Cellular Plus, Inc. v. Superior Court

• Decision Date: 25 March 1993
• Docket Number: No. D015389,D015389
• Citation: 18 Cal.Rptr.2d 308,14 Cal.App.4th 1224
• Court: California Court of Appeals Court of Appeals
• Parties: , 1993-1 Trade Cases P 70,254 CELLULAR PLUS, INC. et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent; U.S. WEST CELLULAR of California, Inc., et al., Real Parties in Interest.

Page 308

18 Cal.Rptr.2d 308

14 Cal.App.4th 1224, 1993-1 Trade Cases P 70,254

CELLULAR PLUS, INC. et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent U.S. WEST CELLULAR of California, Inc., et al., Real Parties in Interest.

No. D015389.

Court of Appeal, Fourth District, Division 1, California.

March 25, 1993.

Review Denied July 1, 1993.

Franklin and Franklin, J. David Franklin, La Jolla, and Alexander M. Schack, San Diego, for petitioners.

Gibson, Dunn & Crutcher, J. Anthony Sinclitico III, San Diego, Morrison & Foerster, Irvine, Philip E. Smith, Sullivan, Walsh & Wood, Scott E. Wood, Hughes, Hubbard & Reed, William T. Bisset, Los Angeles, Sheppard, Mullin, Richter and Hampton, Michael J. Weaver, Seltzer Caplan Wilkins & McMahon, Brian T. Seltzer, Sullivan, Hill, Lewin & Markham, Donald G. Rez, Brobeck, Phleger & Harrison, Daniel G. Lamb, Jr., Pillsbury Madison & Sutro, Douglas R. Tribble, San Diego, Armour, Goodin, Schlotz & MacBride, Harold E. Kruth, San Francisco, Winthrop, Stimson, Putnam & Roberts and Stanley M. Gorinson, Washington, DC, for real parties in interest.

OPINION ON REHEARING

WORK, Acting Presiding Justice.

This case involves a lawsuit by a number of individual consumers and corporate sales agents, including Cellular Plus, Inc. and others (Cellular Plus), against the two licensed providers of cellular telephone service in San Diego County. The trial court granted demurrers to causes of action for wholesale price fixing and retail price fixing under the Cartwright Act. Its decision apparently was based upon the fact the Public Utilities Commission (PUC) regulates the rates charged by the providers, so as to either preclude a violation of the Cartwright Act or require the causes to be brought before the PUC in the first instance. We conclude valid causes of action can be brought before the trial court for wholesale and retail price fixing despite the regulatory authority of the PUC, and accordingly we issue a writ of mandate and direct the court to try first the issue of liability. We further instruct the court to consider, before trying the issue of damages, whether and at what point a PUC determination must be obtained as to what lower rates it would have approved had application been made.

ISSUES

1. Does Cellular Plus have standing to bring causes of action for wholesale and retail price fixing?

2. Are the causes of action by Cellular Plus sufficiently specific under California pleading requirements?

3. Has Cellular Plus alleged any injury which is compensable under the Cartwright Act?

4. Does the regulatory authority of the PUC preclude a violation of the Cartwright Act?

5. Must the wholesale and retail price fixing claims under the Cartwright Act initially be brought before the PUC by reason of possible primary jurisdiction over the claims?

FACTUAL AND PROCEDURAL BACKGROUND

The Federal Communications Commission (FCC) has authorized two facilities-based carriers to provide cellular communications service in the San Diego area. One is U.S. West Cellular of California, Inc. (U.S. West) and the other is PacTel Cellular (PacTel). The PUC granted certificates of public convenience and necessity to U.S. West and PacTel authorizing them to provide cellular telephone service in the San Diego area. Cellular Plus, Inc. and the other corporate petitioners were agents of U.S. West and engaged in the business of obtaining cellular telephone service customers for U.S. West, in addition to the sale of cellular telephone equipment and related services. The individual petitioners were customers of U.S. West and PacTel and purchased cellular service from them.

The PUC formally approved PacTel's rates for cellular telephone service in the San Diego area in its Decision No. 85-04-23 dated April 3, 1985. The PUC approved the rates of Gencom, Incorporated (Gencom) in its Decision No. 85-12-023 dated December 4, 1985. U.S. West acquired Gencom's San Diego cellular business soon thereafter, a transfer the PUC approved in its Decision No. 86-05-077 dated May 28, 1986, and U.S. West assumed Gencom's schedule of approved rates. As Cellular Plus contends, the wholesale and retail prices charged by U.S. West and PacTel for cellular telephone service have remained almost identical since at least 1987 because of their alleged agreement to maintain that status.

Cellular Plus filed its initial complaint in this action in January 1990. After the trial court on two separate occasions granted demurrers with leave to amend, Cellular Plus filed its third amended complaint. The complaint sets forth thirty-one separate causes of action. The third and twenty-second causes of action are for, respectively, wholesale and retail price fixing of cellular telephone service rates in the San Diego County area. On June 28, 1991, the trial court sustained U.S. West's and PacTel's demurrers to the third and twenty-second causes of action without leave to amend. As to the third cause of action for wholesale price fixing, the court stated in its notice of ruling:

"The demurrer is sustained without leave to amend.... The Public Utilities Commission has approved the prices charged by US West and PacTel. They are the only companies authorized to provide cellular service in San Diego County, thereby precluding a violation of the Cartwright Act."

As to the twenty-second cause of action, the court stated:

"The demurrer is sustained without leave to amend because the Public Utility [sic] Commission has jurisdiction over rates charged for cellular service. The demurrer is sustained consistent with the Third Cause of Action."

After its motion for reconsideration was denied, Cellular Plus filed this petition for writ of mandate asking that the court's rulings sustaining the demurrers to the third and twenty-second causes of action be overruled. ¹

After issuing our initial opinion in this matter, we granted PacTel's motion for rehearing in order to more fully address the issue of antitrust injury. This opinion on rehearing expands our discussion of antitrust injury and also adds consideration of the individual consumer plaintiffs where appropriate.

ANALYSIS

Standard of Review

A demurrer raises only a question of law, as the allegations of fact contained in the complaint must be accepted as true by the court for purposes of review. (Strang v. Cabrol (1984) 37 Cal.3d 720, 722, 209 Cal.Rptr. 347, 691 P.2d 1013; Thompson v. County of Alameda (1980) 27 Cal.3d 741, 746, 167 Cal.Rptr. 70, 614 P.2d 728.) A demurrer tests the sufficiency of a pleading, and it is error for a court to sustain a demurrer where the allegations adequately state a cause of action under any legal theory. (Von Batsch v. American Dist. Telegraph Co. (1985) 175 Cal.App.3d 1111, 1117, 222 Cal.Rptr. 239; Banerian v. O'Malley (1974) 42 Cal.App.3d 604, 611, 116 Cal.Rptr. 919.) Applying this standard of review, we address each of the issues in the order set forth above.

Issue 1: Cellular Plus Has Standing

PacTel contends, and U.S. West joins in such contention, Cellular Plus does not have standing to bring the price fixing claims, because Cellular Plus has not alleged a sufficient "antitrust injury" under the Cartwright Act. ² In support of its contention, PacTel cites two federal antitrust cases which held employees do not have standing to sue their employers for antitrust violations. (See Feeney v. Chamberlain Mfg. Corp. (5th Cir.1987) 831 F.2d 93, 96; Stein v. United Artists Corp. (9th Cir.1982) 691 F.2d 885, 896.) However, the corporate plaintiffs of Cellular Plus are not employees of U.S. West. They are merely independent agents of U.S. West, and, as a result, are considered separate entities which normally would have standing to sue under the Cartwright Act. Further, the individual plaintiffs, as customers, cannot in any sense be viewed as employees of U.S. West.

PacTel also cites Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 723, 187 Cal.Rptr. 797, as requiring an antitrust plaintiff to be within the "target area" of the antitrust violation in order to have standing to sue. According to Kolling, an "antitrust injury" is the "type of injury the antitrust laws were intended to prevent, and which flows from the invidious conduct which renders defendants' act unlawful." (Ibid.) PacTel asserts Cellular Plus must be either a consumer or a competitor in order to have standing to make price fixing claims. We find no merit in this assertion. The court in Kolling went on to state:

"The antitrust laws are designed to protect the public, as well as more immediate victims, from a restraint of trade or monopolistic practice which has an anticompetitive impact on the market. [Citations.] Thus, the antitrust laws allow private enforcement by an aggrieved party, even if the complainant be but a single merchant. [Citation.]

"We are persuaded that respondents suffered the type of injury which the antitrust laws seek to prevent. As said in Lee-Moore Oil Co. v. Union Oil Co. (4th Cir.1979) 599 F.2d 1299, 1303, 'the case will be quite rare in which a per se violation of the Sherman Act does not cause competitive injury.' " (Kolling v. Dow Jones & Co., supra, 137 Cal.App.3d at p. 724, 187 Cal.Rptr. 797.)

Thus, the court in Kolling concluded the injuries alleged in that case were not secondary, consequential, or remote, but the direct result of the unlawful conduct and were the kind of injuries the antitrust laws seek to prevent. (Ibid.)

Another California case describes the broad class of persons and injuries which the Cartwright Act intends to cover. In Saxer v. Philip Morris, Inc. (1975) 54 Cal.App.3d 7, 26, 126 Cal.Rptr. 327, the court stated:

"Plaintiff's injuries were not 'secondary' or 'consequential,' since they did not result from injury to third parties; they were not 'remote,' for they were the direct result of the allegedly illegal conduct. [Citations.] The fact that plaintiff was not a competitor of defendants presents no obstacle...