Opinion ID: 2646701
Heading Depth: 1
Heading Rank: 6

Heading: Standard of Review for Primary Jurisdiction

Text: Having determined that the court had concurrent jurisdiction with the PUC, the inquiry is whether the court properly dismissed Petitioner’s Feature Group D claims as a matter of primary jurisdiction. Related to the distinction between primary jurisdiction and subject matter jurisdiction is the question of what standard of review this court should apply in determining whether the court properly dismissed PLNI’s claims. Hawai#i case law in the area of primary jurisdiction has not directly addressed the applicable standard of review. Federal courts of appeal are split as to whether to apply a de 18 The statutory scheme governing the PUC in Hawai#i is not a “complete and comprehensive statutory scheme governing review” by the PUC, Kazmaier, 573 N.E.2d at 659, and thus the instant case is distinguishable from Kazmaier and Village of Evergreen Park. 36 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER novo or abuse of discretion standard, see S. Utah Wilderness Alliance v. Bureau of Land Mgmt., 425 F.3d 735, 750 (10th Cir. 2005); A. Lucchetti, Note, One Hundred Years of the Doctrine of Primary Jurisdiction: But What Standard of Review is Appropriate For It?, 59 Admin. L. Rev. 849, 851 (2007); Lockwood, Competing Standards of Appellate Review, supra, at 721-22, although it appears that most states apply de novo review, see e.g., Siewert v. N. States Power Co., 793 N.W.2d 272, 277 (Minn. 2011); The Country Vintner, Inc. v. Louis Latour, Inc., 634 S.E.2d 745, 750 (Va. 2006); In re Interest of Battiato, 613 N.W.2d 12, 15 (Neb. 2000). The elements of the primary jurisdiction doctrine that are generally considered to be matters of law have been discussed, including whether the issues presented are not within the conventional experience of judges, see Kona Old, 69 Haw. at 93, 734 P.2d at 169, and whether deferring to an agency will promote uniformity and consistency in the regulatory process, see Aged Hawaiians, 78 Hawai#i at 202, 891 P.2d at 289. However, courts that have held that an abuse of discretion standard applies emphasize the prudential nature of the doctrine, namely that “[the court] has discretion either to retain jurisdiction or, if the parties would not be unfairly disadvantaged, to dismiss the case without prejudice.” Reiter, 507 U.S. at 268-69. See also Lockwood, Competing Standards of Appellate Review, supra, at 739 (arguing that direct contact 37 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER with the litigant makes the trial judge better able to weigh the burdens of referral, and that this should be a “heavy consideration” weighing in favor of de novo review). As discussed infra, and consistent with the prudential aspects of the doctrine, the court may take into consideration when in the litigation process the issue of primary jurisdiction was first raised, and the extent to which applying the doctrine could be prejudicial to either party. See U.S. v. McDonnell Douglas Corp., 751 F.2d 220, 224 (8th Cir. 1984) (“A court should be reluctant to invoke the doctrine of primary jurisdiction, which often, but not always, results in added expense and delay to litigants where the nature of the action deems the application of the doctrine inappropriate.”) (internal quotation marks and citation omitted). The focus of the trial court’s decision, however, should be on the rationales underlying the doctrine, which are matters of law. As such, issues of primary jurisdiction should be reviewed de novo on appeal. Such a holding is consistent with this court’s characterization of primary jurisdiction as “a jurisdictional issue.” Chun, 73 Hawai#i at 14, 828 P.2d at 263. Inasmuch as “[t]he existence of jurisdiction is a question of law that we review de novo under the right/wrong standard[,]” Lingle v. Hawai#i Gov’t Emp. Ass’n, AFSCME, Local 152, 107 Hawai#i 178, 183, 111 P.3d 587, 592 (2005), the court’s decision to invoke the primary jurisdiction doctrine is reviewed de novo as well. If the court determines that the primary jurisdiction 38 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER doctrine applies, the court, in its discretion, may determine whether to stay the litigation or dismiss without prejudice.19 VIII. Application of the Primary Jurisdiction Doctrine The court’s decision to invoke primary jurisdiction is reviewed on the basis of the dual rationales underlying the primary jurisdiction doctrine, as discussed above. Applying these two rationales to the instant case, it appears that the court erred in applying the doctrine of primary jurisdiction.
The first rationale relates to the specialized competence of the administrative agency. See Kona Old, 69 Hawai#i at 93, 734 P.3d at 168. In its analysis regarding the primary jurisdiction doctrine, the ICA emphasized the regulatory scheme set forth in HRS Chapter 269, Pacific Lightnet, Inc., 2013 WL 310149, at , and PLNI argues in its Application that there is no specific statutory mandate that directs that PUC must handle billing disputes. It is important to distinguish, 19 On appeal from the ICA’s decision, PLNI does not challenge the fact that the court dismissed all of the Feature Group D claims, rather than staying the enforcement of the jury verdict pending the resolution by the PUC. Thus, this issue need not be decided herein. However, as to this issue, the ICA concluded in Fratinardo, 121 Hawai#i at 468-69, 220 P.3d at 1049-50, that the court has discretion to fashion an appropriate remedy when applying the primary jurisdiction doctrine. This rationale is sound, as evidenced in the instant case, where the court dismissed PLNI’s claims rather than require the parties to wait for the outcome of the PUC’s decision before filing an appeal. However, a court can abuse its discretion in fashioning a remedy after invoking the primary jurisdiction doctrine if such a remedy would unduly prejudice one or both of the parties. See, e.g., Brown, 277 F.3d at 1172-73 (noting that where a twoyear statute of limitations for the plaintiff’s action had expired, the plaintiff may be “unfairly disadvantaged” if the district court were to dismiss the claim without prejudice under the primary jurisdiction doctrine). 39 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER however, between a statutory scheme that evinces the Legislature’s intent to divest the court of jurisdiction, and a statutory or regulatory scheme that places certain issues “within the special competence of an administrative body.” Kona Old, 69 Hawai#i at 93, 734 P.2d at 168 (emphasis added) (internal quotation marks and citation omitted). The question, as noted, is whether the issue is “within the conventional experience of judges.” Far East Conference, 342 U.S. at 574. Thus, while the existence of statutes and regulations discussing the PUC’s authority over particular matters is certainly relevant to the court’s determination of whether to apply primary jurisdiction, it is not dispositive. Equally important is the question of whether the claim presented “falls squarely within the experience and expertise of courts generally[,]” Advamtel, LLC v. AT&T Corp., 105 F.Supp. 2d 507, 512 (E.D.Va. 2000), or if, instead, the claims are premised on “technical matters calling for the special competence of the administrative expert[,]” Aged Hawaiians, 78 Hawai#i at 202, 891 P.2d at 289. Contrary to the ICA’s holding, the statues and rules cited by Time Warner do not require dismissal on the basis of primary jurisdiction. Time Warner cites to HRS § 269-6 (providing PUC with general supervision over all public utilities), HRS § 269-16 (Supp. 1998) (providing PUC with general supervision over all public utility rates charged), and HRS § 269-37 (providing PUC with authority to determine compensation agreements between carriers). These statutes do 40 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER not place the action in the instant case within the “special competence” of the PUC, however. They provide the PUC with authority to take certain actions as an administrative agency, but, the authority granted to the PUC over certain types of billing disputes is shared with the courts. The “special competence” of the PUC under the primary jurisdiction doctrine involves the types of actions that are related to the rationales behind the doctrine, to promote uniformity and to prevent courts from engaging in the types of policy-making decisions that administrative agencies must make. Thus, the PUC’s special competence is in, for example, regulation of utility rates and ratemaking procedures, see HRS § 269-16, and in ensuring that compensation agreements between telecommunications carriers are fair, see HRS § 269-37, actions that promote uniformity across the industry and fair rates for customers. None of these statutes indicate that the PUC should have primary jurisdiction over a billing dispute, where that dispute does not have broader implications with respect to rates or relationships among carriers generally. Moreover, the regulations cited by Time Warner do not require dismissal in order that the PUC to exercise primary jurisdiction. HAR § 6-61-71 provides only that “[t]he commission may at any time investigate matters subject to its jurisdiction.” HAR § 6-80-7(a) simply states that “[t]o the extent feasible and practical, disputed issues of access, interconnection, unbundling, and network termination shall be 41 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER combined into a single petition before the commission.” These provisions seem to set forth only the PUC’s internal procedures for exercising its jurisdiction, rather than any specialized competence in the area of billing disputes. Additionally, Time Warner avers that HAR Chapter 6-80 provides a comprehensive treatment of billing disputes, specifically HAR § 6-80-102, which, to reiterate, states: (a) When a dispute arises between a customer and a telecommunications carrier regarding any bill, the carrier may require the customer to pay the undisputed portion of the bill. The carrier shall conduct an appropriate investigation of the disputed charge or charges and shall provide a report of the investigation to the customer. Where the dispute is not reconciled, the carrier shall advise the customer that the customer has the right to file a complaint with the commission regarding the dispute. However, regardless of whether HAR § 6-80-102 would in fact apply in a situation such as the instant case, it does not evince a comprehensive regulatory scheme that would create a “special competence” in the PUC to resolve billing disputes between two carriers. Thus, Time Warner’s reference to statutory and regulatory requirements are not persuasive with respect to establishing the special competence of the PUC. Also, Time Warner alleges that the Feature Group D claims require the specialized and technical expertise of the PUC. Although Time Warner maintains that the claims required a review of call detail records, which “show who is making the call, who is receiving the call, and what carriers are associated with the calls,” as well as an understanding of carrier identification codes, Time Warner has not indicated why 42 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER a jury would not be able to understand these matters, if properly explained, other than to say that they are “technical” in nature.20 In its briefing, Time Warner claims that the jury was not instructed properly on the technical matters involved in the case, but again, this argument goes to the validity of the jury verdict itself, rather than to whether the court properly dismissed the claim pursuant to primary jurisdiction. Time Warner avers that MCI Telecommunications Corp. v. Ameri-Tel, Inc., 852 F.Supp. 659 (1994), supports its position, in that the court in that case stated: The Court also concludes that there is no need for us to delve deep into the world of information indicators, automatic number identifiers, operator line screening, billed number screening, and all the other acronyms AmeriTel believes are at the heart of this case. The FCC is better suited than this Court to decide issues turning on the operation of these technical mechanisms. However, as we stated above, Ameri-Tel has overstated the nature of this case. 852 F.Supp. at 665. Here, however, it appears that Time Warner has similarly “overstated the [technical] nature of this case.” Id. The MCI court goes on to state that, “[t]his case is not about technical or economic issues in the telecommunications industry, . . . . [i]t is likewise not about the reasonableness of the MCI Tariff. Rather, it is a collection case requiring 20 While Time Warner claims that Hawai#i has recognized that “transmission and billing matters between telecommunications carriers typically require technical expertise that is within the exclusive jurisdiction of the PUC[,]” the cases cited by PLNI indicate that rate-making is within the exclusive jurisdiction of the PUC. See In re Hawaiian Telephone Co., 67 Haw. 370, 379, 689 P.2d 741, 747 (1984); Hawai#i Electric Light Co., 60 Haw. 625, 636, 594 P.2d 612, 620 (1979). 43 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER application of the filed-rate doctrine and construction of the terms of the MCI Tariff.” Id. at 666. Analogously, the instant case is not about technical or economic issues in the telecommunications industry. The questions posed by this case do appear to involve some industry terminology and processes. However, juries frequently hear cases involving technical terms and processes. The presence of industry terminology and technical processes in a particular suit are not enough to require that the court invoke the primary jurisdiction. Thus, there is no indication that these claims are premised on “technical matters calling for the special competence of the administrative expert.” Aged Hawaiians, 78 Hawai#i at 202, 891 P.2d at 289. Instead, the claims at issue in this case appear to be “within the conventional experience of judges.” Far East Conference, 342 U.S. at 574. In Advamtel, the Eastern District of Virginia court considered a claim by local exchange carriers to recover unpaid fees allegedly owed to them by long distance carriers. 105 F.Supp. 2d at 509. AT&T filed a counterclaim alleging, inter alia, that the plaintiff had billed AT&T for access services which AT&T never ordered, contrary to the terms of their filed tariffs. Id. at 512. That court held that two of the counterclaims in the case, requiring an evaluation of the reasonableness of the rates under the applicable tariff, should be referred to the FCC. Id. With respect to the remainder of the counterclaims, the court noted that the threshold legal 44 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER question underlying those claims was “whether plaintiffs had a right to bill [defendant] for the access services at issue . . . .” That court reasoned that “AT&T’s counterclaims are premised on the assertion that, under plaintiffs’ filed tariffs, which establish a procedure for ordering plaintiffs’ access services, it did not order such services[,]” and that, accordingly, “[i]f AT&T never ordered plaintiffs’ access services, AT&T cannot be forced to pay plaintiffs for those services.” Id. Under these facts, Advamtel characterized AT&T’s counterclaim as an “entitlement to bill issue” and stated that it is “essentially similar to a typical contract dispute involving issues of contract formation through offer and acceptance.” Id. Therefore, it held the enforcement of the tariff was “within the ordinary experience and expertise of courts.” Id. at 513. This is akin to the facts of the instant case, wherein PLNI claimed that it was charged for services that it never received, essentially, an “entitlement to bill issue.” Thus, the issues raised in this case are similarly within the ordinary expertise of courts.
The second question is whether applying the primary jurisdiction doctrine will “promote uniformity and consistency in the regulatory process.” Aged Hawaiians, 78 Hawai#i at 202, 891 P.2d at 289. See also, Advamtel, 105 F.Supp.2d at 511 (“One 45 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER issue typically referred to the FCC under the primary jurisdiction doctrine is the reasonableness of a carrier’s tariff because that question requires the technical and policy expertise of the agency, and because it is important to have a uniform national standard concerning the reasonableness of a carrier’s tariff, as a tariff can affect the entire telecommunications industry”); MCI, 852 F.Supp. at 666 (noting that, in a collection case requiring application of the filed-rate doctrine, “there is no danger of . . . contradicting a prior application to the FCC in this case . . . or issuing a ruling inconsistent with the FCC’s overall regulatory scheme.”). Here, there is no indication that applying the primary jurisdiction doctrine would promote the uniformity and consistency rationales behind the doctrine. The instant case does not require the exercise of administrative discretion, and furthermore, a result in this case would not impact the result in any other cases, inasmuch as the facts and circumstances are unique to these parties and their asset purchase agreements with GST. A decision with respect to the obligations of the parties here would not affect future customers or other telecommunications carriers.
In addition to the two rationales underlying the primary jurisdiction, the doctrine also has a prudential aspect, as noted, that courts should take into consideration in deciding whether it is appropriate to stay or dismiss the proceedings and defer to the agency. For example, in Jou, this court stated that 46 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER “[s]taying the proceedings conserves scarce judicial resources by allowing an administrative agency with expertise to decide the predicate issues.” 114 Hawai#i at 128, 157 P.3d at 567. On the other hand, the United States Supreme Court has noted that “[w]ise use of the doctrine necessitates a careful balance of the benefits to be derived from utilization of agency processes as against the costs in complication and delay.” Ricci v. Chicago Mercantile Exch., 409 U.S. 289, 321 (1973). See also McDonnell Douglas Corp., 751 F.2d at 224 (“[A] court ‘should be reluctant to invoke the doctrine of primary jurisdiction, which often, but not always, results in added expense and delay to the litigants where the nature of the action deems the application of the doctrine inappropriate.’”) (emphasis added) (quoting Mississippi Power & Light Co. v. United Gas Pipe Line Co., 582 F.2d 412, 419 (5th Cir. 1976), cert denied, 429 U.S. 1094 (1977)). In connection with these prudential concerns, PLNI argued that the court should not cede jurisdiction where primary jurisdiction is raised only after a jury trial has resolved the factual issues.21 In support of this argument, PLNI cited to 21 PLNI also correctly points out that none of this jurisdiction’s cases applying the primary jurisdiction doctrine have deferred the matter to the agency after a verdict had already been entered in a jury trial. See Chun, 73 Haw. at 10, 828 P.2d at 261 (trial court granted summary judgment); Hawai#i Blind Vendors, 71 Haw. at 368, 791 P.2d at 1263 (trial court granted summary judgment); Aged Hawaiians, 78 Hawai#i at 199-200, 891 P.2d at 286-87 (circuit court granted in part a motion to dismiss on the basis that alternative administrative procedures were available); Kona Old, 69 Haw. at 86, 734 P.2d at 164 (circuit court dismissed appeal from planning department director’s decision); Jou, 114 Hawai#i at 126, 157 P.3d at 565 (circuit court granted motion to dismiss). 47 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER Travelers Insurance Co. v. Detroit Edison Co., 631 N.W.2d 733 (Mich. 2001), in which the Michigan Supreme Court noted that “[t]here may well be cases, for example, in which the invocation of primary jurisdiction is not appropriate because litigation with respect to the particular claim that would normally be subject to the jurisdiction of the administrative agency has ‘advanced to a point where it would be unfair to remit the [party] to another and duplicative proceeding . . . .’” 631 N.W.2d at 746 n.19 (alterations in original) (quoting White Lake Imp. Ass’n v. City of Whitehall, 177 N.W.2d 473, 483 (Mich.App. 1970)). The instant case appears to be one of those cases in which the application of the primary jurisdiction doctrine would be unfair, inasmuch as Time Warner raised the issue only on the eve of trial, and applying the doctrine would require additional proceedings that would be duplicative of the 2007 jury trial. As noted, Time Warner filed its Answer on August 30, 2007, alleging for the first time that PLNI’s claims were barred by the doctrine of primary jurisdiction. On September 4th, after the parties had already submitted proposed jury instructions, witness lists, and special verdict forms, Time Warner submitted its Motion to Dismiss based on the primary jurisdiction of the PUC. This was the same day that trial began. Accordingly, the court decided not to hear the motion, but instead to go forward with the jury trial. 48 FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER Under these circumstances, the timing of Time Warner’s initial assertion that the primary jurisdiction doctrine should apply may be taken into consideration, inasmuch as a party could “game” the system by only raising primary jurisdiction as a latestage alternative, in the event that the court proceedings appear to be resolving in favor of its opponent. In this case, because the issue was raised at a late date and decided only after a jury trial on the factual issues, the late timing of Time Warner’s assertion is a factor among others that weighs against invocation of the doctrine. Therefore, because the rationales underlying the primary jurisdiction doctrine would not be effectuated through its application to this case, we hold the court erred in invoking the doctrine and dismissing PLNI’s claims.