Dunlap v. Colorado Springs Cablevision, Inc.
| Decision Date | 13 April 1992 |
| Docket Number | No. 90SC386,90SC386 |
| Parties | 1992-1 Trade Cases P 69,791, Util. L. Rep. P 26,188 Sam DUNLAP, Ed Bachmann, Margge Adler, Janalyn Kehm and Lawrence D. Ochs, individually, and as representatives of all others similarly situated, Petitioners, v. COLORADO SPRINGS CABLEVISION, INC., a Colorado corporation; Leonard Tow, John Doe and Richard Doe, individually, Respondents. |
| Court | Colorado Supreme Court |
Ireland, Stapleton, Pryor & Pascoe, P.C., Tucker K. Trautman, Denver, and James Robert Barash, Colorado Springs, for petitioners.
J. Gregory Walta, Colorado Springs, for all petitioners except Lawrence D. Ochs.
Holland & Hart, Gregory R. Piche, Joseph W. Halpern and William E. Mooz, Jr., Denver, for respondents.
Davis, Graham & Stubbs, David R. Hammond and Gary R. Doernhoefer, Denver, for amicus curiae Colorado Retail Council.
This case presents the issue of whether consumers of cable television services can establish a claim for relief under Colorado's Unfair Practices Act based on allegedly unlawful pricing practices of the supplier in a geographical area different from that in which the plaintiff consumers receive their services. The district court dismissed a class action suit for damages brought by the plaintiff consumers against Colorado Springs Cablevision, Inc. alleging that in the only area in which Cablevision faced competition, it established prices that were discriminatory and below cost with the intent to destroy competition and injure subscribers, in violation of Colorado's Unfair Practices Act, §§ 6-2-101 to -117, 2 C.R.S. (1973 & 1991 Supp.). The Colorado Court of Appeals affirmed, holding that the plaintiffs failed to state a claim for relief. Dunlap v. Colorado Springs Cablevision, Inc., 799 P.2d 416 (Colo.App.1990). We reverse and remand for further proceedings.
The individual plaintiffs are subscribers to the cable television service of Colorado Springs Cablevision, Inc. (Cablevision) in the City of Colorado Springs. Cablevision had no competition except in an area in the northern part of the city, in which Colorado Springs Citizens Cable, Inc. (Citizens Cable) also provided services. 1 We refer to the area served by both providers as the "Area of Competition" and to the other area served by Cablevision as the "Area of Noncompetition." In January 1988, the individual plaintiffs, on behalf of themselves and all others similarly situated--alleged to consist of approximately 45,000 households--brought a class action against Cablevision, its president, Leonard Tow, and unknown persons designated John Doe and Richard Doe in the District Court for El Paso County. 2 The plaintiffs averred that since April 1, 1986, Cablevision consistently has charged higher prices to subscribers in the Area of Noncompetition than in the Area of Competition, and based on that preliminary averment asserted two claims for relief. The first, which is not before us on certiorari review, asserted that the system of pricing violated the Colorado Springs Municipal Code. The second purported to state a claim for treble damages under the Unfair Practices Act on the basis that Cablevision's pricing in the Area of Competition constituted a sale of cable television services below cost, discriminated between different geographical areas, or both, with the intent to destroy competition and injure subscribers. The plaintiffs alleged that as a result of the discriminatory pricing they have overpaid for the cable television service and will be forced to do so in the future as long as the discriminatory pricing continues. The plaintiffs contend therefore that they are entitled to treble damages and future treble damages under section 6-2-111(1), as well as interest and costs. The plaintiffs sought recovery against the individual defendants as well as Cablevision on the basis that they aided and assisted Cablevision in the alleged violations.
The defendants moved to dismiss under C.R.C.P. 12(b)(5) on the basis that the municipal ordinance on which the plaintiffs based their first claim does not provide a private right of action and that the plaintiffs lacked standing to pursue their Unfair Practices Act claim for two reasons. Cablevision asserted first that the Unfair Practices Act provides protection only to competitors, not to consumers, and second that an overcharge is not a legally cognizable injury under that statute. After argument, the district court granted the motion to dismiss as to both claims. The court held that the plaintiffs failed to state a claim upon which relief can be granted for the alleged ordinance violation. As to the Unfair Practices Act claim, the court held that the plaintiffs lacked standing to sue because the Act addresses only injury to competitors and "is not intended to protect consumers who complain they pay too much."As a result,the plaintiffs "have not sustained any injury to any legal right."3
On appeal, the Colorado Court of Appeals affirmed. Dunlap, 799 P.2d 416 (Colo.App.1990). As to the Unfair Practices Act claim, it stated that the basis of the district court's dismissal order was C.R.C.P. 12(b)(5), failure to state a claim on which relief can be granted. 4 The court held that the Unfair Practices Act is addressed to price cutting that might injure or destroy competition and that the issue of overcharging is unrelated to the Act's intent. Id. at 417. According to the court of appeals, the fact that some cable subscribers are charged a higher rate for services is not an injury of the type the Act was designed to prevent. Id. The court also sustained dismissal of the first claim for relief, which was predicated on violation of a Colorado Springs municipal ordinance. We granted certiorari limited to the issue of whether the plaintiff consumers have standing to assert a claim under the Unfair Practices Act.
The right of the plaintiffs to seek relief under the Unfair Practices Act in this case has been analyzed in the district court as presenting an issue of standing and in the court of appeals as posing an issue of failure to state a claim upon which relief can be granted. Therefore, we must consider both the doctrine of standing and the rules concerning dismissal for failure to state a claim in order to resolve the issue presented for review. The central question under both analyses, for the purposes of this case, is whether the plaintiffs have alleged an injury that is cognizable under the Unfair Practices Act, §§ 6-2-101 to -117, 2 C.R.S. (1973 & 1991 Supp.).
To determine whether a particular plaintiff has standing to bring suit, a court must ascertain "(1) whether the party seeking judicial relief has alleged an actual injury from the challenged action; and (2) whether the injury is to a legally protected or cognizable interest" based on constitutional, statutory, or other recognized sources. O'Bryant v. Public Utilities Comm'n, 778 P.2d 648, 652 (Colo.1989); see Colorado General Assembly v. Lamm, 700 P.2d 508, 516 (Colo.1985); Wimberly v. Ettenberg, 194 Colo. 163, 168, 570 P.2d 535, 539 (1977). The determination of whether a particular plaintiff has standing to bring suit is therefore inextricably tied to the merits of the case. Cloverleaf Kennel Club, Inc. v. Colorado Racing Comm'n, 620 P.2d 1051, 1056 (Colo.1980); Wimberly, 194 Colo. at 168, 570 P.2d at 539. A plaintiff satisfies the injury in fact requirement by demonstrating that the activity complained of has caused or has threatened to cause injury to the plaintiff such that "a court [can] say with fair assurance that there is an actual controversy proper for judicial resolution." O'Bryant, 778 P.2d at 653; accord Conrad v. City and County of Denver, 656 P.2d 662, 668 (Colo.1983). In resolving whether the plaintiff has alleged an injury sufficient to confer standing, a court must accept as true the allegations set forth in the complaint and may weigh other evidence supportive of standing. Lamm, 700 P.2d at 516. Here, the plaintiffs have alleged that they have been overcharged for cable television service. It is fair to infer from the complaint that the plaintiffs claim that the proceeds of the overcharges have been used to subsidize the price discrimination resulting from the low rates charged by Cablevision in the Area of Competition. 5 We conclude that the allegation of overcharges is sufficient to meet the injury in fact requirement.
The plaintiffs must also demonstrate that the harm allegedly suffered arose from the infringement of a legally protected interest for which judicial relief is available. O'Bryant, 778 P.2d at 653; State Bd. for Community Colleges v. Olson, 687 P.2d 429, 435 (Colo.1984). To meet this requirement, the plaintiffs must show that the legislature, in enacting the Unfair Practices Act, intended to confer a legal right on persons such as the plaintiff cable television customers to bring suit to redress the type of harm they allege. See O'Bryant, 778 P.2d at 653. The question thus becomes whether the injury alleged by the plaintiffs is the type of injury that the Unfair Practices Act was enacted to prevent. This last issue is closely tied to the issue of whether the plaintiffs have stated a claim upon which relief can be granted pursuant to C.R.C.P. 12(b)(5) 6 and is the central issue of this controversy.
The purpose of a motion to dismiss for failure to state a claim is to test the formal sufficiency of the statement of the claim for relief. 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1356, at 294 (2d ed. 1990). A complaint should not be dismissed for failure to state a claim upon which relief can be granted if, after examining the complaint, "the allegations provide for relief on any possible theory." Id. § 1357 at 337. Here, the plaintiffs alleged in pertinent part:
8. Defendant has no competitor in the cable...
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