General Telephone Co. of the Northwest, Inc. v. Washington Utilities & Transp. Com'n

Decision Date19 September 1985
Docket NumberNo. 50995-6,50995-6
Citation104 Wn.2d 460,706 P.2d 625
CourtWashington Supreme Court

Kenneth O. Eikenberry, Atty. Gen., James R. Cunningham, Robert Daniel Cedarbaum, Asst. Attys. Gen., Olympia, for petitioner.

G.T.E. Service Corp., Lyman R. Mitten, II, Marilyn B. Vogel, Stamford, Conn., for respondent.

CALLOW, Justice.

The Washington Utilities and Transportation Commission (Commission) appeals a supersedeas order that permits the General Telephone Company of the Northwest (GTNW) to charge higher interim rates than the Commission had allowed. The Commission argues that (1) the Superior Court engaged in ratemaking, thereby exceeding the scope of its statutory authority to grant interim relief; and (2) the supersedeas order failed to meet the statutory requirements.

The essential facts are undisputed. GTNW filed for a $47,623,000 rate increase on October 1, 1982. The Commission suspended the increase on October 20 and reviewed the need for the increase with an earlier $1,649,000 filing. Thus, the total requested increase before the Commission was $49,272,000. After extensive hearings, the Commission rejected the proposed increases as excessive. It allowed an increase of $4,816,665. GTNW unsuccessfully moved for reconsideration on September 6, 1983.

GTNW sought judicial review in King County Superior Court on October 20, 1983. It appealed on three grounds irrelevant to this appeal. The company also requested a supersedeas order that authorized an interim rate increase of $8,273,000 per annum. The increase represented the amount to which GTNW allegedly would be entitled during the appeal period if its appeal succeeded. In support, GTNW submitted the affidavit of J. Pat McGee, its General Accounting Manager. McGee stated that if GTNW were not allowed to collect the $8.3 million, it would suffer "great and irreparable harm." 1 The harm would result from the prohibition against retroactive rate collection. McGee also promised that GTNW would refund all interim rates collected, with interest, if the appeal failed. GTNW did not file a bond or other security with the court. The Commission did not controvert the affidavit.

The trial court allowed GTNW to charge the higher interim rates. It issued a supersedeas order on December 8, 1983, that stated, in pertinent part:

[GTNW] has shown through the affidavit of J. Pat McGee that it will suffer great or irreparable damage if the effect of [the Commission's order] is not stayed or suspended during the pendency of the appeal of Cause No. U-82-45. The nature of the damage is that petitioner will be denied rates and revenues associated with the issues on appeal, and that these rates and revenues cannot be recovered retroactively if petitioner's position prevails on appeal.

The court further finds [GTNW] has demonstrated the ability to provide adequate security for the repayment of all amounts collected pursuant to this order if respondent ultimately prevails on this appeal. This security is in the form of a surcharge tariff which provides for a full refund to customers of all surcharge revenues, with accrued interest at the rate prescribed by law, if the issues contested in its appeal are decided in favor of [the Commission].

The court did not consider the Commission's record or the merits of GTNW's case.

The Commission asked for discretionary review by the Court of Appeals which accepted review pursuant to RAP 2.3(b). The case subsequently was certified to this court under RCW 2.06.030(d).

The first issue is whether the Superior Court exceeded the scope of the supersedeas statute by authorizing GTNW to charge increased interim rates.

The resolution of this appeal depends on the interpretation of the supersedeas statute, RCW 80.04.180, which provides:

Supersedeas. The pendency of any writ of review shall not of itself stay or suspend the operation of the order of the commission, but the superior court in its discretion may restrain or suspend, in whole or in part, the operation of the commission's order pending the final hearing and determination of the suit.

No order so restraining or suspending an order of the commission relating to rates, charges, tolls or rentals, or rules or regulations, practices, classifications or contracts affecting the same, shall be made by the superior court otherwise than upon three days' notice and after hearing, and if a supersedeas is granted the order granting the same shall contain a specific finding, based upon evidence submitted to the court making the order, and identified by reference thereto, that great or irreparable damage would otherwise result to the petitioner, and specifying the nature of the damage.

In case the order of the commission under review is superseded by the court, it shall require a bond, with good and sufficient surety, conditioned that such company petitioning for such review shall answer for all damages caused by the delay in the enforcement of the order of the commission, and all compensation for whatever sums for transmission or service any person or corporation shall be compelled to pay pending the review proceedings in excess of the sum such person or corporations would have been compelled to pay if the order of the commission had not been suspended.

The court may, in addition to or in lieu of the bond herein provided for, require such other or further security for the payment of such excess charges or damages as it may deem proper.

(Italics ours.) 2 The statute first appeared in 1911, and was enacted in its present form in 1961. Virtually no legislative history exists, and no recent case law has construed it.

The Commission argues that the Superior Court usurped agency authority. It asserts that supersedeas order runs counter to the Commission's administrative delegation of power to set and suspend rate increases, RCW 80.36.130 and .140, and the rule that an agency's findings are prima facie correct, RCW 80.04.430.

We disagree. The statutes the Commission cites are general rules for appeal of agency decisions. The supersedeas statute addresses a specific situation: the prevention of "great or irreparable damage" to an entity while an appeal is pending. The specific statute supersedes a general statute when both apply. E.g. State v. Shriner, 101 Wash.2d 576, 580, 681 P.2d 237 (1984); Hartig v. Seattle, 53 Wash. 432, 437, 102 P. 408 (1909); 2A C. Sands, Statutory Construction § 51.05 (4th ed. 1973).

The Commission further claims that the Superior Court acted beyond the scope of RCW 80.04.180. The statute allows the court only to "restrain or suspend" the Commission's order. The order allowed GTNW a $4.8 million increase, and is still effective. The court also allowed a rate increase of an additional $8.3 million. That increase allegedly represents unauthorized judicial ratemaking. Under the Commission's interpretation, the only application of RCW 80.04.180 arises when the Commission's order reduced telephone rates.

The Commission's theory does not consider the entire utility rate increase procedure and the actual effect of the order in that scheme. The utility commences the ratemaking process by filing with the Commission for a rate increase. RCW 80.04.130(1). The Commission has the power to suspend the rate increase for up to 10 months, while hearings are pending. The utility bears the burden of proof to justify the need for an increase. RCW 80.04.130(2). The Commission has the power to determine what constitutes a reasonable rate increase, if any. RCW 80.04.130(1). If it finds the rate unreasonable, it may vacate the increase and set a reasonable rate. RCW 80.36.140. If the Commission fails to vacate the increase, or fails to act within the 10-month period, the full increase takes effect. See State ex rel. Pac. Inland Tariff Bur. v. Clifford, 46 Wash.2d 807, 812, 285 P.2d 569 (1955). Thus, the Commission's order in this case had two components: (1) the permanent elimination of the $49.3 million increase, and (2) a substitute increase of $4.8 million. See Alaska Pub. Utils. Comm'n v. Greater Anchorage Area Borough, 534 P.2d 549, 542-53 (Alaska 1975); Department of Pub. Utils. v. New Eng. Tel. & Tel. Co., 325 Mass. 281, 90 N.E.2d 328 (1950).

The Superior Court, therefore, had the power to "restrain or suspend" either or both actions that comprised the Commission's order. The court chose to restrain, in part, the effect of the permanent suspension of the $49.3 million increase. It allowed an interim annual increase of $8.3 million while the appeal is pending. The statute clearly authorizes such an action if the other requirements are met. 3 The Kansas Supreme Court reached the same result with a virtually identical statute and similar facts in Southwestern Bell Tel. Co. v. State Corp. Comm'n, 226 Kan. 234, 597 P.2d 633 (1979). In doing so, the court held that a utility has made a sufficient showing that "great or irreparable damage" would result if it shows that unless the interim relief is granted a substantial sum will be irretrievably lost. The court specifically rejected any requirement that before being entitled to interim relief the utility had to show that it could not reasonably serve its customers or meet operating expenses unless such relief was granted. The court also concluded that the utility would not be required to show a reasonable probability of prevailing on the merits of the case.

The same conclusion follows from an analysis of the supersedeas order as an injunction pendente lite. The court only has the power to suspend or restrain a Commission order based on the status quo ante. The question then becomes the measuring point for the status quo ante. The Commission argues that the relevant point is immediately before GTNW filed for a rate increase. The company responds that the status quo ante occurred immediately...

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