municipal license and was regulated by the city were insufficient to tip the state action scale in favor of the plaintiffs. The court viewed Halleck as closely paralleling Jackson v. Metropolitan Edison Co., where the court held that government grant of monopoly status to a private utility company, extensive government regulation, and the utility company's provision of electricity to the community were insufficient to constitute state action. The court in Halleck observed that "Numerous private entities in America obtain government licenses, government contracts, or government granted monopolies." 139 S. Ct. at 1932. The implication is that if these indicia of government actions were sufficient to constitute state action, a good deal of the private sector would become state actors.

In West v. Atkins, 487 U.S. 42 (1988), the court held that a private physician who provided medical services to prison inmates pursuant to a contract with North Carolina was engaged in state action. The court in Halleck found West distinguishable. In West North Carolina outsourced its constitutional obligation to provide medical care to inmates to a private physician. The government, however, "has no such [constitutional] obligation to operate public access channels." Halleck,139 S. Ct. at 1929 n.1.

Sotomayor's Dissent

Justice Sotomayor's dissenting opinion in Halleck pointed out that the constitutional obligation in West came about only after the state voluntarily chose to operate a prison. The dissent found that "West resolves this case" because "the legal features are the same: When a government (1) makes a choice that triggers constitutional obligations, and then (2) contracts out those constitutional obligations to a private entity, that entity in agreeing to take on the job becomes a state actor for purposes of §1983." 139 S. Ct. at 1940 (dissenting opinion).

The court rejected plaintiff's argument that the public access stations are the property of the City of New York, 139 S. Ct. at 1933 ("The short answer…is that the public access channels are not the property of New York City."). The dissent thought that the relevant question was whether the public access channels were "purely private property," 139 S. Ct. at 1941, and found that they were not because, inter alia, "Time Warner's cable franchise suggests a government property interest in the [public access] channels." Id.

Conclusion

The majority and dissent viewed the case very differently. To the majority Halleck was a case about a private entity operating a forum where speech occurs. To the dissent Halleck was "a case about an organization appointed by the government to administer a constitutional public form." 139 S. Ct. at 1934. The majority indicated that if the city operated the public access channel the First Amendment would apply. 139 S. Ct. at 1934. See also Knight First Amendment Institute at Columbia University v. Trump, 928 F.3d 226 (2d Cir. 2019) (President's Twitter account used for governmental purposes is subject to First Amendment).

To the dissent, "[t]he First Amendment [should] not fall silent simply because a government hands off the administration of its constitutional duties to a private actor." Id. at 1941 (dissenting opinion). The court, however, viewed the First Amendment falling silent as a good thing.

Martin A. Schwartz is a professor emeritus of law and the author of a multi-volume Section 1983 Litigation treatise published by Wolters Kluwer Law and Business.