Lawsuit Against Utility Company Is Permitted If It Does Not Interfere With The Public Utilities Commission's Regulatory Mission

August 8, 2008 | Bulletin No. 897538.1

In Koponen v. Pacific Gas and Electric Co., (--- Cal.Rptr.3d ---, 2008 WL 2878331, Cal.App. 1 Dist., July 28, 2008), a California Court of Appeal reviewed a trial court’s ruling that a lawsuit against a utility company was barred by Public Utilities Code Section 1759, which prohibits superior courts from reversing or interfering with actions of the state Public Utilities Commission (“PUC”).

The court ruled that Section 1759 does not bar such a lawsuit, so long as it does not interfere with the PUC’s mission of regulating utility companies.

Facts

Brian Koponen and other property owners sued Pacific Gas and Electric Co. ("PG&E') claiming that it violated the terms of easements obtained adjoining their properties by allowing the easements to be used for the installation and leasing of fiber optic lines by telecommunications companies.

The trial court ruled that since PG&E is regulated by the PUC, Section 1759 prohibited the suit which states that superior courts have no jurisdiction to review PUC matters. The court granted PG&E's demurrer. Koponen and the other plaintiffs appealed.

Decision

The court reviewed the language of Section 1759, which provides that no superior court “shall have jurisdiction to review, reverse, correct, or annul any order or decision of (the PUC) 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 Waters v. Pacific Telephone Co., (1974) 12 Cal 3d 1, the California Supreme Court interpreted that to mean that lawsuits against utilities are “limited to those situations in which an award of damages would not hinder or frustrate (PUC’s) declared supervisory and regulatory policies.”

The dispute here, the court noted, was about whether PG&E had violated the plaintiffs’ property rights through the improper use of its easements. The PUC, the court said, “has no regulatory authority or interest in private disputes over property rights between PG&E and private landowners.” Further, there was no evidence that the PUC has ever considered the extent of PG&E’s property interest in its rights of way, or that the PUC has adopted any policy limiting a utility’s liability for invading the property interests of private parties. The court therefore followed that the lawsuit did not constitute a superior court review or reversal of any PUC action or policy that would be precluded by Section 1759.

Section 1759 does prohibit the plaintiffs from seeking returns of “unjustly obtained profits” resulting from the use of the easements because the PUC does have authority over PG&E rates and how those revenues are to be allocated, the court said. However, it does not bar them from seeking damages for the improper uses of the rights of way, or relief from those violations, the court concluded.

The trial court’s ruling that it lacked jurisdiction was therefore reversed as to those claims that survived Section 1759’s limits and the matter was remanded for further proceedings.