News & Thought Leadership from Sulloway & Hollis

April 1, 2019

Can Public Utility Company Tariffs Affect Litigation?

In the right cases, public utility companies can invoke their tariffs to achieve a lawsuit dismissal, eliminate specific causes of action, or limit the damages.

This article first appeared in the DRI Publication For the Defense, April 2019

Public utility companies operate in a heavily regulated environment. Owing to these companies’ monopoly status in their service territory and the fact that they provide basic services to individuals and businesses—gas and electricity for heating and cooling, communications services, among others—they operate subject to federal, state, or local rules, or a combination of the three, and regulations that dictate how they operate.

Plaintiffs who sue public utility companies often include allegations of an array of regulatory violations in support of their claims, hoping to take advantage of the general rule that a violation of a regulation is evidence of negligence. This does not make public utility companies unique. What makes them unique is that public utility companies have another tool available to defend against a lawsuit: their tariffs. Depending on the facts, a utility company’s tariff can be a basis for dismissal a lawsuit in its entirety, eliminate specific causes of action, or limit the damages available to a plaintiff. These tools are hiding in plain sight in the terms and conditions of service for most tariffs. Understanding tariffs and how courts have treated arguments based on their language is critical for counsel representing public utility companies in litigation.

What Is a Utility Tariff?

In its most basic terms, a utility tariff states the rates that a company can charge to its customers for service (e.g., natural gas, electricity, or communications) and the terms and conditions of providing that service. Public utility companies do not unilaterally impose rates or terms and conditions of services on their customers. Usually, by statute, a company submits its proposed tariff to the relevant regulatory agency, which then reviews, and possibility revises it, and the regulators accept the tariff. At this point the tariff is deemed “filed.” For example, in Massachusetts, natural gas and electric distribution companies file tariffs with the Department of Public Utilities. Communication companies file tariffs with the Department of Telecommunications and Cable. Most states follow a similar framework. On the federal level, for example, the Federal Energy Regulatory Commission and the Federal Communications Commission requires certain types of companies to file tariffs. Finding a utility tariff is as simple as performing an electronic search of an agency’s file room on its website or checking the company’s website.

Historical Context—Federal

The successful use of tariff provisions to defeat claims dates back over 100 years and includes a pair of United States Supreme Court cases involving telegraph companies that are still cited in recent decisions. Primrose v. Western Union Telegraph Co., 154 U.S. 1 (1894), is one of the oldest such decisions and somewhat anomalous by today’s standards in one respect: the telegraph company’s rate was not approved by any regulatory authority. The rate at issue did not immunize the telegraph company for negligence; however, it limited the type and amount of recovery available to the customer.

Later, in Western Union Telegraph Company v. Esteve Bros. & Co., 256 U.S. 566 (1921), the Court upheld another limitation of liability involving a telegraph company; however, this time the company operated in accordance with a tariff that was on file with the Interstate Commerce Commission. As with Primrose, the limitation did not immunize the company from liability. It only limited the amount and form of recovery. The Court explained:

The limitation of liability [is] an inherent part of the rate. The company could no more depart from the amount charged for the service rendered.… It could not be varied by agreement; still less could it be varied by lack of agreement. The rate became, not as before a matter of contract by which a legal liability could be modified, but a matter of law by which a uniform liability was imposed. Assent to the terms of the rate was rendered immaterial, because when the rate is used, dissent is without effect.
Id. at 571–72.

This doctrine is often referred to as the “filed-rate doctrine.” More recently, United States Supreme Court has upheld different exculpatory provisions in tariffs that were filed with regulators under various statutory schemes administered by various agencies. See e.g., Southwestern Sugar & Molasses Co. v. River Terminals Corp., 360 U.S. 411 (1959) (involving the Interstate Commerce Commission); Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571 (1981) (involving the Federal Energy Regulatory Commission); American Tel. and Tel. Co.v. Central Office Telephone, Inc., 524 U.S. 214 (1998) (involving the Federal Communications Commission). Lower federal courts have followed suit and decisional law is relatively consistent, with cases turning on the specific circumstances and language at issue.


Federal decisions are all well and good, but what if you are representing a company in state court, defending against state law claims? For example, a residential home fire may result in a lawsuit against a natural gas or electric utility. Do these federal decisions help? As with so many questions of law and fact, it depends. As important as the facts of your case and the specific language of your tariff are, your state law may matter even more.

Why Your State’s Law Is Significant

Unlike contract law, not every state has addressed utility tariff language as a legal defense. Your state may have no law. As a result, those federal decisions (and decisions from other jurisdictions) are usually a necessary component of a tariff argument. Your trial court judge may have never encountered a tariff-based argument and may not have any notion of how utility tariffs work. Many of the federal decisions contain extensive analysis that can educate and assist a state court judge regarding utility tariffs, while also providing some comfort that by limiting a plaintiff’s claim, the judge is not stepping too far out on a limb.

Where Can You Find Helpful State Law?

On the other hand, there are a handful of states with relatively significant bodies of case law construing and applying utility tariffs. For example, Maryland, Massachusetts, and Texas have legal authority concerning utility tariffs that are helpful for constructing an argument, especially when the application of a utility tariff involves a matter of first impression. Because those jurisdictions have multiple decisions in the area, they have worked through some analytical details that might not have been worked through in a state that only has one decision. Key decisions from these three jurisdictions include the following: Singer Company v. Baltimore Gas and Electric Co., 558 A.2d 419 (Md. App. 1989); Re Liability of Electric Power Companies for Injury or Damages Resulting from Problems in the Delivery of Electric Power, 82 Md. P.S.C. 92 (Apr. 5, 1991), 1991 Md. PSC Lexis 60; Maryland Casualty Co. v. NSTAR Elec. Co., 30 N.E. 3d 105 (Mass. 2015); Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211 (Tex. 2002).

Where Should You Be Cautious?

So where should you be cautious? The obvious answer is everywhere, in every case. But because the utility tariffs can have harsh results—significantly reducing damages or precluding certain claims entirely—not every Court is willing enforce them aggressively. For example, in Mobile Electronics Service, Inc. v. FirstTel, Inc., 649 N.W.2d 603 (S.D. 2002), the plaintiff brought a claim due to a telephone company’s failure to change the classification of the business’ number from unlisted to listed. The plaintiff sued for breach of contract and negligence, claiming lost business and the cost of additional advertising as damages. With respect to those claims, the tariff limited the plaintiff’s damages, stating, “liability, if any, shall not exceed an amount equal to the proportionate charge for the service for the period during which the service was affected.” The Court refused to enforce this tariff provision, characterizing the tariff language as an illegal contract of adhesion.

Mobile Electronics Service, Inc., represents a minority view on the issue, which the South Dakota Supreme Court acknowledges in the decision, but it is not alone in declining to enforce tariff provisions to limit claims. Most of those decisions, however, are limited to the particular facts and tariff language before the Court. See, e.g., Adams v. Northern Illinois Gas Co., 809 N.E.2d 1248 (Ill. 2004); Estate of Pearson ex rel. Latta v. Interstate Power and Light Co., 700 N.W.2d 333 (Iowa 2005); Seiwart v. Northern States Power, 793 N.W.2d 272 (Minn. 2011). Illinois, for example, did not enforce the particular tariff language at issue in Adams due to the nature of the plaintiff’s claims, but the decision did not establish a hard rule refusing to enforce tariffs.

Utility Tariffs by Industry

Court decisions dealing with tariff-based defenses in the telecommunications, electric, and natural gas industries warrant study because they reveal how you may succeed or fail in particular circumstances if you assert the defense.


Decisions enforcing utility tariffs for telecommunications companies date back the furthest. The United States’ decisions from Primrose through Central Office Telephone, Inc., demonstrate how entrenched this body of law is for this utility sector. On the state side, In re Illinois Bell Switching Station Litigation 641 N.E.2d 440 (Ill. 1994), and Disk ‘n’ Data, Inc. v. AT & T Communications, 616 N.E.2d 76 (Mass. 1993), follow a similar line of analysis.

As a result, there are some interesting, unique decisions. For example, in US Airways, Inc. v. Qwest Corp., 361 P.3d 942 (Ariz. Ct. App. 2015), the Court of Appeals of Arizona allowed the telecommunications company to limit damages arising from a service interruption due to ordinary negligence, even though the plaintiff was not a direct customer.

Telecommunications companies probably benefit from the fact that most plaintiffs are businesses seeking economic damages for service interruptions and improper listings. Few claims are for property damage, personal injury, or wrongful death, which are more common for electric and natural gas utilities. That said, if a plaintiff’s case raises allegations of fraud or intentional misconduct, then the utility tariff is unlikely to help the defense. See, e.g., Pink Dot, Inc. v. Teleport Communications Group, 107 Cal. Rptr. 2d 392 (Cal. Ct. App. 2001); Satellite System, Inc. v. Birch Telecom of Oklahoma, 51 P.3d 585 (Okla. 2002).


The electric utility decisions invoking tariff-based defense fall into three categories: cases involving service interruptions, cases involving personal injuries, and cases involving property damage.

Service Interruptions – Tariff-based arguments by electric utilities are more recent than those by telecommunications companies. One of the most noteworthy decisions is Houston Lighting & Power Co. v. Auchan USA, Inc., 995 S.W.2d 668 (Tex. 1999). Auchan arose from a service interruption, resulting in a 15-hour power outage. During that time, the plaintiff, a grocer, suffered food spoilage. The electric utility sought to limit the types of damages available to the plaintiff resulting from ordinary negligence. (The issues of gross negligence and willful misconduct were not before the Court.) The Texas Supreme Court applied the tariff, citing the regulatory proceeding regarding the tariff at issue to support its conclusion that the tariff had to be enforced because it was essential to the rate structure. Without that limitation, the utility’s rates would be higher.

Interestingly, the Auchan decision’s analysis began with the old United States Supreme Court decisions referenced above. And in the context of the telecommunications decision, an electric tariff that limited the types of damages available due to service interruptions is a good bridge. If you have a case of first impression—facts or law—this approach may work. Another noteworthy piece of the analysis in Auchan was the Court’s discussion of the regulatory proceeding. In discussing the reasonableness of the utility’s tariff, the Court noted that other courts have considered and enforced utility tariff limitations of liability and the proceedings of a Texas utility company before the Public Utility Commission concerning its request for the approval of a tariff limitation of liability. See id. at 673 (citing Tex. Pub. Util. Comm’n, Application of Central Power and Light Company for Approval of Tariff Amendment, Docket No. 3189, 7 Tex. P.U.C. Bull. 53 (June 22, 1981)).

Also, the Auchan court explains that the structural realities of utility companies weigh in favor of enforcing tariff limitations of liability, including (1) that historically, “utilities have not operated in the same environment as unregulated businesses,” (2) that utilities are not free to charge what the market will bear, because their rates are set by state regulators, and (3) that a utility’s rate of return, and thereby, access to investment capital, is controlled by the regulators, which makes it in the public interest to protect the financial integrity of public utilities by enforcing reasonable limitations of liability. Id. at 674–75. What Auchan is talking about is the necessity of striking a balance of benefits and burdens associated with the utility model that is used throughout the United States.

The Auchan court demonstrated a degree of deference to regulators that is not present in most other contract or tort cases. If you have a case in which a utility tariff provision can come into play, ask yourself, have the regulators specifically weighed in on that type of provision?

Personal Injury – Sticking with Texas, three years after Auchan, the Supreme Court of Texas decided Southwestern Electric Power Co.v. Grant, 73 S.W.3d 211 (Tex. 2002). This decision is noteworthy because the Court confronted the claim that a utility tariff limiting liability for personal injuries is prima facie unconscionable. See Grant, 73 S.W.3d at 214. This case demonstrates that a utility company can defend both business-related claims and personal injury claims with its tariff.

The Court concluded that the utility’s “tariff provision limiting its personal injury liability is reasonable because the provision is narrowly drawn and provides a remedy for [the utility’s] gross negligence or willful misconduct.” Id. at 220 (citations omitted). In addition to the bases elaborated on in Auchan, the Court also highlighted the fact that utilities have administrative responsibilities and burdens that other businesses do not have. See id. at 221.

A case such as Grant addresses a potentially significant psychological barrier: the idea that a person who suffers bodily injuries can see his or her claims limited in some way due to a regulatory filing that the person was completely unaware of. In doing so, however, this tariff left an avenue of relief for gross negligence or willful misconduct. In other words, the tariff did not overreach for tort immunity.

Property Damage – In 2015, the Massachusetts Supreme Judicial Court considered whether a tariff may limit a utility’s liability to non-residential customers for special, indirect, or consequential damages resulting from the utility’s gross negligence. See Maryland Casualty, 30 N.E.3d at 107. This decision includes one of the more recent, comprehensive discussions of tariff principles concerning limitations of liability and why courts enforce those provisions. It cites many of the same cases and principles discussed above as part of its analysis.

Maryland Casualty demonstrates how tariffs can be narrowly tailored to address a specific category of claims. In Grant, claims for gross negligence and willful misconduct remained available to the plaintiff. In contrast, the tariff at issue in Maryland Casualty limited remedies available for non-residential customers for “special, indirect, or consequential damages whatsoever, including, but not limited to, lost profits or revenue, loss of use of equipment, cost of capital, cost of temporary equipment, overtime, business interruption, spoilage of goods, claims of the Customers or the Customer or other economic harm.” Id. at 109. The Court upheld that limitation in the face of claims of gross negligence and willful and wanton misconduct. See id. at 113–16. As a business-related claim that was subject to a targeted tariff provision, the utility positioned itself for success for this type of argument. It was not seeking to immunize itself against all claims of all kinds.

In State Farm Fire & Casualty Co. v. PECO, 54 A.3d 921 (Pa. Super. 2012), which involved a subrogation claim, the Superior Court of Pennsylvania discussed a tariff limitation of liability in the context of a residential home fire. This property damage case is a good example of using a service interruption and variation tariff provision to limit a claim. Ultimately, the Court concluded that a portion of the plaintiff’s claim was not barred by the tariff (strict liability); however, the Court reiterated that “[a] clause which limits but which does not entirely exempt a utility from liability is enforceable and will not be void on public policy grounds.” Id. at 927–28 (citation omitted).

Natural Gas

There are fewer cases involving natural gas utility company tariffs than other tariff types. At least two courts, however, have applied a utility tariff limitation of liability to personal injury claims.

In Del Carmen Canas v. CenterPoint Energy Resources Corp., 418 S.W.3d 312 (Tex. App. 2013), the Court of Appeals of Texas applied a utility tariff limitation of liability in context of a wrongful death claim resulting from a gas explosion. The decision upheld the dismissal of the plaintiffs’ negligence, negligence per se, and strict liability claims and reversed the trial court’s decision, in part, by dismissing claims for gross negligence and misrepresentation claims. See id. The utility did not claim that the tariff barred gross negligence claims, so the Court did not address whether a limitation of liability for gross negligence is reasonable. See id. at 323–24.

Lupoli v. Northern Utilities Gas, Inc., 17 Mass. L. Rptr. 708 (Mass. Super. 2004), arose from a flash fire involving a commercial pizza oven. The plaintiff claimed burn injuries. Applying New Hampshire law, the trial court held that the natural gas tariff precluded the plaintiff’s claims for strict liability and breach of warranty. Natural gas companies have also used their tariffs with success in Longardner v. Citizens Gas & Coke Utility, 2005 WL 5705008 (Ind. Super. Aug. 16, 2005) (trial order), and Pocklington v. Ameren IP, 2012 WL7040561 (Ill. App. Ct.) (June 8, 2012).

Natural gas companies’ experiences with tariff-based defenses provide a good example of the need to consider carefully if and when a particular provision applies and should be used. The courts deciding Estate of Pearson and Adams, for example, deliberately avoided applying utility tariff provisions because of the circumstances of those cases.

In Estate of Pearson, the application of the tariff turned on a discussion of the plaintiffs’ claims in relation to the “point of delivery,” the line between the customer’s and the utility’s responsibility. See Estate of Pearson, 700 N.W.2d at 343–44. The plaintiffs made general and specific allegations, so although the tariff could limit claims on the customer side of the gas system, it could not bar claims generally. See id.

A plain reading of sections 4.06, 4.07, and 5.04 of the tariff leads us to believe these sections only cover liability for inspections and/or defects in the pipes on the customer’s side of the point of delivery, not for a failure to warn its customers of any hazard inherent in its gas service.

Id. at 344. This is a situation in which the tariff limitation of liability did not apply to the specific facts of the case, not one in which the Court deemed the tariff’s language unreasonable.

Adams presented a different issue with the tariff’s application, which also turned on a provision that attempted to draw a distinction between the customer’s and the utility’s equipment. See Adams, 809 N.E.2d at 1263. The utility’s argument failed in Adams because it overreached with its attempt to apply the tariff, claiming a limitation of liability that would not be allowed at common law. See id. at 1268–68. The Court noted that the Illinois Commerce Commission rejected the notion of absolute tort immunity in the past, which made the utility’s position untenable. Id. at 1269–73. Similar to Estate of Pearson, Adams did question the concept of a utility limiting its liability through a tariff provision but did not rule that tariff-based defenses are prohibited. In the case of Illinois, its Supreme Court barred a class claim against an electric utility seven years after Adams. See Sheffler v. Commonwealth Edison Co., 955 N.E.2d 1110 (Ill. 2011).

Practical Suggestions

As the preceding discussion shows, utility tariff case law is not evenly distributed across jurisdictions or industries. Surely, some of this is attributable to the unique nature of this defense, the different issues that confront each utility category, and the chance element of litigation. It is entirely possible that you may not be able to assess the viability of a tariff defense based on the allegations in a complaint. What can you do in that situation?

First, raise the tariff as an affirmative defense even if it is not 100 percent clear that a provision applies based on a complaint. The tariff’s applicability may not be clear until after discovery begins, and some jurisdictions will limit your ability to invoke it later in the case.

Second, research your jurisdiction’s law regarding tariff application in judicial decisions, and if possible, locate all rate cases that discuss the tariff provisions at issue.

Third, compare your facts and the tariff language in your case to those in other judicial decisions, regardless of the type of utility. There are some basic legal concepts that that cut across all types of utilities that may be helpful. For example, courts generally defer to a validly adopted tariff and will not allow the parties to vary the tariff’s terms. The specific facts of other cases can give you a sense of your chance of success. Finally, choose wisely, especially if utility tariff-based defenses are a novel issue in your jurisdiction. This defense may seem harsh in some circumstances. Central Office, 524 U.S. at 223. So, consider if the defense makes sense. As demonstrated above, utility tariffs afford a defense to all types of claims and damages, but it is unlikely that a company will have success if there are allegations of fraud or an attempt to immunize the company. Generally, courts want to see that aggrieved parties have some avenue for relief, even if a plaintiff under a specific set of circumstances is unable to prevail due to a tariff provision.

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