Zahn v. North American Power & Gas, LLC

2016 IL 120526IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 120526)
PEGGY ZAHN, Appellant, v. NORTH AMERICAN
POWER & GAS, LLC, Appellee (The People of the State of Illinois ex rel. Lisa Madigan,
Attorney General of Illinois, Intervenor-Appellant).
Opinion filed December 1, 2016.
CHIEF JUSTICE KARMEIER delivered the judgment of the court, with
opinion.
Justices Freeman, Thomas, Kilbride, Garman, Burke, and Theis concurred in
the judgment and opinion.
OPINION
¶1 The United States Court of Appeals for the Seventh Circuit has certified for
instruction from this court the following question of Illinois law: Does the Illinois
Commerce Commission have exclusive jurisdiction over a reparation claim, as
defined in Sheffler v. Commonwealth Edison Co., 2011 IL 110166, brought by a
residential consumer against an alternative retail electric supplier, as defined by
section 16-102 of the Electric Service Customer Choice and Rate Relief Law of
1997 (220 ILCS 5/16-102 (West 2014))? Zahn v. North American Power & Gas,
LLC, 815 F.3d 1082, 1095 (7th Cir. 2016). We accepted the Seventh Circuit’s
invitation to consider this question pursuant to Illinois Supreme Court Rule 20 (eff.
Aug. 1, 1992).1 For the reasons that follow, we answer the question in the negative.
Under Illinois law, the Illinois Commerce Commission does not have exclusive
original jurisdiction over such claims. The claims may be pursued through the
courts.
¶2 BACKGROUND
¶3 We take the facts as the Seventh Circuit has stated them in its certification
ruling. They are simple and straightforward. Peggy Zahn is a residential consumer
of electric power. North American Power & Gas, LLC (NAPG), is an alternative
retail electric supplier (ARES) within the meaning of section 16-102 of the Electric
Service Customer Choice and Rate Relief Law of 1997 (Rate Relief Law) (220
ILCS 5/16-102 (West 2014)), which is part of the Public Utilities Act (Act) (220
ILCS 5/1-101 (West 2014)).
¶4 As defined by section 16-102, an ARES is any “person, cooperative,
corporation, municipal corporation, company, association, joint stock company or
association, firm, partnership, individual, or other entity, their lessees, trustees, or
receivers appointed by any court whatsoever, that offers electric power or energy
for sale, lease or in exchange for other value received to one or more retail
customers, or that engages in the delivery or furnishing of electric power or energy
to such retail customers, and shall include, without limitation, resellers, aggregators
and power marketers,” subject to various exceptions. 220 ILCS 5/16-102 (West
1
In the proceedings before our court, the Illinois Commerce Commission sought and
was granted leave to file a friend of the court brief pursuant to Illinois Supreme Court Rule
345 (eff. Sept. 20, 2010) in support of Peggy Zahn, plaintiff in the federal action. The
Illinois Competitive Energy Association, in turn, requested permission to file a friend of
the court brief supporting North American Power & Gas, LLC, the defendant in the federal
action. Its request was also allowed. In addition, we allowed the State of Illinois to
intervene. As with the Commerce Commission, the State supports Zahn’s position.
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2014). ARESs were authorized by the General Assembly when it enacted the Rate
Relief Law as part of an effort to partially deregulate our state’s electricity market
and make it more competitive. Under this new system, consumers are no longer
confined to purchasing their power from their local public utility. Rather, they have
the option of buying their power from the local public utility, an electric utility
other than their local public utility, or an ARES. Zahn, 815 F.3d at 1084-85.
¶5 In August 2012, Zahn decided to purchase her electricity from NAPG based on
its promise of lower rates. NAPG sent Zahn a letter stating that she would receive
its “New Customer Rate” of $0.0499 per kilowatt-hour during her first month of
service and a “market based variable rate” thereafter. The company also sent her its
“Electricity Sales Agreement Customer Disclosure Statement.” The statement
indicated that the term of the agreement was month-to-month and that “[o]ther than
fixed and/or introductory/promotional rates, all rates shall be calculated in response
to market pricing, transportation, profit and other market price factors.” It also
disclosed, under the heading “Open Price,” that its prices were “variable” based on
“market prices for commodity, transportation, balancing fees, storage charges,
[NAPG] fees, profit, [and] line losses ***. Your price may be higher or lower than
your [local public utility] ***.”
¶6 Zahn never received the $0.0499 per kilowatt-hour “New Customer Rate” she
was promised. During her first two months of service, September and October
2012, NAPG charged her $0.0599 per kilowatt-hour. Thereafter, from November
2012 through June 2014, the rate it charged her was always higher than what she
would have been required to pay her local public utility, Commonwealth Edison
(ComEd), had she not switched to NAPG. At times, NAPG’s rate was nearly triple
ComEd’s.
¶7 Zahn objected to NAPG’s higher charges and filed a class action against the
company in the United States District Court for the Northern District of Illinois.
Zahn’s complaint invoked the court’s diversity jurisdiction (28 U.S.C. § 1332(2012)) and sought damages based on violation of the Consumer Fraud and
Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2014)),
common-law breach of contract, and unjust enrichment. NAPG moved to dismiss
Zahn’s complaint for lack of subject-matter jurisdiction and failure to state a claim.
The district court granted that motion. Zahn then appealed to the United States
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Court of Appeals for the Seventh Circuit. It is in that appeal that the question before
us was certified.
¶8 In assessing whether the district court erred in dismissing Zahn’s complaint, the
Seventh Circuit has concluded that the dispositive threshold issue is whether an
Illinois state court would have had subject-matter jurisdiction to hear plaintiff’s
claims or whether exclusive jurisdiction over those claims lies, instead, with the
Illinois Commerce Commission. The Seventh Circuit reasoned that if the
Commerce Commission alone has jurisdiction to hear claims of this kind under
Illinois law and such claims are not within the subject-matter jurisdiction of the
Illinois state courts, it necessarily follows that a federal district court sitting in
diversity cannot entertain them either. Zahn, 815 F.3d at 1087 (citing Tacket v.
General Motors Corp., Delco Remy Division, 93 F.3d 332, 334 (7th Cir. 1996)).
¶9 In Sheffler v. Commonwealth Edison Co., 2011 IL 110166, this court addressed
the lines of demarcation between the jurisdiction of the Illinois Commerce
Commission and the jurisdiction of the courts with respect to claims against public
utilities. Citing section 9-252 of the Public Utilities Act (220 ILCS 5/9-252 (West
2014)), which pertains to complaints “concerning any rate or other charge of any
public utility,” and in accordance with precedent from our appellate court, we held
there that if a claim is deemed to be one for “reparations” rather than for civil
damages, jurisdiction lies with the Commerce Commission, not the courts. A
reparations claim is one where the essence of the grievance is that a public utility
has charged too much for a service. A civil damages claim, by contrast, is one
where the gist of the complaint is that a public utility has done something else to
wrong the plaintiff. Sheffler, 2011 IL 110166, ¶¶ 41-42.
¶ 10 In the case before us, the Seventh Circuit has characterized Zahn’s claims as
being in the nature of “reparations” as that term is used in Sheffler. There is an
important difference, however, between this case and Sheffler. Sheffler involved a
claim against a conventional public utility. The claim asserted here is against an
ARES. Under section 3-105(b)(9) of the Public Utilities Act (220 ILCS
5/3-105(b)(9) (West 2014)), ARESs are expressly excluded from the definition of
public utility. Pursuant to section 16-102 of the Rate Relief Law (220 ILCS
5/16-102 (West 2014)), ARESs do not qualify as “electric utilities” either. They are
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merely “nonutilities licensed to sell retail electricity.” Commonwealth Edison Co.
v. Illinois Commerce Comm’n, 328 Ill. App. 3d 937, 939 (2002).
¶ 11 Because NAPG is an ARES and ARESs are not utilities, the Seventh Circuit
recognized that Sheffler does not resolve the question of whether claims against
NAPG by customers seeking reparations for overbilling may only be brought
before the Commerce Commission. Finding no other decision by this court directly
on point, the Seventh Circuit looked to the legislature’s stated and implied intent,
the Rate Relief Law’s consumer protection provisions and remedial measures, an
unpublished order by our appellate court, an interim order by the Commerce
Commission in an unrelated case, and a published decision by the appellate court
involving a reparations claim against a telecommunications carrier in an attempt to
estimate how we would decide the question if it came before us. The Seventh
Circuit ultimately concluded that these sources failed to yield a definitive answer. It
has therefore reached out to us directly here, through the mechanism of a certified
question, for instruction.
¶ 12 ANALYSIS
¶ 13 As set forth above, the viability of Zahn’s state law claims against NAPG in her
federal diversity action turns on whether an Illinois state court would have had
subject-matter jurisdiction to hear them or whether, under Illinois law, she would
have been limited to pursuing those claims in an administrative proceeding before
the Commerce Commission. The general principles governing this inquiry were
recently discussed by our court in J&J Ventures Gaming, LLC v. Wild, Inc., 2016
IL 119870. As we noted there, subject-matter jurisdiction refers to a tribunal’s
power to hear and determine cases of the general class to which the proceeding in
question belongs. Id. ¶ 23. The Illinois Constitution vests the circuit courts with
original jurisdiction of all “justiciable matters” except when our court possesses
“original and exclusive jurisdiction relating to redistricting of the General
Assembly and to the ability of the Governor to serve or resume office.” Ill. Const.
1970, art. VI, § 9. Accordingly, so long as a matter brought before a circuit court is
justiciable and does not fall within the original and exclusive jurisdiction of our
court, a circuit court has subject-matter jurisdiction to consider it. McCormick v.
Robertson, 2015 IL 118230, ¶ 20.
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¶ 14 In this case, there is no issue as to justiciability, and the matter is not one that
falls within this court’s original and exclusive jurisdiction. The only reason there is
any doubt as to whether an Illinois circuit court would have jurisdiction to consider
plaintiff’s claims is that there is a line of Illinois authority holding that our General
Assembly may vest original jurisdiction in an administrative agency rather than the
courts when it enacts a comprehensive statutory scheme that creates rights and
duties that have no counterpart in common law or equity. J&J Ventures Gaming,
LLC, 2016 IL 119870, ¶ 23.2 Even if one puts aside the question of whether the
claims asserted by Zahn in this case can properly be said to involve rights or duties
unknown in common law or equity, we do not believe that exception is applicable.
¶ 15 If the legislature intends for exclusive original jurisdiction to lie with the
agency rather than with the circuit courts when it has enacted such a comprehensive
statutory scheme, it must make that intention explicit. Id. ¶¶ 23-24. It has not done
so here. While section 9-252 of the Public Utilities Act (220 ILCS 5/9-252 (West
2014)) does give the Commerce Commission exclusive original jurisdiction over
claims that a public utility has charged “an excessive or unjustly discriminatory
amount for its product, commodity or service,” ARESs are not public utilities. In
defining public utilities, the Act expressly excludes them. See 220 ILCS
5/3-105(a)(9) (West 2014). The claims asserted by plaintiff in this case therefore do
not fall within the Commerce Commission’s exclusive jurisdiction under section
9-252 of the Act. To hold otherwise would require us to interpret the statute in a
way that is directly contrary to its express terms. That, of course, is something we
may not do. No rule of construction authorizes us to declare that the legislature did
not mean what the plain language of the statute imports, nor may we rewrite a
statute to add provisions or limitations the legislature did not include. Illinois State
Treasurer v. Illinois Workers’ Compensation Comm’n, 2015 IL 117418, ¶ 28.
¶ 16 NAPG argues that section 9-252 alone is not dispositive and that, in assessing
the legislature’s intentions regarding the Commerce Commission’s jurisdiction, we
should consider the overall statutory framework. There is support for this approach
2
Although our precedent refers to the “jurisdiction” of administrative agencies, that is
something of a misnomer. The term “jurisdiction” is not strictly applicable when referring
to an administrative agency. We use it as shorthand for describing the agency’s authority to
act. J&J Ventures Gaming, LLC, 2016 IL 119870, ¶ 23 n.6.
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in J&J Ventures Gaming, LLC, 2016 IL 119870, where we recently held that
legislative intent to divest circuit courts of jurisdiction and to place exclusive
original jurisdiction in an administrative agency may be discerned by considering
the statute as a whole, with the relevant provisions construed together and not in
isolation and with an eye toward the reason for the law, the problems sought to be
remedied, and the purposes to be achieved. Id. ¶¶ 24-25. Application of that
approach, however, does not support NAPG’s assertion that the legislature
intended for the Commerce Commission to have exclusive jurisdiction over claims
such as plaintiff asserted against ARESs.
¶ 17 The Rate Relief Law, which created ARESs, is a component of the Public
Utilities Act (220 ILCS 5/1-101 et seq. (West 2014)), and it is the Public Utilities
Act that provides the foundational statutory scheme at play in this case. The Public
Utilities Act was enacted to assure the provision of efficient and adequate utility
service to the public at a reasonable cost. Local 777 v. Illinois Commerce Comm’n,
45 Ill. 2d 527, 535 (1970). The Commerce Commission was created under the Act
as the body responsible for maintaining “a balance between the rates charged by
utilities and the services performed.” Sheffler v. Commonwealth Edison Co., 2011
IL 110166, ¶ 40.
¶ 18 The rate-making process is a complicated one. See, e.g., Ameren Illinois Co. v.
Illinois Commerce Comm’n, 2012 IL App (4th) 100962, ¶¶ 8-13 (describing how
the Commerce Commission establishes the rates a public utility may charge its
customers). The legislature’s decision to place responsibility for that process on the
Commerce Commission is a reflection of that complexity. In creating the
Commerce Commission, the legislature understood that insuring that a public
utility’s rates are just and reasonable and that its services are adequate would
require consideration of complex technological and scientific data and expert
opinion, and it determined that such matters are best addressed by a tribunal that is
itself capable of passing upon complex data. See Sheffler, 2011 IL 110166, ¶ 40.
¶ 19 When the legislature established the regulatory structure for public utilities
under the Public Utilities Act and then conferred on the Commerce Commission
responsibility for determining whether rates charged by those utilities are just and
reasonable, it also vested exclusive jurisdiction in the Commerce Commission to
consider complaints that a utility has charged an amount for its product, commodity
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or service that is excessive or unjust. Id. ¶ 41; 220 ILCS 5/9-252 (West 2014). This
is entirely logical. If technical expertise is needed to determine whether a utility
rate is just and reasonable, it follows that the same technical expertise may be
necessary to ascertain whether the rate subsequently charged by the utility is unjust
or excessive. The two go hand in hand.
¶ 20 Such considerations are not present, however, when it comes to ARESs.
ARESs were not part of the traditional regulatory system established to govern
public utilities. They were introduced under the Rate Relief Law as part of an effort
to partially deregulate Illinois’s electricity market (Zahn, 815 F.3d at 1084-85).
As we have already pointed out, ARESs are expressly excluded from the definition
of “public utility” under the Public Utilities Act (220 ILCS 5/3-105(b)(9) (West
2014)) and are not “electric utilities” under section 16-102 of the Rate Relief Law
(220 ILCS 5/16-102 (West 2014)). They are simply “nonutilities licensed to sell
retail electricity” (Commonwealth Edison Co. v. Illinois Commerce Comm’n, 328
Ill. App. 3d 937, 939 (2002)). As such—and there is no dispute on this point—the
prices they are permitted to charge are not established by the Commerce
Commission through the conventional rate-making process and do not have to be
submitted to the Commerce Commission for approval under the “just and
reasonable” standard. In contrast to public utilities, an ARES’s prices are a matter
of contract between the ARES and its customers. The technical and regulatory
expertise of the Commerce Commission does not come into play. Accordingly, the
justification for giving the Commerce Commission exclusive original jurisdiction
over the disputes involving rates charged by public utilities is absent where, as here,
the complaint concerns overcharging by an ARES.
¶ 21 NAPG correctly points out that ARESs are subject to numerous statutory
requirements that are under authority of the Commerce Commission. For example,
there are provisions obligating ARESs to obtain certificates of service authority
from the Commerce Commission before serving residential customers (220 ILCS
5/16-115(a) (West 2014)); that forbid ARESs from discriminating against
customers based on race, gender, or income (220 ILCS 5/16-115A(d) (West
2014)); that require them to obtain authorization in prescribed form before
switching customers from another supplier (220 ILCS 5/16-115A(b) (West 2014));
and that impose standards regarding their marketing and billing practices (220
ILCS 5/16-115A(e) (West 2014)). Under section 16-115B(a) of the Rate Relief
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Law (220 ILCS 5/16-115B(a) (West 2014)), complaints alleging violation or
nonconformance with these or other provisions of the law applicable to ARESs
may be entertained by the Commerce Commission. If the Commerce Commission
determines that an ARES is in violation or noncomformance, it may order the
ARES to cease and desist; impose financial penalties; or alter, modify, revoke, or
suspend the ARES’s certificate of service authority. 220 ILCS 5/16-115B(b) (West
2014).
¶ 22 Zahn, the State, and the Commerce Commission differ somewhat in their
assessment of the significance of these additional provisions. In the State’s view,
they should be read as permitting claims such as those asserted by Zahn to be heard
and disposed of by the Commerce Commission if an aggrieved residential
consumer elects to pursue them in that forum. The Commerce Commission itself
suggests that, at the most, its jurisdiction extends only to claims that an ARES’s
rates or services are impermissible because they contravene the particular factors
set forth in section 16-115A(d) of the Rate Relief Law (220 ILCS 5/16-115A(d)
(West 2014)), a situation not present here. As for Zahn, she asserts that
notwithstanding whatever other authority the Commerce Commission may
possess, the absence of a provision expressly authorizing it to order reparations to
consumers precludes a construction of the law that would confer exclusive
jurisdiction over such claims on the Commerce Commission.
¶ 23 We express no view on the relative merits of these respective positions, for it is
unnecessary for us to do so. Whatever the precise scope of the Commerce
Commission’s authority to consider claims asserted by residential consumers
against ARESs, it is clear that nothing in the additional sections of the Public
Utilities Act, including the provisions of the Rate Relief Law cited by NAPG, can
fairly be read as expressing an explicit intention by the legislature that the
Commerce Commission has exclusive original jurisdiction over those claims.
Where the General Assembly has intended to confer exclusive jurisdiction on the
Commerce Commission regarding a particular issue, it has said so specifically. See,
e.g., 220 ILCS 5/16-125(h) (West 2014) (‘[r]emedies provided for under this
Section [governing transmission and distribution reliability] may be sought
exclusively through the Illinois Commerce Commission as provided under Section
10-109 of [the Public Utilities] Act”). NAPG can cite no similar language with
respect to claims of overcharging asserted by residential consumers against
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ARESs. Consideration of the statute as a whole, as well as the reason for the law,
the problems sought to be remedied, and the purposes to be achieved, therefore
reaffirms the conclusion we reached at the outset of this opinion based our
examination of section 9-252 of the Public Utilities Act: the claims of the type
asserted by plaintiff in this case do not fall within the Commerce Commission’s
exclusive jurisdiction. That being so, an Illinois circuit court would have
subject-matter jurisdiction to entertain them.
¶ 24 CONCLUSION
¶ 25 For the foregoing reasons, we answer the certified question “Does the Illinois
Commerce Commission have exclusive jurisdiction over a reparation claim, as
defined in Sheffler v. Commonwealth Edison Company, 2011 IL 110166, brought
by a residential consumer against an alternative retail electric supplier, as defined
by section 220 ILCS 5/16–102?” in the negative.
¶ 26 Certified question answered.
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