Opinion ID: 2085545
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Heading Rank: 2

Heading: Construction of the Tariff

Text: The Act is in derogation of the common law. Illinois Bell Switching Station, 161 Ill.2d at 240, 204 Ill.Dec. 216, 641 N.E.2d 440. The majority acknowledges that, as a result, the Act it is to be strictly construed in favor of persons sought to be subjected to its operation, that is, in favor of the utility. 211 Ill.2d at 68-69, 284 Ill.Dec. at 325, 809 N.E.2d at 1271. As the majority also notes, once the tariff is approved by the Commission, it has the force of law. 211 Ill.2d at 56, 284 Ill.Dec. at 317, 809 N.E.2d at 1263 (citing Illinois Bell Switching Station, 161 Ill.2d at 244, 204 Ill.Dec. 216, 641 N.E.2d 440, and Illinois Central Gulf R.R. Co. v. Sankey Brothers, Inc., 67 Ill.App.3d 435, 439, 23 Ill.Dec. 749, 384 N.E.2d 543 (1978) (stating that, [a] tariff is a law, not a contract, and has the force and effect of a statute), affirmed, 78 Ill.2d 56, 34 Ill.Dec. 328, 398 N.E.2d 3 (1979)). Further, the majority states that interpretation of the tariff is governed by the rules of statutory construction. 211 Ill.2d at 55, 284 Ill.Dec. at 323, 809 N.E.2d at 1269. Nevertheless, the majority, citing cases from California, New York, and Georgia, states that the language of the tariff, especially any exculpatory language, should be strictly construed against the utility, based on the canon of construction of contracts that contract terms should be construed against the drafter. 211 Ill.2d at 69, 284 Ill.Dec. at 325, 809 N.E.2d at 1271. Although it may be generally accepted (211 Ill.2d at 69, 284 Ill.Dec. at 325, 809 N.E.2d at 1271) in some jurisdictions that a tariff should be construed as a mere contract, there is also contrary authority. The courts of Washington and Oregon, for example, apply the standard principles of statutory construction to the interpretation of a tariff, including applying the rule of construction that the court is to ascertain the drafters' intent when they promulgated the language. See, e.g., National Union Insurance Co. v. Puget Sound Power & Light, 94 Wash.App. 163, 171, 972 P.2d 481, 484 (1999); U.S. West Communications, Inc. v. City of Longmont, 924 P.2d 1071,1079 (Colo.App.1995). Even in a jurisdiction in which the construe against the drafter canon is applied to public utility tariffs, it has been said that a strict construction against a tariffs author is not justified where the construction would ignore a permissible and reasonable construction which conforms to the intentions of the framers of the tariff. Info Tel Communications, LLC v. U.S. West Communications, Inc., 522 N.W.2d 880, 884 (Minn.App.1999). This court has never held that a public utility tariff should be construed against the utility that drafted the language. There are valid arguments to be made on both sides because the tariff has characteristics of both contract and statute. This court may in some future case be called upon to decide whether ambiguous language in a tariff should be construed in favor of or against the drafting utility. This is not such a case. The language at issue is unambiguous. NI-Gas assumes no responsibility in connection with the installation, maintenance or operation of the customer's equipment. Our duty is to apply the plain meaning of these words, in light of the underlying purpose of the Act, which is to provide citizens of Illinois with utility service at reasonable rates and, as a necessary part of that scheme, to limit the liability of utility companies. The majority also suggests that the tariff provision should not be given effect because, if it were a private contract, it would not be interpreted as permitting NI-Gas to absolve itself of any duty to its customers. 211 Ill.2d at 68, 284 Ill.Dec. at 325, 809 N.E.2d at 1271. This statement misses the point in several respects. First, it defies logic to say that a tariff should be enforced under the same rules as a private contract. The entire concept of a tariff is that it supercedes any contract between the utility and the individual customer. Indeed, the utility is forbidden from privately contracting around the terms of the tariff. Second, the Act and the tariff do not permit the utility to absolve itself of any duty. They permit, indeed they require, that the utility undertake precisely defined duties to its customers. Finally, unlike a private company, a public utility cannot adjust its prices to compensate for increased exposure to liability when the courts recognize a new common law duty. For example, in Sarelas the plaintiff claimed that Illinois Bell Telephone owed him a duty of continuing service, which it violated by interrupting his service for 2 1/2 hours as the result of a clerical error. The appellate court noted that in the case of an ordinary corporation this would be nothing of which to complain, for in general a corporation is entitled to refrain from doing business with its customers unless it is otherwise bound by contract; but a utility is different. It has a duty to its subscribers that goes beyond that of an ordinary corporation. However, this duty has but one source, the tariff, which in this instance is on file with the Illinois Commerce Commission. (Emphasis added.) Sarelas, 42 Ill.App.2d at 374, 192 N.E.2d 451. Thus, the court observed, the extent to which defendants owed plaintiff `a legal duty' is determined by the particular provisions of the tariff on file with the commission; there is no contract    on which plaintiff can rely, nor are his allegations of a breach of duty sufficient to constitute a claim in tort. Sarelas, 42 Ill. App.2d at 375, 192 N.E.2d 451. In the end, a breach of duty by the utility arises either from the tariff or not at all. Sarelas, 42 Ill.App.2d at 375, 192 N.E.2d 451. Following the mandate to construe the Act strictly in favor of the regulated utility, the appellate court in Barthel v. Illinois Central Gulf R.R. Co., 74 Ill.2d 213, 23 Ill.Dec. 529, 384 N.E.2d 323 (1978), held that section 73 of the Act, which allows the utility to be held liable for certain acts and omissions, did not abrogate the common law defense of contributory negligence because it did not plainly appear that the intent of the statute was to impose strict liability. Barthel, 74 Ill.2d at 221, 23 Ill. Dec. 529, 384 N.E.2d 323. See also Tucker v. Illinois Power Co., 232 Ill.App.3d 15, 29, 173 Ill.Dec. 512, 597 N.E.2d 220 (1992) (construing Act as not authorizing award of punitive damages in action for negligent termination of gas service in below freezing weather when plaintiff would not have been entitled to punitive damages under common law theory of liability). The majority purports to apply the exact reasoning of Barthel (211, Ill.2d at 70, 284 Ill.Dec. at 326, 809 N.E.2d at 1272), when it concludes that just as the statute in Barthel did not abrogate a pre-existing common law defense, the tariff at issue here does not abrogate the common law exception. 211 Ill.2d at 70, 284 Ill.Dec. at 326, 809 N.E.2d at 1272. Plaintiff, however, does not seek to hold NI-Gas liable under an existing exception to the common law rule that gas companies have no duty with regard to the fixtures and equipment of their customers. She seeks to expand the existing exception to recognize an entirely new duty to warn. The majority observes that NI-Gas has had opportunities in the past to assert that the tariff precludes imposition of a duty, yet has not done so. 211 Ill.2d at 55, 284 Ill.Dec. at 319-20, 809 N.E.2d at 1265-66. This observation is not persuasive for two reasons. First, simple logic dictates that a party's decision to raise a particular issue or assert a particular defense in one litigation has no preclusive effect in later litigation with an entirely different party. Second, the cases cited by the majority are inapposite. In Pioneer Hi-Bred Corn Co. of Illinois v. Northern Illinois Gas Co., 61 Ill.2d 6, 329 N.E.2d 228 (1975), the plaintiff's theory of liability was that NI-Gas negligently performed an inspection. There was no leak or defect in the plaintiff's equipment. Rather, NI-Gas employees purportedly inspected plaintiff's equipment for the specific purpose of determining the proper pressure for the delivery of gas to the plaintiff's premises. Pioneer Hi-Bred, 61 Ill.2d at 9, 329 N.E.2d 228. Previously, in Clare, this court had noted that a gas company has no duty to inspect the pipes or fixtures belonging to a customer in the absence of notice of a defect. Clare, 356 Ill. at 244, 190 N.E. 278. Indeed, the gas company has no right to go upon the premises of one of its customers for the purpose of inspecting his pipes or other fixtures except upon the invitation, license or permission of the owner. Clare, 356 Ill. at 244, 190 N.E. 278. In Pioneer Hi-Bred as in Clare, a gas company employee was invited to enter the plaintiff's premises for the purpose of making an inspection. The inspections served different purposes: in Clare, to determine the source of an offensive odor; in Pioneer Hi-Bred, to calculate the proper pressure for the delivery of gas. In Clare, the gas company was not liable for the eventual damages and injuries because the evidence showed that the inspection, which was not negligently or unskillfully made, did not reveal the source of the leak. Clare, 356 Ill. at 245, 190 N.E. 278. In Pioneer Hi-Bred, the gas company might have been held liable for negligently conducting an inspection had the plaintiff proven that an inspection actually took place. Pioneer Hi-Bred, 61 Ill.2d at 13-14, 329 N.E.2d 228. This court agreed with NI-Gas that the trial court properly refused to give the requested instruction on negligent inspection to the jury, because the tendered instruction assumed a fact in disputeÔÇöthat there had actually been an inspection. Pioneer Hi-Bred, 61 Ill.2d at 13-14, 329 N.E.2d 228. The majority's statement that [n]either this court nor NI-Gas believed that this tariff precluded a common law analysis in a negligence action for personal injury in Pioneer Hi-Bred (211 Ill.2d at 59, 284 Ill.Dec. at 320, 809, N.E.2d at 1266), although true, is irrelevant. The common law duty asserted in Pioneer Hi-Bred had already been recognized in Clare. The majority also points to this court's decision in Metz v. Central Illinois Electric & Gas Co., 32 Ill.2d 446, 207 N.E.2d 305 (1965), as further support for its statement that where a utility tariff speaks to a specific duty, the tariff may be controlling; however, where the tariff does not address a particular situation, the common law applies and a common law duty analysis must be applied. (Emphasis added.) 211 Ill.2d at 61, 284 Ill.Dec. at 320, 809 N.E.2d at 1266. When a tariff speaks to a specific duty, as in this case, it is controlling. The majority asks why the appellate court failed to mention the tariff in this case. 211 Ill.2d at 62, 284 Ill.Dec. at 320, 809 N.E.2d at 1266. Metz involved an explosion that occurred as a result of a defect in the gas main, which is the responsibility of the gas company both under the tariff and at common law. Thus, the answer to the majority's question is obvious-the tariff was irrelevant to the gas company's alleged negligence to properly maintain its own equipment. The majority is determined to ignore our obligation to determine whether NI-Gas has a duty to warn by looking at the plain language of the tariff, even if that plain meaning departs from the manner in which the common law may have developed in the decades since the Act was adopted and the tariff was approved, or the way in which we would decide the question today. I accept, arguendo, the majority's statement that it is evident that the tariff essentially codifies the common law rule that a gas company has no duty with respect to a consumer's gas pipes and fittings. 211 Ill.2d at 63, 284 Ill.Dec. at 322, 809 N.E.2d at 1268. Thus, I do not dispute the majority's conclusion that the tariff did not abrogate the common law exception to the rule of a gas company's nonliability. 211 Ill.2d at 70, 284 Ill.Dec. at 326, 809 N.E.2d at 1272. That exception, however, applies only when the gas company has actual or constructive knowledge of a gas leak or a defect on the premises of the individual customer. NI-Gas had neither actual nor constructive notice of a gas leak in the Adams' home. At most, NI-Gas was aware that some Cobra connectors might still be in use in its service area, and that these connectors could fail after prolonged exposure to the odorant that NI-Gas is required, by law, to add to natural gas. This does not constitute a a gas leak of which it has notice. 211 Ill.2d at 65, 284 Ill.Dec. at 323, 809 N.E.2d at 1269. The majority even admits that recognizing a duty to warn on the facts of this case would not be based on the common law as it existed at the time the tariff was filed and approved some fifty years ago. It would, instead, be a reasoned adaptation of the preexisting common law. 211 Ill.2d at 53, 284 Ill.Dec. at 316, 809 N.E.2d at 1262. Our prior case law does not permit such reasoned adaptation of the common law when it would alter the terms of the applicable tariff. The majority's conclusion that allowing this cause of action to proceed would not contravene the public policy of this state regarding liability limitations contained in public utility tariffs (211 Ill.2d at 63, 284 Ill.Dec. at 322, 809 N.E.2d at 1268) is similarly flawed. Although plaintiff does not seek a rate preference or enforcement of a side agreement, she is seeking to impose liability in tort in excess of that permitted by the tariff. Exposure to liability in tort bears a direct relationship to rate setting. See Illinois Bell Switching Station, 161 Ill.2d at 245, 204 Ill.Dec. 216, 641 N.E.2d 440. Meyer is cited by the majority (211 Ill.2d at 57-58, 284 Ill.Dec. at 319, 809 N.E.2d at 1265) for the proposition that the tariff provides the source for, and determines the nature and extent of, a public utility's service obligations to its customers. The Meyer plaintiffs installed an alarm system on their premises and connected it to the defendant's equipment at a junction box located on a telephone pole. Burglars disconnected the alarm at the junction box and made off with hundreds of thousands of dollars worth of property from the plaintiffs' warehouse. The issue on appeal was whether the defendant utility owed a duty to the plaintiffs under the circumstances as alleged. As in the present case, the circumstances in Meyer included a connection between the customer's equipment and the utility's equipment. That connection failed and plaintiffs suffered damages as a result. Citing Sarelas, the appellate court stated, It has been established that the source of any duty of Illinois Bell, as a public utility, to its subscribers is only in the tariff as filed. Meyer, 88 Ill.App.3d at 55, 42 Ill. Dec. 942, 409 N.E.2d 557. The portions of the tariff dealing with customer-provided equipment and systems plainly stated that: `[W]here such equipment or system is connected to Company facilities the responsibility of the Company shall be limited to the furnishing of facilities suitable for exchange telecommunications service or    the Company shall not be responsible for (1) the through transmission of signals generated by the customer-provided equipment or system, or for the quality of, or defects in, such transmission   .' Meyer, 88 Ill. App.3d at 55, 42 Ill.Dec. 942, 409 N.E.2d 557. Thus, the appellate court found that the plain language of this provision exculpates [the telephone company] from liability. Meyer, 88 Ill.App.3d at 55, 42 Ill.Dec. 942, 409 N.E.2d 557. The court affirmed the trial court's dismissal of the complaint because the tariff is the sole source of any duty owed by defendant to plaintiffs and the plaintiffs had failed to establish a duty thereunder. Meyer, 88 Ill.App.3d at 56, 42 Ill.Dec. 942, 409 N.E.2d 557. Further, the Meyer court found a reasonable basis for treating this public utility differently from private corporations and for limiting its liability to subscribers in the rendering of its service. Meyer, 88 Ill.App.3d at 57, 42 Ill.Dec. 942, 409 N.E.2d 557. The Act requires that all rates and charges imposed by a public utility be just and reasonable and, to achieve this end, such rates and charges are fixed by a state agency. Without the limitations on liability set forth by the tariff, defendant 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. This would be particularly true of defects in the transmission of signals originating from customer-provided equipment over which the company could have little control.  (Emphases added.) Meyer, 88 Ill.App.3d at 57, 42 Ill.Dec. 942, 409 N.E.2d 557. In addition to Sarelas and Meyer, the majority also cites North River Insurance Co. v. Jones, 275 Ill.App.3d 175, 211 Ill. Dec.604, 655 N.E.2d 987 (1995) (211 Ill.2d at 55, 284 Ill.Dec. at 317, 809 N.E.2d at 1263), as a source for the definition of a tariff: A tariff is a public document setting forth services being offered, rates and charges with respect to services and governing rules, regulations and practices relating to those services. North River, 275 Ill.App.3d at 185, 211 Ill.Dec. 604, 655 N.E.2d 987, citing Black's Law Dictionary 1306 (5th ed.1979). However, the majority fails to note the holding of North River. The tariff filed by the defendant utility, Illinois Bell Telephone, described the terms and conditions under which it would provide service, including the limitation of liability provision, which had been in effect for the past 50 years. North River, 275 Ill.App.3d at 185, 211 Ill.Dec. 604, 655 N.E.2d 987. Once such a tariff is implemented, the court held, the utility is forbidden from deviating from its terms. It is the filed tariff that defines the scope of duty owed by [the utility]. The source of any duty of [the utility], as a public utility to its subscribers, is only in the tariff as filed. North River, 275 Ill.App.3d at 185, 211 Ill.Dec. 604, 655 N.E.2d 987 (citing Meyer, 88 Ill.App.3d at 55, 42 Ill.Dec. 942, 409 N.E.2d 557, and Sarelas, 42 Ill.App.2d at 375, 192 N.E.2d 451). Thus, I conclude that the appellate court in the present case originally reached the correct result when it concluded that Illinois Bell Switching was dispositive and held that NI-Gas owed no duty to plaintiff's decedent. The overwhelming weight of authority from both this court and our appellate court supports this result. Plaintiff has identified no language in the tariff or in the Act from which the duty she claims can be said to arise. Indeed, the plain language of the tariff expressly disclaims any such duty. Even if the common law exception imposing a duty based on actual or constructive knowledge of a leak or defect in the customer's equipment is deemed to be incorporated into the tariff, it cannot reasonably be said that the tariff also incorporates any change in the common law of duty that the courts of this state subsequently make. To do so would be to engage in bootstrapping of the most egregious kind. In effect, tariffs would not have the effect of statutes. Rather, they would become mere restatements of the common law, subject to change over time as the common law of negligence evolves. This is precisely the situation that the legislature sought to avoid. The majority responds to this statement by citing Bush v. Squellati, 122 Ill.2d 153, 119 Ill.Dec. 366, 522 N.E.2d 1225 (1988), for the proposition that it is for the General Assembly, not this court, to abrogate NI-Gas' common law duty. 211 Ill.2d at 69, 284 Ill.Dec. at 327, 809 N.E.2d at 1273. Bush is inapposite. The issue was whether the maternal grandparents of a child who was adopted by other relatives on the maternal side of the child's birth family had standing to seek court-ordered visitation. This court found no statutory basis for standing and noted that it was for the legislature to expand grandparental visitation rights. Subsequent legislative efforts to do so have met with constitutional barriers. See Wickham v. Byrne, 199 Ill.2d 309, 263 Ill.Dec. 799, 769 N.E.2d 1 (2002). Bush hardly offers support for the majority's conclusion that the tariff does not already shield NI-Gas from liability under these facts.