Qwest Corp. v. Kelly

• Decision Date: 24 October 2002
• Docket Number: No. 2 CA-SA 2002-0046.,2 CA-SA 2002-0046.
• Parties: QWEST CORPORATION, Petitioner, v. Hon. John F. KELLY, Judge of the Superior Court of the State of Arizona, in and for the County of Pima, Respondent, and Mark McMahon, a single man, on behalf of himself and all others similarly situated, Real Party in Interest.
• Court: Arizona Court of Appeals

59 P.3d 789

204 Ariz. 25

QWEST CORPORATION, Petitioner, v. Hon. John F. KELLY, Judge of the Superior Court of the State of Arizona, in and for the County of Pima, Respondent, and Mark McMahon, a single man, on behalf of himself and all others similarly situated, Real Party in Interest.

No. -0046.

Court of Appeals of Arizona, Division 2, Department A.

October 24, 2002.

Fennemore Craig by Timothy Berg, James D. Burgess, Phoenix, and Barney M. Holtzman, Tucson, for Petitioner.

Chandler, Tullar, Udall & Redhair by S. Thomas Chandler, and Law Office of Bruce A. Burke by Bruce A. Burke, Tucson, for Real Party in Interest.

OPINION

FLÓREZ, J.

¶ 1 Real party in interest Mark McMahon, on behalf of himself and others similarly situated, filed a putative class action against Qwest Corporation, the petitioner in this special action, alleging Qwest fraudulently and through misrepresentation had sold him a service he did not need. McMahon and the class he seeks to represent are residential tenants, as opposed to homeowners, who purchased from Qwest monthly "inside wire" maintenance service for the telephone wire leading from the Qwest service outside their respective rental units to the telephone jacks located on the walls within their units.

¶ 2 Qwest moved to dismiss the complaint pursuant to Rule 12(b)(1) and (b)(6), Ariz. R. Civ. P., 16 A.R.S., Pt. 1, contending that the Arizona Corporation Commission (Commission) has exclusive jurisdiction to determine this type of dispute, that the superior court lacked jurisdiction to hear it, and that McMahon's complaint failed to state a claim upon which relief could be granted. The respondent judge denied the motion, and Qwest filed this special action to challenge that ruling. We are asked to consider the scope of the Commission's exclusive jurisdiction as well as the jurisdiction of the superior court to decide claims against a Commission-regulated public utility such as Qwest. We conclude that the respondent judge neither abused his discretion nor exceeded his jurisdiction or legal authority by rejecting Qwest's arguments that the Commission has exclusive jurisdiction over McMahon's claims or that the so-called "filed rate doctrine" bars his claims.

SPECIAL ACTION JURISDICTION

¶ 3 An order denying a motion to dismiss is an interlocutory, nonappealable order. Nataros v. Superior Court, 113 Ariz. 498, 557 P.2d 1055 (1976). See also Northern Propane Gas Co. v. Kipps, 127 Ariz. 522, 525, 622 P.2d 469, 472 (1980) ("[T]he proper procedure for appellate review of a motion to dismiss is through a petition for special action."). Nevertheless, an appellate court should accept jurisdiction of a special action challenging the denial of a motion to dismiss only in limited circumstances, such as when the issue raised is of statewide importance. See Taylor v. Jarrett, 191 Ariz. 550, 959 P.2d 807 (App.1998) (absence of personal jurisdiction and fact that issue presented was one of first impression and of statewide importance constituted circumstances providing exception to general rule that special action jurisdiction should not be accepted to determine propriety of denial of motion to dismiss). Both Qwest and McMahon urge us to accept jurisdiction of this special action, claiming the significant threshold questions raised are purely legal and of statewide importance. See Vo v. Superior Court, 172 Ariz. 195, 836 P.2d 408 (App.1992). We agree and therefore accept jurisdiction of this special action. Cf. U.S. West Communications, Inc. v. Arizona Corp. Comm'n, 201 Ariz. 242, 34 P.3d 351 (2001) (finding questions relating to obligations of Commission mandated by constitution to be legal questions of statewide importance, warranting acceptance of special action jurisdiction); Arizona Corp. Comm'n v. State ex rel. Woods, 171 Ariz. 286, 830 P.2d 807 (1992) (propriety of attorney general's refusal to certify rules proposed by Commission and issue regarding Commission's constitutional power to regulate transactions between public service corporations and their affiliates regarded as urgent, purely legal questions of statewide importance, justifying acceptance of Commission's special action petition). But, because we find, as a matter of law, that the respondent judge correctly denied Qwest's motion to dismiss, we conclude that the respondent judge did not abuse his discretion or exceed his jurisdiction or legal authority. Ariz. R.P. Special Actions 3, 17B A.R.S. Accordingly, we deny special action relief. Cf. Uhlig v. Lindberg, 189 Ariz. 480, 943 P.2d 840 (App.1997) (accepting special action jurisdiction of challenge to superior court's order reversing city court's dismissal of criminal charges, but denying relief).

FACTS AND PROCEDURAL BACKGROUND

¶ 4 Qwest is a corporation that does business in Arizona, selling telephone and related services throughout the state. McMahon, a residential tenant, and other residential tenants purchased from Qwest wire maintenance service for the inside telephone wire of the leased property.¹ McMahon filed a first amended complaint against Qwest in September 2001, alleging, inter alia, that Qwest had committed consumer fraud by concealing material facts regarding the tenants' need for and the value of the wire maintenance service (count one) and by employing deceptive practices in marketing and selling the service to tenants (count two); it had negligently misrepresented information "[i]n the course of arranging for and charging" tenants (count three); and it had violated A.R.S. § 40-361 by charging "more than a just and reasonable fee for inside telephone wire maintenance" (count four). McMahon is seeking damages for Qwest's alleged tortious conduct and violation of the Arizona Consumer Fraud Act, A.R.S. §§ 44-1521 through 1534, as well as injunctive relief, requesting that Qwest be ordered to discontinue its allegedly unlawful practices.

¶ 5 In November 2001, Qwest moved to dismiss the complaint for lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted, pursuant to Rule 12(b)(1) and (b)(6), Ariz. R. Civ. P. Qwest contended that because it is a utility subject generally to regulation by the Commission, and because the wire maintenance plans it had sold are governed by the Competitive Exchange and Network Services Price Cap Tariff, which Qwest filed with the Commission in accordance with A.R.S. § 40-365, the Commission has exclusive and plenary jurisdiction of all matters raised in the complaint, pursuant to article XV, § 3, of the Arizona Constitution. Qwest asserted at the hearing on its motion that the "[C]ommission has the authority to determine to whom services can be offered and by whom they are purchased."

¶ 6 Qwest also argued, both in its motion and at the hearing, that the complaint should be dismissed pursuant to the filed rate doctrine. That federal doctrine, the adoption of which Arizona courts have not yet considered, bars an action in a trial court when that action pertains to a tariff that has been filed with and approved by a regulatory commission. See generally Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922) (establishing filed rate doctrine and holding that when Interstate Commerce Commission has approved railroad rates and found them reasonable and nondiscriminatory, private shipper may not recover damages for loss of benefit of lower rate it would have enjoyed but for conspiracy between carriers fixing rate; finding carrier's published tariff to be the legal rate as between carrier and shipper and that parties' rights cannot be varied or enlarged by contract or tort of carrier, or affected by tort of third party); see also American Tel. & Tel. Co. v. Central Office Tel., Inc., 524 U.S. 214, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998) (discussing filed rate doctrine as bar to tort and contract claims arising out of services addressed by tariff on file with Federal Communications Commission).

¶ 7 McMahon did not contest the dismissal of count four of his first amended complaint, alleging Qwest had violated § 40-361 and had charged him "and all others similarly situated an excessive fee for inside telephone wire maintenance, which is neither a just nor a reasonable fee." But McMahon did oppose the motion as to the remaining counts of consumer fraud and negligent misrepresentation, relying on Campbell v. Mountain States Telephone & Telegraph Co., 120 Ariz. 426, 586 P.2d 987 (App.1978). There, Division One of this court reversed the trial court's grant of a motion to dismiss and held that traditional claims in tort or contract fall within the general jurisdiction of trial courts, rather than the primary, exclusive jurisdiction of the Commission, even though the claims involve a regulated body or enterprise. McMahon also argued that the filed rate doctrine did not support dismissal of counts one through three. He contended the doctrine has no "place in Arizona law," urging the respondent judge to reject it and follow other jurisdictions that have done so, such as California and Washington. McMahon also argued that, given the nature of his claims and the purposes of the filed rate doctrine, there is no reason to apply it here to bar the complaint in any event.

¶ 8 The respondent judge dismissed count four but, relying solely on Campbell, he denied the motion as to counts one through three. This special action followed.

SUBJECT MATTER JURISDICTION

¶ 9 In article XV of the Arizona Constitution, its framers "established the Commission as a separate, popularly-elected branch of state government." State ex rel. Woods, 171 Ariz. at 290, 830 P.2d at 811. Section 3 of article XV specifies the powers and duties of the Commission, providing as follows:

The Corporation Commission shall have full power to, and shall, prescribe just and reasonable classifications to be used and just and reasonable rates and charges to be made and collected, by public service

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