Case Name: In re ILLINOIS BELL SWITCHING STATION LITIGATION
Court: Illinois Appellate Court
Jurisdiction: Illinois
Decision Date: 1992-06-30
Citations: 234 Ill. App. 3d 457
Docket Number: No. 1—89—0974
Parties: In re ILLINOIS BELL SWITCHING STATION LITIGATION
Judges: 
Reporter: Illinois Appellate Court Reports, Third Series
Volume: 234
Pages: 457–473

Head Matter:
In re ILLINOIS BELL SWITCHING STATION LITIGATION
First District (2nd Division)
No. 1—89—0974
Opinion filed June 30, 1992.
SCARIANO, J., dissenting.
Joyce & Kubasiak, P.C., William J. Harte, Ltd., and Karla Wright, Ltd., all of Chicago, and DiTommaso & Berman, of Oak Brook (Edward T. Joyce, William J. Harte, and Karla Wright, of counsel), for appellants.
Kirkland & Ellis, of Chicago (Frank Cicero, Jr., P.C., J. Andrew Langan, Susan P. Jordan, and Walter R. Lancaster, of counsel), for appellee.
On October 23, 1992, the Appellate Court, First District, withdrew the July 30, 1991, opinion in case No. 1 — 89—0974, published at 218 Ill. App. 3d 224. A new opinion was subsequently filed June 30,1992.

Opinion:
JUSTICE DiVITO
delivered the opinion of the court:
Plaintiffs filed a complaint, framed as a class action representing customers of defendant Illinois Bell Telephone Company (Bell), against Bell, alleging economic damages as a result of a fire in Bell's Hinsdale, Illinois, switching station which disrupted service for one month. Counts I and II of plaintiffs' complaint alleged violations of the Illinois Public Utilities Act (the Act) (Ill. Rev. Stat. 1987, ch. 111⅔, par. 1 — 101 et seq.), count III alleged common law willful and wanton misconduct, count IV alleged breach of contract, and count V sought a declaratory judgment that a provision in Bell's tariff did not bar their claims. The circuit court dismissed counts I through IV and granted summary judgment for Bell on count V. Plaintiffs appeal the court's order pertaining to counts I, II, and V, raising as issues (1) whether a limitation of liability clause in Bell's tariff bars recovery for economic losses resulting from interruptions in telephone service; and (2) whether the Moorman doctrine (Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 435 N.E.2d 443) bars tort claims for economic losses due to alleged willful and wanton misconduct in actions brought pursuant to the Act. Ill. Rev. Stat. 1987, ch. 111⅔, par. 5-201.
The subject of the present litigation is Bell's telephone switching station in Hinsdale, Illinois. Bell has five such switching stations, which route and direct telephone calls over particular geographic areas. The Hinsdale station services the western and southwestern suburbs of Chicago and is able to process 3.5 million calls per day.
In order to protect the computer equipment and cables housed in its Hinsdale station from fire, Bell equipped it with an automatic fire sensor which would detect the presence of fire. In addition, Bell equipped the Hinsdale station with a fire alarm which would sound if a fire was detected; the alarm was connected so that, if sounded, it would register in Bell's office in Springfield, Illinois. Bell, however, did not connect the alarm to a local fire or police de partment. Further, although the Hinsdale station was automated and usually devoid of people, Bell did not install automatic firefighting equipment, but merely bolted manual extinguishers on the walls of the station.
On the afternoon of May 8, 1988, a fire started in Bell's Hinsdale switching station. No one was in the station at this time; however, the fire alarm was triggered and, at 3:50 p.m., registered for nine consecutive minutes in Bell's Springfield office. After the alarm sounded, Bell did not respond. The fire triggered a second alarm in Bell's Springfield office at 4:20 p.m.; however, Bell again did not respond in any manner to the fire.
At 4:50 p.m., someone passing the Hinsdale station saw smoke coming from the building and alerted the fire department. Although the fire department arrived within minutes, the Hinsdale station was already consumed by fire and the contents of the station destroyed. Consequently, telephone service to the western and southwestern suburbs of Chicago ceased.
Because of the fire damage, telephone service to the area affected was disrupted for approximately one month; as a result of the disruption in service, numerous Bell customers filed class action lawsuits against Bell. The cases were eventually consolidated and an amended joint class action complaint was filed. Bell moved to dismiss the complaint for failure to state a cause of action, and the circuit court granted Bell's motion.
Plaintiffs then filed a second amended joint class action complaint containing five counts: counts I and II contained allegations that Bell violated several provisions of the Act and the Illinois Commerce Commission rules, count III alleged willful and wanton negligence, count IV alleged breach of contract, and count V sought a declaratory judgment that the exculpatory language in Bell's tariff did not bar the action. Bell again moved to dismiss the complaint and the circuit court granted Bell's motion, dismissing counts I through IV and awarding summary judgment for Bell on count V. Plaintiffs appeal the court's dismissal of counts I and II, and the award of summary judgment on count V.
I
Plaintiffs initially contend that Bell's tariff, filed with the Illinois Commerce Commission (ICC) in accordance with the Act, is in contravention of the Act, and thus does not protect Bell from liability for interruption in service. Moreover, although the tariff, which describes the "terms and conditions of service," preempts any con tract expectancy from customers and contains an exculpatory clause which bars recovery for consequential damages due to interruptions in service, plaintiffs maintain that it is against public policy and should thus not bar plaintiffs' claims.
In response, Bell contends that the tariff is not against public policy and, further, that the tariff, accepted by the legislature for 50 years, legally defines the limits of its liability for interruptions in service. Consequently, Bell maintains that the tariff bars plaintiffs' claims.
The most recent tariff, like other tariffs filed by Bell going back several decades, lists among its general "regulations" a service interruption liability exclusion. That exclusion provides as follows:
"The liability of the Company for damages arising out of mistakes, omissions, interruptions, delays, errors or defects in transmission occurring in the course of furnishing service * shall in no event exceed an amount equivalent to the proportionate charge to the customer for the period of service during which such mistake, omission, interruption, delay, error or defect in transmission occurs. No other liability shall in any case attach to the Company." Illinois Bell Telephone Company Tariff, Illinois Commerce Commission No. 5, pt. 1, §5, par. 3.1.
Plaintiffs predicate their claims upon Bell's duties pursuant to the Act and the ICC rules. The Act requires a public utility to provide "adequate, efficient," and "reliable" service. (Ill. Rev. Stat. 1987, ch. 111⅔, pars. 8—101, 8—401.) The ICC rules require Bell to "adopt and pursue a maintenance program aimed at preventing service interruptions" and to "make reasonable provisions to meet emergencies resulting from * fire[s]." (83 Ill. Adm. Code §730.402(a), 730.408(a) (1985).) Plaintiffs assert that Bell, in failing to provide automatic fire-fighting equipment and in failing to respond to the alarms which sounded in its Springfield office, violated both the Act and ICC rules. Consequently, plaintiffs argue that Bell should not be able to escape liability by use of exculpatory language in contravention of both the Act and the ICC rules.
Neither the Act nor the ICC rules, however, specify whether the duty to provide entirely uninterrupted phone service is included in the description of adequate, efficient and reliable service. Rather, both the Act and ICC rules are silent on this point and address only general requirements of reliable and efficient service. It cannot be said that reliable and efficient service necessarily includes continuous, uninterrupted service.
Bell is nowhere charged with the duty to provide completely uninterrupted service, but rather, is required to provide "service and facilities which are in all respects adequate, efficient, reliable and environmentally safe and which * constitute the least-cost means of meeting the utility's service obligations." (Ill. Rev. Stat. 1987, ch. 111⅔, par. 8—401.) Furthermore, in enacting the Act, the legislature intended that "[telecommunications services should be available to all people of the State of Illinois at just, reasonable and affordable rates and be provided as widely and economically as possible." (Joint Committee on Public Utility Regulation (April 1985), at 21.) Consistent, then, with the legislature's dictate that Bell provide cost-effective service, Bell is required to file a tariff "which describes the nature of the service, applicable rates and other charges, [and] terms and conditions of service." Ill. Rev. Stat. 1987, ch. 111⅔, par. 13-501.
Moreover, while plaintiffs contend that the ICC has never approved of the tariff and Bell's customers had no input as to the contents of the tariff, the ICC has expressed an opinion that interruption of service complaints are limited by Bell's tariff. (Menco v. Illinois Bell Telephone Co., No. 84—0277 (Illinois Commerce Commission, Oct. 17, 1984).) Correspondingly, a reasonable interpretation of a statute by an agency charged with enforcement of that statute is entitled to great weight. (See Pielet Brothers Trading, Inc. v. Pollution Control Board (1982), 110 Ill. App. 3d 752, 756, 442 N.E.2d 1374.) Though a court of review is not bound by an agency's interpretation of law, "the construction of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong, especially when [the legislature] has refused to alter the administrative construction." Red Lion Broadcasting Co. v. Federal Communications Comm'n (1969), 395 U.S. 367, 381, 23 L. Ed. 2d 371, 383-84, 89 S. Ct. 1794, 1802; see NLRB v. Hendricks County Rural Electric Membership Corp. (1981), 454 U.S. 170, 177, 70 L. Ed. 2d 323, 330, 102 S. Ct. 216, 222.
In Meneo, a Bell customer brought suit against Bell to recover damages when its computer was put out of service for 15 days due to a malfunction in Bell's equipment. After an evidentiary hearing, the ICC explicitly implemented the tariff by applying the liability exclusion provision in dismissing Menco's complaint which sought recovery of economic losses suffered as a result of the temporary service interruption. Menco v. Illinois Bell Telephone Co., No. 84— 0277 (Illinois Commerce Commission, Oct. 17, 1984).
Furthermore, in J. Meyer & Co. v. Illinois Bell Telephone Co. (1980), 88 Ill. App. 3d 53, 409 N.E.2d 557, and Sarelas v. Illinois Bell Telephone Co. (1963), 42 Ill. App. 2d 372, 192 N.E.2d 451, this court held that Bell's duty to its customers is determined by the particular provisions of the tariff on file with the ICC.
In Sarelas, a Bell customer filed suit against Bell alleging that Bell disconnected his telephone for 2xlz hours, thereby violating its legal duty to provide service. In affirming the dismissal of the plaintiff's complaint, the Sarelas court held that "the extent to which [Bell] owed plaintiff 'a legal duty' is determined by the particular provisions of the tariff on file with the commission; there is no contract in this case on which plaintiff can rely, nor are his allegations of a breach of duty sufficient to constitute a claim in tort. He complains simply of the disconnection of his telephone *." Sarelas, 42 Ill. App. 2d at 375.
In J. Meyer & Co., the plaintiffs sued for damages sustained in a theft at their warehouse when burglars circumvented an alarm system which was connected to Bell's equipment. The plaintiffs alleged willful and wanton misconduct by Bell because Bell allegedly knew of other, similar burglaries and placed its junction box, with easily identifiable alarm wires, in an easily accessible location. In affirming the dismissal of the plaintiffs' suit, the appellate court held that "the source of any duty of Illinois Bell, as a public utility, to its subscribers is only in the tariff as filed." J. Meyer & Co., 88 Ill. App. 3d at 55.
Like plaintiffs in the instant case, the J. Meyer & Co. plaintiffs sought to circumvent the tariff by relying upon the statutory language requiring utilities to provide service "as shall promote the safety, health, comfort and convenience of its patrons, employees, and public" (Ill. Rev. Stat. 1975, ch. 111⅔, par. 32, now Ill. Rev. Stat. 1987, ch. 111⅔, par. 8—101). The court rejected this argument, holding that "a review of the relevant decisions discloses that section 32 [now section 8 — 101] does not require that a public utility render particular types of primary services" and that "the tariff is the sole source of any duty owed" by Bell. J. Meyer & Co., 88 Ill. App. 3d at 56.
Plaintiffs further contend that to allow Bell to immunize itself against gross negligence and willful misconduct is unreasonable and does nothing to further the public good. Plaintiffs maintain that the courts of several States are split on the question of whether a telephone company may limit its liability for defects in service. Both plaintiffs and Bell cite to numerous jurisdictions for the proposition that the tariff's exculpatory language is either against or not against public policy when damages result from allegedly willful and wanton misconduct on the part of Bell. A review of the cases, however, discloses that none are precisely on point; rather, several deal with exculpatory clauses in private contracts and others address advertising in telephone directories.
Further, it should be noted that the apparent diversity of opinion seems to a great extent to be merely a function of the diversity of legislation on this question and on closely related matters existing in the various jurisdictions in which this question has been addressed. However, as Bell argues, those cases are neither binding nor persuasive, particularly where Illinois courts have upheld the tariff's liability exclusion on an allegation of willful and wanton misconduct. J. Meyer & Co., 88 Ill. App. 3d 53.
Notwithstanding plaintiffs' arguments that the tariff should not operate to bar claims for damages resulting from Bell's willful and wanton misconduct, "[without the limitations on liability set forth by the tariff, [Bell] would be uniquely vulnerable to claims based on signal transmission defects which may result from a variety of causes, adversely affecting its ability to fulfill the public need for reasonable telephone service charges." J. Meyer & Co., 88 Ill. App. 3d at 57.
We agree with the California Supreme Court when it stated, in Waters v. Pacific Telephone Co. (1974), 12 Cal. 3d 1, 7, 523 P.2d 1161, 1164, 114 Cal. Rptr. 753, 756:
"The theory underlying [decisions upholding the right of regulated utilities to limit their liabilities] is that a public utility, being strictly regulated in all operations with considerable curtailment of its rights and privileges, shall likewise be regulated and limited as to its liabilities. In consideration of its being peculiarly the subject of state control, 'its liability is and should be defined and limited.' [Citation.] There is nothing harsh or inequitable in upholding such a limitation of liability when it is thus considered that the rates as fixed by the commission are established with the rule of limitation in mind. Reasonable rates are in part dependent upon such a rule."
See also Stern v. General Telephone Co. (1975), 50 Cal. App. 3d 538, 123 Cal. Rptr. 373.
If Bell's liability were extended to all those who suffered pecuniary loss, its liability would become grossly disproportionate to its fault. We hold that prior Illinois authority and legislative intent require the conclusion that the exculpatory language in Bell's tariff properly limits claims from disruption of service to a rebate of the costs for the missed service. Because "[w]here the legislature chooses not to amend a statute after a judicial construction, it will be presumed that it has acquiesced in the court's statement of legislative intent" (Miller v. Lockett (1983), 98 Ill. 2d 478, 483, 457 N.E.2d 14), we find that the exculpatory language in the tariff, accepted for decades in Illinois, is neither in contravention of the Act or ICC rules nor against public policy, and thus, bars plaintiffs' claims.
II
Plaintiffs next contend that Bell failed to satisfy its duties pursuant to the Act (Ill. Rev. Stat. 1987, ch. 111⅔, pars. 8—101, 8—104, 8—501). Plaintiffs maintain that the statute requires utilities to provide "adequate," "reliable," and "efficient" service and facilities; if the utility fails to provide that which is required, it is "liable * for all loss, damages or injury caused thereby." Ill. Rev. Stat. 1987, ch. 111⅔, pars. 5-201, 8-401.
In response, Bell contends that, although the Act requires it to provide adequate, reliable, and efficient service, the Act does not provide standards for determining whether a utility is in compliance and, thus, common law tort principles apply. Bell maintains that because plaintiffs' purely economic losses, based on expectation damages, have no legally cognizable basis in tort, plaintiffs' claims are barred by the Moorman doctrine. Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 435 N.E.2d 443 ("When the defect is of a qualitative nature and the harm relates to the consumer's expectation that a product is of a particular quality *, contract, rather than tort, law provides the appropriate set of rules for recovery").
The applicable provisions of the Act under which plaintiffs base their claims provide that "[ejvery public utility shall furnish * facilities * in all respects adequate, efficient, just and reliable" (Ill. Rev. Stat. 1987, ch. 111⅔, par. 8 — 101) and that "[ejvery public utility shall provide service and facilities which are * adequate, efficient, reliable" (Ill. Rev. Stat. 1987, ch. 111⅔, par. 8 — 401). Plaintiffs assert that Bell failed to satisfy its duties pursuant to the foregoing statutes and that its omission gives rise to their claims under section 5 — 201, which provides:
"In case any public utility shall do, cause to be done or permit to be done any act, matter or thing prohibited, forbidden or declared to be unlawful, or shall omit to do any act, matter or thing required to be done either by any provisions of this Act or any rule, regulation, order or decision of the Commission, issued under authority of this Act, the public utility shall be liable to the persons or corporations affected thereby for all loss, damages or injury caused thereby or resulting therefrom, and if the court shall find that the act or omission was wilful, the court may in addition to the actual damages, award damages for the sake of example and by the way of punishment." Ill. Rev. Stat. 1987, ch. 111⅔, par. 5—201.
Plaintiffs assert that, in providing a statutory remedy, the legislature has precluded the use of the Moorman doctrine barring tort claims for economic losses. Plaintiffs maintain that no court in Illinois has applied the Moorman doctrine to claims arising from statutory liability, although several courts have addressed Moorman's applicability to the Uniform Commercial Code (Ill. Rev. Stat. 1987, ch. 26, par. 1—101 et seq.), the Contribution Act (Ill. Rev. Stat. 1987, ch. 70, par. 301 et seq.), and the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1987, ch. 121½, par. 261 et seq.). See Cirilo's, Inc. v. Gleeson, Sklar & Sawyers (1987), 154 Ill. App. 3d 494, 507 N.E.2d 81; Warren v. LeMay (1986), 142 Ill. App. 3d 550, 491 N.E.2d 464.
In Warren, plaintiff home purchasers brought a claim against a real estate broker and an exterminator under the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) for misrepresentation and nondisclosure with respect to termite infestation. The applicable statute provided a remedy for fraud, prohibiting the "use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression, or omission of any material fact, with intent that others rely on the concealment, suppression or omission," and permitted a private damages action for violations of the statute. (Ill. Rev. Stat. 1981, ch. 121½, pars. 262, 270a.) The Warren defendants attempted to apply the Moorman doctrine to bar purely economic damages in a tort claim. The court, however, refused to apply Moorman, reasoning that
"Moorman dealt with damages compensable under common law principles of negligence, misrepresentation and strict liability. Here, by contrast, defendant * was found liable for violation of a statute which specifically authorizes the award of actual damages *. In view of this express statutory authorization, the availability of a remedy for actual damages to plaintiffs is beyond doubt." Warren, 142 Ill. App. 3d at 579.
In Cirilo's, the third-party defendant argued that Moorman supported his claim that he was not jointly subject to liability in tort pur suant to the Contribution Act because he could be liable to the original plaintiff only for economic losses. The Cirilo's court found the third-party defendant's reliance on Moorman to be misplaced because "Moorman did not adjudicate a contribution claim, nor does it purport to define 'liability in tort' for Contribution Act purposes; it speaks only to the initial plaintiff-defendant relationship." Cirilo's, 154 Ill. App. 3d at 497.
Although Bell acknowledges that no court has held that Moorman defeats a statutory cause of action, it nevertheless contends that the Act's liability provisions are in derogation of the common law and, thus, common law principles, including Moorman apply. See Barthel v. Illinois Central Gulf R.R. Co. (1978), 74 Ill. 2d 213, 384 N.E.2d 323.
In Barthel, the plaintiffs sued for personal injuries and wrongful death resulting from a collision between a car and one of the defendant's freight trains. The Barthel plaintiffs sued under the same provision of the Act as the present plaintiffs, alleging violations by the defendant of various regulations relating to the safety of railroad crossings. The Barthel plaintiffs made the same argument made by plaintiffs here: that section 5 — 201's provision that a utility violating the Act "shall be liable" for "all" damages was conclusive as to whether a common law doctrine, in Barthel, contributory negligence, could preclude damages.
The Barthel court found that the Act is in derogation of the common law and thus tort principles limiting a plaintiff's claims under the Act will not be abrogated unless "it plainly appears that the intent of the statute" is to do so. (Barthel, 74 Ill. 2d at 221.) The Barthel court further found that "statutes in derogation of the common law are to be strictly construed in favor of persons sought to be subjected to their operation. The courts will read nothing into such statutes by intendment or implication." (Barthel, 74 Ill. 2d at 220.) Thus, the court held that the common law defense of contributory negligence would bar recovery, despite the Act's provision of liability for "all * damages" resulting from a violation of the Act. Barthel, 74 Ill. 2d at 224.
In the instant case, it does indeed appear that section 5 — 201, which allows recovery for "all" damages, is incompatible with Moor-man's common law tort principles, which do not allow recovery for economic damages in tort actions. (Compare Ill. Rev. Stat. 1987, ch. 111⅔, par. 5—201, with Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill. 2d 69, 435 N.E.2d 443.) However, despite the apparent incompatibility, courts will not abrogate common law tort principles unless statutes "plainly" evidence legislative intent to do so. (Barthel, 74 Ill. 2d at 221.) It does not appear from the language of the Act that the legislature intended to abrogate the common law doctrines of Moorman and, thus, plaintiffs should not escape the doctrine prohibiting recovery for economic losses in tort actions simply because they assert their claims pursuant to the Act.
While it is true that section 5 — 201 imposes liability for all loss resulting from a utility's violation of the Act and that common law doctrines do not allow recovery for all loss, the Act must be "strictly construed" in favor of Bell. (Barthel, 74 Ill. 2d at 221.) The legislature did not "plainly" evidence its intent to dispose of common law principles. (See Barthel, 74 Ill. 2d at 221.) The Moorman doctrine is no less compatible with the Act than is the defense of contributory negligence; yet, the supreme court in Barthel held that violations of the Act imposed liability not for "all" loss, but just for those losses for which the plaintiff was not contributorily negligent.
Although plaintiffs argue that Warren and Cirilo's preclude the application of the Moorman doctrine to limit recovery, both cases are consistent with such an application. The Consumer Fraud Act was designed to provide remedies for damages to expectation interests in the context of fraudulent business practices. (See Warren, 142 Ill. App. 3d 550; Ill. Rev. Stat. 1981, ch. 121½, par. 261 et seq.) Moorman's inapplicability to the Consumer Fraud Act is consistent with the Act's purposes. Further, the Contribution Act focuses on the relationship between the parties and the third-party defendant; it does not address the initial plaintiff-defendant relationship, as does Moorman. Cirilo's, 154 Ill. App. 3d 494, 507 N.E.2d 81.
We conclude that Moorman is not rendered inapplicable merely because plaintiffs assert a statutory cause of action. Plaintiffs essentially seek damages because their economic affairs were disrupted. These types of damages are plainly not recoverable in tort; similarly, they should not be recoverable pursuant to the Act. See Barthel, 74 Ill. 2d 213, 384 N.E.2d 323.
We note that the Illinois Supreme Court has recently addressed Moorman's applicability to the rendering of legal services. (Collins v. Reynard (1992), 154 Ill. 2d 48.) We are aware, however, that the supreme court has granted rehearing in Collins and we expect that, at the very most, the court might determine that Moorman is not applicable to legal malpractice claims.
In the alternative, plaintiffs argue that, if Moorman does apply, the sudden and dangerous occurrence exception allows their claims. Board of Education v. A, C & S, Inc. (1989), 131 Ill. 2d 428, 546 N.E.2d 580 (Moorman doctrine does not apply where damage to the defective product was due to a sudden and dangerous occurrence).
In response, Bell correctly asserts that any sudden and dangerous occurrence resulted in damage to its facility and not to plaintiffs' property. Rather, it was only plaintiffs' expectations of service which were affected due to the damage to Bell's equipment. See also American Drug Stores, Inc. v. A T &T Technologies, Inc. (1991), 222 Ill. App. 3d 153, 583 N.E.2d 694.
Based on the foregoing, we find that the Moorman doctrine prohibits plaintiffs' claims for purely economic losses and, further, that Bell's tariff, which excludes recovery for expectation damages due to interruptions in service, bars plaintiffs' claims.
Affirmed.
McCORMICK, J., concurs.