Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Mass. Sup. Ct.: Denial of class certification affirmed in consumer action against public utility over power outage, (Oct 31, 2014)

By Linda O’Brien, J.D., LL.M.

A superior court judge did not abuse his discretion in denying certification to a proposed class of customers of a public utility who sustained damages as a result of loss of electric power due to the utility’s alleged inadequate preparation for and response to a major winter storm, the Massachusetts Supreme Judicial Court decided (Bellermann v. Fitchburg Gas and Electric Light Company, October 30, 2014, Duffly, F.).

Fitchburg Gas and Electric Light Company (FG&E) is a public utility that provides electric service to customers in certain municipalities. In December 2008, a major ice storm struck the northeastern United States, during which ice accumulated on utility poles and tree limbs in FG&E’s territory and caused limbs and whole trees to fall onto FG&E’s utility poles and electrical lines. The storm also damaged transmission lines that supply FG&E’s system with power. The storm resulted in power outages across New England, including all of FG&E’s customers.

Consumer Marcia Bellermann and other residential and business FG&E customers who lost power during the winter storm filed a putative class action suit against FG&E. The plaintiffs alleged that FG&E was inadequately prepared for the storm and asserted claims for violations of the Massachusetts Consumer Protection Act (G.L. c. 93A). The plaintiffs moved for class certification and for partial summary judgment, seeking issue preclusion from certain findings by the Department of Public Utilities (DPU) in two prior administrative proceedings. The lower court denied class certification and, while determining that the application of issue preclusion was appropriate, denied partial summary judgment. Both parties appealed.

Class certification. The court found that the plaintiffs did not establish a causal connection between the unfair or deceptive conduct and an injury on a class-wide basis. The plaintiffs asserted two theories of injury: (1) the prolonged power outages were caused by FG&E’s failure to restore power more expeditiously and (2) FG&E failed to plan for widespread and extended outages due to its unfair and deceptive communication system. The court noted that, to prove that class members suffered longer outages than they would have but for FG&E’s failures, causation would have to be resolved on an individual basis. FG&E customers lost electric power for various reasons and distinct obstacles impeded restoration of their power. Even if the plaintiffs were to prove FG&E’s systematic failures, each class member would still have to show on an individual basis that those failures caused a prolonged outage, in the court’s view.

Regarding the second theory, the DPU found in an investigation after the storm that FG&E did not provide accurate and useful information to the public regarding the restoration times and the communication failure resulted in an inability of customers to plan appropriately for an extended outage. While the plaintiffs may be able to show that FG&E engaged in unfair or deceptive conduct by violating an affirmative duty to provide useful information on the scope and duration of expected outages, the plaintiffs did not offer a method for proving on a class-wide basis that FG&E’s failure to provide useful information actually interfered with the ability of different class members to plan for the outages, according to the court.

Issue preclusion. The court determined that the lower court’s application of issue preclusion was within the scope of his discretion. The doctrine of issue preclusion requires that there be an identity of the issues, a finding adverse to the party against whom it is being asserted, and a judgment by a court of competent jurisdiction. In rejecting FG&E’s argument that the lower court judge failed to identify the particular issues to be precluded, the court noted that a number of DPU investigatory findings had been identified: (1) FG&E did not plan sufficiently for emergency weather events and (2) FG&E did not communicate accurate and useful information to the public. The DPU findings were the basis of its decision that FG&E’s failures in preparing for and responding to the 2008 ice storm constituted violations of its duty to provide safe and reliable service. The lower court treated those findings as settled in determining whether the plaintiffs could establish violations under the G.L. c. 93A but acknowledged that a trial judge should retain to make final decisions regarding which issues should be precluded.

FG&E’s argument that the application of issue preclusion was unfair was also rejected. The court noted that FG&E had an adequate incentive to dispute its purported failures before the DPU investigatory proceeding since large financial stakes were involved, such as the possible imposition of a fine, recovery of storm-related costs, and a reduction in its return on equity. Moreover, the DPU did not rely on inadmissible evidence in finding FG&E’s failures or base its findings on FG&E’s failure to carry its burden of proof. Furthermore, the FG&E was represented by competent counsel at the DPU investigatory hearing, had the right to present evidence, and had the opportunity to appeal an adverse administrative decision. Thus, the application of issue preclusion was not an abuse of discretion, the court concluded.

The case is No. SJC-11492.

Attorneys: Barry M. Altman (Altman & Altman) for Marcia D. Bellermann. Gavin J. Rooney (Lowenstein Sandler LLP) for Fitchburg Gas and Electric Light Co.

Companies: Fitchburg Gas and Electric Light Company

Cases: StateUnfairTradePractices MassachusettsNews