South-West Utilities, Inc. v. South Central Bell Telephone Co.

• Decision Date: 20 September 1976
• Docket Number: No. 10786,SOUTH-WEST,10786
• Citation: 339 So.2d 425
• Parties: 1977-1 Trade Cases P 61,303 UTILITIES, INC. v. SOUTH CENTRAL BELL TELEPHONE COMPANY et al.
• Court: Court of Appeal of Louisiana — District of US

Page 425

339 So.2d 425

1977-1 Trade Cases P 61,303

SOUTH-WEST UTILITIES, INC. v. SOUTH CENTRAL BELL TELEPHONE COMPANY et al.

No. 10786.

Court of Appeal of Louisiana, First Circuit.

Sept. 20, 1976.

Rehearing Denied Nov. 15, 1976.

Paul H. Due , Baton Rouge, of counsel, for South-West Utilities.

Victor A. Sachse, Baton Rouge, Herschel L. Abbott, Jr., New Orleans, of counsel for South Central Bell and Murray C. Fincher.

William Sneirson, New York City, of counsel for Western Elec. Co. Clarence M. Dunnaville, New York City, of counsel for Am. Tel. & Tel. co.

Thomas W. Moore, Birmingham, Ronald W. Tweedel, James W. Hammett, New Orleans, of counsel for South Central Bell.

Before SARTAIN, CHIASSON and EDWARDS, JJ.

SARTAIN, Judge.

Plaintiff instituted this appeal from judgment of the trial court sustaining defendants' plea of prematurity directed at the jurisdiction of the court to entertain plaintiff's claim without prior resort to the Louisiana Public Service Commission (hereinafter referred to as the Commission.) We reverse for reasons stated herein .

The petition filed by plaintiff Southwest Utilities initiating this action shows plaintiff to be an interconnect company engaged in the business of providing office communications equipment and service to persons in the State of Louisiana. This equipment is designed to be interconnected with the telecommunications network owned and operated by defendants, South Central Telephone Company and American Telephone & Telegraph Co.

Allegations contained in the petition aver that defendants, South Central, American Telephone & Telegraph Co., and Western Electric, a subsidiary of American Telephone & Telegraph which manufactures equipment in competition with that of plaintiff, '. . . engaged in and continued to engage in the practice of entering into contracts, agreements, conspiracies, and/or combinations in restraint of trade in the State of Louisiana and also of monopolization, attempts to monopolize and combinations and/or conspiracies to monopolize trade or commerce in the State of Louisiana, all in violation of the antitrust laws of the State of Louisiana as set forth in Revised Statutes, La.R.S. 51:121--122, which violations have resulted in injury to the public and to plaintiff in the conduct of its business .' The alleged details of the above described activity may be summarized as follows: (a) Defendants have lowered prices at which their office communications equipment is offered while at the same time raising prices of other services to all customers, thereby eliminating competition with other companies that provide office communications equipment and at the same time recovering amounts by which it purportedly reduced the cost of certain equipment. Defendants allegedly accomplished this by raising line charges which all of its customers must pay, instituting variable service charges on the above mentioned equipment, and requiring the installation and payment of interface devices by interconnection customers. (b) Defendants had acted unfairly to discourage interconnection by maintaining a policy of delay, inconvenience and improper installation and/or maintenance of the above mentioned interface equipment and by representing to plaintiff's customers that equipment problems emanated from plaintiff's equipment when in fact it was defendants' own equipment from which problems originated. It is further alleged that defendants have promulgated through advertising and direct representation to potential customers of plaintiff that plaintiff would not remain in business and thus would not be able to service what it sells or furnishes to its customers. (c) Defendants have engaged in sham representations to regulatory agencies to obtain the institution of anticompetitive tariffs.

Plaintiffs allege that due to these practices by defendant it has been effectively precluded from most of the product market and has suffered severe economic injury to its business in excess of two and one-half million dollars. Plaintiff seeks treble damages pursuant to R.S. 51:137 in an amount of $7,879,914.00.

Defendant South Central Bell filed an exception of prematurity urging that the court was without jurisdiction to consider these matters in an initial determination. Defendant Bell argues that inasmuch as its rates and the quality of its services are the gravamen of plaintiff's complaints, such matters must first be referred to the Louisiana Public Service Commission under the regulatory powers granted the Commission pursuant to Art. 4, § 21(B) of the Louisiana Constitution of 1974. Defendants, American Telephone & Telegraph Co., Western Electric and Murray Fincher, alleged vice president of defendant Bell, also filed similar exceptions noting therein that while they themselves were not regulated by the Commission defendant Bell was and therefore argued that action taken against them absent a determination made upon the rates and services of defendant Bell by the Commission would be premature.

The trial judge held in his written reasons for judgment that with the exception of allegations pertaining to unfair advertising the issue presented was the reasonableness and fairness of Bell's rates and charges that were approved and controlled by the Public Service Commission. He concluded that by virtue of Art. 6, Sec. 4 of the Constitution of 1921 and Art. 4, Sec. 21 of the Louisiana Constitution of 1974 exclusive original jurisdiction in matters where the issue presented is the propriety and reasonableness of rates and services is vested in the Public Service Commission. The court thus dismissed the complaint as to all allegations except that of unfair advertising which the court felt required no administrative expertise and which was not within the scope of the Commission's jurisdiction.

The question presented herein is the applicability vel non of the doctrine of primary jurisdiction. This doctrine has been described by the U.S. Supreme Court in Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (1952), as

'. . . a principle, now firmly established, that in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over. This is so even though the facts after they have been appraised by specialized competence serve as a premise for legal consequences to be judicially defined. Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary resort for ascertaining and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure.'

342 U.S. 570, 574--575, 72 S.Ct. 494.

It is said by one author to be a determination of who shall make the initial finding where two potential jurisdictions exist. Davis, Administrative Law Test, 3rd Ed., 1972, Chap. 19, Sec. 1901 at p. 373. The doctrine is not be confused with the concept of 'exhaustion of administrative remedies' which covers the procedural point at which judicial review may be sought on administrative decisions. One author draws the distinction as follows:

'In all (situations where the application of primary jurisdiction is relevant) there is at some point a claim enforceable by original judicial action, that is to say, a claim which in whole or in part is tried and enforced by judicial action. It is this that distinguishes the doctrine from the doctrine which demands exhaustion of administrative remedies before seeking judicial interference. In the exhaustion situation the claim is enforceable by administrative action alone; the judiciary is being invoked to correct or quash the administrative action. The exhaustion doctrine where applicable forbids judicial supervision of the administrative process until the latter has been exhausted.'

Jaffe, 'Primary Jurisdiction Reconsidered. The Antitrust Laws.' 102 Univ. of Penn.Law Rev. 577, 579 (1954).

One of two major considerations undertaken by the courts in applying the doctrine of primary jurisdiction is the need for uniformity in various areas of regulated industry, particularly in the area of rates. In the case of Texas & Pacific Railway Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553, 1907, the case to which has been attributed the inception of the doctrine of primary jurisdiction, ¹ the court confronted the situation presented by the Interstate Commerce Act which provided that shippers injured by unreasonable rates could pursue their claims before the I.C.C. or in the courts. In holding the agency to be the only proper initial forum in such disputes, in spite of the statute, the court stated:

'. . . If, without previous action by the Commission, power might be exerted by courts and juries generally to determine the reasonableness of an established rate, it would follow that, unless all courts reached an identical conclusion, a uniform standard of rates in the future would be impossible, as the standard would fluctuate and vary dependent upon the divergent conclusions reached as to reasonableness by the various courts called upon to consider the subject as an original question. Indeed, the recognition of such a right is wholly inconsistent with the administrative power conferred upon the Commission, and with the duty, which the statute casts upon that body, of seeing to it that the statutory requirement as to uniformity and equality of rates is observed. Equally obvious is it that the existence of such a power in the courts, independent of prior action by the Commission, would lead to favoritism, to the enforcement of one rate in one jurisdiction and a different one in another, would destroy the...