People ex rel. Orloff v. Pacific Bell
| Decision Date | 05 June 2001 |
| Docket Number | No. A089528.,A089528. |
| Citation | 89 Cal.App.4th 844,108 Cal.Rptr.2d 48 |
| Parties | The PEOPLE ex rel. Thomas J. ORLOFF, as District Attorney, etc., et al., Plaintiffs and Appellants, v. PACIFIC BELL et al., Defendants and Respondents. |
| Court | California Court of Appeals Court of Appeals |
Lawrence G. Brown, Executive Director, Counsel for Amicus Curiae, California District Attorneys Association.
Fred G. Hiestand, for Amicus Curiae, Civil Justice Association of California.
The district attorneys of three Northern California counties—Alameda, San Mateo, and Monterey—appeal from a judgment dismissing their suit for injunctive relief and civil penalties under the unfair competition law (UCL). The trial court sustained a general demurrer by respondent public utility without leave to amend after concluding its subject matter jurisdiction over the suit was preempted. For reasons that will appear, we affirm.
Acting in the name of the People, appellant district attorneys1 filed their complaint in the Alameda County Superior Court on September 2, 1999, seeking statutory remedies including injunctive relief under the UCL for alleged unfair and deceptive advertising by respondent.2 The complaint targeted three services marketed to telephone customers by the utility—call blocking, "custom calling" features, and inside telephone wire repair insurance—as the subject of the alleged deceptive practices. With respect to the marketing of each service, the complaint alleged, the utility had deceived its customers by false and misleading advertising. Pacific Bell and Telesis Group filed a general demurrer to the complaint, contending that because administrative proceedings seeking comparable relief for the identical alleged misconduct were pending before the Public Utilities Commission (commission), the superior court's subject matter jurisdiction over the cause was ousted by section 1759 of the Public Utilities Code ().
The proceedings before the commission to which respondent referred in its demurrer were commenced in 1998 by several consumer advocacy groups and labor unions, which filed serial administrative complaints attacking the utility's marketing of its call blocking, custom service, and inside wire repair services, the same marketing practices challenged by appellants in this lawsuit. Some of these administrative complaints included claims that the challenged conduct violated the UCL. The separate proceedings were consolidated before an administrative law judge, who held two weeks of evidentiary hearings and filed a tentative ruling for the commission's review on December 22, 1999.
The administrative law judge (ALJ) found respondent had failed to meet the disclosure standards prescribed in the relevant public utilities statute (§ 2896) because customers were not fully informed about the two call blocking options. Regarding the custom calling issue, the ALJ found respondent's sales strategy was designed to convey a mistaken impression to customers and failed to meet the requirements of its current tariff. She also found respondent had failed to present customers with sufficient information regarding alternative inside wire repair services. The ALJ's decision recommended multiple remedies, including ordering respondent to deposit $25 million in a customer education fund and imposing a fine in the amount of $20 million, half of which would be stayed pending compliance with the decision. Both the ALJ's proposed ruling and a competing tentative ruling by Assigned Commissioner Neeper, recommending somewhat different remedies, were appealed to the full Commission, where they are pending review.3
Following briefing and oral argument, the superior court sustained respondent's demurrer without leave to amend, ruling it lacked jurisdiction to proceed in light of the ongoing adjudicatory proceedings before the commission challenging identical conduct and asserting similar claims for relief. This appeal timely followed.
[1] This appeal presents the intersection ("collision" might be more apt) of competing legislative policies embodied in separate statutory schemes. On the one hand, in those matters lying within its broad administrative ken, the Legislature has decreed the preemptive power of the commission to oust, under articulated circumstances, the exercise of all judicial jurisdiction except that of the Supreme Court and the Court of Appeal. (§ 1759, subd. (a).)4 On the other hand, the Legislature has conferred similarly broad powers on public law enforcement officials—represented by the state's Attorney General and its 58 county district attorneys—to enforce statutory remedies against consumer fraud and other unfair business practices under the UCL. (Bus. & Prof.Code, §§ 17200, 17500; People v. McKale (1979) 25 Cal.3d 626, 159 Cal.Rptr. 811, 602 P.2d 731.) The question presented by this appeal is, when the two schemes collide, which scheme trumps?
Respondent public utility contends that, because the subject matter of appellants' UCL complaint in the superior court is substantially identical to the subject of adjudicatory proceedings currently pending before the commission, the trial court's jurisdiction to proceed is preempted by section 1759 and the cases construing it. The appellant district attorneys counter with the proposition that their law enforcement role under the UCL is of equal dignity with the commission's regulatory jurisdiction and that this "parallel" lawsuit should be permitted to go forward apace, notwithstanding the concurrent administrative proceedings. Neither side cites case or other legal authority squarely for or against appellants' position. We have found none. Although we must decide the case in the absence of authority directly in point, there are standards to which we resort for guidance.
In San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 55 Cal.Rptr.2d 724, 920 P.2d 669 (Covalt), our Supreme Court considered whether a claim for damages and related relief brought against a public utility by homeowners, stemming from fears that nearby electrical high transmission lines exposed them to the threat of cancer, was preempted by section 1759. The utility had set up the statute as a jurisdictional defense, arguing the suit was barred by the commission's statutory jurisdiction to regulate electrical powerlines. The trial court overruled a demurrer to the complaint, but the Court of Appeal reversed. Granting review, the Supreme Court affirmed the appellate ruling ordering the demurrer sustained without leave to amend. (Covalt, supra, 13 Cal.4th at p. 914, 55 Cal.Rptr.2d 724, 920 P.2d 669.) Building on its prior decision in Waters v. Pacific Telephone Co. (1974) 12 Cal.3d 1, 114 Cal.Rptr. 753, 523 P.2d 1161, the Covalt court wrote "[u]nder the Waters rule ... an action for damages against a public utility pursuant to section 2106 is barred by section 1759 not only when an award of damages would directly contravene a specific order or decision of the commission, i.e., when it would `reverse, correct, or annul' that order or decision, but also when an award of damages would simply have the effect of undermining a general supervisory or regulatory policy of the commission, i.e., when it would `hinder' or `frustrate' or `interfere with' or `obstruct' that policy." (Covalt, supra, 13 Cal.4th at p. 918, 55 Cal.Rptr.2d 724, 920 P.2d 669, italics added.)
The opinion in Cellular Plus, Inc. v. Superior Court (1993) 14 Cal.App.4th 1224, 18 Cal.Rptr.2d 308, is an instructive example of circumstances under which judicial jurisdiction is not ousted by section 1759. Plaintiffs alleged price fixing claims against two cellular telephone service companies, asserting an unlawful antitrust conspiracy in violation of the Cartwright Act. (Bus. & Prof.Code, § 16720 et seq.) (See Cellular Plus, Inc. v. Superior Court, supra, 14 Cal.App.4th at pp. 1242-1247, 18 Cal.Rptr.2d 308.) In sustaining defendants' demurrer to the complaint, the trial court ruled the utilities were immune from Cartwright Act liability because of the commission's exclusive jurisdiction over utility ratemaking. Relying on the jurisdictional formulation in Waters, supra, 12 Cal.3d 1, 114 Cal.Rptr. 753, 523 P.2d 1161, the Court of Appeal reversed. "We cannot conceive," it wrote, (Cellular Plus, Inc. v. Superior Court, supra, 14 Cal.App.4th at p. 1246,18 Cal.Rptr.2d 308.)
And in Stepak v. American Tel. & Tel. Co. (1986) 186 Cal.App.3d 633, 231...
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...over UCL claims where proceedings involving the same underlying facts are pending before the PUC. (People ex rel. Orloff v. Pacific Bell (2001) 89 Cal.App.4th 844, 108 Cal.Rptr.2d 48; review granted Sept. 26, 2001, S099131; Pacific Gas & Electric Co. v. Superior Court (2002) 95 Cal.App.4th ......