State ex rel. Monsanto Co. v. Public Service Com'n of Missouri

• Decision Date: 16 September 1986
• Docket Number: No. 67903,67903
• Parties: STATE ex rel. MONSANTO COMPANY, et al., Respondents, v. PUBLIC SERVICE COMMISSION OF MISSOURI, et al., Appellants.
• Court: Missouri Supreme Court

Page 791

716 S.W.2d 791

STATE ex rel. MONSANTO COMPANY, et al., Respondents, v. PUBLIC SERVICE COMMISSION OF MISSOURI, et al., Appellants.

No. 67903.

Supreme Court of Missouri En Banc.

Sept. 16, 1986.

Rehearing Denied Oct. 14, 1986.

Michael C. Pendergast, Jefferson City, Robert M. Lee, Donald L. Godiner, St. Louis, Richard W. French, Jefferson City, for appellants.

Robert C. Johnson, Joseph J. Simeone, Mark S. Packer, Francis J. Hruby, St. Louis, for respondents.

DONNELLY, Judge.

Relators, Monsanto Company, Anheuser Busch, Inc., General Motors Corporation, McDonnell Douglas Corporation, and Nooter Corporation ("Industrials"), are a group of large industrial utility customers who oppose the "rate design" under the 1983 tariff of Laclede Gas Company ("Laclede"), which the Public Service Commission ("PSC") approved in rate case No. GR-83-233. "Rate design" is the method used to determine the rates to be charged to individual classes of customers. The Industrials claim that under this rate design they are charged substantially more than the actual cost to serve them.

The Circuit Court of Cole County reversed the rate design determination of the PSC Report and Order in Case No. GR-83-233 under a writ of review brought by the Industrials. The Court of Appeals, Western District, reversed, holding that the challenge to the 1983 tariff was mooted when a 1984 tariff containing the same rate design method came into effect without challenge by the Industrials.

On January 11, 1983, Laclede filed with the PSC revised rate schedules to increase its natural gas service revenues by $24,000,000, to take effect February 10, 1983. The PSC entered an order to suspend the proposed tariff rates while hearings could be held on Laclede's proposal. The Industrials were granted intervention and prefiled testimony and exhibits challenging the rate design. Their challenge was directed only at the rate design and not at the rate increase.

Laclede also prefiled direct testimony and exhibits. Laclede presented testimony as to the reasonableness of the then current rate design and recommended that it should be maintained with the additional revenue proposed to be allocated among every class of customer on the basis of uniform percentage of increase. The Industrials claimed that they were being charged rates substantially in excess of the cost of distribution to them as compared to other customer classes and, therefore, the rate design was inappropriate.

A prehearing conference was held on August 22, 1983. A Stipulation and Agreement was issued and subscribed by all the parties to the proceedings except the Industrials. The nonunanimous Stipulation and Agreement proposed that the PSC authorize Laclede to file tariffs designed to increase revenues by $17,800,000 allocated among all its rate schedules on a uniform percentage of total revenue basis. The Stipulation and Agreement also proposed that the PSC commence a hearing on the rate design issue.

The hearing was held and the principals presented their full cases on the rate design issue. The PSC issued a decision accepting and adopting the Stipulation and Agreement on the issues. The PSC rejected the cost of service study prepared by the Industrials as the basis for rate design and cost allocation. The Industrials were denied a rehearing or reconsideration of the decision. Industrials filed a Petition for Review in the Circuit Court.

While the rate design decision was pending for judicial review in the Circuit Court, Laclede filed tariffs with the PSC designed to increase revenues by another $14,200,000. The issues of this rate case, No. GR-84-161, were ordered by the PSC on September 21, 1984, according to the terms of a unanimous Stipulation and Agreement of all the principals, Industrials included. The issue of rate design under review from the prior case, No. GR-83-233, was a component of rate case No. GR-84-161, and was included in the unanimous Stipulation and Agreement.

The Circuit Court reviewed Case No. GR-83-233 during pendency of Case No. GR-84-161 and held that the PSC's adoption of the nonunanimous Stipulation and Agreement in Case No. GR-83-233 unreasonably limited the hearing, contrary to State ex rel. Fischer v. Public Service Commission, 645 S.W.2d 39 (Mo.App.1982) cert. denied, 464 U.S. 819, 104 S.Ct. 81, 78 L.Ed.2d 91 (1983), and was in violation of due process. The court determined that the rate design was unlawful and unreasonable and not supported by the evidence. The court reversed and remanded for a rehearing of issues respecting the rate design. The court also stayed as to the Industrials the rates approved by the order on condition that the Industrials pay into the court's registry each month the amount of the difference between the rates charged the Industrials prior to the order and the rates charged the Industrials under the new, but suspended, tariffs.

The Court of Appeals reversed and remanded the judgment of the circuit court with directions to dismiss the writ of review in Case No. GR-83-233, to dissolve the order to stay the rates as to the Industrials and to disburse to Laclede the money impounded into the registry of the Circuit Court, and to remand the case to the PSC for reinstatement of decision. The cause was then transferred to this Court under authority of Mo. Const. art. V, § 10.

THE ISSUE OF MOOTNESS

The Court of Appeals held that the Industrials' Stipulation and Agreement to the 1984 rate case, GR-84-161, rendered moot the reasonableness and lawfulness issues of the 1983 rate design approved in rate case GR-83-233. The court found that the issue of rate design under review was a component of rate case GR-84-161 and was "concluded by the unanimous consensus of all the signatories to the [1984] Stipulation and Agreement," Industrials included. The court held that the order entered in case GR-84-161 "not only consummate[d] the rate design issue contested among the principals in the prior decision under review, but also perpetuate[d] the rate design, and that on the unanimous consensus of the principals--the Industrials included." The court stated that as such, the Industrials relinquished controversy with the rate design adopted in GR-83-233 and now acquiesce, by concurring in the 1984 Stipulation and Agreement, that it was, when subsistent, reasonable and lawful. The Court of Appeals concluded that under these circumstances, the reasonableness and lawfulness of the rate design approved by the PSC in Case No. GR-82-233 and challenged by the Industrials had become moot.

The court also concluded that the PSC determination of the rate design issue in the 1984 order took force under § 386.370, RSMo 1978, and as such, superseded the rate design order entered in the case under review. The court stated that the rate of revenue, which became final without contest, vested as a property right in Laclede and that the rate design, although contested, was superseded when the subsequent rate design order went into effect without contest. The court reasoned that with an approved and unchallenged rate design in effect, there would be no way for Laclede to recoup any revenue, now vested as a property right, if distributed to the Industrials because of an erroneous rate design. The court concluded, "Any error the order in Case No. GR-83-233 made against the Industrials is simply no longer subject to redress."

A case on appeal becomes moot when circumstances change so as to alter the position of the parties or subject matter so that the controversy ceases and a decision can grant no relief. Fugel v. Becker, 2 S.W.2d 743, 746 (Mo. banc 1928); Grogan v. Hays, 639 S.W.2d 875, 877 (Mo.App.1982). The court of appeals may take notice of facts outside the record in determining mootness, as did the court in the present case. State ex rel. Donnell v. Searcy, 347 Mo. 1052, 152 S.W.2d 8, 10 (Mo. banc 1941).

The Court of Appeals appears to have based its holding on two separate and distinct points. First, that since the Industrials joined in the unanimous Stipulation and Agreement in 1984, which included the same rate design, they thereby acquiesced that the challenged rate design was reasonable and lawful. Second, since the rate of revenue had vested as a property right in Laclede, and since the rate design in the 1984 order was uncontested, no relief could be granted to the Industrials because Laclede was entitled to the revenue provided in the 1983 order, and the difference could not be recouped from other customers. According to the Court of Appeals, each of these points standing alone could have rendered the case moot.

Although the Industrials agreed to the rate design in the 1984 order, this does not necessarily mean that they acquiesce to a similar rate design from the previous year. In fact, the Industrials expressly stated the opposite in paragraph 5 of the 1984 Stipulation in Case No. GR-84-161, which states:

[N]othing in this Stipulation and Agreement shall have any probative or precedential value therein, nor in any way impair or prejudice the positions of any of the respective parties, in the Pending Appeal, relative to the issues to be resolved therein with respect to Commission Case No. GR-83-233 * * *.

Nothing in this stipulation and Agreement shall in any way affect the disposition of funds as have heretofore been paid into the registry of the Circuit Court of Cole County pursuant to a stay of certain rates in Commission Case No. GR-83-233 as ordered by Judge Byron L. Kinder on May 17, 1984 in connection with the Pending Appeal of Case No. GR-83-233 (hereinafter referred to as the "Funds"), and such Funds shall continue to be maintained in the court registry (and interest shall continue to accrue thereon) until such time as the court shall order the withdrawal of the Funds.

Furthermore, in paragraph 10 the parties stated:

This Stipulation and Agreement represents a negotiated dollar settlement which, if approved by the Commission,...