Opinion ID: 2105618
Heading Depth: 2
Heading Rank: 2

Heading: Is SWEPCO'S Tariff Reasonable?

Text: SWEPCO argues that the tariff provision limiting liability for personal injury is enforceable because the PUC, which comprehensively regulates electric utilities' rates and services, approved the tariff. Moreover, SWEPCO contends that because a PUC-approved tariff has the force and effect of law under the filed-rate doctrine, the tariff is presumptively reasonable. SWEPCO reasons that the electric utility industry differs from an unregulated industry in which a company can adjust its prices or services for liability risks. Further, SWEPCO asserts that the PUC carefully defines a utility's duties through its tariff-approval process and does not allow utilities to incorporate personal-injury liability into its rates. Finally, SWEPCO contends that its tariff is reasonable under this Court's Auchan analysis. See Auchan, 995 S.W.2d at 673-75. In response, Grant argues that whether a tariff limiting liability for personal injury is reasonable is a question for the factfinder. Moreover, Grant asserts that even if a utility can limit its liability, the utility nevertheless retains a duty to exercise proper precautions to anticipate and prevent injuries to customers. Further, Grant contends that the factors this Court and the PUC have applied to uphold a tariff provision limiting liability dealt solely with liability for economic damages and do not apply to liability for personal-injury damages. Finally, Grant argues that the trial court's granting summary judgment based on SWEPCO's tariff violates the open-courts provision of the Texas Constitution, article I, section 13. We review a tariff's reasonableness as a question of law. Auchan, 995 S.W.2d at 671. This Court has never determined whether a provision in a utility's tariff limiting liability for personal injuries is reasonable. However, we have held that a tariff provision limiting liability for economic damages resulting from a utility's negligence was reasonable. Auchan, 995 S.W.2d at 675. Likewise, a number of jurisdictions have upheld tariffs absolving utilities from liability for economic damages. See Auchan, 995 S.W.2d at 671-72 (citations therein). These jurisdictions only invalidate tariffs that purport to limit a utility's liability for economic damages caused by gross negligence or willful misconduct. See Auchan, 995 S.W.2d at 672 (citations therein). Generally, the courts that have upheld tariff provisions limiting liability for economic damages hold that, when administrative agencies regulate utilities to ensure reasonable rates and nondiscriminatory service, such a liability limitation is presumed reasonable unless a litigant can show otherwise. See, e.g., Western Union Tel. Co., 256 U.S. at 572, 41 S.Ct. 584; Metro-Link Telecom, 919 S.W.2d at 691. Similarly, jurisdictions that have upheld a tariff provision limiting liability for personal-injury damages did so because a regulatory agency comprehensively regulated the utility and approved the tariff so it had the force and effect of law. See Los Angeles Cellular Tel. Co. v. Superior Ct. of Los Angeles County, 65 Cal.App.4th 1013, 76 Cal.Rptr.2d 894, 897-98 (1998) (holding in a personal-injury suit that a limitation on liability was valid because by its terms, [the utility's tariff] applies to negligence actions without regard to the nature of the damages sought); Landrum v. Florida Power & Light Co., 505 So.2d 552, 553-54 (Fla.Dist.Ct.App.1987) (holding in a personal-injury and property-damage suit that a tariff validly approved by the Public Service Commission, including a limitation on liability for ordinary negligence ... is valid). For these reasons, and those discussed below, we agree with these jurisdictions and conclude that SWEPCO's tariff provision limiting liability for personal injury is reasonable. SWEPCO's tariff provision limiting its personal-injury liability is reasonable because the provision is narrowly drawn and provides a remedy for SWEPCO's gross negligence or willful misconduct. See, e.g., Landrum, 505 So.2d at 554; Computer Tool & Eng'g, Inc. v. Northern States Power Co., 453 N.W.2d 569, 573 (Minn.Ct. App.1990) (A limitation for economic damages did not violate public policy because liability remains for gross negligence as well as willful or wanton acts.); Lee v. Consolidated Edison Co., 98 Misc.2d 304, 413 N.Y.S.2d 826, 828 (1978) (A limitation for economic damages is reasonable so long as the company has not attempted to absolve itself from its own willful misconduct or gross negligence.). Furthermore, the tariff specifically states that SWEPCO shall not be liable for damages occasioned by interruption, failure to commence delivery, or voltage, wave form, or frequency fluctuation caused by interruption or failure of service or delay in commencing service.... But it does not exclude personal-injury claims against SWEPCO that arise from SWEPCO's negligence in other contexts. For example, the tariff provision would not shield SWEPCO from liability if an employee, in the performance of his or her duties, injures a person while driving to a job site. Thus, SWEPCO's tariff provision limiting liability does not violate public policy, because it does not purport to relieve SWEPCO from liability under all conceivable circumstances. See Computer Tool, 453 N.W.2d at 573. Some of the factors we relied on in Auchan also guide us in determining whether SWEPCO's tariff provision limiting liability for personal-injury damages is reasonable. See Auchan, 995 S.W.2d at 673-75. In Auchan, we observed that a tariff prevents a utility from refusing service to customers who have a greater potential for economic damages. See Auchan, 995 S.W.2d at 674. Furthermore, we noted that if a utility's customers suffer economic injuries, the utility cannot raise rates to compensate for the losses it incurs if it is found liable. Thus, we concluded a utility's liability exposure could have a direct detrimental effect on its finances. See Auchan, 995 S.W.2d at 674; see also Landrum, 505 So.2d at 554. Additionally, we recognized that utilities' consumers in a highly-regulated industry have protection, because utilities are subject to strict administrative review and control. Auchan, 995 S.W.2d at 674-75. Based on these observations, and other factors not pertinent to our inquiry here, we held that the tariff's limitation on liability for economic damages in that case was reasonable. The Auchan consideration that a regulated utility must provide non-discriminatory service at uniform rates also applies in personal-injury cases. If certain consumers are more likely to suffer personal injuries due to interruptions or fluctuations in electric service, a utility like SWEPCO cannot raise rates or deny service to compensate for these potential losses without the PUC's approval. Rather, the PURA's regulatory scheme requires that a utility provide electricity at uniform rates on a nondiscriminatory basis. See Arkansas La. Gas, 453 U.S. at 579, 101 S.Ct. 2925; Keogh, 260 U.S. at 156, 43 S.Ct. 47. Thus, a tariff provision limiting liability for personal-injury damages resulting under certain circumstances from a utility's negligencebut not gross negligence or willful misconductprotects the utility's ability to provide effective, consistent, and nondiscriminatory service. Moreover, the Auchan consideration that the electric utility industry affords consumers protection because the industry is highly regulated likewise applies in personal-injury cases. Auchan, 995 S.W.2d at 674-75. The PUC has broad regulatory authority to ensure utilities provide safe, adequate, efficient, and reasonable service. See Tex. Util.Code § 38.001. Several PUC regulations provide remedies to consumers and penalize utilities for unsafe or inadequate service. For example, the PUC may institute a formal investigation against a utility on its own initiative or upon a customer's complaint. 16 Tex. Admin. Code § 22.241(a). A customer may complain to the PUC about an electric utility's acts or omissions that violate the PURA or PUC regulations. 16 Tex. Admin.Code § 22.242(a). The PUC resolves these complaints either through an informal proceeding or through a formal complaint process. 16 Tex. Admin. Code § 22.242(c)-(e). The PUC also imposes administrative penalties on utilities that do not provide safe, adequate, reasonable and efficient service to customers. See, e.g., Tex. Pub. Util. Comm'n, Entergy Gulf States, Inc. Service Quality Issues (Severed from Docket No. 16705), Docket No. 18249 (Apr. 22, 1998) (order on rehearing); Tex. Pub. Util. Comm'n, Application of Houston Power and Light Co., Docket No. 4540, 1982 WL 213186 (Dec. 6, 1982) (final order). These penalties can include lowering a utility's reasonable return on investment capital, adopting minimum performance target levels the utility must meet, adopting customer-service performance benchmarks, requiring quality assurance through independent audits and consultants, and requiring the utility to provide notice to customers about a utility's service quality requirements. See, e.g., Tex. Pub. Util. Comm'n, Entergy Gulf States, Inc., Docket No. 18249, at 27-28. Our conclusion that SWEPCO's tariff provision limiting liability for personal-injury damages is reasonable does not conflict with Crowell v. Housing Auth. of Dallas, 495 S.W.2d 887, 889 (Tex.1973). In Crowell, the plaintiff alleged that a defective gas heater in an apartment that the Dallas Housing Authority leased and maintained caused his father to die from carbon-monoxide poisoning. 495 S.W.2d at 888. The court of appeals affirmed the trial court's order granting the Authority summary judgment based on a lease provision limiting the Authority's liability for personal injury and property damage. Crowell, 495 S.W.2d. at 888-89. In deciding whether the lease provision violated public policy, we stated that, generally, an agreement exempting a party from liability for negligent injury is void as against public policy. And we noted in dicta that the same rule applies to public utilities. Crowell, 495 S.W.2d at 889. We then concluded that the lease provision violated public policy because the Authority was a public body organized to provide safe and sanitary accommodations to people with low incomes who had no choice but to accept the lease's terms to have a place to live. Crowell, 495 S.W.2d at 889; cf. Churchill Forge, Inc. v. Brown, 61 S.W.3d 368 (Tex. 2001) (holding that the Texas Property Code permits a landlord and tenant to contract over who will pay for repairs irrespective of whether the tenant causes the damage). But the present case is distinguishable from Crowell. Unlike the Authority's lease agreement in Crowell, SWEPCO's tariff is not a mere contract between SWEPCO and its customers. Rather, the filed tariff that the PUC approved under a statutory scheme acquires the force and effect of law and governs SWEPCO's relationship with its customers. See Keogh, 260 U.S. at 162-63, 43 S.Ct. 47; Carter, 365 F.2d at 496; Metro-Link Telecom, 919 S.W.2d at 692. Moreover, SWEPCO must comply with the PUC's rules that regulate its rates, ensure that it provides non-discriminatory service, and require penalties if SWEPCO provides inadequate or unsafe service. See Tex. Util.Code § 38.001; 16 Tex. Admin. Code §§ 22.241(a), 22.242(a), (c)-(e). None of these factors protecting the consumer existed in Crowell. In sum, for all the reasons discussed above, we conclude that SWEPCO's tariff provision limiting liability for personal-injury damages that arise under certain circumstances from SWEPCO's ordinary negligence is reasonable as a matter of law. Consequently, we agree with the trial court's decision to grant SWEPCO's summary-judgment motion on Grant's negligence claim.