Opinion ID: 2237187
Heading Depth: 1
Heading Rank: 8

Heading: refund jurisdiction

Text: We now turn to the issue of whether the circuit court or the Commission lawfully possesses subject matter jurisdiction over the terms and implementation of the refund from the illegal rates collected pursuant to the Commission's Rate Order I. As stated above, the appellate court in the instant case held that the circuit court had no legal basis to exercise jurisdiction over the refund. ( Hartigan II, 202 Ill.App.3d at 955, 956, 149 Ill.Dec. 341, 561 N.E.2d 711.) The appellate court determined that Supreme Court Rule 305 (134 Ill.2d R. 305) authorizes the trial court to stay enforcement of its judgment pending appeal. ( Hartigan II, 202 Ill.App.3d at 955, 149 Ill.Dec. 341, 561 N.E.2d 711.) The appellate court concluded, however, that issuance of this court's mandate in Hartigan I, which remanded the cause to the Commission for further ratemaking proceedings, terminated the appellate process and, consequently, the circuit court's jurisdiction over the case. Hartigan II, 202 Ill.App.3d at 955, 149 Ill.Dec. 341, 561 N.E.2d 711. The appellate court found that the remandment of the case to the Commission pursuant to the decision in Hartigan I revested jurisdiction in the Commission ( Hartigan II, 202 Ill.App.3d at 956, 149 Ill.Dec. 341, 561 N.E.2d 711), and that the Commission had statutorily based jurisdiction over the refund pursuant to the Act ( Hartigan II, 202 Ill.App.3d at 960, 149 Ill.Dec. 341, 561 N.E.2d 711). Therefore, the appellate court reviewed only the terms of the refund set forth in the Commission's Rate Order II. For the reasons which follow, we reverse the appellate court on this issue. Under the Act, the Commission must set just and reasonable rates that a utility may charge its customers. (Ill.Rev. Stat.1985, ch. 1112/3, par. 9-101.) Once the Commission sets the utility's rates, the utility must charge that rate. (Ill.Rev.Stat. 1985, ch. 1112/3, par. 9-240.) That rate must remain in effect throughout the appellate process unless the reviewing court stays or suspends it. (Ill.Rev.Stat.1985, ch. 1112/3, par. 10-204.) If no stay is obtained, and the rate is reversed on appeal, the utility may continue to collect the challenged rates while the appeal is pending, but must refund that portion of the rate order which the reviewing court holds to be improper. Independent Voters v. Illinois Commerce Comm'n (1987), 117 Ill.2d 90, 103, 109 Ill.Dec. 782, 510 N.E.2d 850. In the instant case, the appellate court determined that the present refund from Rate Order I fell within the ambit of section 9-252 of the Act and apparently determined that the Commission had jurisdiction over the refund pursuant to this section. (See Hartigan II, 202 Ill.App.3d at 959-61, 149 Ill.Dec. 341, 561 N.E.2d 711.) Section 9-252 provides in pertinent part: When complaint is made to the Commission concerning any rate or other charge of any public utility and the Commission finds, after a hearing, that the public utility has charged an excessive or unjustly discriminatory amount for its product, commodity or service, the Commission may order that the public utility make due reparation to the complainant therefor, with interest at the legal rate from the date of payment of such excessive or unjustly discriminatory amount. (Ill.Rev.Stat.1985, ch. 1112/3, par. 9-252.) As support for its conclusion that the present refund is based on section 9-252, the appellate court noted that, in Hartigan I, this court referred to the refund as the ratepayers' claims for reparations for excessive rates ( Hartigan I, 117 Ill.2d at 148, 109 Ill.Dec. 797, 510 N.E.2d 865). Hartigan II, 202 Ill.App.3d at 959, 149 Ill.Dec. 341, 561 N.E.2d 711. We find, however, that the appellate court has misconstrued the decision in Hartigan I. Although this court did refer to the ratepayers' claims for a refund as claims for reparations in Hartigan I, it clarified that statement when it stated: [T]he trial judge, upon Edison's motion, allowed Edison to collect the rate ordered by the Commission in [Rate Order I] but ordered the amount collected over and above the rate previously charged by the utility to be held in escrow, subject to ratepayers' refund claims. As discussed, refunds dating from the circuit court's reversal are allowable under our decision in Independent Voters   . (Emphasis added.) Hartigan I, 117 Ill.2d at 148, 109 Ill.Dec. 797, 510 N.E.2d 865. In Independent Voters, 117 Ill.2d 90, 109 Ill.Dec. 782, 510 N.E.2d 850, this court reaffirmed its decision in Mandel Brothers, Inc. v. Chicago Tunnel Terminal Co. (1954), 2 Ill.2d 205, 117 N.E.2d 774, holding that, in a situation where the Commission has approved rates as just and reasonable but those rates are later reversed on appeal, section 9-252 of the Act does not apply. ( Independent Voters, 117 Ill.2d at 96, 109 Ill.Dec. 782, 510 N.E.2d 850.) In Mandel Brothers, this court determined that rates approved by the Commission as just and reasonable rates could not be excessive or unjustly discriminatory for the purposes of awarding reparations even if those rates are later reversed by a reviewing court. ( Mandel Brothers, 2 Ill.2d at 209, 117 N.E.2d 774.) The Mandel Brothers holding was based on the statutory scheme of the Act which requires the utility to charge rates approved by the Commission throughout the appellate process unless the reviewing court stays or suspends the new rates. ( Mandel Brothers, 2 Ill.2d at 211, 117 N.E.2d 774.) The Mandel Brothers court reasoned that, because the utility is required to charge rates set by the Commission, these rates cannot be deemed to be excessive rates as a basis of a claim for reparations. Mandel Brothers, 2 Ill.2d at 212, 117 N.E.2d 774. The Mandel Brothers holding was reaffirmed by this court in both Independent Voters and Citizens Utilities Co. v. Illinois Commerce Comm'n (1988), 124 Ill.2d 195, 124 Ill.Dec. 529, 529 N.E.2d 510. We now reaffirm the Mandel Brothers holding for a third time. The Commission, once it approved the rates in Rate Order I as just and reasonable rates, cannot now require Edison to pay reparations for those rates, even though Rate Order I was reversed on appeal. The Commission's function is legislative in nature and the rates that it sets are prospective in operation. (See Mandel Brothers, 2 Ill.2d at 210, 117 N.E.2d 774.) To allow the Commission to now order reparations from rates that it originally set would violate the well-established rule against retroactive ratemaking. Citizens Utilities Co., 124 Ill.2d at 207, 209, 124 Ill.Dec. 529, 529 N.E.2d 510. This court's holding in Independent Voters, however, went beyond the scope of Mandel Brothers. In Independent Voters, the Commission approved rates which this court later set aside. The court then remanded the cause to the Commission to conduct further ratemaking proceedings. Thereafter, intervenors in Independent Voters petitioned this court for a refund of overcharges collected pursuant to the portions of the rate order which the court had determined to be invalid. In addressing intervenors' petition, the court initially noted that no provision in the Act purports to take away a court's equitable jurisdiction ( Independent Voters, 117 Ill.2d at 100, 109 Ill.Dec. 782, 510 N.E.2d 850), nor could the legislature do so ( Peoples Gas Light & Coke Co. v. Slattery (1939), 373 Ill. 31, 42, 25 N.E.2d 482). The court determined that, once a rate order has been set aside on review, the utility may not continue to benefit from the invalid portions of the rate order. ( Independent Voters, 117 Ill.2d at 104, 109 Ill.Dec. 782, 510 N.E.2d 850.) Although, under Mandel Brothers, the Commission could not award reparations for excessive rates pursuant to the Act in this factual situation, this court decided:  Peoples Gas Light & Coke Co. v. Slattery [citation] made clear that this court may exercise its equitable powers when an appropriate remedy is not provided in the Act [citation]. The Act does not specifically provide a remedy for this situation, although it provides for a court to review the lawfulness and reasonableness of Commission proceedings [citation]. Too, the unavailability of a refund would force the consumer to pay a rate that has been held to be in excess of that established under proper criteria and would raise due process questions. [Citation.] (Emphasis added.) ( Independent Voters, 117 Ill.2d at 104, 109 Ill.Dec. 782, 510 N.E.2d 850.) To alleviate this situation, this court in Independent Voters exercised its inherent powers to fashion an equitable remedy and, for the first time, ordered a refund of overcharges collected pursuant to the invalid portions of the rate order. In this regard, the court stated: [T]his court's decision holding that certain expenses and deductions allowed in the rate order were improper was final. That portion of the rate order was invalid from the time this court entered its judgment. The portion of the rates that was held to be erroneously set by the Commission should be refunded to customers who paid them   . To hold otherwise would allow Bell to continue collecting the unlawfully increased rate and benefiting from such, without a remedy to the customer, until the Commission conducts hearings and determines a new rate base. Independent Voters, 117 Ill.2d at 102-03, 109 Ill.Dec. 782, 510 N.E.2d 850. In the instant case, the ICC-approved rates which were established in Rate Order I were set aside on appeal by the circuit court. This court affirmed the circuit court's reversal of Rate Order I. ( Hartigan I, 117 Ill.2d 120, 109 Ill.Dec. 797, These facts present a situation similar to that of the factual situation that this court encountered in Independent Voters. (See Independent Voters, 117 Ill.2d 90, 109 Ill.Dec. 782, 510 N.E.2d 850.) This court's decision in Independent Voters controls the instant case. Therefore, the refund of illegal rates collected under the Commission's Rate Order I is an equitable remedy made available to ratepayers pursuant to this court's equitable powers delineated in its decision in Independent Voters and is not a statutorily based remedy, as the appellate court concluded. The question that remains is whether the circuit court lawfully possesses subject matter jurisdiction over the terms and implementation of the refund from Rate Order I. In its jurisdictional statement, the circuit court held that its jurisdiction over the refund was based on its inherent judicial power flowing from Supreme Court Rule 305(b) (134 Ill.2d R. 305(b)). In this regard, the circuit court stated: The May 16, 1986 Order was entered pursuant to Supreme Court Rule 305 and was an exercise of judicial discretion unrelated to the Public Utilities Act and well beyond the scope of anything which the [Commission] could have done itself. At the time of the Stay Order there was simply no law, statutory or caselaw, in Illinois which authorized a refund to consumers once a rate was declared to be illegal. The May 16th Order permitted Edison to continue to charge the illegal rate promulgated by the Commission's [Rate Order I] in exchange for Edison's acquiescence in a refund to consumers if this Court's declaration of illegality was not reversed upon appeal. On this issue the Circuit Court was affirmed by the Supreme Court. The benefits of the May 16th Order to both the utility and to the consumers were eminent and the assurances of a refund were unprecedented.       Having promulgated an illegal rate the [Commission] was powerless to correct or unwind the process by granting refunds because the [Commission] is powerless to engage in retroactive ratemaking. It is thus clear that without the May 16, 1986 Order there simply never could have been a refund possibility. The Refund is the product of activity which was exclusively judicial and was not dependent upon anything contained in the Public Utilities Act nor reserved therein to the [Commission]. Retained jurisdiction in [ sic ] a commonplace prerogative utilized by courts to enforce their ordersthat is how it is used in the Stay/Refund Order. The jurisdiction which this Court originally obtained in the captioned case was based on Section 68 of the Public Utilities Act in force at that time. That statutory jurisdiction was exhausted when this Court entered its Order of April 29, 1986. The activities of May 16 were undertaken outside of the Public Utilities Act, were authorized by Supreme Court Rule 305 and were clearly the exercise of a discretionary authority well within this Court's inherent judicial powers. Jurisdiction for the Stay/Refund Order is based in legal concepts which are judicial in character and not on any statutory grant. That jurisdiction survives until performance under the order is completed or accomplished with finality. (Emphasis in original.) People ex rel. Hartigan v. Illinois Commerce Comm'n (Cir.Ct. Cook Co. Oct. 12, 1989), No. 85-CH-10970. In order to determine whether the circuit court's May 1986 stay order properly retained jurisdiction over the terms and implementation of the refund pursuant to Supreme Court Rule 305(b), it is necessary to discuss the circuit court's rollback instruction in its April 1986 decision. In their briefs, Edison and the Commission have intimated that the circuit court's rollback order was an illegal order. Therefore, these parties suggest that the circuit court's May 1986 stay order amounted to a stay of a void order which cannot be the basis of the circuit court's retained jurisdiction over the refund from Rate Order I. In its April 1986 decision on the merits, the circuit court reversed the Commission's rate increase established in Rate Order I, instructed the Commission to promulgate new revised rates within 30 days, instructed the Commission to exclude certain costs from these revised rates, and rolled back the $495 million annual increase set in Rate Order I. In Hartigan I, Edison and the Commission challenged the circuit court's decision to reverse Rate Order I, its instructions to the Commission, and its roll back of rates. This court affirmed the circuit court's decision to reverse Rate Order I. It determined, however, that many of the circuit court's instructions to the Commission regarding further ratemaking proceedings were beyond its authority and constituted judicial ratemaking. ( Hartigan I, 117 Ill.2d at 141-48, 109 Ill.Dec. 797, 510 N.E.2d 865.) The court stated: [A] circuit court reviewing an order of the Commission may only affirm or reverse the order or remand the cause for further evidence. Directing the Commission to establish a specific rate is judicial ratemaking, a function that the legislature has charged to the Commission exclusively. The court had no authority to order a rollback, or return, to the prior rates. [Citation.] Moreover, the court may not impose a time limit within which the Commission, an agency created by the legislature, must perform its ratemaking function. Hartigan I, 117 Ill.2d at 148, 109 Ill.Dec. 797, 510 N.E.2d 865. We take this opportunity to clarify this court's earlier statement concerning the circuit court's lack of authority to order a rollback, or return, to prior rates. The Commission is responsible for setting rates public utilities may charge its customers. (Ill.Rev.Stat.1985, ch. 1112/3, pars. 9-102 through 9-202.) Under the statutory scheme, when Commission-approved rates are reversed by a reviewing court, the invalid rates remain in effect throughout the appellate process unless those rates are suspended or stayed by a court of review. (Ill.Rev.Stat.1985, ch. 1112/3, par. 10-204 (formerly Ill.Rev.Stat.1983, ch. 1112/3, par. 75).) Section 10-204 of the Act authorizes the reviewing court to stay or suspend the invalidated rates while the parties appeal its decision with respect to the rate order. (Ill.Rev.Stat.1985, ch. 1112/3, par. 10-204.) Section 10-204 provides in pertinent part: [T]he pendency of an appeal shall not of itself stay or suspend the operation of the rule, regulation, order or decision of the Commission, but during the pendency of the appeal the reviewing court may in its discretion stay or suspend, in whole or in part, the operation of the Commission's rule, regulation, order or decision. (Emphasis added.) Ill.Rev. Stat.1985, ch. 1112/3, par. 10-204(a). Although the circuit court cannot order a rollback, or return, to prior rates (see Illinois Commerce Comm'n v. Chicago & Eastern Illinois Ry. Co. (1928), 332 Ill. 243, 163 N.E. 664), the reviewing court may stay the operation of the new, invalidated rate order (Ill.Rev.Stat.1985, ch. 1112/3, par. 10-204). If the new rates are stayed or suspended, it is the Commission which must determine what rates will be in effect during the appellate process. (See Slattery, 373 Ill. at 48, 25 N.E.2d 482.) The Commission is statutorily authorized to set temporary rates under certain conditions. (Ill.Rev.Stat.1985, ch. 1112/3, par. 9-202 (formerly Ill.Rev.Stat.1983, ch. 1112/3, par. 36).) If a court suspends the Commission's rate order, the Commission must determine whether prior rates will remain in effect during the appeal or whether it will set temporary rates to be in effect during the appeal process. Therefore, the circuit court in the instant case erred when it instructed the Commission to rollback the $495 million annual rate increase and restore or return to the prior rates. Furthermore, the circuit court has no authority to rollback or suspend rates retroactively to the date of the Commission's rate order. In the instant case, however, the circuit court acted well within its statutory authority in staying or suspending, from the date of its decision throughout the appellate process, the $495 million annual rate increase established in Rate Order I. (Ill.Rev.Stat.1985, ch. 1112/3, par. 10-204; see Hartigan I, 117 Ill.2d at 148, 109 Ill. Dec. 797, 510 N.E.2d 865.) Therefore, we find that, in its April 1986 decision, the circuit court, in effect, properly stayed or suspended the operation of the rate increase established in Rate Order I pursuant to section 10-204 of the Act (Ill.Rev. Stat.1985,ch. 1112/3, par. 10-204). The circuit court, however, improperly ordered the Commission to set revised rates which excluded all the costs of Byron I from Edison's rate base, the effect of which was to order the Commission to return to Edison's prior rates. In addition, as the circuit court properly noted, the entry of its April 1986 decision on the merits was a final judgment ( Independent Voters, 117 Ill.2d at 102, 109 Ill.Dec. 782, 510 N.E.2d 850), which terminated its statutory jurisdiction to review Commission orders ( Illinois Consolidated Telephone Co. v. Aircall Communications, Inc. (1981), 101 Ill.App.3d 767, 769, 57 Ill.Dec. 197, 428 N.E.2d 747). In May 1986, however, the circuit court exercised its judicial authority under Supreme Court Rule 305(b) and granted Edison's motion to stay the enforcement of its April 1986 decision to suspend Rate Order I's $495 million annual rate increase. Supreme Court Rule 305(b) provides in relevant part: (b)    (1) On notice and motion, and an opportunity for opposing parties to be heard, the trial court, or the reviewing court or a judge thereof, may stay pending appeal    the enforcement, force and effect of any    final or interlocutory judgment or judicial or administrative order.       (3) The stay, whether granted by the trial or reviewing court, shall be conditioned upon such terms as are just. (Emphasis added.) 134 Ill.2d R. 305(b). In granting its May 1986 stay order pursuant to Supreme Court Rule 305(b), the circuit court, as it correctly determined, was acting in a judicial capacity and exercising inherent equitable powers. Stay orders granted pursuant to Supreme Court Rule 305(b) are treated as preliminary injunctions. (See Allied Contracting Co. v. Bennett (1982), 110 Ill.App.3d 310, 311, 66 Ill.Dec. 54, 442 N.E.2d 326.) A court's power to grant a stay is an equitable power to enforce equitable principles. Cahokia Sportservice, Inc. v. Illinois Liquor Control Comm'n (1975), 32 Ill.App.3d 801, 806, 336 N.E.2d 276. The circuit court was authorized by Rule 305(b) to grant its stay conditioned upon such terms as are just. (Emphasis added.) (134 Ill.2d R. 305(b).) In the instant case, as the circuit court stated, its decision to stay enforcement of its April 1986 judgment allowed Edison to collect invalidated rates throughout several years of appeals and remand. Therefore, the circuit court, pursuant to Rule 305(b), conditioned its stay order on retention of jurisdiction over the terms and implementation of any potential refund from money collected pursuant to the invalidated Rate Order I. Under Supreme Court Rule 305(b), the trial court may condition a stay upon just terms. In determining whether the circuit court's retained jurisdiction was a just condition to granting Edison's motion for the stay order, we note that all parties benefitted from the stay order and its refund-related conditions. The circuit court expressly stated that it would not have granted Edison's motion to stay enforcement of its April 1986 decision unless that stay was conditioned upon its retained jurisdiction to dictate the terms of and implement any potential refund. By staying the enforcement of its April 1986 rate suspension, the circuit court allowed Edison to continue to collect the invalidated rate increase in Rate Order I for several years. Had the circuit court refused to stay its suspension of the invalidated rates, and this court later reversed the circuit court and reinstated Rate Order I, Edison could not have recovered any money lost during the appellate process because of the rule against retroactive ratemaking. Intervenors, on the other hand, benefitted from the refund-related conditions of the stay order. The circuit court properly observed that, at the time it granted its May 1986 stay order, there was no statutory or case law precedence for the equitable remedy of a refund. Without the circuit court's condition retaining jurisdiction over a potential refund, consumers may have been required to pay improper rates throughout the appellate process without a remedy. If the circuit court had not retained jurisdiction to establish a refund, either it would not have granted the stay or consumers may have been charged an improper rate for years without recourse. In addition, we note that, in its stay order, the circuit court laid the groundwork for the type of equitable refund which we later validated by this court's decision in Independent Voters. As stated in Independent Voters, this type of remedy is equitable in nature, and the circuit court in this case was acting in its equitable capacity. Therefore, we conclude that the stay order's condition that the circuit court retain jurisdiction over the terms and implementation of a refund is a just and equitable condition pursuant to Supreme Court Rule 305(b). Furthermore, the appellate court erroneously concluded that the issuance of this court's decision in Hartigan I terminated the appellate process and any possible jurisdiction over the refund that the circuit court may have obtained. ( Hartigan II, 202 Ill.App.3d at 955, 149 Ill.Dec. 341, 561 N.E.2d 711.) On the contrary, the decision in Hartigan I remanded the cause to the Commission for further ratemaking proceedings. Remandment involves the continuation of the same case rather than the beginning of a new and distinct case. Therefore, the decision in Hartigan I did not terminate the circuit court's retained jurisdiction over the terms and implementation of a refund acquired pursuant to Supreme Court Rule 305(b). For these reasons, we reverse the appellate court on this issue and hold that the circuit court lawfully acquired and retained equitable jurisdiction over the terms and implementation of the refund pursuant to Supreme Court Rule 305(b).