Elder v. Pac. Bell Tel. Co.

205 Cal.App.4th 841

141 Cal.Rptr.3d 48

12 Cal. Daily Op. Serv. 4785

2012 Daily Journal D.A.R. 5618

Rex ELDER, Plaintiff and Appellant,

v.PACIFIC BELL TELEPHONE COMPANY et al., Defendants and Respondents.

No. A130718.

Court of Appeal, First District, Division 3, California.

April 30, 2012.

Review Denied July 18, 2012.

John C. Ochoa, retained counsel, Chicago, IL, David C. Parisi, Suzanne Havens Beckman, Azita Moradmand, Parisi & Havens LLP, Sherman Oaks, for Appellant Rex Elder.

Jan T. Chilton, Donald J. Querio, Philip Barilovits, Severson & Werson, San Francisco, for Respondent ACI Billing Services, Inc.

Douglas R. Tribble, Connie J. Wolfe, Roxane A. Polidora, Pillsbury Winthrop Shaw Pittman LLP, San Diego, for Respondent Pacific Bell Telephone Company.

JENKINS, J.

Plaintiff Rex Elder, individually and on behalf of a class of similarly situated individuals, filed this lawsuit seeking relief against defendants Pacific Bell Telephone Company (hereafter Pacific Bell) and ACI Billing Services, Inc., doing business as OAN (hereafter OAN) ¹ for the inclusion of allegedly unauthorized charges on a subscriber's telephone bill, a practice known as “cramming,” in violation of Public Utilities Code section 2890, subdivision (a). We agree with plaintiff that the superior court erred in sustaining defendants' demurrers without leave to amend. Accordingly, the judgment of dismissal is reversed and the matter is remanded for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

A. Law Relating to Cramming

In 1998, the Legislature added sections 2889.9 and 2890 to the Public Utilities Code² to address “cramming,” which is the practice of including unauthorized charges on a subscriber's telephone bill. (See Stats.1998, ch. 1036, § 2; Stats.1998, ch. 1041, § 3, amended by Stats.1999, ch. 1005, § 65.7, and by Stats.2000, ch. 931, § 4.) In pertinent part, section 2889.9 reads: “(a) No person or corporation shall misrepresent its association or affiliation with a telephone carrier when soliciting, inducing, or otherwise implementing the subscriber's agreement to purchase the products or services of the person or corporation, and have the charge for the product or service appear on the subscriber's telephone bill.” In pertinent part, section 2890 reads: “(a) A telephone bill may only contain charges for products or services, the purchase of which the subscriber has authorized.” The statutes also contain provisions addressing billing and dispute procedures regarding cramming. ( §§ 2889.9, 2890.) By these statutory enactments, the Legislature intended “to do all of the following: [¶] (a) Reduce the inclusion of unauthorized charges on a telephone subscriber's bill, a practice known as ‘cramming.’ [¶] (b) Clarify the rights and remedies available to California consumers with regard to telephone billing disputes. [¶] (c) Provide California consumerswith a consistent, effective, and easily accessible means of resolving disputes over unauthorized, inadvertent, misleading, or fraudulent charges that appear on their telephone bills. [¶] (d) Encourage the verification of telephone charges.” (Stats.1998, ch. 1041, § 1.)

B. Current Lawsuit³

In October 2009, plaintiff, on behalf of himself and others similarly situated, sued defendants Pacific Bell and OAN seeking relief for cramming. ⁴ By the first amended complaint, plaintiff sought relief for a class defined as: “[A]ll landline telephone subscribers in the state of California who suffered losses or damages as a result of ... Pacific Bell billing for OAN products or services not authorized by the subscriber; provided, however, that the following are excluded from this Class: (i) the Defendants, and (ii) any employee of Defendants.” The pleading set forth causes of action for breach of contract (against Pacific Bell only), tortious interference with a contract and restitution/unjust enrichment (against OAN only), unfair business practices in violation of California's Unfair Competition Law ( Bus. & Prof.Code, § 17200 et seq.) (hereafter UCL) ⁵ (against both defendants), and unauthorized telephone charges in violation of section 2890 (against both defendants). ⁶ In the prayer for relief, plaintiff sought certification of a class and appointment of counsel, declaratory and injunctive relief, actual damages, including prejudgment interest, exemplary damages, costs, and attorney fees.

Defendants generally demurred to the entire complaint based on the ground that the Public Utilities Commission (hereafter PUC) had exclusive or primary jurisdiction to resolve the lawsuit (Code Civ. Proc., § 430.10, subd. (a)), and generally demurred to each count based on the failure to allege facts sufficient to state a cause of action (Code Civ. Proc., § 430.10, subd. (e)). OAN specifically demurred on the ground that each cause of action against it was uncertain. (Code Civ. Proc., § 430.10, subd. (f).) Plaintiff opposed the demurrers.

The superior court granted defendants' general demurrers without leave to amend on the ground that the PUC had exclusive jurisdiction over this lawsuit. Because of its ruling that it lacked jurisdiction, the court did not address defendants' alternate argument that this lawsuit should be stayed under the doctrine of primary jurisdiction and the PUC should be given the opportunity to rule on plaintiff's claims in the first instance. The court also found that a cause of action for tortious interference with a contract against OAN failed because the complaint did not allege facts to support a necessary inference that OAN knew the third-party charges were unauthorized but nonetheless it forwarded them to Pacific Bell for inclusion in a subscriber's telephone bill. Having sustained the demurrers without leave to amend, the court issued a judgment dismissing the lawsuit in its entirety. Plaintiff timely appeals.

DISCUSSION

I. Standard of Review

In reviewing the ruling on defendants' demurrers, “we do not review the validity of [the superior court's] reasoning but only the propriety of the ruling itself. [Citation.]” ( Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958, 93 Cal.Rptr.2d 413.)⁷ “We independently evaluate the complaint, construing it liberally, giving it a reasonable interpretation, reading it as a whole, and viewing its parts in context. [Citation.] Treating as true all material facts properly pleaded, we determine de novo whether the factual allegations of the complaint are adequate to state a cause of action under any legal theory, regardless of the title under which the factual basis for relief is stated. [Citation.]” ( Burns v. Neiman Marcus Group, Inc. (2009) 173 Cal.App.4th 479, 486–487, 93 Cal.Rptr.3d 130.) “Each element must be pleaded with particularity so as to apprise the defendant of the specific grounds for the charge and enable the court to determine whether there is any basis for the cause of action, although less specificity is required if the defendant would likely have greater knowledge of the facts than the plaintiff. [Citation.]” ( City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211, 129 Cal.Rptr.3d 433.)

II. Application of Exclusive Jurisdiction Doctrine Is Not Warranted In This Case

Section 1759, subdivision (a) (hereafter section 1759(a)), provides that no court, except the Supreme Court or a court of appeal, has jurisdiction to interfere with the PUC's performance of its official duties.⁸ However, section 2106 allows an action to be filed in the superior court for damages caused by an allegedly unlawful act of a public utility. ⁹ As the court explained in Cundiff v. GTE California, Inc. (2002) 101 Cal.App.4th 1395, 125 Cal.Rptr.2d 445: “ Section 2106 and section 1759 address different things. Section 1759 defines and limits the power of the courts to pass judgment on, or interfere with, what the commission does. Section 2106, on the other hand, confirms the full power of the courts to pass judgment on what utilities do. Section 2106 ‘explicitly authorizes California courts to hear claims against public utilities for damages.’ [Citation.] The similarity between the two statutes is that they both dictate which courts have jurisdiction to engage in these activities. Only appellate courts can review decisions ... of the commission and interfere with its actions, whereas suits for relief against utilities can be brought in the trial court.” ( Id. at p. 1405, 125 Cal.Rptr.2d 445, italics omitted.)

Our Supreme Court has harmonized sections 1759 and 2106, by using a three-part test to determine whether a superior court has subject matter jurisdiction to hear a private action against a public utility, or whether such an action would be barred by section 1759(a): (1) whether the PUC had authority to regulate the conduct at issue; (2) whether it exercised that authority; and (3) whether the superior court action would hinder, frustrate, interfere with, or obstruct that authority. ( San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 917–918, 55 Cal.Rptr.2d 724, 920 P.2d 669.) As applied to this case specifically, we consider (1) whether the PUC had the authority to adopt “a regulatory policy” on cramming conduct and “what steps the utilities should take, if any, to minimize” cramming; (2) “whether the PUC had exercised that authority;” and (3) “whether the superior court action would hinder or interfere with the PUC's exercise of regulatory authority with respect to” cramming. ( Hartwell Corp. v. Superior Court (2002) 27 Cal.4th 256, 266, 115 Cal.Rptr.2d 874, 38 P.3d 1098( Hartwell ).)

Here, there is no question that the PUC has both the constitutional and statutory authority to make rules regarding cramming. (Cal. Const., art. XII, §§ 1–6; see §§ 2889.9, subds. (c), (d), (e), (f), (i), 2890.1.) And, there is no question that the PUC has adopted rules governing cramming pursuant to sections 2889.9 and 2890.1. At issue here is the third factor-whether plaintiff's superior court action against defendants...