Opinion ID: 2646701
Heading Depth: 1
Heading Rank: 8

Heading: Application of the Filed-Rate Doctrine

Text: 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.
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 -12. The ICA also clarified that the dismissal was without prejudice. Id. at . 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. 51 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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)).
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. 52 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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 53 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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 54 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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.
PLNI argues that the time limitation is not at issue in this case, because even though tariffs are implicated, the filedrate doctrine does not apply. Specifically, PLNI alleges that 55 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER “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 56 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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 57 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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 filed58 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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. 59 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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 60 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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. 61 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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. 62 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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. 63 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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 120day 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 64 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER 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.