Court Opinion

ID: 2800783
Source: CourtListenerOpinion
Date Created: 2015-05-14 15:07:52.540885+00
Date Added: 2024-06-11T15:29:34.062656
License: Public Domain

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SJC-11741

   MARYLAND CASUALTY COMPANY1 & another2 vs.     NSTAR ELECTRIC
                      COMPANY & another.3

            Middlesex.    January 5, 2015. - May 14, 2015.

 Present:     Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, &
                              Hines, JJ.

Department of Public Utilities. Public Utilities, Electric
     company, Rate structure, Negligence. Negligence, Public
     utilities, Limitation of liability.

     Civil action commenced in the Superior Court Department on
March 27, 2008.

     The case was heard by Dennis J. Curran, J., on motions for
summary judgment, and entry of a stipulated final judgment was
ordered by him.

     The Supreme Judicial Court on its own initiative
transferred the case from the Appeals Court.

    1
      As subrogee of Cambridge Incubator, Inc., doing business
as Cambridge Innovation Center, and Sedo.com, LLC.
    2
      Assurance Company of America, as subrogee of Allodia
Corporation.
    3
        NSTAR Electric and Gas Corporation.
                                                                     2

     Matthew M. O'Leary (Andrew J. Fay with him) for the
plaintiffs.
     Andrea Peraner-Sweet (Barbara L. Drury with her) for the
defendants.

    LENK, J.   This case raises the question whether a tariff

filed with and approved by the Department of Public Utilities

(DPU) may limit a public utility from liability to

nonresidential customers for special, indirect, or consequential

damages resulting from the utility's gross negligence.     We hold

that a properly approved tariff may so limit a public utility's

liability.

    1.   Background.   On December 8, 2006, two employees of

NSTAR Electric and Gas were performing a switching procedure to

restore electrical equipment that had been taken out of service.

During the procedure, an explosion occurred, igniting a fire in

the basement of a building at One Broadway in Cambridge.     Smoke

filled the basement and flowed into the stairwells leading up to

the other floors of the building.   The fire and smoke resulted

in extensive damage to the building, requiring its closure for

approximately six weeks.   Construction and repairs continued for

a lengthy period of time thereafter.

    At the time of the fire, the building was owned by the

Massachusetts Institute of Technology (MIT).   MIT leased space
                                                                     3

in the building to Cambridge Incubator, Inc. (Cambridge

Incubator),4 Sedo.com, LLC (Sedo), and Allodia Corporation

(Allodia).    Cambridge Incubator and Sedo purchased insurance

coverage from Maryland Casualty Corporation (Maryland Casualty);

Allodia purchased insurance coverage from Assurance Company of

America (Assurance).    In the wake of the fire, Maryland Casualty

paid claims by Cambridge Incubator and Sedo, and Assurance paid

claims by Allodia.

     Maryland Casualty and Assurance then brought this complaint

against NSTAR Electric Company and NSTAR Electric & Gas Company

(collectively, NSTAR), seeking to recover for the claims paid to

Cambridge Incubator, Sedo, and Allodia.    The plaintiffs asserted

causes of action in negligence, gross negligence or reckless,

wilful and wanton misconduct, breach of contract, and breach of

express and implied warranties.    They alleged that the explosion

resulted from NSTAR's inadequate maintenance of its equipment at

the building and training of the crew performing the switching

procedure.

     NSTAR moved for partial summary judgment.    It contended

that, to the extent to which the insurers sought recovery for

business interruption losses, their claims were barred as a

     4
         Doing business as Cambridge Innovation Center.
                                                                    4

matter of law by Massachusetts Department of Telecommunications

and Energy Tariff No. 200A (tariff), filed with and approved by

the DPU on January 31, 2006, and in effect when the explosion

occurred in December, 2006.    The tariff contained a "Limitation

of Liability" clause providing that, "for non-residential

Customers served under general service rates, the Company shall

not be liable in contract, in tort (including negligence and

[G. L. c.] 93A), strict liability or otherwise for any special,

indirect, or consequential damages . . . ."

    A judge of the Superior Court allowed, in part, NSTAR's

motion for summary judgment.   The judge determined that, while

private parties may not contractually limit their liability for

gross negligence, a tariff filed with and approved by a

regulatory agency may so limit a public utility's liability.

Because the claims paid to Allodia and Sedo that the plaintiffs

sought to recover were exclusively for business interruption,

the judge determined that they were fully precluded by the

"Limitation of Liability" clause.   By contrast, the judge

concluded that, to the extent Maryland Casualty sought to

recover for claims paid to Cambridge Incubator for property

damage, its claims were not for "special, indirect or

consequential damages," and thus were not barred by the tariff.
                                                                    5

     In the wake of the judge's decision, the parties filed a

stipulated judgment awarding Maryland Casualty the amount of

$17,062 plus interest for claims paid to Cambridge Incubator for

property damage.   The plaintiffs then appealed from the decision

granting partial summary judgment, and we transferred the case

to this court on our own motion.

     2.   Discussion.   On appeal, the plaintiffs assert that the

judge improperly granted partial summary judgment because:

(1) there is a genuine dispute regarding the authenticity of the

tariff; (2) the language at issue in the tariff does not clearly

and unambiguously preclude liability for claims based on gross

negligence or wilful and wanton misconduct; and (3) NSTAR cannot

limit its liability for losses caused by its own gross

negligence or wilful and wanton misconduct.5   We conclude that

the tariff is authentic, that the clause at issue does encompass

claims based on gross negligence or wilful and wanton

     5
      The plaintiffs also assert that there is a genuine dispute
regarding whether the losses sought by plaintiffs were caused by
NSTAR's gross negligence or wilful and wanton misconduct. We
agree with NSTAR that this argument is not properly before the
court. The judge never addressed whether there is a genuine
dispute of material fact regarding NSTAR's alleged gross
negligence or wilful and wanton misconduct. Instead, the judge
determined that, even if the plaintiffs could show gross
negligence, their claims would be barred as a matter of law by
the "Limitation of Liability" clause.
                                                                   6

misconduct, and that the clause is enforceable.6

     a.   Authenticity of the tariff.   General Laws c. 25, § 1,

provides that the DPU "shall have an official seal, which shall

be judicially noticed."    The judge based his decision granting

summary judgment on the copy of the tariff submitted to the

Superior Court by NSTAR and accompanied by a cover letter that

contained the DPU's official seal.    The cover letter attests

that "the attached are true and certified copies of NSTAR

Electric Company/Cambridge Electric Company Terms and Conditions

for Distribution Services Tariffs . . . on file with the Rates

and Revenue Requirements Division of this Agency and also a copy

of the Stamp Approval dated January 31, 2006 of the compliance

filing . . . ."

     The plaintiffs contend that the judge erred in granting

summary judgment to NSTAR because there is a genuine and

material factual dispute as to the authenticity of the tariff at

issue.    The plaintiffs' challenge to the tariff's authenticity

focuses on discrepancies between the copy of the tariff that

accompanied NSTAR's motion for summary judgment and the copy of

     6
       Because we conclude that the "Limitations of Liability"
clause precludes all of plaintiffs' claims, we do not address
NSTAR's alternative argument that, regardless of the clause, the
claims of Sedo and Allodia are barred by the economic loss
doctrine.
                                                                    7

the tariff later submitted to the court with the cover letter

from the DPU.   We conclude that these alleged discrepancies,

which involve minor differences in the pagination of the

documents, do not give rise to a "genuine issue" regarding the

authenticity of the tariff accompanied by the DPU's official

seal.   See DIRECTV, LLC v. Department of Revenue, 470 Mass. 647,

657-658 (2015), citing HipSaver, Inc. v. Kiel, 464 Mass. 517,

522 (2013) (no genuine issue of material fact where party has

"no reasonable expectation" of prevailing on factual dispute).

See also Mass. R. Civ. P. 56(c), as amended, 436 Mass. 1404

(2002).

     b.   Interpretation of the "Limitation of Liability" clause.

The tariff's "Limitation of Liability" clause provides, in full:

          "Unless there is negligence on the part of the
     Company, the Company shall not be liable for damage to the
     person or property of the Customer or any other persons
     resulting from the use of electricity or the presence of
     the Company's appliances and equipment on the Customer's
     premises. In any event, for non-residential Customers
     served under general service rates, the Company shall not
     be liable in contract, in tort (including negligence and
     [G. L. c.] 93A), strict liability or otherwise for any
     special, indirect, or consequential damages whatsoever
     including, but not limited to, loss of profits or revenue,
     loss of use of equipment, cost of capital, cost of
     temporary equipment, overtime, business interruption,
     spoilage of goods, claims of Customers of the Customer or
     other economic harm."

     This court has observed that, "where words in a tariff are
                                                                        8

used in a peculiar or technical sense, and where extrinsic

evidence is necessary to determine their meaning or proper

application, so that 'the enquiry is essentially one of fact and

of discretion in technical matters,' then the issue of tariff

application must first go to the [regulatory] [c]ommission."

Spence v. Boston Edison Co., 390 Mass. 604, 613 (1983), quoting

United States v. Western Pac. R.R., 352 U.S. 59, 66 (1956).       The

interpretive question at issue in this case, however, does not

turn on any technical term.   Instead, it concerns the meaning

and scope of a tariff provision specifying the types of damages

for which NSTAR may be held liable.     Because the interpretation

of such a provision poses a pure question of law, it is proper

for judicial resolution.   See Patterson v. Christ Church in the

City of Boston, 85 Mass. App. Ct. 157, 159 (2014).

    We have little difficulty concluding that the portion of

the "Limitation of Liability" clause at issue here encompasses a

claim of gross negligence or wilful and wanton misconduct.        The

clause refers to liability "in tort."     A cause of action for

gross negligence or wilful and wanton misconduct is a form of

liability "in tort."   MacFadyen v. Maki, 70 Mass. App. Ct. 618,

621-623 (2007); 1 D.B. Dobbs, P.T. Hayden, & E. M. Bublick,

Torts § 140 (2d ed. 2011); Restatement (Second) of Torts § 500
                                                                   9

(1965).

    The plaintiffs assert that the clause's parenthetical

phrase -- "(including negligence and [G. L. c.] 93A)" --

indicates that "[t]he only 'tort' liability [the clause]

purports to limit is that for 'negligence and [G. L. c.] 93A.'"

"It is," however, "hornbook law that the use of the word

'including' indicates that the specified list . . . that follows

is illustrative, not exclusive."   Puerto Rico Maritime Shipping

Auth. v. Interstate Commerce Comm'n, 645 F.2d 1102, 1112 n.26

(D.C. Cir. 1981).   The tariff's "use of the word 'including'

indicates that the [parenthetical] list is representative, not

all-inclusive, and that any . . . tort is covered" by the

clause.   See Barrows v. Wareham Fire Dist., 82 Mass. App. Ct.
623, 626 (2012).

    In context, the specific reference to "negligence" in the

parenthetical serves to clarify the relation between the

"Limitation of Liability" clause's first and second sentences.

The first sentence indicates that the public utility shall not

be held liable to any customers "[u]nless there is negligence on

the part of the Company."   The second sentence indicates that,

"[i]n any event," the utility shall not be liable "in tort

(including negligence . . .)" to "non-residential Customers
                                                                   10

served under general service rates . . . for any special,

indirect, or consequential damages whatsoever."   The clause's

specific reference to liability for "negligence," then,

elucidates the relation between the "no liability to any

customers without negligence" rule established in the first

sentence and the "no liability to nonresidential customers

served under general service rates for special, indirect or

consequential damages" rule articulated in the second sentence.

It does not render the latter rule ambiguous.

    Indeed, the intention to exempt the company from all

liability to nonresidential customers served under general

service rates for special, indirect, or consequential damages is

abundantly clear from the tariff.   The tariff's list of the

potential bases for liability is followed by the phrase "or

otherwise," thereby sweeping up any other potential bases of

liability not encompassed in the already broad categories of

liability specifically listed.   Further, the tariff's reference

to "special, indirect, or consequential damages" is sandwiched

between the words "any" and "whatsoever."   Finally, the tariff's

illustrative list of potential forms of "special, indirect, or

consequential damages" is preceded by the phrase "including, but

not limited to."
                                                                   11

    Short of a specific reference to gross negligence or wilful

and wanton misconduct, it is difficult to imagine how the tariff

more plainly could have exempted the plaintiffs from liability

for "special, indirect, or consequential damages."    Because such

a specific reference is not required, and the plaintiffs do not

contest that they are nonresidential customers served under

general service rates or that they are seeking to recover

special, indirect, or consequential damages, the rule

articulated in the second sentence encompasses the plaintiffs'

claims.

    c.    Enforceability of the limitation of liability clause.

In Massachusetts, a public utility's "liability for damages may

be limited by properly filed and approved tariffs."     Disk 'N'

Data, Inc. v. AT&T Communications, 415 Mass. 886, 888 (1993).

Such tariffs "have the 'force and effect of law,'" id., so long

as they satisfy the basic "requirement of reasonableness,"

Wilkinson v. New England Tel. & Tel. Co., 327 Mass. 132, 135

(1951) (Wilkinson).

    The core of the plaintiffs' argument is that, while a

public utility may, through its tariff, limit its liability for

ordinary negligence, it may not limit its liability for gross

negligence or wilful and wanton misconduct.   In making that
                                                                  12

argument, the plaintiffs invoke the well-established principle

of contract law indicating that, "while a party may contract

against liability for harm caused by its negligence, it may not

do so with respect to its gross negligence."    Zavras v. Capeway

Rovers Motorcycle Club, Inc., 44 Mass. App. Ct. 17, 19 (1997).

See CSX Transp., Inc. v. Massachusetts Bay Transp. Auth., 697 F.

Supp. 2d 213, 226 (D. Mass. 2010) ("the [Supreme Judicial Court]

would not enforce agreements purporting to require

indemnification against gross negligence").    We conclude that

the plaintiffs' invocation of that principle of contract law is

inapposite in light of the distinction between a contractual

release of liability and a properly filed and approved public

utility tariff.

    The plaintiffs' argument relies primarily on one, nearly

one and one-half century old precedent, Ellis v. American Tel.

Co., 13 Allen 226 (1866) (Ellis).   In that case, a plaintiff

sued a telegraph company for damages resulting from a missent

telegraph.   Id. at 227. This court determined that the statutory

scheme governing telegraph companies "takes the business of

conducting and managing a line of electric telegraph within this

[C]ommonwealth out of the class of ordinary private occupations,

and makes it a quasi public employment, to be carried on with a
                                                                  13

view to the general benefit and for the accommodation of the

community."   Id. at 231.   The court nevertheless deemed

enforceable a contractual clause providing that the telegraph

company would not be liable for errors and delays in the

transmission of messages unless the plaintiff paid extra to have

the message in question sent back to the station from which it

originated.   Id. at 236.   The court observed that the general

rule that a defendant is liable for damages caused by its

negligence:

         "does not operate so as to prevent parties from
    prescribing reasonable rules and regulations for the
    management of the business, or establishing special
    stipulations for the performance of service which, if made
    known to those with whom they deal, and directly or by
    implication assented to by them, will operate to abridge
    their general liability at common law, and to protect them
    from being held responsible for unusual or peculiar hazards
    which are incident to particular kinds of business. Of
    course, a party cannot in such way protect himself against
    the consequences of his own fraud or gross negligence, or
    the fraud or gross negligence of his servants or agents."

Id. at 234.

    In Wilkinson, 327 Mass. at 135, the court cited Ellis,

supra, in the context of claims against a telephone company for

financial loss caused by the defendant's failure of service.

The court affirmed a directed verdict in favor of the defendant

telephone company, based on a limitation of liability clause in

the rate schedule and accompanying regulations.    Wilkinson,
                                                                  14

supra at 134.   The court observed, in dicta, that "[o]ne of the

counts in the plaintiff's declaration alleges wilful and wanton

acts of the defendant and, if sustained by evidence, might

require submission of this action to the jury."    Id. at 135.

The court concluded, however, that the plaintiff could not

recover on that count because "[n]owhere in the opening

statement . . . [was] there a sufficient allegation of facts

from which the jury could infer or find any wilful or wanton

misconduct on the part of the defendant."    Id.

    In our view, both the Wilkinson court's citation to Ellis

and the plaintiffs' reliance on Ellis elide the significant

historical transformation in the regulation of public utilities

that occurred after 1866, when Ellis was decided.    The Ellis

court determined that the statutory scheme governing the

telegraph industry transformed it into "a quasi public

employment," even though the statutory scheme did not confer on

telegraph companies all the duties and obligations that apply to

common carriers.   Ellis, 13 Allen at 231.   The court

nevertheless concluded that the statutory scheme "recognized and

affirmed" a telegraph company's right, under "familiar and well

settled principles of common law," to "make rules and

regulations by which to define and limit their duties and
                                                                     15

obligations in the transaction of the business which they assume

to carry on."   Id. at 235.

    The limitation of liability clause at issue in Ellis, then,

was contractual.   Its contractual character, moreover, was

crucial to the court's decision.       The court observed that the

plaintiff "had notice" of the term limiting the telegraph

company's liability.     Id. at 237.   Although the plaintiff, as

the intended recipient rather than the sender of the missent

message, "entered into no express contract with the defendants,"

the court concluded the plaintiff's power to recover was limited

by the terms of the contract entered into between the sender and

the telegraph company.     Id.   As the court explained, "it is

difficult to see how the plaintiff, who claims through the

contract entered into by the sender of the message with the

defendants, which created the duty and obligation resting on the

defendants, can claim any higher or different degree of

diligence than that which was stipulated for the parties to the

contract."   Id. at 238.

    In the late Nineteenth Century, this contract-based

approach gave way to the now dominant tariff-based model for

public utilities regulation.      See Kearney & Merrill, The Great

Transformation of Regulated Industries Law, 98 Colum. L. Rev.
                                                                  16

1323, 1331-1332 (1998) (Kearney & Merrill).   Under that model,

the "progenitor" of which was the 1887 Interstate Commerce Act

(ICA), a public utility is required to file a tariff, which

contains all rates and all regulations, practices, or

classifications affecting those rates.   See Kearney & Merrill,

supra at 1331.   Once the tariff is approved by the relevant

regulatory agency, any deviation from it is strictly prohibited.

Id.   With respect to telegraphs (the industry at issue in

Ellis), the United States Supreme Court observed in Western

Union Tel. Co. v. Priester, 276 U.S. 252, 259 (1928), that, as a

result of amendments to the ICA bringing the telegraph industry

into the tariff-based model of public utility regulation,

"[w]hat had previously been a matter of common law liability,

with such contractual restrictions as the [S]tates might permit,

then became the subject of [F]ederal legislation to secure

reasonable and just rates for all without undue preference or

advantage to any."

      Wilkinson, decided eighty-five years after Ellis, manifests

the transformation in public utility regulation.   Whereas in

Ellis telegraph companies operating in the Commonwealth were

"only required to transmit despatches 'according to the

regulations' which they may establish," Ellis, 13 Allen at 235,
                                                                      17

in Wilkinson the defendant telephone company's "rates,

regulations, and practices [were] subject to the control and

supervision of the [DPU]."     Wilkinson, supra at 133.   The DPU's

ultimate control over the rates, regulations, and practices

governing the provision of telephone service, moreover, was

crucial to the court's analysis of the case.      In affirming the

grant of a directed verdict, the court observed that "rates and

regulations are indissolubly bound together" such that, "[w]hen

the [DPU] approved [the] regulation [at issue], it must have had

in mind its effect on rates and no modification of the

regulation may be countenanced."    Id. at 136.

    We likewise have observed that "the extensive legislative

regulation of [an electric company's] rates and practices takes

the furnishing of electricity out of the realm of contract law."

FMR Corp. v. Boston Edison Co., 415 Mass. 393, 396 (1993).

Instead, "[t]he process of utility rate making by a public

regulatory body is the exercise of a legislative function, . . .

which has been delegated to the [DPU] through the enactment of

G. L. c. 164" (citation omitted).    Boston Edison Co. v. Boston,

390 Mass. 772, 774 (1984).   The result of that process is a

"quasi statutory enactment."    Id. at 777, quoting Haverhill Gas

Co. v. Findlen, 357 Mass. 417, 420 (1970).
                                                                  18

    In light of this distinction, we are persuaded that the

contract rule against releases for gross negligence or wilful

and wanton misconduct should not be applied in the tariff

context.   Several considerations lead us to that conclusion.

    First, tariffs differ from contracts in that the regulatory

process by which the rates are set provides recourse for the

public to challenge rates or tariff terms as onerous or unfair.

Courts in the Commonwealth have been particularly "cautious in

enforcing releases against liability," and have "decline[d] to

do so" in circumstances "where a public utility attempts to

limit its liability."   Zavras v. Capeway Rovers Motorcycle Club,

Inc., 44 Mass. App. Ct. 17, 19 (1997).   See Sharon v. Newton,

437 Mass. 99, 106 (2002) ("We have not had occasion to rule on

the validity of releases required in the context of a compelled

activity or as a condition for the receipt of essential services

[e.g., public education, medical attention, housing, public

utilities], and the enforceability of mandatory releases in such

circumstances might well offend public policy").   Such

heightened scrutiny makes sense in the context of contractual

releases, given that public utilities typically enjoy

"legislatively sanctioned monopol[ies]" for the provision of

essential services, Boston Edison Co. v. Boston, 390 Mass. at
                                                                  19

777, obviating the possibility of true bargaining between a

utility and its customers.

      In the context of a public utility tariff, however, the

regulatory regime provides a framework for protecting against

onerous or unfair limitations in liability.   Pursuant to G. L.

c. 164, § 94, for instance, electric companies operating within

the Commonwealth must file with the DPU "schedules . . . showing

all rates, prices and charges to be charged or collected within

the [C]ommonwealth for the sale and distribution of . . .

electricity, together with all forms of contracts to be used in

connection with such schedules."   Before an electric company may

change its rates, the DPU must "hold a public hearing and make

an investigation as to the propriety of such proposed changes."

Id.   The DPU may initiate an investigation, either upon

complaint or on its own motion, into a proposed rate change.

Id.   Furthermore, "all contracts for the sale of . . .

electricity by . . . electric companies . . . shall be filed

with the [DPU]," and the "[DPU] may investigate the propriety of

any such contract, both before and after such contract has

become effective, and may, after notice and a public hearing,

make such orders relative to the rates, prices, charges and

practices covered by such contract as the public interest
                                                                     20

requires."     Id.

    Second, because the tariff that results from this process

is "not . . . a matter of contract by which a legal liability

could be modified, but a matter of law by which a uniform

liability was imposed," see Western Union Tel. Co. v. Esteve

Bros. & Co., 256 U.S. 566, 572 (1921), it demands a degree of

judicial deference not warranted in the contractual context.

The statutory scheme indicates that "[t]he Legislature delegated

the responsibility for regulating [electric] company practices

to the DPU."     Lebowitz Jewelers Ltd. v. New England Tel. & Tel.

Co., 24 Mass. App. Ct. 268, 273 (1987).     To evaluate and

invalidate that "Limitation of Liability" clause based on

traditional contract law principles would entail the court

impermissibly "substitut[ing] its judgment for that of the

Legislature."     Id., quoting Purity Supreme, Inc. v. Attorney

Gen., 380 Mass. 762, 776 (1980).

    Finally, a judicial decision invalidating the "Limitation

of Liability" clause would have effects beyond the clause

itself.   "The limitation of liability was an inherent part of

the rate" set by the DPU, and "[t]he company could no more

depart from it than it could depart from the amount charged for

the service rendered."     Western Union Tel. Co. v. Esteve Bros. &
                                                                   21

Co., 256 U.S. at 571.   Because "the rates as fixed by the [DPU]

are established with the rule of limitation in mind,"

invalidation of the limitation would undermine the broader

structure by which both the public utility's "rights and

privileges" as well as "its liabilities" are carefully defined

and limited.   Waters v. Pacific Tel. Co., 12 Cal. 3d 1, 7

(1974).

    The fact that the plaintiffs here allege gross negligence

or wilful and wanton misconduct does not alter the analysis.     In

a classic formulation, this court described the distinctions

between ordinary negligence, gross negligence, and wilful and

wanton misconduct as matters of degree.   "The element of

culpability which characterizes all negligence is in gross

negligence magnified to a high degree as compared with that

present in ordinary negligence," but is nevertheless "something

less than . . . willful, wanton and reckless conduct . . . ."

Altman v. Aronson, 231 Mass. 588, 591-592 (1919).    Because the

tariff provision at issue applies to all claims by

nonresidential customers seeking to recover "special, indirect,

or consequential damages," without regard to distinctions

between the degrees of culpability, we decline to make such a

distinction.
                                                                   22

    Courts in other jurisdictions have reached the same

conclusion.   Most pertinently, the United States Supreme Court

in Western Union Tel. Co. v. Priester, 276 U.S. 252, 259-260

(1928), after concluding that the tariff system took the

regulation of the telegraph industry out of the realm of

contract law, determined that a plaintiff could not escape a

limitation of liability clause in a tariff simply by affixing

the "vituperative epithet" of "gross" to an allegation of

negligence.   "[I]f it be assumed that we can weigh and measure

degrees of negligence and that a public service company may not

by contract alone limit its liability for gross negligence, so-

called," the court observed, "nevertheless we may not disregard

a lawful exercise of the regulatory power which has made no

distinction between degrees of negligence, nor may we, upon any

theory of public policy, annex to the rate as made conditions

affecting its uniformity and equality."   Id. at 260.   Tracking

this analysis, courts in other jurisdictions similarly have

rejected arguments that an allegation of gross negligence takes

a plaintiff's claim out of the scope of a limitation of

liability clause.   See Stern v. General Tel. Co., 50 Cal. App.
3d 538, 541-542 (1975); Professional Answering Serv., Inc. v.

Chesapeake & Potomac Tel. Co., 565 A.2d 55, 65 (D.C. 1989); In
                                                                    23

re Illinois Bell Switching Station Litig., 234 Ill. App. 3d 457,

463-465 (1992).

    We acknowledge that a number of courts in other States have

reached a different conclusion, determining that a provision in

a tariff exempting a public utility from liability for gross

negligence is invalid.   Closer examination of the extra-

jurisdictional authorities identified by the plaintiffs,

however, reveals that many are distinguishable from the instant

case.   In Satellite Sys., Inc. v. Birch Telecom of Okla., Inc.,

51 P.3d 585, 589 (Okla. 2002), for instance, the Oklahoma

Supreme Court observed that "[c]ourts overwhelmingly reject

attempts to limit liability either by contract or by tariff for

gross negligence, willful misconduct, and fraud."    There,

however, the plaintiff alleged that the defendant engaged in

fraud, not gross negligence, and the court held that, "[b]ecause

[the] tariff attempted to limit its liability for fraud, it was

unreasonable, does not have the force of law, and is not

binding."   Id.   In other decisions cited by the plaintiffs, the

tariff specifically provided that, while the utility would not

be liable for negligence, it could be held liable for gross

negligence.   See Pilot Indus. v. Southern Bell Tel. & Tel. Co.,

495 F. Supp. 356, 362 (D.S.C. 1979) ("This Court is likewise
                                                                 24

convinced that the tariff on file with the South Carolina Public

Service Commission and the Federal Communications Commission

effectively limits defendant's liability for service

interruptions in the absence of its gross negligence or

wilful/wanton conduct"); Lee v. Consolidated Edison Co., 98
Misc. 2d 304, 305 (N.Y. Sup. Ct. 1978) (tariff provision

"essentially exempts [electric company] from liability for

ordinary negligence and renders it liable for gross negligence

only").   Because these tariffs did not seek to exempt the

defendants from liability for gross negligence, the courts had

no occasion to determine whether such an exemption would be

valid.

    Finally, while we reject a categorical rule that a

limitation of liability clause in a tariff must distinguish

between ordinary negligence and gross negligence or wilful and

wanton misconduct, a tariff provision limiting liability

nevertheless must satisfy the basic requirement of

reasonableness.   Wilkinson, 327 Mass. at 135; Lebowitz Jewelers

Ltd. v. New England Tel. & Tel. Co., 24 Mass. App. Ct. at 270.

The plaintiffs, however, only argue that the challenged

provision is "unreasonable" insofar as they contend that any

tariff provision limiting liability for gross negligence is
                                                                       25

unreasonable.   We reject that contention, and see no other

reason for thinking that the "Limitation of Liability" clause is

unreasonable.

    The provision does not categorically exempt NSTAR from

liability for negligence, much less gross negligence.     On the

contrary, the provision specifically contemplates liability for

negligence, to both residential and nonresidential customers

alike.    The portion of the "Limitation of Liability" clause that

the plaintiffs challenge here merely exempts NSTAR from

liability for a particular type of damages ("special, indirect,

or consequential damages") asserted by a particular class of

customers (nonresidential customers served under general service

rates).   There are compelling reasons why the DPU could approve

of such a limitation, even where it fails to make a distinction

between ordinary negligence and gross negligence.   As scholars

have noted, consequential damages, such as damages for lost

profits or business interruption, are at once extremely

difficult to predict and potentially immense in magnitude.     See,

e.g., Tort Recovery for Negligently Inflicted Economic Loss:       A

Reassessment, 37 Stan. L. Rev. 1513, 1536 (1985).

    Under these circumstances, we think that the "Limitation of

Liability" clause is reasonable.   We have no occasion to address
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whether a broader limitation of liability tariff provision --

one that, for instance, fully immunized a public utility from

liability for damages resulting from its gross negligence or

wilful and wanton misconduct, rather than merely immunizing it

from claims for a particular type of damages, or one that

encompassed claims for fraud -- would, if it were to survive DPU

scrutiny, satisfy the basic requirement of reasonableness.

    3.   Conclusion.   For the reasons stated, we conclude that

the limitation of liability clause in the tariff precludes the

plaintiffs' claims to recover for business interruption and

other consequential or economic damages.

                                    Judgment affirmed.