Satellite System, Inc. v. Birch Telecom of Oklahoma, Inc.
Satellite System, Inc. v. Birch Telecom of Oklahoma, Inc.
Opinion of the Court
I. ISSUE
¶ 1 This matter is before this Court for review of a certified interlocutory order. The issues are: (1) whether Oklahoma has adopted a state filed tariff doctrine, also know as a filed rate doctrine, which would bar actions against a public utility that has filed tariffs with the Oklahoma Corporation Commission (Commission), and (2) whether the limitation-of-liability provision approved as part of the defendant’s tariff acts to limit the defendant’s liability for fraudulent acts to a prorated refund for the service. We find that the plaintiffs fraud claim is not barred by the filed tariff doctrine nor are the plaintiffs damages limited by the tariffs limitation-of-liability provision.
II. FACTS
¶ 2 The alleged facts are as follows. The plaintiff, Satellite Systems, Inc. (SSI), is an Oklahoma corporation which uses telemarketing to sell its satellite systems mostly to customers in rural areas. It uses long distance calling in its telemarketing program. Initially, SSI had “local plus” service with Southwestern Bell Communications (SBC). Local plus service allowed SSI to make intrastate long distance calls for a flat monthly fee rather than on a cost-per-minute basis.
¶ 3 In April of 2001, representatives of Birch Telecom of Oklahoma, Inc. (Birch), an intrastate telecommunications carrier, contacted SSI and induced it to switch its telephone service to Birch. Birch represented that it could provide local plus service to SSI. After SSI changed its phone service to Birch, SSI immediately encountered problems when attempting to use local plus service. Thereafter, Birch informed SSI that it could not provide local plus service. SSI asserts in its brief that when it attempted to revert to SBC, Birch refused to allow SBC access to the telephone lines. SSI alleges that it was damaged by Birch’s fraudulent conduct.
¶4 SSI filed a petition claiming damages for breach of contract and for fraud. The district court dismissed the breach of contract claim but refused to dismiss the fraud claim. The district court certified the order for immediate review. This Court granted the petition for certiorari. At this Court’s invitation, the Commission and the Attorney General of Oklahoma both filed briefs as amicus curiae.
III.FEDERAL FILED TARIFF DOCTRINE
¶ 5 Birch argues that both the contract claim and the fraud claim should have been dismissed because they were barred under the filed tariff doctrine or, in the alternative, under its tariffs limitation-of-liability provision. First recognized in Keogh v. Chicago & Northwestern Railway,
IV.STATE FILED TARIFF DOCTRINE
¶ 6 Because Birch is an intrastate telecommunications company required to file its tar
¶7 Although we agree that these provisions reflect a policy supporting a state filed tariff doctrine, other policies undermine a comprehensive doctrine which would bar a state claim for common law fraud. Title 12, section 2 of the Oklahoma Statutes provides: “The common law, as modified by constitutional and statutory law, judicial decisions and the condition and wants of the people, shall remain in force in aid of the general statutes of Oklahoma_” Thus, “[t]he common law remains in force in this state, unless a statute explicitly provides to the contrary.”
V. .TARIFF’S LIMITATION-OF-LIABILITY PROVISION
¶ 8 Birch attempts to utilize the limitation-of-liability provision to shield it from potential liability for the alleged fraudulent conduct. We do not agree that the limitation-of-liability provision filed as part of Birch’s tariff protects Birch from liability for fraudulent conduct. The tariff provides:
The liability of [Birch] for any claim or loss, expense or damage,-due to any interruption, delay, error, omission, or defect in any service, facility, or transmission provided under this Tariff or any service order shall not exceed the amount of the credit allowance described in Section 2.6 herein. The extension of credit allowances as described in Section 2.6 shall be the sole remedy of Customer and sole liability of the Company for any interruption, delay, error, omission, or defect in any service, facility, or transmission provided under this Tariff or any service order. In no event will [Birch] be liable for any direct, indirect, consequential, incidental, exemplary, punitive, or special damages, or for any lost business, goodwill, income or profits, even if advised of the possibility of the same.
This tariff is consistent with the Commission general rule which limits liability to a prorated refund for service interruptions lasting more than 24 hours and within the control of the telecommunications service provider.
¶ 9 Even though the limitation-of-liability provision does not explicitly address fraudulent conduct, the tariff limits the damages for which Birch may be liable. This provision
¶ 10 The Commission is vested with authority to guard the public’s interest with regard to utility rates.
¶ 11 Oklahoma has a strong legislative public policy against contracts which attempt “to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another.”
“[T]he telephone company may, by contractual stipulation, or by general exchange tariff, rules and regulations applying to all customer’s contracts, which are on file and approved by the Oklahoma Corporation Commission limit the amount of its liability for injuries resulting from omissions and mistakes ... so long as it does not seek immunity from gross negligence or willful misconduct.”
¶ 12 Based on Oklahoma’s public policy as stated in section 212 of title 15, attempts to limit liability for fraud either by tariff or by contract are unreasonable. Because Birch’s tariff attempted to limit its liability for fraud, it was unreasonable, does not have the force of law, and is not binding.
¶ 13 This holding is consistent with the majority of jurisdictions applying state law. Although divided, courts have generally upheld tariff liability limitations for ordinary negligence within a regulatory agency’s authority to adopt reasonable rates for regulated services.
VI. SSI’S FAILURE TO ADDRESS LIMITATION-OF-LIABILITY PROVISION IN TRIAL COURT
¶ 15 Birch asserts that SSI should not be allowed to address the issue of whether the tariff itself limits liability because SSI did not address the issue in its response to the motion to dismiss. We note that the cases cited by Birch in support of this assertion do not involve motions to dismiss.
VII. CONCLUSION
¶ 16 The trial court properly dismissed SSI’s rate-based contract claim based on the filed tariff doctrine and properly denied the motion to dismiss as to the fraud claim. The trial court is affirmed, and the cause remanded for further proceedings.
CERTIFIED INTERLOCUTORY ORDER AFFIRMED; CAUSE REMANDED FOR FURTHER PROCEEDINGS.
. 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922).
. Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 20 (2nd Cir. 1994).
. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981).
. Wegoland, 27 F.3d at 19.
. Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 760 F.2d 1347 (2nd Cir. 1985), aff'g 476 U.S. 409, 106 S.Ct. 1922, 90 L.Ed.2d 413 (1986).
. Rendí L. Mann-Stadt, Note, Limitation of Liability for Interruption of Service for Regulated Telephone Companies: An Outmoded Protection?, 1993 U. Ill. L.Rev. 629.
. Okla. Stat. tit. 17, § 139.103 (2002); see Pink Dot, Inc. v. Teleport Communications Group, 89 Cal.App.4th 407, 107 Cal.Rptr.2d 392, 398 (2001).
. Okla. Stat. tit. 17, §§ 139.102(24), 139.103 (2001); Okla. Admin. Code § 165:55-5-1; 47 U.S.C. § 203.
. Okla. Admin. Code 165:55-5-1.
. Wagoner v. Bennett, 1991 OK 70, 814 P.2d 476.
. Wright v. Grove Sun Newspaper Co., Inc., 1994 OK 37, ¶ 5, 873 P.2d 983, 987; Hull v. Sun Refining and Marketing Co., 1989 OK 168, 789 P.2d 1272.
. Wright, 1994 OK 37 at 115, 873 P.¿d at 987.
. Okla. Admin. Code 165:55-9-6.
. Okla. Const. Art. 9, § 18; Okla. Stat. tit. 17, § 152 (2002); Public Service Co. v. State ex rel. Corp. Comm’n, 1997 OK 145, ¶ 10, 948 P.2d 713, 717.
. Okla. Const, art. 9, § 18; Okla. Stat. tit. 17, § 152 (2002); Public Service Co., 1997 OK 145 at ¶ 10, 948 P.2d at 717; 1 Kenneth Culp Davis, Administrative Law Treatise § 5.03 at 299 (1st ed. 1958) (hereinafter K.C. Davis); 1 Kenneth Culp Davis, Administrative Law Treatise § 6.3 at 233-34 (3rd ed. 1994).
. Henry v. Corporation Comm’n, 1990 OK 103, ¶3 n. 10, 825 P.2d 1262, 1270 n. 10 (Opala, J„ concurring specially); K.C. Davis, supra, § 5.03 at 299.
. Henry, 1990 OK 103 at ¶ 3 n. 10, 825 P.2d at 1270 n. 10; K.C. Davis, supra, § 5.03 at 299.
. SeeHenry, 1990 OK 103 at ¶3 n. 10, 825 P.2d at 1270 n. 10; K.C. Davis, supra, § 5.03 at 299.
. Okla. Stat. tít 15, § 212 (2002).
. 279 F.Supp. 712 (W.D.Okla. 1967).
. Id. at 714.
. See Henry, 1990 OK 103 at ¶ 13 n. 10, 825 P.2d at 1270 n. 10; K.C. Davis, supra, § 5.03 at 299.
. Bulbman, Inc. v. Nevada Bell, 108 Nev. 105, 825 P.2d 588, 590 (Nev. 1992); Kunin, Unilateral Tariff Exculpation in the Era of Competitive Telecommunications, 41 Cath U.L.R. 907, 915—16 n. 45 (1922).
. Holman v. Southwestern Bell Tel. Co., 358 F.Supp. 727, 728 (D.C.Kan. 1973); Robinson Ins. & Real Estate v. Southwestern Bell Tel. Co., 366 F.Supp. 307, 311 (W.D.Ark. 1973); Wheeler Stuckey Inc. v. Southwestern Bell Tel. Co., 279 F.Supp. 712, 714-15 (W.D.Okla. 1967); Sommer v. Mountain States Tel. & Tel. Co., 21 Ariz.App. 385, 519 P.2d 874, 876 (1974); Pink Dot, 107 Cal.Rptr.2d at 398; Southern Bell Tel. & Tel. Co. v. Invenchek, Inc., 130 Ga.App. 798, 204 S.E.2d 457 (Ga.Ct.App. 1974); Burdick v. Southwestern Bell Tel. Co., 9 Kan.App.2d 182, 675 P.2d 922, 925 (1984); Danisco Ingredients United States, Inc. v. Kansas City Power & Light Co., 999
. 12 Cal.3d 1, 114 Cal.Rptr. 753, 523 P.2d 1161, 1164(1974).
. Wilkinson v. New England Tel. & Tel. Co., 327 Mass. 132, 97 N.E.2d 413, 416 (1951).
. Id.
. Id.
. Mothershed v. Mothershed, 1985 OK 23, 701 P.2d 405; Stillwater Industrial Foundation, Inc. v. State Bd. of Regents of Okla. Ag. and Mechanical Colleges, 1975 OK 127, 541 P.2d 173; Frey v. Independence Fire and Casualty Co., 1985 OK 25, 698 P.2d 17.
. Patel v. OMH Medical Ctr., Inc., 1999 OK 33, ¶ 43 n. 62, 987 P.2d 1185, 1202 n. 62.
Concurring Opinion
concurring in result:
¶ 1 I concur in the result reached by the majority opinion. I write separately only because I would expressly adopt the filed
If 2 Satellite Systems, Inc. (SSI) sued Birch Telecom of Oklahoma, Inc. (Birch). SSI asserted two theories of liability, breach of contract and fraudulent inducement. Birch moved to dismiss both theories on the ground that both are precluded by the filed tariff doctrine. The trial court agreed that the breach of contract theory is precluded by the filed tariff doctrine but allowed the fraud theory to go forward.
¶ 3 The trial court certified for appeal its interlocutory order denying Birch’s motion to dismiss the fraud theory. The majority opinion affirms the trial court, holding that “even if a state filed rate doctrine has been adopted in Oklahoma, it does not bar a common law fraud claim.”'
¶4 The majority opinion neither adopts nor rejects the filed tariff doctrine. Rather, it creates an exception to a doctrine it has not adopted. Without this court explicitly adopting the doctrine, the question of whether to create an exception to the doctrine is purely hypothetical.
¶ 5 It has long been the rule that we do not give advisory opinions or answer hypothetical questions. Dank v. Benson, 2000 OK 40, 5 P.3d 1088, 1091; Keating v. Johnson, 1996 OK 61, 918 P.2d 51, 61; Application of Fun Country Development Authority, 1977 OK 138, 566 P.2d 1167; City of Shawnee v. Taylor, 1943 OK 11, 132 P.2d 950; Shinn v. Oklahoma City, 1939 OK 29, 87 P.2d 136 (1939). For this reason, I would expressly adopt the filed tariff doctrine and then recognize the fraud exception to the doctrine.
Concurring Opinion
concurring in the court’s opinion.
¶ 1 The qualifiedly concurring justice invites the court, once again, to expand its inquiry beyond the issues necessary to decide. Mindful as I am of the time-honored principle that appellate courts may not extend their pronouncements beyond the strict framework of matters that must be resolved, I join the court in declining his tempting offer. Myers v. Lashley, 2002 OK 14, 44 P.3d 553, 561. See Patterson v. Beall, 2000 OK 92, 19 P.3d 839, 849-50 (Opala, J., dissenting), for my warning against “hyper-global” pronouncements.
Reference
- Full Case Name
- SATELLITE SYSTEM, INC., Plaintiffs/Appellee, v. BIRCH TELECOM OF OKLAHOMA, INC., Defendant/Appellant
- Cited By
- 29 cases
- Status
- Published