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Muise v. GPU

June 14, 2000

MADELINE MUISE, INDIVIDUALLY AND AS OWNER AND OPERATOR OF MEDIATION AND THERAPY ASSOCIATES, ON BEHALF OF HERSELF AND ALL OTHER INDIVIDUALS AND BUSINESS ENTITIES SIMILARLY SITUATED, PLAINTIFF-RESPONDENT,
v.
GPU, INC., ITS SUBSIDIARIES, AGENTS, SERVANTS AND/OR EMPLOYEES, AND/OR GPU ENERGY, ITS AGENTS, SERVANTS, AND/OR EMPLOYEES AND JOHN DOE MANUFACTURERS AND/OR SUPPLIERS, A FICTITIOUS NAME DENOTING CORPORATIONS, PARTNERSHIPS, OR OTHER BUSINESS ENTITIES WHO ASSIST OR ARE INVOLVED IN THE DELIVERY OF ELECTRICITY TO THE CONSUMER AND THE MANUFACTURERS AND SUPPLIERS OF EQUIPMENT USED FOR THE SAME, DEFENDANT-APPELLANT. AND GEORGE J. TZANNETAKIS, AND PAULA R. ZACCONE-TZANNETAKIS, HUSBAND AND WIFE, ANNA JACOUBS, GERALD HOY AND KATHLEEN HOY, HUSBAND AND WIFE, LLOYD VACCARELLI AND DOROTHY VACCARELLI, HUSBAND AND WIFE, FRANK CRACOLICI, MARMOL, INC., D/B/A UMBERTO RESTAURANT, WARREN ABRAHAMSEN D/B/A FAIRWINDS CATERING, C.K. SEAFOOD, INC., D/B/A BAYSHORE FISHERY, CHARLES KURICA, JR. AND JANICE KURICA, HUSBAND AND WIFE, FOREIGN CARS OF MONMOUTH, INC., RAD ENTERPRISES, INC., D/B/A KRAUZER CONVENIENCE STORE, AND FAIR HAVEN HARDWARE, INC., ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-RESPONDENTS,
v.
GPU, INC. AND ITS SUBSIDIARY COMPANIES, JERSEY CENTRAL POWER & LIGHT COMPANY, GPU GENERATION, INC., AND GPU SERVICE, INC., ALL D/B/A GPU ENERGY, DEFENDANTS-APPELLANTS.



Before Judges King, Carchman and Lefelt.

The opinion of the court was delivered by: King, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: May 24, 2000

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.

I.

In these actions, consolidated as one class-action lawsuit, plaintiffs sought damages from GPU, Inc., and related entities (defendants) for electric-service outages arising from high demand during a week-long heatwave in July 1999. Plaintiffs attributed the outages to defendants' negligence in operations, maintenance, and planning for a predictable event. Defendants moved without success to dismiss in favor of the primary jurisdiction of the Board of Public Utilities (the Board).

We granted defendants' motion for leave to appeal the denial of their motion to dismiss. R. 2:2-3(b); R. 2:5-6. Defendants argue here that the Board must consider plaintiffs' claims before a court does, in order to preserve the integrity of its oversight functions. Plaintiffs and the Board as amicus disagree. The Board asserts that it has finished its investigation of the power outages and has ordered appropriate measures to prevent a recurrence. It declares that trial of this case in the Law Division will not prejudice the Board or the public interest as long as any new issue within its exclusive jurisdiction is referred to it. No such issue is presently identified. Defendants also argue that plaintiffs have no right to a jury trial of their claims.

We conclude that the Law Division judge properly retained jurisdiction over these claims, rather than defer to the Board. We affirm that decision. Future developments may require reference of certain issues to the Board, but not at present.

II.

This is the procedural background. On July 20, 1999 the Muise plaintiffs, individual and business customers of the public utility's electrical service, filed a class-action complaint against GPU, Inc., and related entities, alleging damage "as a result of electrical power interruption and/or electrical deficiency and/or power failures and blackouts." They alleged that those defendants failed "to properly and adequately prepare for and anticipate the demand for electricity," and pleaded negligence, breach of contract, breach of warranty, intentional misrepresentation, failure to warn, fraud, and consumer fraud. They sought compensatory damages, treble damages pursuant to the consumer fraud statutes, punitive damages, and a jury trial on all issues. The defendants denied liability and asserted numerous affirmative defenses which included the Board's primary jurisdiction and the court's lack of subject-matter jurisdiction.

On July 22, 1999 the Tzannetakis plaintiffs, who were also individual and business customers of the public utility's electrical service, filed a class-action complaint against GPU, Inc., and other related entities, also alleging damage from the failure of those defendants "to provide safe and reliable delivery of energy in the form of electrical power." They alleged that those defendants should have known that their infrastructure and maintenance were inadequate to furnish service as represented and required. They pleaded many theories of liability, including negligence, strict liability, fraud, misrepresentation, breach of warranty, breach of contract, and consumer fraud. They sought compensatory damages, treble damages pursuant to the consumer fraud statutes, punitive damages of at least $350,000 "per claimant," and a trial by jury "on all issues so triable." The defendants denied liability and asserted the same defenses.

On October 8, 1999 the parties consented to consolidate the Muise and Tzannetakis actions. On October 12, 1999 the judge granted class certification, denied defendants' motion to dismiss in favor of the Board's primary jurisdiction, and denied a motion to dismiss for failure to exhaust administrative remedies. Defendants later abandoned their exhaustion contention.

At the October 12, 1999 hearing, the judge said that he would deny defendants' motion for a stay, which defendants had not yet formally filed, in order to allow discovery and class notification to proceed. On October 18, 1999 the judge memorialized the grant of class certification and the denial of defendants' motions to dismiss. The order defined the class as follows:

All customers of GPU Energy in New Jersey including, but not limited to, customers in Monmouth and Ocean Counties, and all dependents, tenants, employees and other intended beneficiaries of customers of GPU Energy in New Jersey including, but not limited to, Monmouth and Ocean Counties, who suffered damages as a result of the failure of GPU Energy to deliver electricity during the week beginning Sunday, July 4, 1999. The officers, directors and agents of the defendants are specifically excluded from the class. Any persons with claims for personal injury arising out of the power outages are excluded from the class.

The order also appointed the Muise plaintiffs' counsel and the Tzannetakis plaintiffs' counsel as "counsel for the class."

On January 11, 2000 we granted defendants' motion for leave to appeal in order to determine the proper forum for these claims.

III.

The Board has the power of "general supervision and regulation of and jurisdiction and control over all public utilities . . . and their property, property rights, equipment, facilities and franchises so far as may be necessary for the purpose of carrying out the provisions of this Title." N.J.S.A. 48:2-13. It also has the power to set "just and reasonable standards, classifications, regulations, practices, measurements or service to be furnished, imposed, observed, and followed" by a public utility. N.J.S.A. 48:2-25(a).

The Board's powers include ordering a public utility to comply with laws and ordinances, maintain a "system of accounts" in a prescribed manner, furnish periodic detailed reports, and notify the Board of any accident upon the utility's property "or indirectly arising from or connected with its maintenance or operations." N.J.S.A. 48:2-16. In addition, the Board may "[i]nvestigate upon its own initiative or upon complaint in writing any matter concerning any public utility." N.J.S.A. 48:2-19.

The Board may order a public utility "to furnish safe, adequate and proper service, including furnishing and performance of service in a manner that tends to conserve and preserve the quality of the environment and prevent the pollution of the waters, land and air of this State, and including furnishing and performance of service in a manner which preserves and protects the water quality of a public water supply, and to maintain its property and equipment in such condition as to enable it to do so." N.J.S.A. 48:2-23.

If a management audit, to be conducted every three to six years by Board staff or consultants, demonstrates "that any of the operating procedures or any other internal workings of the affected utility are inefficient, improvident, unreasonable, negligent or an abuse of discretion," the Board may hold a hearing and order the utility "to adopt such new or altered practices and procedures as the board shall find to be necessary to promote efficient and adequate service to meet the public convenience and necessity." N.J.S.A. 48:2-16.4. The Board would also determine the "reasonable and proper costs and expenses" of such measures and recognize them "as proper business expenses." N.J.S.A. 48:2-16.4.

The regulations set technical standards for the construction of new utility facilities and installations. N.J.A.C. 14:3-2.1 to -2.5. They must be "in accordance with standard utility practice," and utilities must "make reasonable efforts to protect the public and its property from injury or damage and shall exercise due care to reduce hazards" that their "equipment and facilities" may pose. N.J.A.C. 14:3-2.1(a).

Under the regulations' general maintenance provisions, a utility "shall have and maintain its entire plant in such condition as will enable it to furnish safe, proper and adequate service." N.J.A.C. 14:3-2.6. It also "shall inspect its equipment and facilities at sufficiently frequent intervals to disclose conditions, if existing, which would interfere with safe, adequate and proper service, and shall promptly take corrective action where conditions disclosed by such inspection so warrant," N.J.A.C. 14:3-2.7(a), and must do so as well for the poles and towers that it owns or uses. N.J.A.C. 14:3-2.7(c). It must "exercise reasonable diligence to avoid interruptions, curtailments or deficiencies . . . of service . . . ." N.J.A.C. 14:3-3.9(a). The only specific maintenance provisions require a utility to follow "established practice" for inspecting ...


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