Pacific Lightnet, Inc. v. Time Warner Telecom, Inc.Â

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Electronically Filed
Supreme Court
SCWC-28948
18-DEC-2013
09:00 AM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
---o0o—
PACIFIC LIGHTNET, INC.,
Petitioner/Plaintiff-Appellant/Cross-Appellee
vs.
TIME WARNER TELECOM, INC., and
TIME WARNER TELECOM OF HAWAI#I L.P.,
Respondents/Defendants-Appellees/Cross-Appellants.
SCWC-28948
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(ICA NOS. 28948 and 29105; CIVIL NOS. 05-1-0428 AND 03-1-2557)
December 18, 2013
RECKTENWALD, C.J., NAKAYAMA, ACOBA, McKENNA, AND POLLACK, JJ.
OPINION OF THE COURT BY ACOBA, J.
We hold that, first, the circuit court of the first
circuit (the court) erred in invoking the primary jurisdiction
doctrine to dismiss the instant case. Second, inasmuch as the
filed-rate doctrine applies, the court erred in failing to
instruct the jury that Petitioner/Plaintiff-Appellant/Cross-
Appellee Wavecom Solutions Corporation, formerly known as Pacific
Lightnet, Inc. (PLNI) could not recover for any claims involving
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charges not filed within 120 days of receipt of billing, in
accordance with the Hawai#i Public Utilities Commission (PUC) and
Federal Communications Commission (FCC) filed tariffs.
Accordingly, we affirm in part and vacate in part the
February 21, 2013 judgment of the Intermediate Court of Appeals
(ICA), filed pursuant to its January 25, 2013 Memorandum Opinion,
vacate the court’s October 23, 2007 order granting the Motion to
Dismiss for Lack of Subject Matter Jurisdiction filed by
Respondent/Defendants-Appellees/Cross-Appellants Time Warner
Telecom, Inc. and Time Warner Telecom of Hawai#i L.P. (Time
Warner) on September 4, 2007, and vacate in part the court’s
December 12, 2007 judgment.
I. Background
The instant appeal involves a dispute between two
telecommunications carriers. Time Warner is a telecommunications
carrier that provides voice, internet and data services. As part
of these services, Time Warner provides “call termination
services,” which is the ability for customers of one carrier to
make and complete calls to customers of Time Warner. The dispute
in this case relates to call termination services that were
allegedly provided by Time Warner.
The claims in this case consist of two separate billing
disputes between the carriers over the call termination services.
The two claims are called collectively, “Feature Group D claims.”
First, PLNI claims that Time Warner owes it a credit for certain
past charges. Second, PLNI contests certain charges by Time
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Warner for services that it allegedly never received. The
background facts relevant to these two claims follow.
A. GST’s Sale to Time Warner
GST Telecommunication, Inc. (GST) was a
telecommunications company that filed for Chapter 11 bankruptcy
on May 17, 2000. In September 2000, Time Warner agreed to
purchase certain assets of GST in bankruptcy, including GST’s
mainland telephone network. The acquisition was made pursuant to
an asset purchase agreement between Time Warner and GST, dated
September 11, 2000. According to Time Warner, the asset purchase
agreement gave it “all Carrier Identification Codes (a.k.a.
CICs).” CICs are used to identify telephone calls associated
with a certain carrier.1
Time Warner did not purchase all of GST’s assets, but
rather, GST retained for later sale the assets of GST Hawaii’s
operations, including all rights to what the asset purchase
agreement called “Feature Group D” accounts. Time Warner
maintains that although it acquired the Carrier Identification
Codes from GST, GST recognized that it was still responsible to
pay Time Warner the outstanding balance under certain CICs for
services that GST customers had previously received.
B. GST’s Sale to PLNI
In March 2001, TM Communications Hawai#i (TM) agreed to
purchase, inter alia, the remainder of the GST assets in Hawai#i
1
CICs presumably entitle their holder to collect payment for
certain call termination services.
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that were not previously sold to Time Warner. PLNI is a
subsidiary of TM.2 The asset purchase agreement between GST and
TM, dated March 9, 2001 stated that TM had purchased:
[A]ll of the [GST’s] rights, title, and interests in and to
the Business, including, without limitation, in and to all
the assets, properties, rights, accounts receivable and
Assumed Contracts of [GST] and claims of [GST] related to
the Business . . . .
C. Customer Investigation Forms and Dispute Submissions Filed
with Time Warner
On September 18, 2001, PLNI and/or its predecessor GST
Hawai#i filed a “Customer Investigation Form” with Time Warner
requesting that Time Warner investigate and resolve PLNI’s claim
for disputed invoice amounts relating to “Feature Group D”
services. The Customer Investigation Form listed the “Disputed
Amount[s]” as $30,760.16, “All Invoices $200,000[,]” and “All
Invoices[.]”
D. Assignment by TM to PLNI
TM assigned its rights in the asset purchase agreement
with GST to PLNI in October 2001. According to Time Warner,
under PLNI’s assumed asset purchase agreement, PLNI was informed
of Time Warner’s purchase of GST assets, as well as which assets
were covered by PLNI’s purchase. Time Warner states that Section
1.2 of the asset purchase agreement “provided that [PLNI] was not
acquiring any assets that had been conveyed to [Time Warner],”
and that this meant that “excluded from PLNI’s purchase were ‘all
2
The parties do not make any arguments based on the parent-
subsidiary relationship between TM and PLNI, and as noted infra, TM eventually
assigned its rights in the asset purchase agreement to PLNI.
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Carrier Identification Codes’ that Time Warner had acquired.”
Time Warner asserts that, pursuant to the plain language of
PLNI’s assumed asset purchase agreement, PLNI did not acquire
CICs 5756, 5478 or any other Carrier Identification Codes.
E. Time Warner’s Alleged Resolution of Dispute with GST
On June 1, 2002, according to Time Warner, Time Warner
and GST resolved the billing dispute over pre-October 2001 call
termination services received. Time Warner states that, “[b]ased
on proper certification from GST, [Time Warner] credited GST’s
account $327,714.03 for end user taxes that should not have been
charged, and GST paid the remaining balance due and owing.” Time
Warner notes that “as [Time Warner] was still providing
transition services for GST under the asset purchase agreement
between Time Warner and GST, including housing certain GST
divisions [such as] GST’s billing services, the notice of the
$327,714.03 credit was sent to GST, via Time Warner’s street
address.”
According to Time Warner, on August 7, 2002, any
dispute regarding who owned certain Carrier Identification Codes
was resolved by GST when it assigned CIC 5478 to PLNI via Time
Warner’s Consent and Agreement to Assign Service. Time Warner
asserts that CIC 5756, as well as all other Carrier
Identification Codes remained with Time Warner pursuant to the
terms of the original asset purchase agreement executed between
GST and Time Warner.
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II. Circuit Court Proceedings
A. Pre-Trial Proceedings
On December 30, 2003, PLNI filed a complaint and motion
for preliminary injunction in the court against Time Warner,
alleging, inter alia, that:
34. On September 18, 2001, [PLNI] filed a dispute on
defendants’ customer-investigation form for erroneous
billings and payments concerning Feature Group D services
that defendants never provided to either [PLNI] or GST. As
of December 4, 2003, defendants indicated they were still
processing this claim, which, according to [PLNI’s]
calculation, will result in a $230,760.16 credit in [PLNI’s]
favor.
. . . .
41. [Time Warner] ha[s] wrongfully mis-billed [PLNI] for
services defendants never provided, and are liable to [PLNI]
for damages in an amount that exceeds $200,000, but which
amount will be more precisely proved at trial.
PLNI additionally asked for “money damages based on [Time
Warner’s] wrongful actions in . . . © mis-billing [PLNI] for
Feature Group D services [Time Warner] never provided.”
On June 22, 2005, PLNI filed with Time Warner the first
of another series of Billing Dispute Submissions relating to
disputed invoices. Specifically, PLNI claimed that it was billed
on several account numbers for Feature Group D services that it
did not receive.
On November 13, 2006, PLNI filed its pretrial statement
stating, inter alia, that Time Warner “misbilled [PLNI] for other
telecommunications services” and that Time Warner was “liable to
[PLNI] for damages in an amount that exceeds $200,000.” March
20, 2007, at the court’s direction, both parties filed motions
for summary judgment regarding some of the claims in PLNI’s
complaint. This did not include the Feature Group D claims. The
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court entered summary judgment in favor of Time Warner.
According to Time Warner, the parties’ action then focused on the
remaining claims, which at this point Time Warner believed did
not include the Feature Group D claims.
On July 16, 2007, Time Warner filed a motion seeking,
among other things, dismissal of the Feature Group D claims on
the basis that they had been resolved. On July 27, 2007, PLNI
filed its opposition, alleging that the Feature Group D claims
had not been “satisfactorily resolved.” On August 15, 2007, the
court issued an order denying Time Warner’s motion in part, and
allowing PLNI to proceed with its Feature Group D claims.
On August 20, 2007, PLNI submitted to Time Warner a
proposed Short Impartial Statement of the Case, which provided,
in relevant part that:
[PLNI] asserts claims against [Time Warner] for billing
[PLNI] approximately $138,000 to date for a
telecommunications switching service called Feature Group D,
which [Time Warner] purported to supply to [PLNI], but which
[PLNI] has not received from [Time Warner]. [Time Warner]
denies having improperly billed [PLNI].
Based on the court’s rulings up to this point, PLNI asserted that
the only remaining dispute for trial was the Feature Group D
claim. On August 27, 2007, Time Warner filed its motion in
limine, seeking to exclude evidence regarding elements of the
Feature Group D dispute that had not been asserted in the
December 30, 2003 complaint and of which [Time Warner] alleged it
had not been given adequate notice (Motion in Limine).
On August 30, 2007, Time Warner filed an Answer to
[PLNI’]s original complaint (Answer). This answer asserted a
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number of affirmative defenses, including that “[PLNI’s] claims
are barred by the filed tariff doctrine.”
The court denied Time Warner’s Motion in Limine on
August 31, 2007, which, Time Warner points out, was the last
business day before the start of trial.
Also on August 31, 2007, PLNI filed a Motion to Strike
Time Warner’s Answer (Motion to Strike). PLNI’s memorandum in
support of its Motion to Strike stated that Time Warner had,
“[w]ithout first moving for leave of the [c]ourt,” filed its
answer “three years and eight months after [PLNI] filed its
complaint and two business days before the start of
trial . . . .”
On September 4, 2007, Time Warner submitted a motion to
dismiss for lack of subject matter jurisdiction on the basis that
the only remaining issues in the case, the Feature Group D
claims, were of a technical nature requiring the expertise of the
PUC.
B. Jury Trial
A jury trial commenced the same day. On September 11,
2007, over Time Warner’s objection, the jury was provided with a
special verdict form addressing contract issues.3 Time Warner
3
Time Warner’s Amended Proposed Special Verdict Form stated as
follows, in pertinent part:
Question No. 1. Is Pacific LightNet entitled to GST
Hawaii’s claim for the billing dispute submitted by GST
Hawai#i to Time Warner Telecom on September 18, 2001?
Yes ________ No ________
(continued...)
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points out that the court refused to give the jury instructions
on the law of tariffs, which it claims govern Feature Group D
issues.4
3
(...continued)
If you answered Question No. 1 “Yes”, then go on to
answer Question No. 2. If you answered Question No. 1 “No”,
do not answer any further questions in Part A, but go on to
Part B.
4
Time Warner requested that the court provide the jury with a
number of supplemental jury instructions. These included, inter alia:
Telecommunications Rules - Fair Compensation for Call
Termination
Telecommunications carriers must be compensated on a
fair basis for terminating calls from another carrier’s
customers. This includes the reasonable and necessary
costs, as prescribed by law under tariff, of the
telecommunications carrier in providing the services in
question.
Telecommunications Rules - Compensation for Termination
Services Received
Pacific LightNet, Inc. is required by law to pay Time
Warner Telecom for call termination services that Pacific
LightNet, Inc. and its customers received.
Telecommunications Rules - Tariff Compliance
Telecommunications carriers are required to file
tariffs with the Federal Communications Commission and the
Hawai#i Public Utilities Commission. These filed tariffs
govern the telecommunications carriers’ services, rates, and
charges. Telecommunications carriers and their customers
are required to comply with these tariffs.
Telecommunications Rules - Tariff Content
Time Warner Telecom has filed tariffs with the Federal
Communications Commission and the Hawai#i Public Utilities
Commission as required by law. Time Warner Telecom’s
tariffs govern the rates, terms, and condictions for call
termination of other carrier’s customers.
Telecommunications Rules - Tariff Compliance
Pacific Lightnet, Inc., as a telecommunications
carrier who receives call termination services from Time
Warner Telecom, is required by law to comply with the terms
of Time Warner Telecom’s tariffs.
Tariff - Billing Dispute Procedures
By law, any objections to billed charges must be
reported to Time Warner Telecom within 120 days of the
receipt of the billing, or such claims are waived. All
claims objecting to billing must include supporting
documentation.
(continued...)
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The record indicates that the jurors were given, inter
alia, the following instruction:
Instruction No. 13: Telecommunications Rules - Tariff
Compliance[ 5]
Telecommunications carriers are required to file
tariffs with the Federal Communications Commission and the
Hawai#i Public Utilities Commission. These filed tariffs
govern the telecommunications carriers’ services, rates, and
charges. Telecommunications carriers and their customers
are required to comply with these tariffs. [Handwritten as
follows] The tariffs are both contracts and the law.
The tariffs were introduced into evidence as Trial Exhibit D-2
and D-3.
The jury returned a verdict in favor of PLNI in the
amount of $327,714.03 in damages resulting from the credit that
was allegedly owed to PLNI. With respect to the overcharge
claim, the jury found that there was a breach of contract,
4
(...continued)
If the claim is timely filed and supporting
documentation is provided, Time Warner Telecom is required
to make adjustments to the invoices, but only where
circumstances exist which reasonably indicate that such
adjustments are appropriate.
Tariff - Limitations on Liability of the Carrier
By law, Time Warner Telecom cannot be held liable for
any claims arising under its provision of services,
including billing disputes over call termination services,
that are due to any causes beyond the control of Time Warner
Telecom.
Telecommunications Rules - Tariff Cannot Be Altered
The terms within Time Warner Telecom’s tariffs cannot
be altered without prior approval from the Federal
Communications Commission and the Hawai#i Public Utilities
Commission
Telecommunications Rules - Tariff Cannot be Altered
If you make an award of any kind to Pacific LightNet,
Inc., your award cannot alter, amend, or contradict the
terms of Time Warner Telecom’s filed tariffs.
5
A handwritten note on the instruction indicates that this
instruction was given, as modified, over the objection of Time Warner.
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awarded $1.00 nominal damages for breach of contract, and
determined that PLNI’s outstanding bills owed to Time Warner for
Feature Group D services should be reduced by $118,109.58. The
jury special verdict form stated as follows:
Question No. 1. Did Plaintiff Pacific Lightnet, Inc.
prove breach of contract by Defendants regarding the billing
dispute submitted on September 18, 2001? 6
Yes ___X____ No ________
If you answered Question No. 1 “Yes”, then go on to
answer Question No. 2, if you answered Question No. 1 “No”,
go on to Question 3.
Question No. 2. What are the damages for this breach
of contract?
$ 327,714.03
Go on to Question No. 3.
Question No. 3. Did Plaintiff Pacific Lightnet, Inc.
prove breach of contract by Defendants regarding Feature
Group D billings for any period from October 11, 2001,
through the present? 7
Yes ___X____ No ________
If you answered Question No. 3 “Yes”, then go on to
answer Question No. 4. If you answered Question No. 3 “No”,
do not answer any further questions. Please have the
Foreperson sign the Special Verdict Form and call the
Bailiff.
Question No. 4. What are the damages for this breach
of contract?
$ 1
If you awarded more than $1 in Question No. 4, sign
the Special Verdict Form and call the Baliff. If you
awarded $1, go on to Question No. 5.
Question No. 5. If you awarded $1 in Question No. 4,
state whether Plaintiff Pacific Lightnet, Inc. proved that
6
Questions 1 and 2 relate to the credits that PLNI was allegedly
due, but that Time Warner contended had already been resolved with GST.
7
Questions 3, 4, and 5 relate to claims that PLNI was erroneously
charged for services that it allegedly never received, in breach of the
contract between PLNI and Time Warner. The special jury verdict form
indicates that the jury found that there was a breach of contract, awarded $1
as nominal damages for the breach, and found that PLNI had been overcharged by
$118,109.58.
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the pending bills should be reduced and, if so, in what
amount.
No ________ Yes ___X____
$ 118,109.58
Please have the Foreperson sign the Special Verdict
Form and Call the Baliff.
DATED: Honolulu, Hawai#i, 9/13/07.
C. Post-Trial Proceedings
On September 20, 2007, the court heard Time Warner’s
motion to dismiss for lack of subject matter jurisdiction that
had been submitted prior to trial, on September 4, 2007. At the
September 20, 2007 hearing, the court stated near the conclusion
of the hearing that it would grant the motion and stay the effect
of the verdict:
So what I’ll say is in granting the motion on the basis of
primary jurisdiction, I’m staying the effect of the verdict
but we’re going to get this up because we’re not going to
wait around. That would be ridiculous so that you could
take it up as part of the judgment. That’s my -- I don’t
think -- even if I’m wrong as to how the mechanics of the
judgment should look, they’ll tell me that too. But I just
want it not to be a matter that languishes here for no good
reason and then have to do a 54(b) cert on the summary
judgment and send that up. That would be extremely
inefficient, don’t you agree? I mean, I’m assuming you’re
going to appeal the summary judgment?
(Emphasis added.)
The court granted the motion to dismiss for lack of
subject matter jurisdiction on October 23, 2007. The jury
verdict was stayed until further order of the court.
On October 25, 2007, the court entered an order
granting in part and denying in part PLNI’s Motion to Strike Time
Warner’s Answer. In the order, the court stated that “[t]he
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Motion is granted with respect to [PLNI’s] request that all
affirmative defenses asserted by [Time Warner] in its Answer to
[PLNI’s] Verified Complaint . . . filed December 30, 2003 . . . ,
except for the defense of lack of subject matter jurisdiction,
are hereby stricken.”8 (Emphases added.)
On November 2, 2007, PLNI filed a Motion for
Reconsideration of Order Granting Time Warner’s Motion to Dismiss
for Lack of Subject Matter Jurisdiction Based on the Primary
Jurisdiction Doctrine of the PUC (Motion for Reconsideration of
Primary Jurisdiction). In its memorandum in support of the
Motion for Reconsideration of Primary Jurisdiction, PLNI argued
that the court should stay the proceedings instead of dismissing
the Feature Group D Claims. The court denied PLNI’s Motion for
Reconsideration of Primary Jurisdiction on December 4, 2007.
On December 12, 2007, the court entered its final
judgment, stating that the Feature Group D Claims were dismissed
on the basis of the primary jurisdiction doctrine, but the
enforcement of the jury verdict was stayed until further order of
the court. The judgment stated, in relevant part:
On October 23, 2007, the [c]ourt issued its Order Granting
Defendants [Time Warner]’s Motion to Dismiss for Lack of
Subject Matter Jurisdiction Based Upon the Primary
Jurisdiction Doctrine of the Public Utilities Commission,
Filed September 5, 2007. By this Order, the [c]ourt
dismissed all of the Feature Group D Claims on the basis of
the primary jurisdiction doctrine. Due to the dismissal of
all of the Feature Group D Claims, the [c]ourt stayed
8
During trial, it appears that the judge allowed testimony into
evidence that was relevant to at least one of these defenses, but the court
did not provide instructions to the jury on the defenses.
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enforcement of the jury verdict in favor of PLNI on the Feature
Group D claims entered on September 13, 2007 until further order
of the [c]ourt.
(Emphasis added.)9
On December 20, 2007, Time Warner filed a Motion for
Judgment as a Matter of Law or Alternatively for New Trial (JMOL
Motion). The JMOL Motion stated that, “[t]his Motion is made out
of an abundance of caution to preserve [Time Warner]’s rights to
appeal the underlying jury verdict, despite the fact that final
judgment was ultimately entered in [Time Warner]’s favor based on
the primary jurisdiction doctrine and the summary judgment
orders, among other things.” (Emphasis added.) Time Warner
alleged in its JMOL Motion that the “the jury verdict exceeded
the bounds of law under the filed tariff doctrine and the law of
assignments, and the jury was not properly instructed on certain
terms including the affirmative defenses.” Time Warner argued
that the striking of the affirmative defenses from its Answer
contributed to the incomplete jury instructions and permitted the
jury to return a verdict that violated the law of the tariffs,
and additionally, violated the law of assignments.
On January 14, 2008 PLNI filed its Notice of Appeal
with the ICA. On April 14, 2008, Time Warner filed its Notice of
Cross-Appeal.
9
Based on the transcript of September 20, 2007 hearing on the
motion to dismiss, it appears that the court was unsure as to the appropriate
language for the judgment. The judge stated, “even if I’m wrong as to how the
mechanics of the judgment should look, [the appellate court] will tell me that
too.”
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On January 31, 2008, the court held a hearing on the
JMOL Motion. The court stated that the JMOL Motion would be
dismissed for lack of jurisdiction, because the court had found
that it lacked jurisdiction over the Feature Group D claims:
THE COURT: [Counsel for Time Warner], these are your
motions. The first one is for judgment as a matter of law
or alternatively for a new trial, and that’s with respect to
what we called the --
[Counsel for Time Warner]: Feature Group D.
THE COURT: Correct, which is what we had the trial
for --
[Counsel for Time Warner]: That’s correct, Your
Honor.
THE COURT: -- which I later ruled over objection that
there was primary jurisdiction in the PUC, and, therefore,
the claim would be dismissed for lack of jurisdiction. So
since you are not asking me to change that ruling -- are
you?
[Counsel for Time Warner]: I am not, Your Honor.
THE COURT: And, therefore, this motion is dismissed
for lack of jurisdiction.
. . . .
THE COURT: But if I didn’t have jurisdiction, I don’t
understand how I could possibly grant a new trial or
judgment as a matter of law. It’s perfectly okay that you
brought this motion and that it’s been briefed because if
I’m wrong on primary jurisdiction, then the judgment would
enter consistent with the prevailing party on the verdict
and nothing [is] wrong with you preserving your rights
through this motion.
. . . .
THE COURT: But, otherwise, I don’t see how I could
possibly be internally consistent by ruling on the motion.
In accordance with its oral ruling at the hearing, on March 7,
2008, the court filed its order denying Time Warner’s JMOL
Motion.
III. ICA Appeal
On appeal to the ICA, PLNI asked, inter alia,10 whether
the court erred in dismissing the Feature Group D claims on the
10
PLNI raised a total of five points of error in its appeal to the
ICA, however, only the one listed is relevant on certiorari to this court, and
thus, discussion of PLNI’s other points of error is omitted.
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grounds that primary jurisdiction lay with the PUC, even though
the jury had already rendered a verdict in favor of PLNI. PLNI
argued that the primary jurisdiction doctrine did not warrant
dismissal of the case by the court.
On cross-appeal to the ICA, Time Warner alleged, inter
alia, that “[t]he jury verdict should be vacated because it is
contrary to the law, and consequently, the [] [c]ourt erred by
denying [Time Warner’s] motion for judgment as a matter of
law.”11 Time Warner maintained that “[g]ranting judgment as a
matter of law/new trial is appropriate when the jury verdict is
contrary to the law.”
Oral argument was had on June 22, 2011, and the ICA
issued its Memorandum Opinion on January 25, 2013. Pacific
Lightnet, Inc. v. Time Warner Telecom, Inc., Nos. 28948, 29105,
2013 WL 310149, at *1 (Haw. App. Jan 25, 2013). PLNI’s points of
error on appeal to this court relate solely to the Feature Group
D claims, and thus, the ICA’s holding only as to those claims is
discussed. See id. at *5.
The ICA reviewed de novo the question of whether the
court properly determined that the PUC had primary jurisdiction.
Id. It noted that in Chun v. Employees’ Retirement System, 73
Haw. 9, 828 P.2d 260 (1992), this court “treated primary
jurisdiction similar to the question of subject matter
11
The remaining points of error alleged by Time Warner in its
Opening Brief are not relevant to this appeal.
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jurisdiction.” Id. (citing Chun, 73 Haw. at 14, 828 P.2d at
263). The ICA therefore reasoned that because questions of
subject matter jurisdiction are reviewed de novo, that standard
of review should also be applied to questions of primary
jurisdiction. Id. It stated, however, that “if it is determined
that primary jurisdiction applies such that [PLNI’s] claims
should first be addressed in the PUC, we will review for abuse of
discretion the [] court’s decision to dismiss those claims rather
than staying the [] court proceedings on those claims.” Id.
(citing Fratinardo v. Emps.’ Ret. Sys., 121 Hawai#i 462, 469, 220
P.3d 1043, 1050 (App. 2009)).
The ICA first considered whether the court properly
applied the primary jurisdiction doctrine, concluding that,
“[u]nder the regulatory scheme set forth in [Hawai#i Revised
Statutes (HRS)] Chapter 269 and the applicable rules pertaining
to the PUC, the issues involved in resolving the Feature Group D
claims have been placed within the special competence of the
PUC.”12 Pacific Lightnet, 2013 WL 310149, at *7. It noted that
“because the [] court properly recognized the primary
jurisdiction of the PUC, the [] court was mandated to suspend the
judicial proceedings as to the Feature Group D claims.” Id. at
*9.
12
The ICA also reasoned that the issues of fact in the case required
the PUC’s technical expertise. Pacific Lightnet, 2013 WL 310149, at *7.
Although the ICA characterized this as the “filed-rate doctrine”, id., this
consideration would be relevant to the question of primary jurisdiction, as
indicated infra.
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The ICA additionally concluded that the jury verdict
must be vacated pursuant to the filed-rate doctrine. Id. at *9.
It reasoned that because the tariff provisions, including the
120-day requirement, cannot be waived by the carrier, and Time
Warner “was entitled to assert under the tariffs that certain
portions of the Feature Group D claims were barred under the 120-
day requirement[,]” an issue which the jury did not consider, the
jury verdict violated the filed-rate doctrine. Id. at *9-10.
Then, the ICA considered whether the court’s remedy of
dismissal was appropriate, holding that the court did not abuse
its discretion in dismissing, rather than staying, the Feature
Group D claims. Id. at *11-12. The ICA clarified that “the
dismissal is without prejudice to PLNI asserting the Feature
Group D claims in the PUC.” Id. at *12.
IV. Application for Certiorari
In its Application, PLNI asks first, whether “the ICA
err[ed] in affirming [the court’s] application of the primary
jurisdiction doctrine post-trial in deference to the [PUC], where
the PUC’s statute does not place ‘special competence’ over
billing disputes in the agency and the jury was capable of
rendering a special verdict based on the factual evidence at
trial?”. (Emphasis added.) Second, PLNI inquires whether “the
ICA err[ed] in ruling that the jury’s verdict must be vacated
because it violated the filed-rate doctrine, where the jury was
instructed on the terms and effect of the tariff by [the court],
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and the rates, terms and reasonableness of the tariff were never
challenged?” (Emphasis added.)13
With respect to its first point of error, PLNI’s
Application argues that “there is no specific statutory mandate
that directs that the PUC must handle billing disputes which may
arise between a carrier and its customers.” (Emphasis in
original.) On this point, PLNI maintains that the jury could
resolve the factual issues in this case without need for the
PUC’s technical expertise.
As to its second point of error, PLNI argues that this
court’s decision in Balthazar v. Verizon Hawai#i, Inc., 109
Hawai#i 69, 123 P.3d 194 (2005), recognized that the filed-rate
doctrine does not always apply where tariffs are implicated.
PLNI claims that “the [] court, and the jury as trier of fact,
could and did in fact correctly interpret and enforce the
tariff.” PLNI contends that “there was no danger that the jury
was unaware of the 120-day provision in the tariff.” In PLNI’s
view, the difference of $118,109.08 between what was actually
awarded and PLNI’s requested amount of damages “shows that the
jury may have discounted the amount sought based on the 120-day
rule in the tariff[,]” and thus, “[t]he verdict should stand.”
In response, Time Warner argues that dismissal pursuant
to the primary jurisdiction doctrine is appropriate because the
13
Although Time Warner filed a cross-appeal with the ICA challenging
the validity of the jury’s verdict, Time Warner did not appeal the ICA’s
decision to this court, since as noted supra, the ICA held that the jury’s
verdict must be vacated. See Pacific Lightnet, 2013 WL 310149, at *10.
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Feature Group D claims required resolution of issues that were
“‘placed within the special competence of an administrative
body[,]’” (quoting Kona Old Hawaiian Trails Grp. v. Lyman, 69
Haw. 81, 93, 734 P.2d 161, 162 (1987)), and that the jury verdict
violates the filed-rate doctrine and should be vacated. Time
Warner avers, inter alia, that the time limitations within which
to dispute a carrier’s billing must be adhered to, including the
120-day limitation in the PUC’s tariffs, and that the jury
verdict did not consider this rule, because the jury was not
instructed on the law of tariffs.
In its Reply, PLNI emphasizes that there was no need
for a technical analysis of call records or carrier
identification codes to establish a foundation for PLNI’s right
to the credit and that the PUC does not have special statutory
competence in resolving billing disputes. Further, it
characterizes Time Warner’s objections to the Feature Group D
claims verdict as essentially an assault on the competence of the
jury to weigh the evidence and make credibility determinations.
Finally, it avers that the jury properly took the tariffs into
consideration because the jury was instructed that the tariffs
provided the applicable law and had the actual tariffs, including
the 120-day limit provision, as trial exhibits.
V. Overview of the Primary Jurisdiction and Filed-Rate Doctrines
The instant case implicates two doctrines that both
relate to conflicts involving public utilities -- the doctrine of
primary jurisdiction and the filed-rate doctrine. Although the
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two doctrines often arise in the same cases, they are conceptually
distinct and each doctrine is applied differently.
A. Primary Jurisdiction Doctrine
The doctrine of primary jurisdiction is generally
applicable to all areas where administrative agencies exercise
expertise. In Kona Old, this court stated that “[p]rimary
jurisdiction . . . comes into play whenever enforcement of the
claim requires the resolution of issues which, under the
regulatory scheme have been placed within the special competence
of an administrative body[.]” 69 Hawai#i at 93, 734 P.2d at 168
(emphasis added) (internal quotation marks omitted) (quoting
United States v. Western Pac. R.R., 352 U.S. 59, 63-64 (1956)).
Primary jurisdiction is “conceptually analogous” to the
doctrine of the exhaustion of administrative remedies. See Aaron
J. Lockwood, Note, The Primary Jurisdiction Doctrine: Competing
Standards of Appellate Review, 64 Wash. & Lee L. Rev. 707, 739
(2007) (hereinafter Lockwood, Competing Standards of Appellate
Review); see also Goya Foods, Inc. v. Tropicana Products, Inc.,
846 F.2d 848, 851 (1988) (“The doctrine of primary jurisdiction
represents a version of the administrative exhaustion requirement
. . . .”). As this court noted in Kona Old, “‘[b]oth are
essentially doctrines of comity between courts and agencies.’”
69 Haw. at 93, 734 P.2d at 168 (quoting B. Schwartz,
Administrative Law § 8.23, at 485 (2d ed. 1984)). However, it is
important to note that unlike the doctrine of exhaustion, the
doctrine of primary jurisdiction does not require a determination
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that the court lacks jurisdiction over the matter. Compare
Hawai#i Blind Vendors Ass’n v. Dep’t of Human Servs., 71 Haw.
367, 371, 791 P.2d 1261, 1264 (1990) (concluding that the agency
was the appropriate forum for an initial decision in Rudolph-
Sheppard Vending Stand Act claims under the doctrine of primary
jurisdiction) with Tamashiro v. Dep’t of Human Servs., 112
Hawai#i 388, 411-12, 146 P.3d 103, 126-27 (2006) (overruling
Hawai#i Blind Vendors to the extent that it held that the circuit
court had any original subject matter jurisdiction over Rudolph-
Sheppard Vending Stand Act claims); see also, Tamashiro, 112
Hawai#i at 429-30, 125 P.3d at 143-45 (Pollack, J., dissenting)
(“This court’s conclusion that the circuit court had concurrent
jurisdiction to decide the issues raised in Hawai#i Blind Vendors
was unequivocally a determination of subject matter jurisdiction
over the case.”).
Instead, primary jurisdiction presumes that the claim
at issue is originally cognizable by both the court and the
agency. Aged Hawaiians v. Hawaiian Homes Comm’n, 78 Hawai#i 192,
202, 891 P.2d 279, 289 (1995). In contrast, applying the
doctrine of exhaustion requires that the claim be only cognizable
before the agency. Kona Old, 69 Haw. 93, 734 P.2d 169; See
Lockwood, Competing Standards of Appellate Review, supra, at 742.
Thus, the court must first determine whether the agency has
exclusive original jurisdiction, in which case, the doctrine of
exhaustion would apply. If not, and the court finds that it does
possess jurisdiction over the matter, the court can then decide
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if it is appropriate to apply the doctrine of primary
jurisdiction. See Lockwood, Competing Standards of Appellate
Review, supra, at 750-51.
The impetus behind the primary jurisdiction doctrine is
two-fold. First, as noted, it is designed to address cases
“‘raising issues of fact not within the conventional experience
of judges or cases requiring the exercise of administrative
discretion[.]’” Kona Old, 69 Haw. at 93, 734 P.2d at 169
(quoting Far East Conference v. U.S., 342 U.S. 570, 574 (1952)).
In Far East Conference, for example, the United States Supreme
Court was deciding “whether, in a suit brought by the United
States to enjoin a dual-rate system enforced in concert by
steamship carriers engaged in foreign trade, a District Court can
pass on the merits of the complaint before the Federal Maritime
Board has passed upon the question.” 342 U.S. at 573.
The District Court in Far East Conference had invoked
the primary jurisdiction doctrine, reasoning that “[w]hether a
given agreement among carriers should be held to contravene the
act may depend upon a consideration of economic relations, of
facts peculiar to the business or its history, of competitive
conditions in respect to the shipping of foreign countries, and
of other relevant circumstances, generally unfamiliar to a
judicial tribunal, but well understood by an administrative body
. . . .” The Court upheld the District Court’s use of the
doctrine. Id. at 573-74.
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Second, “[t]he primary jurisdiction doctrine is
designed to promote uniformity and consistency in the regulatory
process.” Aged Hawaiians, 78 Hawai#i at 202, 891 P.2d at 289
(citing Western Pac. R.R., 352 U.S. at 63-64). The goal of
ensuring regulatory uniformity and consistency though the primary
jurisdiction doctrine is evinced by the fact that the doctrine
arose in the context of interstate transportation carrier rates,
see Texas & Pacific Railway Co. v. Abilene Cotton Oil Co., 204
U.S. 426 (1907), and has been applied in Hawai#i cases in a
number of other contexts where disparate decisions on a
particular issue could undermine an administrative agency’s
authority and a uniform regulatory scheme. See Chun, 73 Haw. at
11, 828 P.2d at 260 (primary jurisdiction doctrine invoked with
respect to implementation of statutory scheme governing employee
retirement benefits); Hawai#i Blind Vendors, 71 Haw. at 370, 791
P.2d at 1264 (application of the Department of Human Services’
primary jurisdiction to decide the circumstances under which the
Department of Transportation could give priority treatment to a
non-profit that employed handicapped individuals); Jou v. Nat’l
Ins. Co., 114 Hawai#i at 128, 157 P.3d at 567 (applying the
primary jurisdiction doctrine to a claim that an insurance
carrier had acted in bad faith). Thus, in deciding whether the
primary jurisdiction doctrine applies, a judge should consider
whether various courts addressing the same regulatory issue would
reach different results and if those disparities would impact an
overall regulatory scheme.
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B. Filed-Rate Doctrine
The filed-rate doctrine is also known as the filed-
tariff doctrine. Balthazar, 109 Hawai#i at 72, 123 P.3d at 198.
Essentially, “it prohibits a regulated entity from charging rates
for its services that differ from the rates filed with the
appropriate federal regulatory agency.” Id. (citing Ark. La. Gas
Co. v. Hall, 453 U.S. 571, 577 (1981)). In Balthazar, this court
provided a brief history of the doctrine, noting that the twin
aims of the filed-rate doctrine were to “(1) prevent[] service or
rate discrimination among consumers and (2) prevent[] courts from
intruding upon the rate-making authority of federal agencies.”
Id. at 73, 123 P.3d at 198 (citing Bryan v. BellSouth
Communications, Inc., 377 F.3d 424, 429 (4th Cir. 2004)).
Although originally a federal doctrine, this court has held that
the principles of the filed-rate doctrine apply where rates are
filed with a state regulatory agency. Id. (citing Molokoa
Village Dev. Co. v. Kauai Elec. Co., 60 Haw. 582, 587, 593 P.2d
375, 379 (1979) (stating that the rule that prevents carriers
from being bound under equitable doctrines to their undercharges
“applies equally to other utilities”)).
In the telecommunications sector, regulated entities
have their rates and terms defined in tariffs filed with the
state PUC and the FCC. See Balthazar, 109 Hawai#i at 74, 123
P.3d at 199. “Generally, tariffs are ‘public documents setting
forth services being offered; rates and charges with respect to
services; and governing rules, regulations, and practices
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relating to those services.’” In re Waikoloa Sanitary Sewer Co.,
109 Hawai#i 263, 271, 125 P.3d 484, 492 (2005) (brackets omitted)
(quoting Adams v. Northern Illinois Gas Co., 808 N.E.2d 1248,
1263 (2004)).
Pursuant to the filed-rate doctrine, “filed tariffs
govern a utility’s relationship with its customers and have the
force and effect of law until suspended or set aside.” Id.
(emphasis added) (quoting Southwestern Elec. Power Co. v. Grant,
73 S.W.3d 211, 217 (2002)). Balthazar noted that “neither the
tort of the carrier nor the existence of a contract will work to
vary or enlarge the rights defined in a tariff.” 109 Hawai#i at
73, 123 P.3d at 198 (citation omitted).
It is well-established that “‘the filed-rate
doctrine. . . does not preclude courts from interpreting the
provisions of a tariff and enforcing that tariff,’ Brown [v. MCI
WorldCom Network Services, Inc.], 277 F.3d [1166,] 1171-72 [(9th
Cir. 2002)], and that ‘if the filed-rate doctrine were to bar a
court from interpreting and enforcing the provisions of a tariff,
that doctrine would render meaningless the provisions of the
[Federal Communications Act] allowing plaintiffs redress in
federal court,’ id. at 1172.” Waikoloa, 109 Hawai#i at 272, 125
P.3d at 493 (original brackets omitted).
The filed-rate or filed-tariff doctrine does preclude
certain types of claims, however. This court has held that
claims that “directly attack the validity or reasonableness of
rates or terms defined in a tariff” are barred, see Balthazar,
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109 Hawai#i at 74, 81, 123 P.3d at 199, 206, and claims that seek
damages are barred “if an award of damages ‘would have the effect
of imposing any rate other than that reflected in the filed
tariff[,]’” id. at 81, 123 P.3d at 206 (quoting Dreamscape
Design, Inc. v. Affinity Network, Inc., 414 F.3d 665, 669 (7th
Cir. 2005)). Despite these limitations, it appears that so long
as a claim only “ask[s] the courts to interpret the filed rates,
or to enforce the filed rates” the claim will not be barred by
the filed-rate doctrine. Id. (citations and internal quotation
marks omitted).
This court has applied the filed-rate doctrine in three
prior cases, Molokoa Village, Balthazar, and Waikoloa, which are
briefly summarized as follows for illustrative purposes. In
Molokoa Village, the plaintiff alleged that the defendant, the
electric utility serving Kauai, was required to reimburse to the
plaintiff the costs of installation of an underground electric
system in a real estate development, as agreed upon by the
parties. 60 Haw. at 583, 593 P.2d at 377. The defendant alleged
that although the parties had agreed, it was unable to lawfully
reimburse the full agreed-upon costs because of the limitations
provided in its tariff. Id. at 584, 593 P.2d at 377.
According to the terms of the tariff, the tariff barred
payment of the agreed-upon claim, unless the additional expense
of the underground installation was for “engineering and
operating reasons.” Id. at 588, 593 P.2d at 380. This court
construed the defendant’s position as asserting the defense of
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“illegality,” and therefore concluded that the defendant carried
the burden of proof to show that the reimbursement would violate
the tariff limitation. Id. In addressing the merits, Molokoa
Village held that “[t]he facts found by the trial court suggest
that the [plaintiff] may have had engineering and operating
reasons for some portion of [the] underground installation and
thus do not negate the existence of such reasons for assuming the
entire cost of the system.” Id. at 589, 593 P.2d at 380. Since
the defendant did not affirmatively establish that there were no
engineering and operating reasons for the additional cost, this
court held that a reimbursement of the agreed-upon amount was
required. Id. Thus, in Molokoa Village, the filed-rate doctrine
was analyzed as a defense to a contract claim.
In Balthazar, Verizon had represented to consumers that
they must pay a fee in order to receive “Touch Calling” services.
109 Hawai#i at 71, 123 P.3d at 196. However, identical telephone
services were provided to customers who did not pay the fee. Id.
at 70, 123 P.3d at 195. The plaintiffs filed a complaint against
Verizon, claiming that Verizon had engaged in false, unfair,
and/or deceptive trade practices by misrepresenting to consumers
that they had to pay an additional fee. Id. at 71, 123 P.3d at
195. The relevant tariff provisions provided that a charge was
to be paid for the Touch Calling service, because the PUC had
ordered that the existing rate structure be kept intact despite
changes in the relevant technology, to enable the recovery of
costs for other services. Id.
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Verizon filed a motion to dismiss the complaint,
arguing that plaintiff’s complaint was barred by both the filed-
rate and primary jurisdiction doctrines. Id. The trial court
denied Verizon’s motion to dismiss, but later granted a motion
for summary judgment filed by Verizon on the ground that the
claims were barred by the filed-rate doctrine. Id. at 70, 123
P.3d at 195. This court held that the claims were barred because
(1) knowledge of the tariff terms, including the fees for Touch
tone calling services was imputed to consumers under the filed-
rate doctrine, id. at 75, 123 P.3d at 200, (2) despite the
alleged misrepresentations, the plaintiffs incurred no injury
because they had paid the filed rate for the Touch Calling
service under the terms of the tariff, id. at 80, 123 P.3d at
205, and (3) payment to the plaintiffs to reimburse the Touch
Calling fee by Verizon or by the court in the form of damages
would have the effect of imposing a lower rate for Touch Calling
fees than the rate prescribed by the tariff, in violation of the
filed-rate doctrine, id. at 80-81, 123 P.3d at 205-06. Thus, in
Balthazar, this court interpreted and enforced the terms of the
tariff in reaching its result.
In Waikoloa, this court considered, inter alia, whether
contributions made by real estate developers to a public utility
to build new wastewater collection and treatment facilities fell
within the purview of a filed tariff. 109 Hawai#i at 270, 125
P.3d at 491. The appellant had appealed from a final order of
the PUC requiring that it refund certain contributions. Id.
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This court concluded that the PUC had erred in requiring that the
appellant provide a refund to the developers, because the
appellant’s filed tariff stated that “[developers] shall be
required to pay a non-refundable contribution in aid of
construction of the Company.” Id. at 272, 125 P.3d at 493
(emphasis in original). Waikoloa interpreted the tariff under
the principles of statutory interpretation, and held that because
the tariff language explicitly prohibited refunds, the payments
were not refundable, regardless of whether the limitations on
refunds furthered the public policy behind the filed-rate
doctrine. Id. at 272 n.10, 273, 125 P.3d at 493 n.10, 494.
VI. Subject Matter Jurisdiction
A.
As noted, in this case, the court dismissed the Feature
Group D claims in an order titled “Order Granting [Time Warner]’s
Motion to Dismiss for Lack of Subject Matter Jurisdiction Based
on the Primary Jurisdiction of the Public Utilities Commission
Filed September 5, 2007.”14 However, it must be noted that the
doctrine of primary jurisdiction is distinct from subject matter
jurisdiction for analytical purposes. As explained above, under
the doctrine of primary jurisdiction, the court and the agency
14
Neither party argues that the court lacked subject matter
jurisdiction, and the ICA apparently assumed that the court did have subject
matter jurisdiction. However, it is noted that “[i]f the parties do not raise
the issue [of lack of jurisdiction over the subject matter], a court sua
sponte will, for unless jurisdiction of the court over the subject matter
exists, any judgment rendered is invalid.” Tamashiro, 112 Hawai#i at 398, 146
P.3d at 113 (citation omitted). In this case, there was no statute that would
deprive the court of jurisdiction over the Feature Group D claims. Therefore,
the court had subject matter jurisdiction in the instant case.
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share concurrent jurisdiction over the matter. See, e.g., Chun,
73 Haw. at 12, 828 P.2d at 262; Hawai#i Blind Vendors, 71 Haw. at
371, 791 P.2d at 1264; Kona Old, 69 Haw. at 93, 734 P.2d at 169.
See also, Reiter v. Cooper, 507 U.S. 258, 268 (1993) (“Referral
of the issue to the administrative agency does not deprive the
court of jurisdiction[.]”).
Although this court, in Chun, seems to suggest that
primary jurisdiction is part of subject matter jurisdiction, the
language of Chun’s holding is that “[t]he stay of proceedings
pending administrative review involves a jurisdictional issue
which can never be waived by any party at any time.” 73 Hawai#i
at 14, 828 P.2d at 263 (citation omitted). Thus, primary
jurisdiction is “a jurisdictional issue,” id., although it does
not directly implicate a court’s subject matter jurisdiction.
See also, Tamashiro, 112 Hawai#i at 430, 146 P.3d at 145
(Pollack, J., dissenting) (noting that a court’s conclusion that
it had concurrent jurisdiction with an agency over particular
matter means that the court has already decided that it possesses
subject matter jurisdiction).
This distinction is reflected in the discretion given
to courts to decide whether to dismiss or stay litigation after a
finding that the primary jurisdiction doctrine applies, as
discussed infra. Fratinardo, 121 Hawai#i at 469, 220 P.3d at
1050. If primary jurisdiction was equivalent to subject matter
jurisdiction, then dismissal would be the only option available
to courts. See Riethbrock v. Lange, 128 Hawai#i 1, 11, 282 P.3d
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543, 553 (2012) (“A judgment rendered by a circuit court without
subject matter jurisdiction is void.”) (citation omitted).
B.
First, it must be determined whether the court had
subject matter jurisdiction over the Feature Group D claims. The
ICA noted that there is no dispute over whether the Feature Group
D claims were “originally cognizable” in the court, and analyzed
the case only with respect to whether the court had primary
jurisdiction over the matter. Pacific Lightnet, Inc., 2013 WL
310149, at *6, n.6. However, this court must address subject
matter jurisdiction to first determine whether the claims were
cognizable in circuit court.
“The existence of jurisdiction is a question of law that
[this court] review[s] de novo under the right/wrong
standard.” Amantiad v. Odum, 90 Hawai#i 152, 158, 977 P.2d
160, 166 (1999) (quoting Lester v. Rapp, 85 Hawai#i 2358,
241, 942 P.2d 502, 505 (1977)). “[I]f a court lacks
jurisdiction over the subject matter of a proceeding, any
judgment rendered in that proceeding is invalid[,
t]herefore, such a question is valid at any state of the
case[.]” Bush v. Hawaiian Homes Comm’n, 76 Hawai#i 128,
133, 879 P.2d 1272, 1277 (1994) (brackets and internal
quotation marks omitted).
Kepo#o v. Kane, 106 Hawai#i 270, 281, 103 P.3d 939, 950 (2005)
(brackets in original).
Time Warner does not argue that PLNI’s claims should
have been dismissed because the PUC had exclusive jurisdiction
over the Feature Group D claims. However, in support of its
argument that the court properly exercised the doctrine of
primary jurisdiction, Time Warner cites to a number of statutory
provisions that it claims indicate the legislature’s intent to
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set up a comprehensive regulatory scheme, “which specifically
gives the PUC primary jurisdiction over transmission and billing
disputes between carriers.” Although Time Warner characterizes
these as indicating “primary jurisdiction,” as a preliminary
matter, it must be determined whether these statutes would give
the PUC exclusive jurisdiction over the Feature Group D claims.15
HRS § 269-6(a) (Supp. 2000) provides that “[t]he public
utilities commission shall have the general supervision
hereinafter set forth over all public utilities, and shall
perform the duties and exercise the powers imposed or conferred
upon it by this chapter.” In addition, with respect to the PUC’s
investigative powers, HRS § 269-7(a) (1993) provides that:
(a) The public utilities commission and each commissioner
shall have power to examine into the condition of each
public utility . . . the fares and rates charged by it . . .
the amount and disposition of its income, and all its
financial transactions, its business relations with other
persons, companies, or corporations, its compliance with all
applicable state and federal laws and with the provisions of
its franchise, charter, and articles of association, if any,
its classifications, rules, regulations, practices, and
15
Several other jurisdictions have statutes that unequivocally grant
original, exclusive jurisdiction in their state utilities commission for
certain types of claims. For example, in Kazmaier Supermarket v. Toledo
Edison Co., 573 N.E.2d 655 (Ohio 1991), the Ohio supreme court reviewed a
number of provisions in its revised code, and concluded that “[t]he
[legislature] has provided a specific remedy for persons, firms or
corporations who have sustained damages due to an unlawful act of a public
utility, or where such damages arise from the utility’s omission to do any act
or thing required by law or by the order of the commission.” Id. at 659.
Similarly, in Village of Evergreen Park v. Commonwealth Edison Co., 695 N.E.2d
1339 (Ill. App. Ct. 1998), an Illinois appellate court reviewed the Illinois
Commerce Commission’s jurisdiction, noting that “[i]n accordance with [the
Public Utility] Act, the [Commerce] Commission has exclusive jurisdiction over
complaints of excessive rates or overcharges by public utilities; and courts
have jurisdiction over those matters only on administrative review.” Id. at
1341. The instant case is distinguishable from Kazmaier and Village of
Evergreen Park in that, as discussed infra, Hawai#i law related to the PUC
does not divest subject matter jurisdiction from the courts. See, e.g.,
Balthazar, 109 Hawai#i at 81, 123 P.3d at 206; Waikoloa, 109 Hawai#i at 273,
125 P.3d at 494.
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service, and all matters of every nature affecting the
relationships and transactions between it and the public or
persons or corporations.
(Emphases added.)
The Feature Group D claims in the instant case would
fall within the broad provisions of HRS § 269-6 and HRS § 269-7,
as a dispute between telecommunication carriers regarding billing
and compensation for services.16 However, this would not deprive
the court of jurisdiction over such matters. The language of the
above provisions indicates only that the PUC would have
jurisdiction over matters such as transactions between carriers,
and not that the PUC would have exclusive jurisdiction. While
such provisions authorize the PUC to undertake certain
activities, including investigation, they do not prohibit the
court from deciding cases involving matters such as the
relationship between a public utility and other companies or
corporations. See HRS § 269-7(a).
Moreover, HRS § 269-15(a) (1993) states that “[t]he
commission may examine into any of the matters referred to in
section 269-7[17], notwithstanding that the same [matters
16
In support of its assertions that the PUC has original
jurisdiction over these matters, Time Warner also cites to HRS § 269-37 (Supp.
1995). However, HRS § 269-37 relates to the negotiation of compensation
agreements between carriers, which does not appear to be implicated in this
case. See HRS § 269-37.
17
The remainder of HRS § 269-7 provides that:
(b) The commission may investigate any person acting in the
capacity of or engaging in the business of a public utility
within the State, without having a certificate of public
convenience and necessity or other authority previously
obtained under and in compliance with this chapter or the
(continued...)
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referred to in HRS § 269-7] may be within the jurisdiction of any
court or other body; provided that [HRS § 269-15] shall not be
construed as in any manner limiting or otherwise affecting the
jurisdiction of any such court or other body.” (Emphases added.)
Hence, the statute recognizes that the matters described in 269-7
may be within the jurisdiction of the court, indicating that PUC
jurisdiction is not exclusive. HRS § 269-15(a) expressly
preserves the jurisdiction “of any such court” as concurrent with
the authority granted to the PUC.
In HRS § 269-15(a), the legislature recognized
concurrent jurisdiction could exist in the courts, when it stated
that “[HRS § 269-15] shall not be construed as in any manner
limiting or otherwise affecting the jurisdiction of any such
court . . . .“ As stated previously, courts have exerted subject
matter jurisdiction over PUC matters. See Balthazar, 109 Hawai#i
at 71, 123 P.3d at 195; Molokoa Village, 60 Haw. at 588, 593 P.2d
at 380.
Accordingly, under Hawai#i’s statutory scheme, certain
powers are granted to the PUC, but those statutorily enumerated
powers do not deprive the circuit courts of jurisdiction in areas
17
(...continued)
rules promulgated under this chapter.
(c) Any investigation may be made by the commission on its
own motion, and shall be made when requested by the public
utility to be investigated, or by any person upon a sworn
written complaint to the commission, setting forth any prima
facie cause of complaint. A majority of the commission
shall constitute a quorum.
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where jurisdiction might overlap. Rather, claims brought in the
courts may be subject to the primary jurisdiction doctrine and
the filed- rate doctrine, which serve to limit the ability of a
plaintiff to bring claims in the courts rather than with the PUC,
as discussed supra. Consequently, these doctrines do not erect
barriers to original jurisdiction.18
Thus, in Hawai#i, the courts have subject matter
jurisdiction over disputes between carriers regarding billing and
compensation for services. The court in this case, then, had
concurrent jurisdiction with the PUC over PLNI’s Feature Group D
claims.
VII. Standard of Review for Primary Jurisdiction
Having determined that the court had concurrent
jurisdiction with the PUC, the inquiry is whether the court
properly dismissed Petitioner’s Feature Group D claims as a
matter of primary jurisdiction. Related to the distinction
between primary jurisdiction and subject matter jurisdiction is
the question of what standard of review this court should apply
in determining whether the court properly dismissed PLNI’s
claims. Hawai#i case law in the area of primary jurisdiction
has not directly addressed the applicable standard of review.
Federal courts of appeal are split as to whether to apply a de
18
The statutory scheme governing the PUC in Hawai#i is not a
“complete and comprehensive statutory scheme governing review” by the PUC,
Kazmaier, 573 N.E.2d at 659, and thus the instant case is distinguishable from
Kazmaier and Village of Evergreen Park.
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novo or abuse of discretion standard, see S. Utah Wilderness
Alliance v. Bureau of Land Mgmt., 425 F.3d 735, 750 (10th Cir.
2005); A. Lucchetti, Note, One Hundred Years of the Doctrine of
Primary Jurisdiction: But What Standard of Review is Appropriate
For It?, 59 Admin. L. Rev. 849, 851 (2007); Lockwood, Competing
Standards of Appellate Review, supra, at 721-22, although it
appears that most states apply de novo review, see e.g., Siewert
v. N. States Power Co., 793 N.W.2d 272, 277 (Minn. 2011); The
Country Vintner, Inc. v. Louis Latour, Inc., 634 S.E.2d 745, 750
(Va. 2006); In re Interest of Battiato, 613 N.W.2d 12, 15 (Neb.
2000).
The elements of the primary jurisdiction doctrine that
are generally considered to be matters of law have been
discussed, including whether the issues presented are not within
the conventional experience of judges, see Kona Old, 69 Haw. at
93, 734 P.2d at 169, and whether deferring to an agency will
promote uniformity and consistency in the regulatory process,
see Aged Hawaiians, 78 Hawai#i at 202, 891 P.2d at 289.
However, courts that have held that an abuse of discretion
standard applies emphasize the prudential nature of the
doctrine, namely that “[the court] has discretion either to
retain jurisdiction or, if the parties would not be unfairly
disadvantaged, to dismiss the case without prejudice.” Reiter,
507 U.S. at 268-69. See also Lockwood, Competing Standards of
Appellate Review, supra, at 739 (arguing that direct contact
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with the litigant makes the trial judge better able to weigh the
burdens of referral, and that this should be a “heavy
consideration” weighing in favor of de novo review). As
discussed infra, and consistent with the prudential aspects of
the doctrine, the court may take into consideration when in the
litigation process the issue of primary jurisdiction was first
raised, and the extent to which applying the doctrine could be
prejudicial to either party. See U.S. v. McDonnell Douglas
Corp., 751 F.2d 220, 224 (8th Cir. 1984) (“A court should be
reluctant to invoke the doctrine of primary jurisdiction, which
often, but not always, results in added expense and delay to
litigants where the nature of the action deems the application
of the doctrine inappropriate.”) (internal quotation marks and
citation omitted).
The focus of the trial court’s decision, however,
should be on the rationales underlying the doctrine, which are
matters of law. As such, issues of primary jurisdiction should
be reviewed de novo on appeal. Such a holding is consistent
with this court’s characterization of primary jurisdiction as “a
jurisdictional issue.” Chun, 73 Hawai#i at 14, 828 P.2d at
263. Inasmuch as “[t]he existence of jurisdiction is a question
of law that we review de novo under the right/wrong standard[,]”
Lingle v. Hawai#i Gov’t Emp. Ass’n, AFSCME, Local 152, 107
Hawai#i 178, 183, 111 P.3d 587, 592 (2005), the court’s decision
to invoke the primary jurisdiction doctrine is reviewed de novo
as well. If the court determines that the primary jurisdiction
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doctrine applies, the court, in its discretion, may determine
whether to stay the litigation or dismiss without prejudice.19
VIII. Application of the Primary Jurisdiction Doctrine
The court’s decision to invoke primary jurisdiction is
reviewed on the basis of the dual rationales underlying the
primary jurisdiction doctrine, as discussed above. Applying
these two rationales to the instant case, it appears that the
court erred in applying the doctrine of primary jurisdiction.
A.
The first rationale relates to the specialized
competence of the administrative agency. See Kona Old, 69
Hawai#i at 93, 734 P.3d at 168. In its analysis regarding the
primary jurisdiction doctrine, the ICA emphasized the regulatory
scheme set forth in HRS Chapter 269, Pacific Lightnet, Inc.,
2013 WL 310149, at *7, and PLNI argues in its Application that
there is no specific statutory mandate that directs that PUC
must handle billing disputes. It is important to distinguish,
19
On appeal from the ICA’s decision, PLNI does not challenge the
fact that the court dismissed all of the Feature Group D claims, rather than
staying the enforcement of the jury verdict pending the resolution by the PUC.
Thus, this issue need not be decided herein. However, as to this issue, the
ICA concluded in Fratinardo, 121 Hawai#i at 468-69, 220 P.3d at 1049-50, that
the court has discretion to fashion an appropriate remedy when applying the
primary jurisdiction doctrine.
This rationale is sound, as evidenced in the instant case, where
the court dismissed PLNI’s claims rather than require the parties to wait for
the outcome of the PUC’s decision before filing an appeal. However, a court
can abuse its discretion in fashioning a remedy after invoking the primary
jurisdiction doctrine if such a remedy would unduly prejudice one or both of
the parties. See, e.g., Brown, 277 F.3d at 1172-73 (noting that where a two-
year statute of limitations for the plaintiff’s action had expired, the
plaintiff may be “unfairly disadvantaged” if the district court were to
dismiss the claim without prejudice under the primary jurisdiction doctrine).
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however, between a statutory scheme that evinces the
Legislature’s intent to divest the court of jurisdiction, and a
statutory or regulatory scheme that places certain issues
“within the special competence of an administrative body.” Kona
Old, 69 Hawai#i at 93, 734 P.2d at 168 (emphasis added)
(internal quotation marks and citation omitted). The question,
as noted, is whether the issue is “within the conventional
experience of judges.” Far East Conference, 342 U.S. at 574.
Thus, while the existence of statutes and regulations discussing
the PUC’s authority over particular matters is certainly
relevant to the court’s determination of whether to apply
primary jurisdiction, it is not dispositive. Equally important
is the question of whether the claim presented “falls squarely
within the experience and expertise of courts generally[,]”
Advamtel, LLC v. AT&T Corp., 105 F. Supp. 2d 507, 512 (E.D.Va.
2000), or if, instead, the claims are premised on “technical
matters calling for the special competence of the administrative
expert[,]” Aged Hawaiians, 78 Hawai#i at 202, 891 P.2d at 289.
Contrary to the ICA’s holding, the statues and rules
cited by Time Warner do not require dismissal on the basis of
primary jurisdiction. Time Warner cites to HRS § 269-6
(providing PUC with general supervision over all public
utilities), HRS § 269-16 (Supp. 1998) (providing PUC with
general supervision over all public utility rates charged), and
HRS § 269-37 (providing PUC with authority to determine
compensation agreements between carriers). These statutes do
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not place the action in the instant case within the “special
competence” of the PUC, however. They provide the PUC with
authority to take certain actions as an administrative agency,
but, the authority granted to the PUC over certain types of
billing disputes is shared with the courts.
The “special competence” of the PUC under the primary
jurisdiction doctrine involves the types of actions that are
related to the rationales behind the doctrine, to promote
uniformity and to prevent courts from engaging in the types of
policy-making decisions that administrative agencies must make.
Thus, the PUC’s special competence is in, for example,
regulation of utility rates and ratemaking procedures, see HRS §
269-16, and in ensuring that compensation agreements between
telecommunications carriers are fair, see HRS § 269-37, actions
that promote uniformity across the industry and fair rates for
customers. None of these statutes indicate that the PUC should
have primary jurisdiction over a billing dispute, where that
dispute does not have broader implications with respect to rates
or relationships among carriers generally.
Moreover, the regulations cited by Time Warner do not
require dismissal in order that the PUC to exercise primary
jurisdiction. HAR § 6-61-71 provides only that “[t]he
commission may at any time investigate matters subject to its
jurisdiction.” HAR § 6-80-7(a) simply states that “[t]o the
extent feasible and practical, disputed issues of access,
interconnection, unbundling, and network termination shall be
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combined into a single petition before the commission.” These
provisions seem to set forth only the PUC’s internal procedures
for exercising its jurisdiction, rather than any specialized
competence in the area of billing disputes. Additionally, Time
Warner avers that HAR Chapter 6-80 provides a comprehensive
treatment of billing disputes, specifically HAR § 6-80-102,
which, to reiterate, states:
(a) When a dispute arises between a customer and a
telecommunications carrier regarding any bill, the carrier
may require the customer to pay the undisputed portion of
the bill. The carrier shall conduct an appropriate
investigation of the disputed charge or charges and shall
provide a report of the investigation to the customer.
Where the dispute is not reconciled, the carrier shall
advise the customer that the customer has the right to file
a complaint with the commission regarding the dispute.
However, regardless of whether HAR § 6-80-102 would in fact
apply in a situation such as the instant case, it does not
evince a comprehensive regulatory scheme that would create a
“special competence” in the PUC to resolve billing disputes
between two carriers. Thus, Time Warner’s reference to
statutory and regulatory requirements are not persuasive with
respect to establishing the special competence of the PUC.
Also, Time Warner alleges that the Feature Group D
claims require the specialized and technical expertise of the
PUC. Although Time Warner maintains that the claims required a
review of call detail records, which “show who is making the
call, who is receiving the call, and what carriers are
associated with the calls,” as well as an understanding of
carrier identification codes, Time Warner has not indicated why
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a jury would not be able to understand these matters, if
properly explained, other than to say that they are “technical”
in nature.20 In its briefing, Time Warner claims that the jury
was not instructed properly on the technical matters involved in
the case, but again, this argument goes to the validity of the
jury verdict itself, rather than to whether the court properly
dismissed the claim pursuant to primary jurisdiction.
Time Warner avers that MCI Telecommunications Corp. v.
Ameri-Tel, Inc., 852 F. Supp. 659 (1994), supports its position,
in that the court in that case stated:
The Court also concludes that there is no need for us to
delve deep into the world of information indicators,
automatic number identifiers, operator line screening,
billed number screening, and all the other acronyms Ameri-
Tel believes are at the heart of this case. The FCC is
better suited than this Court to decide issues turning on
the operation of these technical mechanisms. However, as
we stated above, Ameri-Tel has overstated the nature of
this case.
852 F. Supp. at 665. Here, however, it appears that Time Warner
has similarly “overstated the [technical] nature of this case.”
Id. The MCI court goes on to state that, “[t]his case is not
about technical or economic issues in the telecommunications
industry, . . . . [i]t is likewise not about the reasonableness
of the MCI Tariff. Rather, it is a collection case requiring
20
While Time Warner claims that Hawai#i has recognized that
“transmission and billing matters between telecommunications carriers
typically require technical expertise that is within the exclusive
jurisdiction of the PUC[,]” the cases cited by PLNI indicate that rate-making
is within the exclusive jurisdiction of the PUC. See In re Hawaiian Telephone
Co., 67 Haw. 370, 379, 689 P.2d 741, 747 (1984); Hawai#i Electric Light Co.,
60 Haw. 625, 636, 594 P.2d 612, 620 (1979).
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application of the filed-rate doctrine and construction of the
terms of the MCI Tariff.” Id. at 666.
Analogously, the instant case is not about technical or
economic issues in the telecommunications industry. The
questions posed by this case do appear to involve some industry
terminology and processes. However, juries frequently hear cases
involving technical terms and processes. The presence of
industry terminology and technical processes in a particular suit
are not enough to require that the court invoke the primary
jurisdiction. Thus, there is no indication that these claims are
premised on “technical matters calling for the special competence
of the administrative expert.” Aged Hawaiians, 78 Hawai#i at
202, 891 P.2d at 289.
Instead, the claims at issue in this case appear to be
“within the conventional experience of judges.” Far East
Conference, 342 U.S. at 574. In Advamtel, the Eastern District
of Virginia court considered a claim by local exchange carriers
to recover unpaid fees allegedly owed to them by long distance
carriers. 105 F. Supp. 2d at 509. AT&T filed a counterclaim
alleging, inter alia, that the plaintiff had billed AT&T for
access services which AT&T never ordered, contrary to the terms
of their filed tariffs. Id. at 512. That court held that two of
the counterclaims in the case, requiring an evaluation of the
reasonableness of the rates under the applicable tariff, should
be referred to the FCC. Id. With respect to the remainder of
the counterclaims, the court noted that the threshold legal
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question underlying those claims was “whether plaintiffs had a
right to bill [defendant] for the access services at issue
. . . .”
That court reasoned that “AT&T’s counterclaims are
premised on the assertion that, under plaintiffs’ filed tariffs,
which establish a procedure for ordering plaintiffs’ access
services, it did not order such services[,]” and that,
accordingly, “[i]f AT&T never ordered plaintiffs’ access
services, AT&T cannot be forced to pay plaintiffs for those
services.” Id.
Under these facts, Advamtel characterized AT&T’s
counterclaim as an “entitlement to bill issue” and stated that it
is “essentially similar to a typical contract dispute involving
issues of contract formation through offer and acceptance.” Id.
Therefore, it held the enforcement of the tariff was “within the
ordinary experience and expertise of courts.” Id. at 513. This
is akin to the facts of the instant case, wherein PLNI claimed
that it was charged for services that it never received,
essentially, an “entitlement to bill issue.” Thus, the issues
raised in this case are similarly within the ordinary expertise
of courts.
B.
The second question is whether applying the primary
jurisdiction doctrine will “promote uniformity and consistency in
the regulatory process.” Aged Hawaiians, 78 Hawai#i at 202, 891
P.2d at 289. See also, Advamtel, 105 F. Supp. 2d at 511 (“One
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issue typically referred to the FCC under the primary
jurisdiction doctrine is the reasonableness of a carrier’s tariff
because that question requires the technical and policy expertise
of the agency, and because it is important to have a uniform
national standard concerning the reasonableness of a carrier’s
tariff, as a tariff can affect the entire telecommunications
industry”); MCI, 852 F. Supp. at 666 (noting that, in a collection
case requiring application of the filed-rate doctrine, “there is
no danger of . . . contradicting a prior application to the
FCC in this case . . . or issuing a ruling inconsistent with the
FCC’s overall regulatory scheme.”). Here, there is no indication
that applying the primary jurisdiction doctrine would promote the
uniformity and consistency rationales behind the doctrine. The
instant case does not require the exercise of administrative
discretion, and furthermore, a result in this case would not
impact the result in any other cases, inasmuch as the facts and
circumstances are unique to these parties and their asset
purchase agreements with GST. A decision with respect to the
obligations of the parties here would not affect future customers
or other telecommunications carriers.
C.
In addition to the two rationales underlying the
primary jurisdiction, the doctrine also has a prudential aspect,
as noted, that courts should take into consideration in deciding
whether it is appropriate to stay or dismiss the proceedings and
defer to the agency. For example, in Jou, this court stated that
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“[s]taying the proceedings conserves scarce judicial resources by
allowing an administrative agency with expertise to decide the
predicate issues.” 114 Hawai#i at 128, 157 P.3d at 567. On the
other hand, the United States Supreme Court has noted that
“[w]ise use of the doctrine necessitates a careful balance of the
benefits to be derived from utilization of agency processes as
against the costs in complication and delay.” Ricci v. Chicago
Mercantile Exch., 409 U.S. 289, 321 (1973). See also McDonnell
Douglas Corp., 751 F.2d at 224 (“[A] court ‘should be reluctant
to invoke the doctrine of primary jurisdiction, which often, but
not always, results in added expense and delay to the litigants
where the nature of the action deems the application of the
doctrine inappropriate.’”) (emphasis added) (quoting Mississippi
Power & Light Co. v. United Gas Pipe Line Co., 582 F.2d 412, 419
(5th Cir. 1976), cert denied, 429 U.S. 1094 (1977)).
In connection with these prudential concerns, PLNI
argued that the court should not cede jurisdiction where primary
jurisdiction is raised only after a jury trial has resolved the
factual issues.21 In support of this argument, PLNI cited to
21
PLNI also correctly points out that none of this jurisdiction’s
cases applying the primary jurisdiction doctrine have deferred the matter to
the agency after a verdict had already been entered in a jury trial. See
Chun, 73 Haw. at 10, 828 P.2d at 261 (trial court granted summary judgment);
Hawai#i Blind Vendors, 71 Haw. at 368, 791 P.2d at 1263 (trial court granted
summary judgment); Aged Hawaiians, 78 Hawai#i at 199-200, 891 P.2d at 286-87
(circuit court granted in part a motion to dismiss on the basis that
alternative administrative procedures were available); Kona Old, 69 Haw. at
86, 734 P.2d at 164 (circuit court dismissed appeal from planning department
director’s decision); Jou, 114 Hawai#i at 126, 157 P.3d at 565 (circuit court
granted motion to dismiss).
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Travelers Insurance Co. v. Detroit Edison Co., 631 N.W.2d 733
(Mich. 2001), in which the Michigan Supreme Court noted that
“[t]here may well be cases, for example, in which the invocation
of primary jurisdiction is not appropriate because litigation
with respect to the particular claim that would normally be
subject to the jurisdiction of the administrative agency has
‘advanced to a point where it would be unfair to remit the
[party] to another and duplicative proceeding . . . .’” 631
N.W.2d at 746 n.19 (alterations in original) (quoting White Lake
Imp. Ass’n v. City of Whitehall, 177 N.W.2d 473, 483 (Mich.App.
1970)).
The instant case appears to be one of those cases in
which the application of the primary jurisdiction doctrine would
be unfair, inasmuch as Time Warner raised the issue only on the
eve of trial, and applying the doctrine would require additional
proceedings that would be duplicative of the 2007 jury trial. As
noted, Time Warner filed its Answer on August 30, 2007, alleging
for the first time that PLNI’s claims were barred by the doctrine
of primary jurisdiction. On September 4th, after the parties had
already submitted proposed jury instructions, witness lists, and
special verdict forms, Time Warner submitted its Motion to
Dismiss based on the primary jurisdiction of the PUC. This was
the same day that trial began. Accordingly, the court decided
not to hear the motion, but instead to go forward with the jury
trial.
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Under these circumstances, the timing of Time Warner’s
initial assertion that the primary jurisdiction doctrine should
apply may be taken into consideration, inasmuch as a party could
“game” the system by only raising primary jurisdiction as a late-
stage alternative, in the event that the court proceedings appear
to be resolving in favor of its opponent. In this case, because
the issue was raised at a late date and decided only after a jury
trial on the factual issues, the late timing of Time Warner’s
assertion is a factor among others that weighs against invocation
of the doctrine. Therefore, because the rationales underlying
the primary jurisdiction doctrine would not be effectuated
through its application to this case, we hold the court erred in
invoking the doctrine and dismissing PLNI’s claims.
IX. Review of the Jury Verdict
PLNI’s second point of error challenges the ICA’s
conclusion that the jury verdict must be vacated because it
violated the filed-rate doctrine. As a preliminary matter, we
must determine whether this point of error may be reached.
Because the court dismissed the Feature Group D claims, through
the dismissal the court appears to have invalidated the jury
verdict, although it apparently did not intend to do so, since it
also stayed the jury’s verdict.
As noted, after a jury verdict was rendered on
September 13, 2007 as to the Feature Group D claims, the court
held a hearing on Time Warner’s September 4, 2007 motion to
dismiss based on the primary jurisdiction of the PUC. At the
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hearing, the court orally ruled that it would grant the motion to
dismiss “on the basis of primary jurisdiction” and that “in
granting the motion . . . [it was] staying the effect of the
verdict . . . .” On October 23, 2007, the court entered an order
granting Time Warner’s motion to dismiss. On December 12, 2007,
the court entered a final judgment which reflected its oral
ruling at the hearing on the motion to dismiss. The final
judgment stated in part, to reiterate: “By [the October 23, 2007]
Order, the [c]ourt dismissed all of the Feature Group D claims on
the basis of the primary jurisdiction doctrine. Due to the
dismissal of the Feature Group D claims, the [c]ourt stayed
enforcement of the jury verdict in favor of PLNI on the Feature
Group D claims entered on September 13, 2007 until further order
of the [c]ourt.”
The court’s dismissal of the Feature Group D claims
would dismiss the jury’s verdict, so there would no longer be
any verdict to enforce. Therefore, the court’s judgment,
dismissing the Feature Group D claims pursuant to its
determination that primary jurisdiction lay in the PUC, and
staying the enforcement of the jury’s verdict pending further
order of the court, was internally inconsistent.
Ordinarily, having concluded that the court erred in
applying the primary jurisdiction doctrine to dismiss the Feature
Group D claims, this court would vacate the dismissal and remand
the case to proceed to trial on those claims. In this case,
however, the trial as to those claims has already taken place and
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a jury has rendered a verdict. The validity of that verdict,
under the filed-rate doctrine was appealed to the ICA, and the
ICA decided whether the verdict was in fact valid on the
merits.22 The parties also briefed substantive issues related to
the jury’s verdict before the ICA and this court. Under these
circumstances, in the interest of judicial economy, this court
may proceed to render a decision as to PLNI’s second point of
error -- whether the jury’s verdict should be upheld as valid.
X. Application of the Filed-Rate Doctrine
In this case, Time Warner alleges that a variety of
tariff provisions were apparently violated by the jury verdict.
Inasmuch as tariffs operate like laws, Time Warner’s argument on
this issue is akin to an argument that the verdict is wrong as a
matter of law. Time Warner contends that, contrary to the jury’s
verdict, the tariffs bar the Feature Group D claims.
A.
Time Warner first alleges that the jury verdict is
contrary to provisions in the PUC and FCC tariffs deeming that
all billing disputes not submitted to Time Warner within 120 days
of receipt of the bill are waived. The PUC tariff titled
“Regulations and Schedule of Intrastate Charges Applying to
Access Services Within the State of Hawai#i” provides as follows,
22
, As noted, the ICA held the court properly invoked the doctrine of
primary jurisdiction in dismissing the Feature Group D claims. Pacific
Lightnet, 2013 WL 310149, at *11-12. The ICA also clarified that the
dismissal was without prejudice. Id. at *12. In light of its conclusion that
dismissal was proper, it is not clear that the ICA’s holding with respect to
the validity of the jury verdict would have any effect.
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at § 2.7:
2.7 Disputed Bills
Objections to billed charges must be reported to the Company
within 120 days of receipt of billing. Any claim not filed
within this time period shall be deemed waived. Claims must
include all supporting documentation and may be submitted
online at . . . or by telephone at . . . . The Company shall
make adjustments to the Customer’s invoice to the extent
that circumstances existing which reasonably indicate that
such changes are appropriate.
(Emphasis added.) In the FCC tariff titled, “Regulations and
Rates of Time Warner Telecom,” § 2.11 similarly provides:
2.11 Claims and Disputes
Objections to billed charges must be reported to the Company
within 120 days of receipt of billing. Any claim not filed
within this time period shall be deemed waived. Claims must
include all supporting documentation and may be submitted
online at . . . or by telephone at . . . . The Company
shall make adjustments to the Customer’s invoice to the
extent that circumstances existing which reasonably indicate
that such changes are appropriate.
(Emphasis added.) Pursuant to the filed-rate doctrine, notice of
the terms and rates of the tariff, including these provisions, is
imputed to PLNI. Balthazar, 109 Hawai#i at 73, 123 P.3d at 198
(citing Evanns v. AT&T Corp., 229 F.3d 837, 840 (9th Cir. 2000)).
B.
In Time Warner’s Answer to PLNI’s initial complaint,
Time Warner had alleged as a defense that PLNI’s claims were
barred by the filed-rate doctrine. As noted, the court struck
the affirmative defenses listed in Time Warner’s Answer because
the Answer was not timely filed,23 including the 120-day
provision in the tariff, which the court construed as a statute
of limitations. This was explained at trial, when Time Warner
23
To reiterate, the only affirmative defense not stricken by the
court was lack of subject matter jurisdiction. See discussion supra.
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submitted an instruction on the 120-day time limitation in the
tariffs as part of its proposed jury instructions. As to the
jury instruction, the court stated:
Okay. As to No. 16, the 120 days, the [c]ourt allowed
evidence of 120 days because it’s relevant in part to the
defense of -- or strike that -- to negativing the
plaintiff’s evidence of undue delay inasmuch as you’re
supposed to file a claim within 120 days and you haven’t
done so and you say all the invoices, and that means
everything before -- well, for the duration of the
relationship which exceeds 120 days, and the [c]ourt allowed
that in as evidence. But the [c]ourt finds that the 120
days of the tariff is akin to or constitutes the statute of
limitations, which in this case is by Hawai#i law an
affirmative defense. And even though -- although there
hasn’t been a request for an instruction about statute of
limitations being six years on a contract, it wouldn’t be
given anyway because I struck all the affirmative defenses.
And it may be that there are two statute of limitations that
are potentially applicable. And I think the best analogy to
that is the City and County ordinance which said you had to
file a complaint within six months, which at one time the
Hawai#i Supreme Court construed as the statute of
limitations. I think this is similar and, therefore,
constitutes an affirmative defense stricken because the
answer asserting that was filed the day before the trial.
And that is the basis for it.
The [c]ourt allows [the] defense to continue to argue
to the extent they [sic] desire to do so the 120 days in
connection with the question of delay in addressing and
resolving the matters, but wants to make clear that there’s
not going to be an argument on what the [c]ourt construes as
an affirmative defense, which is that the claims exceed the
120 days prior to the 2001, Exhibit 81 date. And even
though I know you disagree with the ruling, do you and
counsel understand it?
(Emphases added.)
The court, however, was incorrect in construing the
120-day requirement in the tariff as a statute of limitations.
In deciding that the 120-day limitation did not apply because the
120-day “affirmative defense” was untimely, the court effectively
allowed a waiver of one of the tariff requirements, which is not
permissible under the filed-rate doctrine. Unlike a statute of
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limitations, a tariff provision cannot be waived. See Qwest
Corp. v. AT&T Corp., 371 F. Supp. 2d 1250, 1251 (D. Colo. 2005)
(“the filed tariff doctrine prevents parties from contractually
modifying tariffs. This prohibition includes not only
modification of tariffs’ rates and terms, but also modifications
of a party’s potential liability under tariffs, such as in the
form of a release or waiver.”); Best Telephone Co., Inc., 898
F. Supp. 868, 875 (S.D. Fla. 1994) (“The defendant’s affirmative
defenses of breach of the terms and conditions of the tariff and
failure to comply substantially with the terms and conditions of
the tariff are not barred as a matter of law because all of the
tariff’s terms govern the parties’ rights and liabilities.”)
(emphasis added); Clancy v. Consolidated Freightways, 136
Cal. App. 3d 543, 548 (Cal. Ct. App. 1982) (“[t]he provisions found
in a carrier’s tariffs, including those which limit the time in
which to commence an action against the carrier, cannot be waived
by the carrier since to permit waiver would be to enable the
carrier to discriminate among shippers and this is prohibited by
the Interstate Commerce Act.”) (emphasis added).
The proposition that a filing time period within a
tariff cannot be waived inheres in this court’s reasoning in
Waikoloa, which states that “the filed-rate doctrine applies to
more than just rates; it extends to the services,
classifications, charges, and practices included in the rate
filing.” 109 Hawai#i at 273, 125 P.3d at 494 (emphasis added).
Therefore, all of the “services, classifications, charges, and
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practices” included in the PUC and FCC tariffs, including the
120-day time limitation, would apply to the claims at issue in
this case.
Courts in other jurisdictions have directly addressed
the issue of time limitation provisions in a tariff in the
context of the filed-rate doctrine, and have concluded that time
limitations, like other tariff terms, cannot be waived. In Qwest
Corp., the District Court of Colorado held that the parties could
not, “as a matter of law, release or waive AT&T’s obligations
under Qwest’s tariff, nor alter any applicable statute of
limitations.” 371 F. Supp. at 1252. In Clancy, a California
Court of Appeal case, the court held that “to permit a waiver [of
a limitation on the time in which to commence an action against
the carrier] would be to enable the carrier to discriminate among
shippers.” 136 Cal. App. 3d at 548 (emphasis added). Clancy
reasoned that the timing provision in the tariff was “essential
to secure the general public interest in adequate
nondiscriminatory transportation at reasonable rates and
therefore rigid adherence to the statutory scheme and uniform
standards required.” Id. (citation omitted). Thus, the court
here erred in allowing the tariff “statute of limitations” to be
waived as an affirmative defense that was not timely raised.
C.
PLNI argues that the time limitation is not at issue in
this case, because even though tariffs are implicated, the filed-
rate doctrine does not apply. Specifically, PLNI alleges that
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“the filed rate doctrine does not bar claims where ‘the
plaintiffs . . . paid the file rate but arguably did not receive
a benefit or service in exchange for the payment[,]’” and that
because the claims in the instant case meet this description,
they should not be barred by the filed-rate doctrine. (Quoting
Balthazar, 109 Hawai#i at 81, 123 P.3d at 206.) (Citation
omitted.)
The quoted language from Balthazar is consistent with
that opinion’s reasoning that courts may enforce the tariffs
without implicating the filed-rate doctrine, so long as the
court’s judgment will not result in price discrimination among
rate payers, and the reasonableness of the rates is not at issue.
See Balthazar, 109 Hawai#i at 73, 123 P.3d at 198. Thus, in
cases where plaintiffs arguably paid the filed rate, and the
issue is merely one of enforcement of the tariff provisions, the
plaintiffs claims will not be barred by the filed-rate doctrine.
Balthazar explained that the tariffs at issue in that
case required that customers pay for “Touch Calling” services,
and that in paying for those services, plaintiffs had in fact
received a benefit or service in exchange for paying the filed
rate, so they suffered no legally cognizable injury under the
filed-rate doctrine. Id. at 70, 123 P.3d at 195. While
Balthazar dealt with the enforcement of tariff rates, Balthazar
did not need to address the enforcement of other tariff terms,
such as time limitations. Thus, this case is distinguishable
from Balthazar on those grounds. However, to the extent that
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Balthazar holds that parties must be held to the terms of the
tariffs, the reasoning is applicable here.
In enforcing the tariffs in this case, this court must
also enforce the 120-day time limitation that is contained in the
tariffs, and thus was approved by the PUC. As in Balthazar,
where the PUC had approved the tariff provision requiring payment
for Touch Calling, the PUC has approved the tariff provision
relevant to this case -- that all disputes not submitted within
120-days of the billing are deemed waived. PUC Tariff § 2.7; FCC
Tariff § 2.11. Thus, in addition to setting out the rates for
services, the filed tariffs also contemplate a time limitation
with respect to any billing disputes, and this court must give
effect to that provision just as it would give effect to the
rates themselves.
In Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17 (2d Cir.
1994), the Second Circuit described the filed rate doctrine as
follows:
This regime protects consumers while fostering stability.
The regulatory agencies are deeply familiar with the
workings of the regulated industry and utilize this special
expertise in evaluating the reasonableness of rates. The
agencies’ experience and investigative capacity make them
well-equipped to discern from an entity’s submissions what
costs are reasonable and in turn what rates are reasonable
in light of these costs.
27 F.3d at 20-21 (emphasis added). The PUC and FCC approved the
provisions of the applicable tariffs. As such, this court should
give effect to all portions of the tariff, under the assumption
that, where the PUC and FCC provided a time limitation on the
filing of billing disputes, they had a reason for doing so. For
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example, the PUC and FCC may have been able to require that Time
Warner provide a lower rate to customers because the 120-day time
limitation would decrease the costs incurred by the public
utility in addressing disputes.
In this case, the recovery sought by PLNI would not
have the effect of imposing a different rate from the filed
tariff. See Balthazar, 109 Hawai#i at 74, 123 P.3d at 199
(stating that “courts have held that the filed-rate doctrine bars
claims that seek damages if an award of damages would have the
effect of imposing any rate other than that reflected in the
filed tariff”) (citation and internal quotation marks omitted).
However, to the extent that PLNI may have sought damages for
claims that do not satisfy the 120-day time limitation in the
tariffs, the jury’s award has the effect of imposing terms that
are different from those in the filed tariff. This is just as
problematic from the standpoint of the filed-rate doctrine. As
explained supra, the filed-rate doctrine also extends to
practices included in the rate filing. See Waikoloa, 109 Hawai#i
at 273, 125 P.3d at 494. If this court were not to enforce the
120-day limitation term against PLNI in this case, it would be
applying the tariffs in an inconsistent fashion, effectively
allowing PLNI to be subject to different, more lenient, tariff
terms than other similarly situated entities.
Put another way, if Time Warner and PLNI had a contract
stating that Time Warner was waiving the 120-day provision in the
tariffs, such a contract would not be enforceable. The filed-
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rate doctrine requires that “neither the tort of the carrier nor
the existence of a contract will work to vary or enlarge the
rights defined in a tariff.” Balthazar, 109 Hawai#i at 73, 123
P.3d at 198 (citing Keogh v. Chicago & Northwestern Ry. Co., 260
U.S. 156, 163 (1922)). Thus, the parties in this case could not
contract around the 120-day provision if they tried to do so,
because it is part of the tariff terms. If this court did not
recognize the 120-day time limitation on the claims brought by
PLNI, it would essentially be allowing the parties to waive that
provision of the tariffs, in contravention of the filed-rate
doctrine, just as if it enforced a contract between the parties
waiving that tariff term. Therefore, although PLNI contends that
its suit is to enforce the filed rates, the filed rate doctrine
would still serve to bar an award to PLNI in connection with any
dispute that was filed with Time Warner more than 120 days after
receipt of billing, because under the tariff, any billing dispute
claim not submitted “within 120 days of receipt of billing . . .
shall be deemed waived.”24 (Emphasis added.)
XI. Remedy for Application of the Filed-Rate Doctrine
Having determined that the 120-day time limitation does
apply, the next question is the appropriate remedy. At trial,
24
Although this result may limit recovery in the instant case, such
a result would not incentivize Time Warner to mis-bill its customers. Time
Warner is still subject to all objections to billed charges that are reported
within 120 days of the receipt of the bills. See PUC Tariff § 2.7; FCC Tariff
§ 2.11. Additionally, according to the FCC tariff, “[i]f the dispute is
resolved in favor of the Customer and the Customer has paid the disputed
amount, the Customer will receive an interest credit from the Company for the
disputed amount times a late factor [of 1.5% per month].” FCC Tariff §
2.11.2.
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Time Warner requested the following instruction (Time Warner’s
Requested Jury Instruction No. 16):
TARIFF - BILLING DISPUTE PROCEDURES
By law, any objections to billed charges must be
reported to Time Warner Telecom within 120 days of the
receipt of the billing, or such claims are waived. All
claims objecting to billing must include supporting
documentation.
If a claim is timely filed and supporting
documentation is provided, Time Warner Telecom is required
to make adjustments to the invoices, but only where
circumstances exist which reasonably indicate that such
adjustments are appropriate.
The court did not give the instruction, apparently because it had
stricken that “affirmative defense.” Ultimately, no instruction
was given to the jury specifically on the 120-day provision.
However, the court did instruct the jury as to the tariffs
generally, with the following jury instruction:
Telecommunications carriers are required to file tariffs
with the [FCC] and [PUC]. These filed tariffs govern the
telecommunications carriers’ services, rates and charges.
Telecommunications carriers and their customers are required
to comply with these tariffs. The tariffs are both
contracts and the law.
The jury was provided with a copy of the full PUC and FCC tariffs
as Trial Exhibits D-2 and D-3.
Time Warner argues that the jury verdict “allowed the
law of tariffs to be completely disregarded.” PLNI, on the other
hand, alleges that even if the tariff provision setting out the
120-day time limitation does apply, “there was no danger the jury
was unaware of the 120-day provision in the tariff.”
A.
As noted, the Feature Group D claims involved two
discrete disputes. The first was related to a September 18, 2001
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Customer Investigation Form filed by PLNI, which apparently
included billing disputes for call termination from May 2000
through September 2001. At trial, PLNI introduced evidence that
it was owed a credit in the amount of $327,714.03 that had been
due to its predecessor, GST. Time Warner disputed the validity
of this evidence on two alternative grounds.
First, Time Warner argued that it had already credited
PLNI’s predecessor, GST, for the amount it was due, as part of
the $327,714.03 credit. Second, and relatedly, it alleged that
even if PLNI was due some credit, it was not owed the entire
$327,714.03 amount, because the $327,714.03 was credited to GST
for a separate transaction between GST and TimeWarner that was,
in part or in whole, not related to the assets that PLNI acquired
from GST.25 Thus, it appears that at trial, the amount which
PLNI would have been owed on this billing credit, assuming that
it could establish that Time Warner had not credited GST already
for amounts due, was in dispute. On this claim, the jury found
in favor of PLNI and awarded $327,714.03 in damages. The jury
clearly based its damage award on the evidence introduced by
PLNI, which listed the credit at exactly $327,714.03.
At oral argument before this court, counsel for PLNI
argued that Time Warner had conceded the credit in the amount of
$327,714.03, and thus the 120-day limitation on disputed bills
25
TimeWarner’s argument on this issue appears to be both that the
$327,714.03 credit was, in full or in part, for services of GST that PLNI did
not take over, and that the payment related to TimeWarner’s acquisition of
part of GST.
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should not apply, because Time Warner admitted that it had owed
that amount and the jury found that amount had not been paid to
PLNI. Oral Argument at 3:55-4:30 and 1:05:00, Pacific Lightnet,
Inc. v. Time Warner Telecom, Inc. and Time Warner Telecom of
Hawai#I, L.P., No. SCWC-28948, available at
http://state.hi.us/jud/oa/13/SCOA_071713_28948.mp3. However, it
does not appear that Time Warner actually conceded this point
either at trial or on appeal.
At trial, although Time Warner’s main argument seems to
be that it had already credited PLNI’s predecessor, GST, for the
amount it was due, it also argued that even if PLNI was due some
credit, it was not owed the whole $327K amount, because at least
part of the credit was for entirely separate transactions between
GST and Time Warner. For example, one of the witnesses for Time
Warner explained that even though the evidence regarding the
credit stated that it was for “Honolulu”, it should not all be
attributed to the GST Honolulu office, since the CIC account
listed was “used both on the mainland and in Hawai#i,” including
for call termination from cities such as Bakersfield and San Luis
Obispo in California. Time Warner also argued that PLNI was owed
less than $327,714.03 based on its September 18, 2001 billing
dispute form, which included only estimates of the disputed
charges and contained charges based on bills that were received
more than 120 days prior to the date Time Warner was notified of
the dispute.
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In its Opening Brief to the ICA, Time Warner stated
that “[t]he improper action of the jury as described above is
even more telling because the $327,714.03 attributed to GST to
wipe out its liabilities was not solely for call termination
billings for GST Hawai#i assets -- the only assets that PLNI
acquired for GST[,] . . . [t]he $327,714.03 was also for call
termination billings on the mainland, which PLNI admitted it did
not purchase.”26 Moreover, the court precluded Time Warner from
arguing at trial that the disputed credits were barred by the
120-day limitation. Accordingly, Time Warner was not permitted
to present its full range of arguments concerning these credits.
Because the amount owed to PLNI based on its September 18,
2001 Customer Investigation Form was still in contention during
trial, a jury would need to consider which disputed bills were
relevant to the 2001 Customer Investigation Form, and decide if
those bills were received more than 120 days before the September
18, 2001 form was filed. Any disputed bills that a jury determines
were received more than 120 days before September 18, 2001 cannot be
taken into consideration as part of PLNI’s recovery on its Customer
Investigation Form claim. In this case, the jury awarded PLNI the
full amount it requested. It is not clear that the jury considered
the 120-day tariff provision as limiting the recovery of PLNI on its
26
Although Time Warner did not repeat this language in its Response
to this court, it maintained that the ICA correctly vacated the jury verdict
because it violated the filed-rate doctrine.
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claims related to the September 18, 2001 Customer Investigation Form
and alleged credit.
B.
The second dispute was in connection with alleged
overcharges by Time Warner, on bills issued to PLNI covering a
period from October 11, 2001 through the date of trial in September
2011. On this claim, the jury found that Time Warner had breached
its contract with PLNI, awarded $1 in damages for the breach, and
found that PLNI had been overcharged in the amount of $118,109.58.
PLNI contends that the difference between the $118,109.58
that was actually awarded and PLNI’s requested amount of $139,409.58
may represent the jury’s consideration of the 120-day time
limitation as a bar to recovery on certain claims. However, this
cannot be verified based on the jury’s verdict form or the evidence
presented at trial, as nothing indicates how the jury took the 120-
day time limit into consideration and PLNI does not explain how it
knows that the jury’s diminished award was based on a consideration
of the 120-day limitation.
C.
Therefore, since neither of the jury’s awards demonstrate
that the jury considered the 120-day time limitation, the
appropriate remedy is to remand both issues for consideration by a
new jury. On remand, the court must instruct the jury as to the
120-day provision in the tariffs, informing the jury that any claims
brought by PLNI that were reported to Time Warner more than 120-days
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after PLNI or its predecessor GST received the disputed bill are
waived.27
XII. Other Arguments as to the Validity of the Jury Verdict
Time Warner further asserts that the jury verdict should
be vacated because the jury decided that PLNI “need not pay the
majority of its bills for call termination services including those
services that were admittedly received and validly billed,” and the
jury required that Time Warner was responsible for billing,
transmission, and call termination disputes which were beyond Time
Warner’s control, caused by PLNI or caused by third parties. The
ICA did not reach these arguments, inasmuch as it determined that
the jury verdict must be vacated because it violated the 120-day
tariff provision. Since this case is remanded to the court for
retrial on the Feature Group D claims, the merits of Time Warner’s
remaining challenges to the validity of the jury’s verdict need not
be addressed.
XIII. Conclusion
Therefore, the ICA’s February 21, 2013 judgment is vacated
to the extent that it affirms the court’s dismissal of the Feature
Group D claims based on the primary jurisdiction doctrine. The
ICA’s judgment is upheld in all other respects, with respect to the
Application, including its vacation of the jury verdict on the
27
In the instant case, the jury was instructed that “tariffs are
both contracts and the law[,]” and was given copies of the tariffs, among a
myriad of other exhibits. This reflected the court’s understanding that the
120-day provision operated like a statute of limitations and thus was waived
as an affirmative defense, which, as discussed supra, was incorrect.
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Feature Group D claims, which also vacated the court’s stay of the
jury verdict on those claims, but for the reasons stated herein.
Accordingly, the court’s December 12, 2007 judgment dismissing the
Feature Group D claims and staying the jury verdict on the Feature
Group D claims is vacated, and the case is remanded for a new trial
on the Feature Group D claims, consistent with the foregoing
opinion.
Margery S. Bronster, /s/ Mark E. Recktenwald
and Rex Y. Fujichaku,
for petitioner, /s/ Paula A. Nakayama
J. Douglas Ing, /s/ Simeon R. Acoba, Jr.
Brian Kang, and
Emi L.M. Kaimuloa, /s/ Sabrina S. McKenna
for respondent
/s/ Richard W. Pollack
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