Zurich Am. Ins. Co. v. S. Conn. Gas Co.

442 F.Supp.3d 510

ZURICH AMERICAN INSURANCE COMPANY, Plaintiff,

v.SOUTHERN CONNECTICUT GAS COMPANY, Defendant.

19-cv-00534 (KAD)

United States District Court, D. Connecticut.

Signed February 21, 2020

Stuart G. Blackburn, Windsor Locks, CT, Mark T. Mullen, Cozen O'Connor, Philadelphia, PA, for Plaintiff.

Charles P. Reed, James Efrem Ringold, Loughlin Fitzgerald, P.C., Wallingford, CT, for Defendant.

MEMORANDUM OF DECISION RE: DEFENDANT'S MOTION TO DISMISS (ECF NO. 18)

Kari A. Dooley, United States District Judge:

Plaintiff Zurich American Insurance Company ("Zurich" or the "Plaintiff") filed this action as subrogee to its insured, 300 PRW, LLC ("300 PRW"), which owns property located at 300 Post Road West in Westport, Connecticut (the "Property") for which Defendant Southern Connecticut Gas Company ("SCG" or the "Defendant") provides gas services. (Compl. ¶¶ 6–7, ECF No. 1.) The Plaintiff alleges one count of negligence against the Defendant in connection with an alleged accident at the Property involving subfreezing temperatures that led to frozen pipes and extensive water damage. On June 28, 2019, SCG moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6). (ECF No. 18.) In its supporting memorandum (ECF No. 18-1), SCG asserts that Zurich's action is barred by a limitation of liability provision embodied in the operative tariff that is approved by, and filed with, the Connecticut Public Utilities Regulatory Authority (the "PURA"), which SCG submits is binding on Zurich under the "filed rate doctrine." Zurich filed its opposition to the motion to dismiss on July 26, 2019 (ECF No. 27) and SCG filed a reply brief on August 8, 2019. (ECF No. 28.) For the reasons that follow, Defendant's motion is GRANTED.

Background and Procedural History

Zurich alleges that on January 2, 2018, a sprinkler pipe/head ruptured at the Property due to subfreezing temperatures, resulting in a claim being made under 300 PRW's insurance policy. (Compl. ¶¶ 9, 12–13.) Zurich alleges that the accident was the result of clogged filters in the gas meter that prevented the flow of gas with which to heat the Property. Zurich seeks to hold SCG liable for its purported failure to maintain adequate gas and heating services so as to prevent the sprinkler pipes from freezing. (Id. ¶¶ 8–11.) On April 10, 2019, Zurich filed this action against SCG alleging one count of negligence based upon SCG's alleged negligent interruption of gas services to the Property, negligent supervision of its work crew, failure to inspect the gas service and gas filters to assure proper functioning, and failure to warn 300 PRW of the interruption in services.¹ (Id. ¶ 16.)

SCG's gas rates are set by a tariff that is approved by and filed with the PURA. A copy of the tariff that went into effect on January 1, 2018 (the "SCG Tariff") between SCG and its customers is attached as Exhibit A to SCG's brief. (ECF No. 18-2.) It includes a number of terms and conditions which "apply to all gas rates, to the supply of gas service and to all contracts for gas service." (SCG Tariff at 153.) One of these terms, captioned "Maintenance of Gas Supply by Company," provides in full:

The Company endeavors to provide a regular and uninterrupted supply of gas or firm delivery service, but does not guaranty[sic] continuous service. Whenever it becomes necessary for the Company to curtail gas to its customers because of an insufficient supply to meet total customer requirements, such curtailment shall be made in accordance with the Load Curtailment Plan approved by the [PURA] and these Rules and Regulations. The Company cannot be and is not responsible in contract, tort or otherwise for any loss or damage (direct, indirect or consequential) to any persons or property resulting in any way from any interruption of service or any change in characteristics of service, including but not limited to low or inadequate pressure, regardless of the cause of such interruption or change, unless such loss or damage is the result of willful misconduct or gross negligence on the part of the Company.

(Id. at 155–56 ¶ 19.) Citing this paragraph, SCG argues that this action must be dismissed under the filed rate doctrine.²

Standard of Review

On a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the Court must accept the complaint's factual allegations as true and must draw inferences in the plaintiff's favor. Littlejohn v. City of New York , 795 F.3d 297, 306 (2d Cir. 2015). "In addition to the allegations of the complaint, the Court may also consider matters of which judicial notice may be taken," Hohmann v. GTECH Corp. , 910 F. Supp. 2d 400, 405 (D. Conn. 2012), which include tariffs publicly filed with a regulatory authority, Marcus v. AT & T Corp. , 938 F. Supp. 1158, 1164–65 (S.D.N.Y. 1996), aff'd , 138 F.3d 46 (2d Cir. 1998). The "complaint must ‘state a claim to relief that is plausible on its face,’ " setting forth "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Kolbasyuk v. Capital Mgmt. Servs., LP , 918 F.3d 236, 239 (2d Cir. 2019) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). "Accordingly, ‘threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.’ " Nielsen v. Rabin , 746 F.3d 58, 62 (2d Cir. 2014) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ) (brackets omitted).

Discussion

The Filed Rate Doctrine

The filed rate doctrine, also known as the filed tariff doctrine, "holds that any ‘filed rate’—that is, one approved by the governing regulatory agency—is per se reasonable and unassailable in judicial proceedings brought by ratepayers." Simon v. KeySpan Corp. , 694 F.3d 196, 204 (2d Cir. 2012) (quoting Wegoland Ltd. v. NYNEX Corp. , 27 F.3d 17, 18 (2d Cir. 1994) ). Under the doctrine, "[a]ll customers are ‘conclusively presumed’ to have constructive knowledge of the filed tariff under which they receive service." Fax Telecommunicaciones Inc. v. AT & T , 138 F.3d 479, 489 (2d Cir. 1998) (citation omitted). The "doctrine has been extended across the spectrum of regulated utilities," "is rigid and unforgiving" in its application, and "bars both state and federal claims" when properly invoked.

Simon , 694 F.3d at 205 (internal quotation marks and citations omitted). It derives from the desire to avoid judicial intervention in the province of the regulatory authorities responsible for allocating the applicable legal rights between the industry and its customers (the "justiciability" concern) and to avoid divergent litigation outcomes that would undermine rate uniformity (the "discrimination" interest). See Wegoland , 27 F.3d at 19 ; see also Simon , 694 F.3d at 205.

Courts also "use the filed rate doctrine to, inter alia, ensure that carriers and customers comply with the terms of their tariff agreements" and have applied it "not only to rates or charges, but also to non-price aspects of services." Colon de Mejias v. Malloy , 353 F. Supp. 3d 162, 176 (D. Conn. 2018) (quotation marks, alterations, and citations omitted); see also ICOM Holding, Inc. v. MCI Worldcom, Inc. , 238 F.3d 219, 222 (2d Cir. 2001) ("[T]he filed-rate doctrine bars state-law claims not only that pertain directly to the price of telecommunications services subject to an FCC filing, but also state-law claims that concern various nonprice aspects, such as ‘service, provisioning, and billing options.’ ") (quoting Am. Tel. and Tel. Co. v. Central Office Tel., Inc. , 524 U.S. 214, 220, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998) ).

The "non-price aspects of services" that are deemed binding on a customer, include as relevant here, limitations on liability. For example, in the century-old case of W. Union Tel. Co. v. Esteve Bros. & Co. , 256 U.S. 566, 568, 41 S.Ct. 584, 65 L.Ed. 1094 (1921), relied upon by SCG, the defendant, Western Union Telegraph Company ("Western Union"), transmitted an unrepeated cable message to the plaintiff company which erroneously directed the sale of 2,000 bales of cotton when the message should have read 200 bales, resulting in a loss to the plaintiff of over $30,000. However, the operative tariff governing telegraph and cable rates filed with the Interstate Commerce Commission contained a limitation of liability provision stating that Western Union "shall not be liable for mistakes in transmission of any unrepeated message, beyond the amount of that portion of the tolls which shall accrue to it." Id. at 568–69, 41 S.Ct. 584 (alterations and internal quotation marks omitted). As a result, the Supreme Court held that the plaintiff's damages were limited to Western Union's share of the toll, reasoning that "[t]he limitation of liability was an inherent part of the rate" that "[t]he company could no more depart from ... than it could depart from the amount charged for the service rendered." Id. at 571, 41 S.Ct. 584. It sustained this finding even though the plaintiff was not aware of the tariff—holding that "a rate lawfully established must apply equally to all, whether there is knowledge of it or not." Id. at 573, 41 S.Ct. 584. This iteration of the doctrine continues to apply with equal force under modern regulatory frameworks. See, e.g. , ICOM Holding , 238 F.3d at 222–23 (holding that the plaintiff's breach of contract claims for the defendant's failure to install certain telecommunications services were barred by the filed rate doctrine where the operative tariff absolved the defendant of service guarantees, precluded the defendant's liability for damages flowing from, inter alia , any failure to furnish services, and expressly limited a customer's remedies "to the extension of allowances" set forth in the tariff).

The Filed Rate Doctrine Under Connecticut Law

At oral argument, the Plaintiff asserted that the doctrine, which is a...