Indiana Bell Telephone Co., Inc. v. Friedland

• Decision Date: 09 March 1978
• Docket Number: No. 2-676A242,2-676A242
• Citation: 175 Ind.App. 622,373 N.E.2d 344
• Parties: INDIANA BELL TELEPHONE COMPANY, INCORPORATED, Appellant (Defendant below), v. M. Daniel FRIEDLAND, Appellee (Plaintiff below).
• Court: Indiana Appellate Court

Page 344

373 N.E.2d 344

175 Ind.App. 622

INDIANA BELL TELEPHONE COMPANY, INCORPORATED, Appellant (Defendant below), v. M. Daniel FRIEDLAND, Appellee (Plaintiff below).

No. 2-676A242.

Court of Appeals of Indiana, Second District.

March 9, 1978.

Bruce N. Cracraft and Harold L. Folley, Indianapolis, for appellant.

Stephen B. Caplin, Indianapolis, for appellee.

SULLIVAN, Presiding Judge.

Indiana Bell Telephone Company, Inc., (Bell) appeals from an interlocutory order which certified a class under Ind.Rules of Procedure, Trial Rule 23. We obtained jurisdiction pursuant to Ind.Rules of Procedure, Appellate Rule 4(B) (5).

Friedland, a practicing attorney in Indianapolis, filed a complaint on behalf of himself and others similarly situated. He challenges the validity of certain telephone rates and practices of Bell categorized under the heading of "joint user service".

Bell had on file with the Public Service Commission an approved tariff schedule ¹ pursuant to which Friedland was assessed a rate which included an additional charge of $15.65 per month. Bell assessed this additional charge because Friedland shared his telephone service with another attorney for business purposes. The tariff provides that any customer who shares his telephone service with persons, firms or corporations other than the customer's family, employees, representatives or persons residing in his household shall be charged a "joint user" rate.

It appears that Friedland and his colleague, Ronald Bussell, shared space, expenses and use of the telephone service in one law office. However, they were not partners nor did they practice as a professional corporation nor was either the employee of the other. At the certification hearing, Friedland introduced evidence suggesting that different rates had been assessed to various customers, all of whom allegedly received substantially the same service.

With difficulty, we have been able to glean from Friedland's complaint and brief the following allegations:

(1) that his fellow attorney was his "representative" and therefore the "joint user" rate should not have been assessed to him;

(2) that the discrimination inherent on the face of the approved tariff, between lawyers within a firm and lawyers sharing some other arrangement, is arbitrary and unreasonable; and

(3) that, assuming the facial validity of the tariff, it has nevertheless been applied by Bell in an arbitrary and discriminatory manner.

Friedland brought his action as a class suit on behalf of all Bell customers similarly situated. He seeks damages for any wrongful charges as well as declaratory and injunctive relief. The trial court, after hearing evidence, certified a class as per the following order:

"Parties in person and by counsel, evidence heard under oath, Court finds that pursuant to T.R. 23(A), 23(B)(3) class is hereby certified as those persons and/or businesses as of June 5, 1974 classified as joint users as set out in plaintiff's Exhibit '1' introduced herein, and plaintiff is hereby ordered to prepare form of notice of these proceedings for approval of the Court pursuant to 23(C)(2) within ten (10) days."

Plaintiff's Exhibit "1", referred to in the order, is a list supplied to Friedland by Bell of all customers in the Indianapolis area who were being charged the "joint user" rate as of June 5, 1974. The class as thus fixed was composed of 142 separate persons or entities.

Our disposition of this appeal requires the resolution of two issues.

(1) Is subject-matter jurisdiction of the trial court a proper issue for determination upon review of an interlocutory order certifying the existence of a class?

(2) If so, did the trial court have subject-matter jurisdiction?

I.

Bell contends that the trial court is without jurisdiction because Friedland is attacking the rates, services and practices of a public utility, matters which Bell argues are exclusively within the purview of the Public Service Commission.

Although we are reviewing the propriety of an interlocutory order certifying a class, we properly consider the trial court's jurisdiction over the subject matter for the following reasons. First, it is well-established that "(w)hen there is a lack of jurisdiction of the subject matter in the trial court, the question may be raised at any time and in any manner before final decision and, if not raised in the trial court or by a party to the appeal, then it is the duty of the appeal court sua sponte to raise and determine it." Bobbitt, Indiana Appellate Practice and Procedure, ch. 5, p. 77 (1972). The court in Decatur County REMC v. Public Service Co. (1971) 150 Ind.App. 193, 197, 275 N.E.2d 857, 860, stated in reviewing the grant of a permanent injunction:

"Under the new Rules of Civil Procedure adopted January 1, 1970, the question of jurisdiction over the subject matter is usually raised either in a consolidated motion before answer or by the answer itself if no such motion is used. See Rule TR. 12. However, this defense is available at any time before final decision and in any manner, and if not raised by a party it is our duty, sua sponte, to raise and determine it. Bohannan v. Bohannan (1961) 132 Ind.App. 504, 167 N.E.2d 717; State ex rel. Ayer v. Ewing, Judge, (1952) 231 Ind. 1, 106 N.E.2d 441; Harvey's Indiana Practice, Vol. 1, pp. 604-608. Unlike jurisdiction over the particular case, subject-matter jurisdiction cannot be imposed by mutual consent or waived. Indiana Real Estate Commission v. Blue (1963) 135 Ind.App. 121, 190 N.E.2d 32; State ex rel. Standard Oil Co. v. Review Board of Indiana Employment Sec. Div., (1951) 230 Ind. 1, 101 N.E.2d 60."

Furthermore, Ind.Rules of Procedure, Trial Rule 23, which sets forth the requirements for a class action, specifies that where, as alleged here, there are common questions of fact or law, the class action must be "superior to other available methods for the fair and efficient adjudication of the controversy." T.R. 23(B)(3). Obviously, if the trial court is without subject-matter jurisdiction, this class action would not be the "superior" method of adjudication. Thus, recognition of subject-matter jurisdiction is inherent in the review of a class certification under T.R. 23. In this connection, it would seem an exercise in futility to affirm an interlocutory order certifying a class, thereby encouraging lengthy further proceedings, if we were of the view that the trial court lacks subject-matter jurisdiction of the action brought by the class.

We therefore proceed to consider Bell's contention that the trial court lacks jurisdiction over the claims presented by Friedland.

II.

Under Indiana law the establishment of rates for public utilities is a legislative function. Public Service Commission v. Indiana Bell Tel. Co. (1953) 232 Ind. 332, 112 N.E.2d 751. The Public Service Commission is a creature of the legislature, see Town of Merrillville v. Lincoln Utilities, Inc. (1st Dist. 1976) Ind.App., 355 N.E.2d 851, and it possesses only that jurisdiction or authority granted to it by statute. General Tel. Co. of Ind. v. Public Service Commission of Ind. (1958) 238 Ind. 646, 154 N.E.2d 372; Indiana Tel. Corp. v. Indiana Bell Telephone Co., Inc. (2d Dist. 1976) Ind.App., 358 N.E.2d 218; Citizen's Gas and Coke Utility v. Sloan (1964) 136 Ind.App. 297, 196 N.E.2d 290.

It is also axiomatic that where an administrative remedy is provided by statute, one who seeks relief must first exhaust the administrative alternatives before applying for judicial review. State ex rel. Paynter v. Marion County Superior Court, Rm. No. 5 (1976) Ind., 344 N.E.2d 846; City of East Chicago v. Sinclair Refining Co. (1953) 232 Ind. 295, 111 N.E.2d 459.

Bell contends that Friedland is collaterally attacking, through the judicial process, acts of a public utility intended by the legislature to be reviewed and regulated by the Public Service Commission. Our consideration of this contention requires us to first determine whether in fact the pertinent statutes grant jurisdiction over such claims to the Public Service Commission and, if so, whether the Commission can be divested of jurisdiction when damages are sought.

Friedland alleges alternatively that (1) the tariff incorporating the "joint user" concept is unreasonable, (2) he should be considered a "representative" of his colleague and therefore excluded from the "joint user" rate; and (3) the tariff and rates have been applied in an arbitrary and discriminatory manner.

Initially, we note that Friedland's first allegation attacks the validity and reasonableness of the tariff itself, and therefore is properly within the exclusive jurisdiction of the Public Service Commission. The question of proper establishment of utility rates is a matter to be determined by the Public Service Commission and only thereafter may such determination be reviewed by the courts. State ex rel. Indianapolis Water Co. v. Boone Circuit Court (1974) 261 Ind. 583, 307 N.E.2d 870; Public Service Commission v. City of Indianapolis (1956) 235 Ind. 70, 131 N.E.2d 308.

Friedland's second and third allegations, while still tangentially concerned with definitional concepts, nevertheless challenge the "services" and "practices" of Bell in applying the rate, as opposed to the validity of the rate itself. It is argued that discrimination in application of rates approved by the Public Service Commission presents one of those instances in which the judicial nature of the claim overshadows any administrative characteristic. ²

Friedland brings this action under I.C. 8-1-2-107 (Burns Code Ed. 1973) ³, which creates the right of a civil action for damages sustained in consequence of "unlawful acts" of a public utility. "Unlawful acts" are more specifically defined in part by the following statutes:

I.C. 8-1-2-103 (Burns Code Ed. 1973) provides, in pertinent part:

"Discrimination in sales or service Penalty Special service. If any public utility, or any agent or officer...