Barnett v. Delta Lines, Inc.

• Decision Date: 23 November 1982
• Citation: 137 Cal.App.3d 674,187 Cal.Rptr. 219
• Court: California Court of Appeals Court of Appeals
• Parties: Troy BARNETT, Plaintiff and Appellant, v. DELTA LINES, INCORPORATED, Defendant and Respondent. Civ. 64418.

Page 219

187 Cal.Rptr. 219

137 Cal.App.3d 674

Troy BARNETT, Plaintiff and Appellant, v. DELTA LINES, INCORPORATED, Defendant and Respondent.

Civ. 64418.

Court of Appeal, Second District, Division 3, California.

Nov. 23, 1982.

Ellis & Kingston, Malcolm G. Ellis, Los Angeles, for plaintiff and appellant.

Littler, Mendelson, Fastiff & Tichy, George J. Tichy II, Michael B. Margolis, San Francisco, for defendant and respondent.

O'BRIEN, Associate Justice. ^*

This is an appeal from judgment following an order granting summary judgment for defendant on the grounds of lack of jurisdiction of the Superior Court.

FACTS

The record is somewhat confusing because only the answer to the original complaint is present, whereas the operative complaint in this record is the second amended complaint. Not only is the record lacking a description of who are the plaintiffs, there is no way of ascertaining precisely what respondent denied or admitted in its answer. The briefs are of little help. Respondent's brief refers to and discusses certain paragraphs of "The Third Cause of Action in the complaint dated February 5, 1976," yet that complaint is not part of the record. The "stipulation to amend complaint" filed July 31, 1979, is of little help except to note that the "amended complaint shall be deemed answered with a full denial and with all applicable affirmative defenses." No one knows what the "applicable affirmative defenses" are. Also, the stipulation refers to additions to the "third cause of action" and to certain pages and lines, none of which are reflected in the record. One could surmise that the "Second Amended Complaint" filed July 31, 1979, one day after the stipulation to amend complaint was fully executed, was meant to supplant the original complaint, or the first amended complaint, if one exists; and, further, that the affirmative defenses set forth in the answer to the original complaint, filed December 31, 1977, are the "applicable affirmative defenses." In any event we proceed to review the judgment based on that surmise.

Troy Barnett (appellant) ¹ filed the within action against Delta Lines, Inc. (respondent) alleging damages arising from the illegal closing of one of respondent's divisions, thereby causing the unemployment and loss of seniority of appellant as an employee of the division. It is alleged that the closing of the division violated Public Utilities Code sections 451, 491, and 851. ²

In June 1974 respondent, a highway common carrier with a California Public Utilities Commission (PUC) certificate of public convenience and necessity, entered into a tentative agreement to purchase Alltrans Express California, Inc. (Alltrans), also a holder of such a PUC certificate. The parties then applied to the PUC for approval of the transaction. Protests were filed but on August 6, 1974, after general hearings, the PUC authorized the sale. A rehearing was requested on August 14 and August 15, 1974, but respondent nevertheless went forward and on August 19, 1974, took over Alltrans and operated it as a separate division under the name of TransCal Motor Express, Inc. (TransCal). A limited rehearing was ordered October 8, 1974.

Alltrans (TransCal) continued to operate unprofitably, and on May 1, 1975, respondent decided to sell it. On May 22, 1975, respondent announced that it would close down TransCal effective May 30, 1975. On May 21, 1975, the closure was tentatively approved by union representatives in accordance with the applicable collective bargaining agreement. In August 1975 the tentative approval was finally approved by the applicable union committee.

On May 28, 1975, the Commission staff filed a motion for an interim order to require respondent "... to continue serving all of the TransCal customers served by Alltrans ... at time of acquisition ... in the same manner to which Alltrans customers have been accustomed when served by Alltrans Express California, Inc.," and on May 29, 1975, they filed an amended motion to prevent the shut down. On June 9, 1975, one of the protestants petitioned the PUC for an interim order requiring respondent to reinstate Alltrans service noting that there was no Commission order authorizing respondent to abandon Alltrans service or to close down or sell off equipment, citing Public Utilities Code sections 451 and 491.

Rehearing commenced on June 23, 1975. During the rehearing period it was argued that the May 30, 1975, closing of TransCal was unauthorized. On January 22, 1976, the staff withdrew its May 1975 motions on the ground of mootness and the present action in Superior Court was filed in February 1976. The rehearing continued off and on through December 1977. Ultimately, on December 22, 1978, the Commission denied the application for approval of the 1974 sale, thereby reversing its 1974 approval without directly ruling whether the 1975 TransCal (Alltrans) closedown was lawful. The PUC found that the acquisition would have a substantial and serious anticompetitive effect.

On June 5, 1979, respondent's petition for rehearing was denied. On February 13, 1980, the PUC filed its order authorizing Alltrans and respondent to file tariffs on less than statutory notice, which had the effect of finally reinstating the status quo as it existed prior to the sale in 1974.

Although the question of whether respondent required PUC authorization before it shut down TransCal (Alltrans) in May 1975 remained at least a collateral issue throughout the PUC proceedings, the PUC addressed the question only by noting that although duplicate service was being offered by respondent the shutdown was "accomplished without Commission authority."

CONTENTIONS

The sole issue here is whether the Superior Court has jurisdiction of the within lawsuit given the pendency of the PUC proceedings. ³ Although respondent in its motion for summary judgment argued federal preemption as a ground for judgment, it apparently abandoned this point on appeal because it is not again asserted. ⁴

Appellant contends that since the PUC cannot award monetary damages for violation of the Public Utilities Code, the state court is the only recourse available. Respondent urges that the PUC has exclusive jurisdiction and in any event it implicitly ruled that the shutdown was proper; and, therefore, the Superior Court had no jurisdiction to rule otherwise.

DISCUSSION

The cause of action urged by appellant herein is founded on Public Utilities Code section 2106 which reads as follows:

"Any public utility which does, causes to be done, or permits any act, matter, or thing prohibited or declared unlawful, or which omits to do any act, matter, or thing required to be done, either by the Constitution, any law of this State, or any order or decision of the commission, shall be liable to the persons or corporations affected thereby for all loss, damages, or injury caused thereby or resulting therefrom. If the court finds that the act or omission was wilful, it may, in addition to the actual damages, award exemplary damages. An action to recover for such loss, damage, or injury may be brought in any court of competent jurisdiction by any corporation or person.

"No recovery as provided in this section shall in any manner affect a recovery by the State of the penalties provided in this part or the exercise by the commission of its power to punish for contempt."

It is alleged that respondent violated Public Utilities Code sections 451, 491 and 851. Underlying the allegation of violations is the contention that the shutdown was done without PUC authority and caused damage to the employees, including plaintiff, of the closed-down division.

The issue of the propriety of the closure was before the PUC, albeit collaterally, during the long process of considering the original purchase of Alltrans by respondent. Clearly, the Superior Court could not interfere with the commission in the performance of its official duties. ⁵ There is a potential conflict between sections 2106 and 1759 as one appears to give the statutory right to a cause of action and the other severely hampers that right if the PUC is concurrently handling the underlying issue. This conflict has been put to rest, however. In Waters v. Pacific Telephone Co. (1974) 12 Cal.3d 1, 4-5, 114 Cal.Rptr. 753, 523 P.2d 1161, the court held:

"We further conclude that, in order to resolve the potential conflict between sections 1759 and 2106, the latter section must be construed as limited to those situations in which an award of damages would not hinder or frustrate the commission's declared supervisory and regulatory policies. Our disposition of this case will not insulate the commission's policies regarding limitation of liability from review by this court; under sections 1756-1758, this court retains jurisdiction to review, on petitions for writ of review or certiorari, the lawfulness of any order or decision of the commission in accordance with the procedures set forth in those sections."

Public Utilities Code section 2106 authorizing damage actions must be construed in harmony with section 1759 to avoid unnecessary conflict. Section 2106 can only be utilized when it will not interfere or obstruct the commission in carrying out its own policies. (Waters v. Pacific Telephone Co., supra, 12 Cal.3d 1, 11, 114 Cal.Rptr. 753, 523 P.2d 1161.) This, of course, would include the preclusion of recovery of damages resulting from conduct of a public utility. Other forms of redress are more appropriate, particularly when the basis of the lawsuit involves a fundamental policy decision of the utility, that is to shut down a public utility operation, which is inimical to PUC regulatory authority. The PUC has exclusive jurisdiction over the regulation and control of utilities, and once it has assumed jurisdiction, it cannot be hampered, interfered with, or second-guessed by a concurrent superior court action addressing the same issue. (See Pacific Tel. & Tel. Co. v....