Balthazar v. Verizon Hawaii, Inc.

• Decision Date: 25 November 2005
• Docket Number: No. 26977.,26977.
• Citation: 123 P.3d 194
• Parties: Brendan BALTHAZAR and Michael R. Savona, M.D., Plaintiffs-Appellants v. VERIZON HAWAII, INC., Defendant-Appellee and Hawaiian Telephone Company, GTE Hawaiian Telephone Company, Inc., John Does 1-5, John Doe Corporations 1-5, John Doe Partnerships 1-5, Roe Non-Profit Corporations 1-5, and Roe Governmental Agencies 1-5, Defendants.
• Court: Hawaii Supreme Court

Page 194

123 P.3d 194

Brendan BALTHAZAR and Michael R. Savona, M.D., Plaintiffs-Appellants v. VERIZON HAWAII, INC., Defendant-Appellee and Hawaiian Telephone Company, GTE Hawaiian Telephone Company, Inc., John Does 1-5, John Doe Corporations 1-5, John Doe Partnerships 1-5, Roe Non-Profit Corporations 1-5, and Roe Governmental Agencies 1-5, Defendants.

No. 26977.

Supreme Court of Hawai'i.

November 25, 2005.

James Krueger, Wailuku, and Joseph W. Cotchett, Nancy L. Fineman, & Nanci E. Nishimura, pro hac vice, for plaintiffs-appellants.

Jeffrey S. Portnoy, Honolulu, (Cades Schutte) and Andrew G. McBride, Helgi C. Walker, & M. Evan Corcoran (Wiley Rein &amp Fielding, LLP), pro hac vice, for defendant-appellee Verizon Hawaii, Inc.

MOON, C.J., LEVINSON, ACOBA, and DUFFY, JJ., and Circuit Judge Blondin in Place of NAKAYAMA, J., Recused.

Opinion of the Court by ACOBA, J.

We hold that (1) because the filed-rate doctrine imputes knowledge of the disclosures contained in a tariff filed with a regulatory agency like the Hawai`i Public Utilities Commission (HPUC or the HPUC) by a public utility such as Defendant-Appellee Verizon Hawaii, Inc. (Verizon) and its predecessors to customers of such a utility and (2) because under the filed-rate doctrine customers suffer no legally cognizable injury when they pay the filed rate in exchange for services in accordance with a filed tariff, (3) the doctrine bars claims by customers such as Plaintiffs-Appellants Brendan Balthazar and Michael R. Savona, M.D. (Plaintiffs) who allege unfair or deceptive practices under Hawai`i Revised Statutes (HRS) § 480-2 (1993 & Supp.2004) or §§ 481A et seq. (1993) against Verizon when they have paid the filed rate in exchange for services authorized under the tariff. In this appeal, Plaintiffs appeal from the November 4, 2004 judgment of the circuit court of the second circuit (the court)¹ granting summary judgment in favor of Verizon.

I.

The parties entered into a joint statement of undisputed facts which include the following. In 1968, Verizon's predecessor, GTE Hawaiian Telephone Company, Inc. began offering Touch Calling service. Touch Calling is the brand name under which Verizon markets touch-tone dialing capability. The service offers advantages over the older rotary dialing system including the ability to dial faster and more accurately and the ability to use features available on the network such as voice mail, call forwarding, and call blocking. In 1968, the HPUC authorized Verizon (via Tariff No. 40) to charge a specific tariff to customers electing to acquire Touch Calling service. This tariff is currently described in Tariff No. 3 which defines Touch Calling service as "provid[ing] for the origination of telephone calls and for the transmission of certain data, through the use of a telephone equipped with push buttons in lieu of a rotary dial, by means of tones instead of pulses." Tariff No. 3 also states that "[i]t is an intent to apply TOUCH CALLING rates and charges whenever a customer is served by exchange lines equipped with TOUCH CALLING capability which terminate on a TOUCH CALLING instrument, whether or not, that instrument is provided by the Telephone Company or by the customer." Touch Calling service was optional for consumers.

While Tariff No. 3 describes Touch Calling service, Tariff No. 1 governs Verizon's general provision of telephone services in Hawai`i and Tariff No. 2 describes Verizon's residence exchange primary service. The rates, terms, definitions, and regulations pertaining to Touch Calling service and described in Tariff No. 3 are in addition to those established by Tariff No. 1 which governs Verizon's general provision of telephone services in Hawai`i. Tariff No. 2 discloses the rates, terms, definitions and regulations relating to exchange primary service, the basic telephone service offered by Verizon. Exchange primary service is defined in Tariff No. 2 as the basic transmission path between the customer's premises and Verizon's central office. Tariff No. 2, Section 1, does not specify Touch Calling service as being part of the exchange primary services for residential subscribers.

Beginning in 1983, Verizon began to upgrade its equipment by switching from analog to digital equipment. By the end of 1998, all of the switches in Verizon's central offices were equipped to provide touch tone dialing and "any consumer in Hawai`i who had a touch tone phone could acquire touch tone dialing capability by plugging a touch tone phone into the wall jack connected to a touch-tone capable line." In an October 21, 1998 Honolulu Advertiser article, The Director of Public Affairs for Verizon's predecessor, GTE Hawaiian Telephone Company, Inc. stated that although the cost of providing Touch Calling services had declined due to more efficient computerized switching equipment, the Touch Calling charge remained in effect to enable the recovery of costs for other services such as basic local residential service.

In 1993 and 1995, Verizon proposed eliminating the separate Touch Calling fee described in Tariff No. 3, an act that would have made Touch Calling service part of the basic telephone service Verizon offers and would have required rebalancing of rates. The HPUC, however, rejected Verizon's proposal on both occasions, ordering that the existing rate structure be kept intact.

Verizon represents to Hawai`i consumers that they must pay an extra monthly fee in order to receive Touch Calling service. On its website Verizon states:

This line enhancement, also known as Touch Tone, allows you to use a push button telephone and is necessary for most of the additional features available for use with your telephone system.

Consumers, however, are able to access and enjoy the Touch Calling services from their touch tone phones without paying the additional monthly fee.

II.

On April 11, 2003, Plaintiffs, individually, and on behalf of a class consisting of all Hawai`i consumers who paid fees to Verizon for Touch Calling service for the years 1968 through the present, filed a civil complaint against Verizon. Plaintiffs are customers of Verizon's telephone service who selected and paid for the Touch Calling service.

Plaintiffs claim that Verizon engaged in false, unfair, and/or deceptive practices in violation of HRS §§ 480-2 et seq. (prohibiting unfair or deceptive practices in any trade or commerce)² and 481A et seq. (prohibiting deceptive trade practices by any person including individuals, governments, corporations, and other entities)³ because identical telephone services are provided to consumers who pay the fee and consumers who do not pay the fee.

On June 10, 2003, Verizon filed its Motion to Dismiss Complaint, arguing that the Complaint was barred by both the filed rate and primary jurisdiction doctrines.

On August 21, 2003, the court entered an Order Denying Verizon's Motion to Dismiss in its entirety.

On September 2, 2003, Verizon filed an Expedited Application for Interlocutory Appeal of Order Denying Verizon's Motion to Dismiss, and to Stay Action During Appeal.

On October 21, 2003, the court entered an Order Denying Verizon's Expedited Application for Interlocutory Appeal, And to Stay Action.

On June 18, 2004, Verizon filed its Motion for Summary Judgment. On July 13, 2004, Plaintiffs filed their opposition to the Motion. On July 23, 2004, Verizon filed a reply.

On August 17, 2004, the court entered an Order Granting Defendant [Verizon's] Motion For Summary Judgment and dismissed the Complaint with prejudice.

On November 4, 2004, the court entered the Final Judgment and Notice of Entry of Order.

On December 1, 2004, Plaintiffs filed a Notice of Appeal.

III.

On appeal, Plaintiffs contend (1) "[t]he [court] erred when it held that the action is barred by the filed rate doctrine" and (2) "[t]he [court] erred when it held that the action is barred by the primary jurisdiction doctrine." Verizon answers that (1) "[t]he [court] correctly held that the filed rate doctrine bars [Plaintiffs'] claims on the undisputed facts of the case" and (2) "[t]he [court] properly found that [Plaintiffs'] claims are also barred by the doctrine of primary jurisdiction."

Plaintiffs reply that (1) "Verizon cannot and does not dispute that consumers have the right to bring deceptive business practice lawsuits in [Hawai`i] courts," (2) "[t]he recent United States Supreme Court decision of Bates v. Dow Agrosciences L.L.C., ___ U.S. ___, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005), provides further support that the filed rate and primary jurisdiction doctrines are not applicable," (3) "[t]he only issue to be decided is whether Verizon engaged in false, unfair and/or deceptive business practices," (4) "Plaintiffs' lawsuit does not challenge Verizon's rates," (5) Plaintiffs challenge only Verizon's description of the benefits of optional Touch Call service, and (6) "[Hawai`i] consumers are not engaging in `illicit conduct' to obtain Touch Calling."

Plaintiffs request that this court "reverse" the order granting summary judgment in favor of Verizon and "allow this action to go forward on the merits."

IV.

A grant of summary judgment is "appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Ross v. Stouffer Hotel Co., 76 Hawai`i 454, 457, 879 P.2d 1037, 1040 (1994) (citing S. Utsunomiya Enters., Inc. v. Moomuku Country Club, 75 Haw. 480, 497, 866 P.2d 951, 961,) reconsideration denied, 76 Hawai`i 247, 75 Haw. 580, 871 P.2d 795 (1994). In other words, "summary judgment should not be granted unless the entire record shows a right to judgment with such clarity as to leave no room for controversy and establishes affirmatively that the adverse party cannot prevail under any circumstances." State v. Zimring, 52 Haw. 472, 475, 479 P.2d 202, 204 (1970) (quoting Phoenix Sav. & Loan, Inc. v. Aetna Casualty & Surety Co., 381 F.2d 245, 249 (4th Cir.1967)). "A fact is...