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Daaleman v. Elizabethtown Gas Co.

Decided: June 29, 1978.

HENRY J. DAALEMAN, INDIVIDUALLY AND AS A REPRESENTATIVE OF A CLASS OF ELIZABETHTOWN GAS COMPANY CONSUMERS, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
ELIZABETHTOWN GAS COMPANY, DEFENDANT-APPELLANT AND CROSS-RESPONDENT, AND THE NEW JERSEY BOARD OF PUBLIC UTILITY COMMISSIONERS, DEFENDANT-RESPONDENT



On certification to Superior Court, Appellate Division, whose opinion is reported at 150 N.J. Super. 78 (1977).

For reversal -- Chief Justice Hughes, Justices Sullivan, Pashman, Clifford and Handler and Judge Conford. For affirmance -- None. The opinion of the court was delivered by Sullivan, J. Pashman, J., concurring. Pashman, J., concurring in the result.

Sullivan

The present suit, so far as it is pertinent to this appeal, was filed as a class action against defendant Elizabethtown Gas Company (Elizabethtown), a privately owned public utility corporation operating under the jurisdiction of the Board of Public Utility Commissioners of the State of New Jersey (PUC). Plaintiff alleges that he is a member of a class of 186,000 gas customers of Elizabethtown and that he is maintaining this suit on their behalf under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.

Plaintiff charges that Elizabethtown has fraudulently manipulated the Purchased Gas Adjustment Clause which is a part of its filed tariff so as to overstate the actual cost of gas purchased, as well as the quantity thereof, and has reflected this overstatement in the monthly bills sent to its

customers. The suit demands treble damages, counsel fees and costs. N.J.S.A. 56:8-19.

The trial judge, in an opinion reported at 142 N.J. Super. 531 (Law Div. 1976), dismissed plaintiff's suit, holding that the Consumer Fraud Act did not apply to a public utility. The dismissal was without prejudice to plaintiff presenting the same complaint to PUC, which the trial judge held was the appropriate forum for granting redress for overcharges by a public utility.

On appeal by plaintiff, the Appellate Division, in a reported opinion, 150 N.J. Super. 78 (1977), agreed that the breadth of the PUC's statutorily accorded regulatory control over public utilities virtually mandated adjudication of the merits of plaintiff's complaint by that agency rather than by the court. The Appellate Division held, though, that public utilities were also subject to the provisions of the Consumer Fraud Act and that the court had concurrent jurisdiction to entertain plaintiff's complaint. However, since the basic issue, namely Elizabethtown's alleged fraudulent manipulation of the Purchased Gas Adjustment Clause, was within the PUC's special competence, expertise and statutory jurisdiction, the Appellate Division held that the doctrine of primary jurisdiction should have been invoked and, instead of dismissing the complaint, the court should have stayed the action pending PUC's resolution of the "agency" issues.*fn1

Specifically, the Appellate Division held that the only issue raised by plaintiff's complaint which was not initially adjudicable by the PUC, was plaintiff's right to treble damages and counsel fees. In this regard, the Appellate Division held that the Consumer Fraud Act did not mandate an award of treble damages but only authorized such award in

the discretion of the trial court. The matter was accordingly remanded for reinstatement of plaintiff's complaint and, dependent upon the outcome of the PUC hearing, consideration of the question of treble damages and counsel fees. Elizabethtown's petition for certification was granted by this Court. 75 N.J. 537 (1977), as was plaintiff's cross-petition. 75 N.J. 590 (1977).

As heretofore noted, Elizabethtown is a privately owned public utility corporation operating under the jurisdiction of PUC. It is subject to the provisions of the Public Utilities Act, N.J.S.A. 48:2-1 et seq. and implementing regulations promulgated by PUC. The rates it charges customers for gas service are fixed by PUC. However, an Administrative Order of PUC, N.J.A.C. 14:11-1.13, allows Elizabethtown to include in its tariff a Purchased Gas Adjustment Clause by virtue of which the utility is permitted to make automatic adjustments in its customer billings for variations in the cost of purchasing and storing gas. The administrative order requires Elizabethtown to submit to PUC detailed statements as to such cost figures and adjustments in billings made thereunder. Elizabethtown's alleged overcharging of customers made under this clause is the basis of plaintiff's suit.

The Consumer Fraud Act, originally enacted in 1960, is aimed basically at unlawful sales and advertising practices designed to induce consumers to purchase merchandise or ...


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