M. Brian McMahon
A recurring issue for California courts is whether a private suit against a public utility is barred because the PUC has exclusive jurisdiction under Pub. Util. Code § 1759. The court in Wilson v. Southern California Edison, 234 Cal. App. 4th 123 (2015), affirmed the trial court’s decision that plaintiff’s claims that she was injured by stray voltage resulting from grounding of Edison’s substation were not barred by § 1759, despite the fact that the PUC specifically required substations to be grounded.
The plaintiff brought claims alleging that Edison failed to properly supervise, secure, operate, maintain, or control its electrical substation allowing stray electric voltage to enter her home. The jury found in favor of the plaintiff on all her claims and awarded compensatory and punitive damages. In post-trial motions, Edison argued for the first time that the plaintiff’s claims fell under the exclusive jurisdiction of the PUC. The trial court denied the motions and Edison appealed.
The appellate court held that Edison is not barred from asserting for the first time on appeal that the trial court lacked jurisdiction under § 1759. Nonetheless, the court held that Wilson’s claims were not barred. The court held also there was insufficient evidence to support two of her claims and a retrial was necessary on her nuisance claim, because the jury may have considered irrelevant evidence.
A party may raise § 1759 as a bar to an action against a public utility for the first time on appeal.
The court noted that the Constitution confers broad authority on the PUC to regulate utilities and gives the Legislature plenary power to confer additional authority and jurisdiction on the PUC and to establish the scope of review of actions of the PUC. The Legislature, implementing its constitutional authority, enacted the Public Utilities Act (PUA). Under the PUA, only the Supreme Court and appellate courts have jurisdiction to review or suspend the PUC’s actions. Section 1759 is a statute conveying subject matter jurisdiction in the PUC and divests trial courts of jurisdiction to interfere with the PUC’s regulation of utilities. Because § 1759 is jurisdictional, it cannot be waived by the parties. Therefore, Edison could argue for the first time on appeal that the trial court lacked subject matter jurisdiction under § 1759. 234 Cal. App. 4th at 143-44.
Section 1759 did not bar the plaintiff’s claims.
Whether a superior court has subject matter jurisdiction over a private right of action against a public utility is complicated by the potential conflict between §§ 2106 and 1759 of the Public Utilities Code. Section 1759 provides that no court, except the California Supreme Court and the courts of appeal, “shall have jurisdiction to review, reverse, correct, or annual any order or decision of the commission or to suspend or delay the execution or operation thereof, or to enjoin, restrain, or interfere with the commission in the performance of its official duties.” In contrast, section 2106 provides that a public utility shall be liable for all losses, damages and injuries it causes and permits actions to be brought in any court of competent jurisdiction to recover such losses, damages and injuries.
In resolving the potential conflict between these two sections, the appellate court relied on the three part test adopted in San Diego Gas & Electric Co. v. Superior Court, 13 Cal.4th 893 (1996) (Covalt): (1) whether the PUC has the authority to adopt a regulatory policy with respect to the conduct at issue; (2) whether the PUC has exercised its authority; and (3) whether a court action would hinder or interfere with that policy. Covalt, Id. at 923, 926, 935. If the answer to all three questions is affirmative, then §1759 bars the action against a public utility.
Edison contended that the plaintiff’s action was barred because all three elements of the Covalt test were met. First, the PUC has broad authority to regulate the design, siting, operation and safety of electrical distribution systems. Second, the PUC has exercised that authority by issuing regulations for every possible aspect of electric distribution systems. Third, the jury award obstructs and interferes with the PUC’s regulations and policy by imposing liability on Edison for compliance with those regulations and “effectively finding that Edison was required to do something—completely eliminate stray voltage—that the PUC does not require.”
The PUC filed an amicus brief in support of Edison. It contended that the first two elements of the Covalt test were met because it has the authority and exercised that authority to adopt regulatory policies and programs for the design, construction, operation, and maintenance and safety of utility equipment and facilities. The third Covalt element was satisfied because an adjudication by a court prior to a PUC finding of wrongdoing “would interfere with the Commission’s authority to interpret and apply its own orders, decisions , rules and regulations regarding the design, construction, operation, maintenance and safety of utility equipment and facilities.”
The court ruled that the fact that the PUC issued general regulations requiring that electrical distribution systems be operated and maintained so as to ensure safety and service and setting forth design requirements was insufficient to show that a court action would hinder or interfere with those regulations. 234 Cal. App. 4th at 148-49.
As the court recognized, however, Edison did not rely solely on general safety and design regulations issued by the PUC. Edison contended that PUC regulations require that Edison’s electrical distribution systems be grounded, that the grounding be effective and they establish minimum requirements for ground conductors. Edison’s substation, which was the source of the stray electric voltage in Wilson’s home, was grounded pursuant to those regulations. Edison argued and the court agreed that the PUC expressly requires that electrical distribution systems be grounded and stray voltage is an inevitable byproduct of grounding. Edison argued that the lawsuit contravenes the PUC’s grounding regulations because Edison cannot comply with those regulations while also satisfying Wilson’s demand that it completely eliminate stray voltage on her property.
The court rejected Edison’s arguments. First, the court ruled that, although the PUC’s general orders require grounding of substations, “it may be that Edison could comply with the regulations and still mitigate the stray voltage that results from grounding.” Second, the PUC stated that the “General Orders do not give guidance as to how the utilities operate and maintain their substations, and there are no specific regulations governing substation operation.” The court recognized that the PUC requires each electric utility to establish and update an inspection program for its substations, and meet annually with other utilities to share newly developed practices with the expectation that a “best practice” will evolve that shows how to most effectively operate and safely control the electric systems in California. But the court concluded that “it is unclear whether this “best practice” will address stray voltage issues. Finally, the court distinguished the PUC’s exercise of authority with respect to substations and stray voltage differed from cases in which the courts found that §1759 barred the action. Unlike the situation here, most of those cases were ones in which the PUC conducted or was in the process of conducting investigations into or adopted regulations on the specific issue alleged in the lawsuit. 234 Cal. App. 4th at 149-51.
The court concluded that Wilson’s claims are not within the exclusive authority of the PUC under §1759, because there was no evidence that the PUC has investigated or regulated the issue of stray voltage and without evidence that stray voltage cannot be mitigated without violating the PUC’s regulation requiring grounding. Id. at 151.
This decision in Wilson v. Edison, is consistent with a number of decisions that have rejected claims that §1759 barred an action because the action was not in direct conflict with the PUC’s regulations or rules. See Mata v. Pacific Gas & Electric Co., 224 Cal. App. 4th 309 (2014) (action by heirs for electrocution caused by trimming a tree near a high voltage line was not precluded even though the utility maintained minimum clearances between overhead wires and trees mandated by PUC rules and orders; the PUC’s minimum clearance requirements do not relieve the contractor from the duty to maintain the power lines in a safe condition); Nwabueze v. AT&T, 2011 U.S. Lexis 8506 (2011) (Damage claims for intentional charging of consumers for products and services they have not requested or authorized and the billing and collection of those charges (cramming) after the PUC adopted new cramming rules were not barred; the PUC cannot provide relief for past violations and the PUC did not find these practices comply with its rules); Cundiff v. GTE California, Inc., 101 Cal. App. 4th 1395 (2002) (claims that the phone company charged customers for the rental of obsolete or nonexistent phones without their customers knowledge were not barred; the plaintiffs were not challenging the amount of the rental but the lack of information given to customers about the charges, the PUC did not have authority to give restitution and damages and there was no showing that the PUC’s investigation was part of a broad and continuing supervisory or regulatory program.)