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C. Leslie Pettko, On Behalf of Himself v. Pennsylvania American Water

January 13, 2012

C. LESLIE PETTKO, ON BEHALF OF HIMSELF : AND ALL OTHERS SIMILARLY SITUATED, : APPELLANT
v.
PENNSYLVANIA AMERICAN WATER : COMPANY :



The opinion of the court was delivered by: P. Kevin Brobson, Judge

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

C. Leslie Pettko, on behalf of himself and all others similarly situated, Appellant v. Pennsylvania American Water Company

: No. 1061 C.D. 2011

AMENDING ORDER

AND NOW, this 12th day of March, 2012, upon consideration of Appellant's unopposed Application for Clarification of this Court's January 13, 2012 Order, the order filed with this Court's opinion dated January 13, 2012, is amended for clarification purposes. A corrected copy of the opinion and order is attached.

Argued: November 15, 2011

BEFORE: HONORABLE DAN PELLEGRINI, Judge*fn1 HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge

OPINION BY JUDGE BROBSON

Appellant C. Leslie Pettko (Pettko), on behalf of himself and others similarly situated, appeals from an order of the Court of Common Pleas of Washington County (trial court), which transferred the above-captioned action to the Pennsylvania Public Utility Commission (PUC). Pettko filed a class action against appellee Pennsylvania American Water Company (PAWC), seeking to challenge PAWC‟s billing practices, including practices relating to certain rate increases approved by the PUC, and PAWC‟s alleged practice of rounding up, rather than down, amounts for the various components of its bills. PAWC filed preliminary objections to Pettko‟s first amended complaint (complaint), which the trial court sustained, concluding that the PUC has jurisdiction over the matter. The trial court then transferred the action to the PUC. Pettko seeks review of that order.*fn2 We affirm the trial court‟s order to the extent that it transfers the matter to the PUC, but with the qualifications identified below regarding the trial court‟s legal conclusions.

The particular rate/billing issues that are involved in this case are:

(1) a Distribution System Improvement Charge (DSIC);*fn3 (2) a State Tax Adjustment Charge (STAC); and (3) PAWC‟s alleged system of rounding individual charges in a bill up, rather than down, to the nearest cent. According to Pettko‟s complaint, PAWC‟s billing is based upon water consumption amounts, authorized taxes, fees, and surcharges. (Complaint ¶ 24.) PAWC bills customers based on a thirty-day cycle, but the cycle does not correspond to calendar months. (Id. ¶¶ 25-26.)

With regard to the DSIC component of PAWC‟s bills, Pettko alleged that although the PUC‟s authorizations of periodic increases in DSIC amounts are effective at the beginning of a particular calendar month, PAWC‟s practice is to implement the increase in that charge at the beginning of the billing cycle that predates the effective date of the increase, rather than to pro-rate the charge for the billing cycle during which the increase begins. (Id. ¶ 29, 31.)*fn4

With regard to the STAC, Pettko alleged that the PUC authorized this charge effective January 1, 2010, but that, as with PAWC‟s method of implementing the increase with DSIC increases, PAWC similarly failed to pro-rate the charge such that customers would only be billed for the increase beginning with the effective date of the increase. (Id. ¶¶ 37-38.) With regard to both the DSIC and STAC increases, Pettko alleged that PAWC‟s billing practices improperly resulted in retroactive billing of customers for fee increases that did not become effective until some point after the billing cycle began. (Id. ¶ 40.)

Pettko also challenged PAWC‟s alleged practice of rounding up every individual charge encompassed on a customer‟s bill to the nearest cent, even though "accepted rules of arithmetic would dictate rounding down." (Id. ¶ 41.)

Pettko averred that "[a]lthough individually small, the practice of rounding up to the next cent no matter whether it is the nearest cent, when aggregated among the components in each customer‟s bill and when all of the customers‟ bills are added together, represents a considerable amount of money." (Id. ¶ 43.) Pettko asserted that "absent individually calculating each element of their bills, the customers have no idea that the total is artificially inflated by [PAWC]‟s rounding practices." (Id. ¶ 45.) Pettko claimed that PAWC‟s practices (1) violate Section 2(4)(xxi) of the Unfair Trade Practices and Consumer Protection Law (UTPCPL);*fn5 (2) constitute a conversion; and (3) constitute a breach of contract.

PAWC filed preliminary objections to Pettko‟s complaint averring the following grounds: (1) the PUC, rather than the trial court, has primary and exclusive jurisdiction over Pettko‟s complaint, because Pettko‟s complaint essentially seeks to challenge PAWC‟s billing practices, and the PUC could provide complete relief to Pettko (and the putative class) if the PUC finds merit in Pettko‟s claims;*fn6 (2) Pettko failed to exhaust an available statutory remedy--an action before the PUC; and (3) the complaint fails to comply with Pennsylvania Rule of Civil Procedure No. 1028(a)(2), because Pettko did not include any written contract between him (and the putative class) and PAWC in relation to Pettko‟s breach of contract claim. Before the trial court, Pettko responded to PAWC‟s jurisdictional argument by asserting that his claims for relief are ones that the law recognizes in addition to whatever relief he may be entitled to receive from the PUC. The trial court concluded that the PUC has both primary and exclusive jurisdiction over Pettko‟s claims, dismissed Pettko‟s complaint, and transferred the matter to the PUC.

In this appeal,*fn7 Pettko raises the following issues for our review:

(1) whether the trial court erred in concluding that the PUC has primary and/or exclusive jurisdiction over Pettko‟s claim where Section 103(c) of the Public Utility Code (Code)*fn8 provides that remedies available from the PUC are cumulative and in addition to common law and statutory remedies; and (2) whether the trial court erred in concluding that it lacks jurisdiction to render a determination on the merits of Pettko‟s claims.

We begin, as the trial court did, by considering whether the PUC has primary jurisdiction in this matter.*fn9 In Feingold v. Bell of Pennsylvania, 477 Pa. 1, 383 A.2d 791 (1977), our Supreme Court reviewed a trial court‟s conclusion that it lacked subject matter jurisdiction over the plaintiff‟s equity action against a telephone company.*fn10 The plaintiff sued the telephone company based upon the company‟s alleged failure to maintain a referral system after the plaintiff moved his business and obtained a new phone number. The plaintiff alleged that he lost clients as a consequence of the referral system failure and that the telephone company exacerbated the problem when it published its new phone book with the plaintiff‟s old telephone number. The plaintiff sought injunctive relief and compensatory and punitive damages.

The trial court in that case agreed with the telephone company‟s argument that the plaintiff had failed to exhaust a putative administrative remedy available in an action before the PUC. The Supreme Court phrased the issue before it as "whether [the plaintiff] had adequate administrative remedies available under the Public Utility Law." Feingold, 477 Pa. at 7, 383 A.2d at 794. Based upon its conclusion that the plaintiff sought damages as well as injunctive relief, the Supreme Court concluded that the available administrative remedy was not adequate to address the plaintiff‟s requested relief: "In the instant case, [the plaintiff] could not have been made whole by the PUC, thus ...


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