Gowdey v. Commonwealth Edison Co.

• Decision Date: 12 March 1976
• Docket Number: No. 60272,60272
• Citation: 37 Ill.App.3d 140,345 N.E.2d 785
• Parties: Marilyn GOWDEY et al., Individually and on behalf of others similarly situated, Plaintiffs-Appellees, v. COMMONWEALTH EDISON COMPANY, Defendant-Appellee, Willard Blair and June T. Hamer, Separate Objectors-Appellants.
• Court: United States Appellate Court of Illinois

Page 785

345 N.E.2d 785

37 Ill.App.3d 140

Marilyn GOWDEY et al., Individually and on behalf of others

similarly situated, Plaintiffs-Appellees, v. COMMONWEALTH EDISON COMPANY, Defendant-Appellee, Willard Blair and June T. Hamer, Separate Objectors-Appellants.

No. 60272.

Appellate Court of Illinois, First District, Fifth Division.

March 12, 1976.

Rehearing Denied April 22, 1976.

Paul E. Hamer, Northbrook, for separate plaintiffs-appellants.

Patrick C. O'Day, Chicago, for Willard Blair, objector-appellant.

Paul M. Lurie, Robert A. Holstein and Burton I. Weinstein, Chicago, for Marilyn Gowdey, etc., plaintiffs-appellees.

C. Richard Johnson and James N. Nowacki, Chicago, for Commonwealth Edison Co., defendant-appellee; Isham, Lincoln & Beale, Chicago, of counsel.

Francis J. Reilly, Chicago, for Herman Edwards, claims trustee-appellee.

Joseph V. Roddy, Chicago, trustee for former customers-appellee.

Harry A. Young, Jr., pro se.

Leo A. Segall, Eugene I. Pavalon, Asher, Greenfield, Goodstein, Pavalon & Segall Ltd., Leonard E. Handmacher, Chicago, for intervenor-plaintiffs-appellees Robert Simpson and Judith Losey Clemmons.

SULLIVAN, Justice.

This is an appeal by separate objectors Blair and Hamer from a final order of the circuit court approving the settlement of an action originally brought against Commonwealth Edison Co. (Edison) by plaintiff Gowdey as an individual on her own behalf and on behalf of all other persons who were or had been charged by Edison for its residential light bulb service (hereinafter called plaintiffs).

It appears that for more than 50 years Edison has maintained a bulb service for its residential customers. This practice was initially allowed by the Illinois Commerce Commission (Commission) because of a shortage at that time of adequate quality bulbs on the open market. Edison was permitted to impose a mandatory charge for this service until 1932 when the Illinois Supreme Court, in Consumers Sanitary Coffee and Butter Stores v. Illinois Commerce Commission, 348 Ill. 615, 181 N.E. 411, ruled that Edison must provide the bulb service on an optional basis. Thereafter, apparently in response to the supreme court ruling, the Commission approved a tariff for the light bulb service which set a charge for the service and made it optional. The form was as follows:

'Light bulb service--The above charges include 0.17 cents per kilowatt hour for the first 100 kilowatt hours supplied in the month for light bulb service as described in Rider 10. Light bulb service is optional with the customer. Where the customer elects not to take light bulb service, such charges for the first 100 kilowatt hours shall be reduced by 0.17 cents per kilowatt hour.'

In plaintiffs' complaint it was alleged that Edison (1) unlawfully used a 'negative option' by which the bulb service was included in a customer's bill unless it was otherwise specifically requested; (2) failed to disclose in its bills to residential customers that a charge for a light bulb service was included or that the service was optional; (3) deceived its customers through the use of information, materials and rate cards which were phrased in a manner intended or likely to lead customers to believe the service was free and not optional; and (4) through its marketing scheme, wrongfully charged plaintiffs for the bulb service even though they had never agreed to the purchase or to be charged therefor. Plaintiffs sought extensive injunctive relief as well as a repayment to plaintiffs of all the alleged wrongful charges.

Edison responded by moving to dismiss the complaint on the grounds that primary jurisdiction lay with the Illinois Commerce Commission. Edison contended that the controversy concerned its rates and tariffs which, by Illinois law, are governed exclusively by the Commission--the circuit court having jurisdiction only by way of administrative review. The court denied the motion, holding that it had jurisdiction. ¹ Thereafter, in its answer and in a motion for summary judgment, Edison raised a wide variety of other defenses. It denied that the customer information materials were misleading, deceptive or fraudulent. As an affirmative defense, it contended that it had at all times carefully followed all relevant Commission orders. By exhibits filed with the pleadings, it established that new customers had received a principal rate card with their first bill and periodically thereafter which, it contended, clearly disclosed the charges for and the optional nature of the bulb service. This card, which closely followed the wording of the tariff, stated:

'Light Bulb Service; Optional with the Customer under Rates 1, 6 and 14. Under Rates 1 and 14 (the residential service rates), if the Customer does not take light bulb service, the charges for the first 100 kwhrs. in any month are reduced 17/100ths of a cent per kwhr. * * *.' (Parenthesis added.)

Edison further asserted in its pleadings that (1) no damages could be awarded since the form of option which was allegedly used had been approved by the Commission ²; (2) the so-called negative option was not inherently unlawful because where, as here, the form of option had been expressly approved by the Commission, it was lawful; and (3) the allegation that the plaintiffs had never agreed to purchase the bulb service or to be charged for it was false. Edison also opposed the assertion of the claim on behalf of a class, especially with regard to the claims for damages. It alleged that the issues of fact which were not common to the class predominated over the issues of fact which were. It suggested that some of the critical questions of fact at issue were (1) whether individual class members had knowledge of the availability of and charges for light bulb service; (2) whether individual class members in fact used bulbs under the service; (3) what information concerning the bulb service had been received by individual customers; and (4) what oral or written communications occurred between individual customers and Edison regarding the service. Edison contended that all of these factual questions would have to be resolved individually to determine claims of liability or any possible damages. Because of the importance of these individual issues of fact, it asserted that there was substantial doubt as to the manageability of a class action. As a defense, it also contended that the statute of limitations barred all claims for damage incurred prior to one year before the filing of the suit.

The relevant facts in the case were extensively presented to the trial court. Considerable data pertaining to the income from and the costs of light bulb service was submitted by Edison at the court's request. Other factual matters were presented by Edison's affidavits in support of its motion for summary judgment. Still more facts were presented to the court through the discovery efforts of the parties. Outside experts employed by plaintiffs reviewed and reported on Edison's record keeping procedures.

After various cross-motions for summary judgment had been briefed but before they were ruled upon, plaintiffs and Edison began, under the supervision of the court, extensive settlement discussions. Those negotiations, which began in the Spring of 1972, broke off on several occasions and, during these interruptions, the parties went forward with trial preparation. Finally, in February, 1973, terms of a preliminary settlement agreement were reached.

Upon receiving the proposed settlement, the trial court appointed a number of special officers to review its fairness and reasonableness from a number of viewpoints. A claims trustee and an attorney for that trustee were appointed to monitor any claim procedures for the court and to review the fairness of the settlement generally. A separate trustee was appointed to advise the court with regard to the claims of former light bulb customers. A guardian ad litem for incompetents and possible minor class members was also appointed.

These officers were given access to all discovery materials, as well as all memoranda and other papers filed in the case. The trustees also interviewed certain witnesses. In addition, substantial additional factual investigations were pursued by the court appointed officers, and lengthy memoranda were then prepared by them analyzing the proposed settlement and making suggestions for revision. Finally, agreement was reached by all parties and these officers to a proposed settlement which provided in summary as follows: (1) During the 12 month period immediately following the date of judgment, Edison must re-solicit all of its 2,400,000 residential customers, so that each customer might affirmatively elect whether he wished to continue to subscribe to the light bulb service; (2) any residential customer affirmatively electing not to subscribe to the light bulb service would be discontinued as such and his monthly utility charge reduced accordingly; (3) any residential customer not responding in any fashion to the re-solicitation would be presumed not to wish to continue the light bulb service, dropped as a light bulb service subscriber, and his monthly utility charge reduced accordingly; (4) all new residential customers must affirmatively elect to subscribe to the light bulb service before being charged for it; (5) all Edison bills to residential customers using the service must separately state the light bulb charge; (6) for one year following the date of judgment, Edison would not request of the Illinois Commerce Commission an increase in the light bulb service charge; (7) for a three year period following the date of judgment, Edison must continue the light bulb service whether of not it proved profitable; (8) residential customers still residing in Edison's service area willing to state in writing that they did not wish to subscribe to and have never utilized the light bulb service, upon submission of a simple form so stating, might...