South Central Bell Telephone Co. v. Louisiana Public Service Commission , 256 La. 497 ( 1970 )

BARHAM, Justice.

-South Central Bell Telephone Company filed a petition in the district court for injunctive relief against the Louisiana Public Service Commission. The petition was dismissed on exceptions, and we granted certiorari. For a clearer exposition of the present case we shall outline certain proceedings before the Public Service Commission although we are not directly concerned with those proceedings in this particular suit.

Basic intrastate telephone rates for South Central Bell Telephone Company, the plaintiff, were fixed by the Louisiana Public Service Commission under its constitutional authority on May 5, 1960. Except for minor adjustments the Company has operated under these rates to date. On December 27, 1968, the Company filed with the Commission an application for a permanent increase in its rates which would provide an increase of about 11 per cent in its revenues, or a $17,000,000.00 increase annually. The application additionally requested that the Commission under its Rule N(l) (b) authorize an emergency interim increase. Three supplemental applications were subsequently filed which had the total effect of asking an 8j4 per cent return on the Company’s investment so as to provide both an interim and a permanent increase in annual revenue of about 13 per cent, or approximately $24,000,000.00.¹

On March 5, 1969, the Company asked that a hearing date on its permanent rate application be set for July. The hearing was actually fixed for September 16 and 17, 1969, and was limited to a presentation of the Company’s evidence in chief in support of its application for a permanent increase. Because much of the Company’s evidence was introduced by way of affidavits and depositions, the Commission took this evidence for study before subsequent cross-examination of the Company’s witnesses and presentation of opposition evidence to the application.

On November 20, 1969, the Commission requested further information of the Company, some of which was furnished on December 23, 1969, and the remainder on January 15, 1970. On January 22, 1970, the Commission issued a press release stating that it would set a hearing to commence February 12 on the Company’s application for interim rates as well as for the purpose of cross-examining witnesses whose evidence had been presented at the September hearing on the case in chief, and formal notice of this hearing was given on January 26. An order was issued by the Commission on February 13, 1970, denying the interim rates, but no appeal has been taken from this order and it is not before us in the present matter.

On January 22, 1970, before the Commission’s determination on the interim rate application, the Company by petition filed in the Nineteenth Judicial District Court sought to have that court enjoin the Commission from enforcing present rates and charges and from interfering with the Company’s setting and collecting rates and charges according to the tariff attached to the petition. Although the prayer for injunctive relief was stated in the negative, compliance with the Company’s prayer would require the court to approve and order an interim rate increase.

The court record before us, then, consists of the Company’s petition; the applications filed with the Commission and attached documents, affidavits, exhibits, the testimony of the Company’s general forecast and rate supervisor, the proposed schedule of rates and charges and bond; the direct examination of two witnesses who had appeared before the Commission at its September hearing; the exhibits requested by the Commission and furnished by the Company; exceptions of prescription, improper use of summary procedure, prematurity, and lis pendens filed by the Commission to this suit for injunctive relief; and the two stipulations of the parties agreeing to certain facts and to introducing certain evidence if the petition for preliminai-y injunction was to be considered on the merits. According to the minutes of the Nineteenth Judicial District Court of February 2, 1970, the exceptions were argued, submitted, and taken under advisement, evidence was introduced on the rule for preliminary injunction, and the matter was taken under advisement. On February 17, 1970, the district judge filed written reasons in the record, stating that the exception of prematurity and the exception of lis pendens were maintained.

The Company’s petition for injunction which sought to invoke the jurisdiction of the trial court alleged that the rate of return permitted by the Commission was confiscatory, in violation of the Constitutions of Louisiana and the United States. The trial court refused to exercise its jurisdiction, reasoning that the Company had not exhausted its remedies before the Public Service Commission and that the suit was therefore premature, and that the relief sought was identical with that sought from the Commission and that therefore the exception of lis pendens was good.

There are several procedural grounds upon which we might possibly dispose of this matter. Apparently the trial court found that the factual allegations in the petition did not support the general allegation of confiscation, and that the suit concerned only matters within the jurisdiction of the Commission and was premature. Should we conclude, to the contrary, that the Company’s petition under its charge of denial of constitutional protection by reason of confiscation does allege a cause of action which may be determined only by a court, we could remand to the district court and require it to make a determination on the merits. We might even recall this writ as improvidently granted since-the supervisory jurisdiction of the Court of Appeal was not invoked before application was made to us.² The majority of this, court, however, is of the opinion that the-matter is of such public importance that we should decide the case on its merits on the record before us, rather than make a. disposition of it upon technical grounds-which would only cause delay.

Under Article 6, Sections 3-9, of the Constitution of Louisiana the Public Service Commission has exclusive jurisdiction in the first instance to fix or change any rate to be charged by a public utility, and the courts are without power to fix or change rates until that Commission has acted. Nevertheless, a violation of constitutional rights, such as confiscation of property, would require a court to exercise the necessary authority to grant relief from the constitutional abuse.

The Company’s contention, simply stated, is that, principally because of the increased cost for acquisition of capital, present rates and charges for services yield a rate of return so inadequate as to be confiscatory, and that it must be allowed an immediate rate increase.

Admittedly, the Company in the first half of 1969 received a rate of return of 5.87 per cent on its average net investment. The record shows that the Company sold an issue of debt capital at a cost of 8.53 per cent in November, 1969. However, a simple comparison of these two rates is not decisive of the legal question before us.

We need not, indeed we cannot, determine what are valid permanent rates and charges. We can determine only whether a continued imposition of present tariffs would constitute confiscation of the Company’s property. Although it may be that the Company should receive a higher rate of return on its investment and is entitled to have the Commission fix rates and charges which will produce such a return, the record does not justify a finding that the present rate of return is so inadequate as to be confiscatory. Furthermore, there is nothing in the record which convinces this court that it would be warranted in allowing the extraordinary remedy of fixing rates by injunction as an exception to the specific constitutional provisions defining the Public Service Commission’s powers. In addition, the plaintiff has not convinced us that it will suffer irreparable injury if it is forced to await a contradictory hearing and final determination by the Commission as to the justified rate of return and the tariffs necessary to establish that rate of return.

We reiterate: We are not here concerned with a determination of reasonable telephone rates and charges or with a valid yield of return on the Company’s investment for its operations. We pass only upon the question of whether the Commission’s action or inaction amounts to a constitutional violation — that is, confiscation of the Company’s property. We hold that the Company has failed to establish that the Commission’s enforcement of present rates is tantamount to confiscation.

In the petition, in brief, and in argument the Company implies that the Commission has been dilatory in holding hearings on this matter, and that the delays were intentionally damaging to and discriminating against the Company. However, this is not presented to us for determination. If there is truth in this implication, the Company may seek the court’s supervision under a proper petition for such relief as it feels necessary.

For the reasons stated the suit is dismissed at plaintiff’s costs.

1 . The Company’s first amended application, filed September 4, 1969, sought a rate of return of about 83A per cent, which would provide an increase in annual revenue of about 13 per cent. The second supplemental application, filed October 14, asked for an immediate authorization to increase rates and charges on .an interim basis to provide earnings of at least 7 per cent pending final determination of permanent rates. The third supplemental petition, filed December 15, contained three attachments: A schedule of proposed rates to produce a fair return on the Comj)any’s investment during this interim; a proposed bond for indemnification in the event a rate increase was allowed in the interim but disallowed in whole or in part upon final determination; and an affidavit or “testimony” of the Company’s general forecast and rate supervisor, setting forth that the proposed interim rate would produce an 8% percent rate of return on net investment and provide an annual revenue increase of $24,000,000.00.

2 . The instant ease is obviously not one “ * * * in -which orders of the Public Service Commission are in contest * * *» of which the Supreme Court is given appellate jurisdiction under Article 7, Section 10(3), of the Constitution. Under Article 7, Section 29, the Courts of Appeal have supervisory jurisdiction, subject io the Supreme Court's general supervisory jurisdiction, in those cases therein enumerated of which they are granted appellate jurisdiction.