Stillman & Dolan, Inc. v. Chesapeake & Potomac Telephone Co.

Orth, C. J., delivered the opinion of the Court. We hold in this appeal that the Court of Common Pleas in Baltimore City did not err in sustaining without leave to amend the demurrer of The Chesapeake and Potomac Telephone Company of Maryland (Telephone Company) to the declaration filed by Stillman & Dolan, individually and as agent for sixty-two other plaintiffs, “in their own behalf and on behalf of all other subscribers of [the Telephone Company] similarly situated” (Stillman). The declaration, filed 12 October 1972, ^instituting an action in assumpsit for money payable by the Telephone Company to Stillman, contained four counts. The first three were the common counts. 1 The fourth count set out the heart of the action.

It alleged that the Telephone Company was a public service and telephone company as those terms are defined in Code, art. 78, § 2. 2 3As such, the Telephone ¹⁸¹ Company operated a telephone communications system on a monopoly 3 basis throughout Maryland under rules and regulations promulgated by the Public Service Commission (Commission). 4 The Telephone Company had on file with the Commission tariffs providing certain maximum rates 5 to be charged its customers for services specified in the tariffs. Pursuant to these tariffs, the narr declared the Telephone Company “agreed to provide services at the lowest rates obtainable between any two points within the State of Maryland or for the charges relating to the intra-state aspects of multistate telephone charges.” It asserted that Code, art. 78, § 26 “specifically prohibits [the Telephone Company] from charging, demanding or receiving from any person a greater or lower compensation than from any other person under substantially similar circumstances.” 6 The ¹⁸² declaration states that the tariffs filed provided “for certain specific charges to be applicable within the State of Maryland for those customers desiring to have direct toll-free calling privileges between their location within the State of Maryland and Washington, D. C. Such tarriffs apply for all direct toll-free calling to Washington, D. C. from all points within the State of Maryland with the exception of those areas within the State in the so-called Washington, D. C. metropolitan area which include Washington, D. C. within their local calling area. Such charges on a monthly basis are based on a mileage charge providing for a certain minimum charge for each line installed plus a mileage charge of $3.00 per mile for the first 25 miles of distance covered by such line and $2.10 per mile thereafter up to a distance of 100 miles.” The declaration further alleged that Stillman had been repeatedly overcharged for services with respect to tariffs relating to the installation and usage of direct toll-free calling lines to Washington, D. C. It declaimed: “Pursuant to the requirements of the tariffs on file at the Public Service Commission of Maryland and the requirements of the law of the State of Maryland prohibiting preference and discrimination referred to above, [the Telephone Company] has been,! is and should be required to furnish its services on a uniform and non-discriminatory basis. Thus, for , example, customers residing and situate in Baltimore City who desire direct toll-free calling to Washington, D. C. should be given one of the following exchanges located in Laurel, Berwyn and/or Glendale — 953, 345, 474, 552, 982, 390, or 794 — in order to minimize the mileage charges for such customers.

In fact, [the Telephone Company] has ¹⁸³ over a long period of time deliberately refrained from giving its Baltimore customers one of such exchanges and, assuming its customer to be unknowledgeable of the tariffs on file at the Public Service Commission of Maryland, has steered said customers into using Baltimore City exchanges which, in effect, more than double the mileage charges applicable for such customers for such direct toll-free calling. The same holds true in equal measure for other areas of this state. A few selected customers have been granted numbers for such direct toll-free calling in the above listed exchanges which are available for the purposes enumerated. All other customers, which includes all of the plaintiffs herein, have been arbitrarily discriminated against and are entitled to refunds of all sums paid by them in excess of the aforementioned tariffs together with a reduction in present and future charges plus punitive damages and attorneys’ fees as well as the costs of this action.” Stillman prayed: “a.

That judgment be entered against [the Telephone Company] in an amount to be established by the Court, such sum to constitute a sum total of all excess charges made by the defendant relating to its direct toll-free calling program to Washington, D. C. in the past together with such punitive damages which the Court feels appropriate under the circumstances, it being estimated at this time that such sum is approximately $2,000,000. b. That [the Telephone Company] be ordered to forthwith cease and desist from all preferences and discrimination in said direct toll-free calling program to Washington, D. C. and that all of its customers who are under substantially similar circumstances be treated in the same manner. ¹⁸⁴ c. That [Stillman] be awarded attorneys’ fees and the costs of this action. d. That [Stillman] may have such other and further relief as the case may require.” The Telephone Company demurred to each count on the grounds that the declaration purported to allege a violation of Code, art. 78, § 26 in that the Telephone Company discriminated against Stillman, that The Public Service Commission Law 7 provides that complaints of this type be filed with the Commission, which has authority to hear them in the first instance, subject to judicial appellate review, that the declaration failed to allege exhaustion of the administrative remedy, and that the failure to exhaust the administrative remedies authorized, denied Stillman’s standing to sue in the courts.

Maryland Rule 345; Allen v. Wilkinson, 250 Md. 395 (1968). On 9 August 1974, upon motion of Stillman, the court ordered that Maryland Rule 530 a, subjecting the action to dismissal for lack of prosecution, be suspended for six months from that date. On 29 October 1974 the court, denying the Telephone Company’s motion to “Postpone Time to Answer Plaintiffs Interrogatories pending ruling on Demurrer”, ordered that the hearing on the demurrer be promptly set. The court ruled on the demurrer on 14 May 1975. 8 By its order, it sustained the demurrer without leave to amend.

A memorandum opinion included in the order read: “Preferences and discrimination in respect to any service are a violation of Article 78, Section 26, Annotated Code of Maryland. Under Article 78, Section 56, the Public Service Commission has the duty of enforcing compliance ¹⁸⁵ by such companies with all the requirements of law, including service. C &P Telephone Co., vs. Pincoffs, 23 Md. App. 474, 478 ; Spintman vs. C & P Telephone Co., 254 Md. 423 . The procedures before the Commission are outlined in Article 78, Sections 76-88.

There are provisions for review at both the circuit and appellate level. Article 78, Sections 89-98. Plaintiffs are bound to follow the special form of remedy provided for in Article 78, Sections 76-88, i.e., a hearing before the Commission. In the present posture of the Plaintiffs complaint, the Court feels that it is without jurisdiction to entertain the cause of action.” Stillman noted an appeal. 9 The issue for decision is the propriety of the action of the court below in sustaining the demurrer without leave to amend. 10 The general rule is that when we consider the propriety of an order sustaining a demurrer without leave to amend, we are required to assume, for the purposes of the ruling, the truth of all material and relevant facts that are well pleaded as well as all inferences which can be reasonably drawn from those well pleaded facts.

Schwartz v. Merchants Mort. Co., 272 Md. 305, 307-308 (1974); Kight v. Bowman, 25 Md. ¹⁸⁶ App. 225, 227 (1975). But here the question is one of law going to the jurisdiction of the trial court. Md. Rule 345 a 1.

See Legum v. Blank, 105 Md. 126, 135 (1907). We spelled out the jurisdiction and powers of the Commission in C. & P. Telephone Co. v. Pincoffs, 23 Md. App. 474, 478-479 (1974), cert. denied, 274 Md. 730 (1975): “[T]he Commission is charged with the duty of . supervising and regulating all public service companies subject to its jurisdiction, and of enforcing compliance by such companies with all the requirements of law, including requirements with respect to manner of operation, rates, and service. Code, Art. 78, § 56. So it may fulfill this duty and its general duties and exercise its powers, the Legislature provided that proceedings be conducted before the Commission and designated the procedures to be followed.

Code, Art. 78, §§ 76-88. The Commission is authorized to receive complaints from any person, § 77 (a) or proceed on its own motion, § 77 (c) and to conduct investigations, § 77 (b) and hearings, §§79 and 82, serve process, § 78, issue subpoenas, § 80, and compel testimony on the production of evidence, § 81. In all hearings it shall prepare an official record, which shall include testimony and exhibits, § 83. The proceedings are governed by the rules of the Commission.

It is not bound by the technical rules of evidence or procedure of courts of law or equity, § 76. It shall take final action by order, § 77 (d), which in any contested action shall be in writing and state concisely the grounds for the Commission’s conclusions, § 85. There are provisions for judicial review at the circuit court level, §§ 89-97, and further review at the appellate level, § 98. Section 56 of art. 78 reads in full: “The Commission shall supervise and regulate all public service companies subject to its jurisdiction, ¹⁸⁷ and shall enforce compliance by such companies with all the requirements of law, including, but not limited to requirements with respect to financial condition, capitalization, franchises, plant, manner of operation, rates, and service.

The powers and duties enumerated specifically in this subtitle are not intended to limit the scope of the general powers and duties of the Commission provided for by this article.” It is clear that the Legislature established a comprehensive scheme with respect to matters within the jurisdiction and power of the Commission. That scheme embraced the view that the Commission was first to determine such matters under procedures carefully designated, with judicial review thereafter available, Code, art. 78, § 90, first, at the circuit court level, § 91, 11 and then at the appellate level, § 98 and Courts Art. § 12-308. When the Public Service Commission Law contemplates a hearing before the Commission, that procedure must be followed. C. & P. Telephone Co. v. Pincoffs, supra, at 482 and cases therein cited.

See also David W. Chertkof Trust v. Department of Natural Resources, 265 Md. 291, 295 (1972); Spintman v. C. & P. Tel. Co. of Md., 254 Md. 423, 428 (1969); Poe v. Baltimore City, 241 Md. 303, 311 (1966); Gayer v. Kasdon, 234 Md. 7, 9-10 (1964); appeal dismissed, 379 U. S. 13 (1964); Shpak v. Mytych, 231 Md. 414, 417-418 (1963). We said in Pincoffs , at 483-484, quoting in part from Spintman , at 428: “Where an administrative remedy is available, such as a hearing before the Public Service Commission, to determine the reasonableness of a rate [which includes any schedule, regulation, classification or practice of any public service company affecting the nature of the services rendered], prior resort to that remedy is a necessary prerequisite to a standing before the courts.” ¹⁸⁸ The rationale of this rule was succinctly expressed in Gingell v. Board of County Commissioners, 249 Md. 374, 376-377 (1968): “The reasons for requiring the exhaustion of administrative remedies before resorting to the courts are that it is within the expertise of the administrative agency involved to hear and consider the evidence brought before it and make findings as to the propriety of the action requested; court would be performing the function that the legislature specified by done by the administrative agency; courts might be called on to decide issues that would never arise if the prescribed administrative remedies were followed; and where a statute provides a specific form of remedy in a specific case then this remedy must be followed. . . .” The propriety of the lower court’s action in sustaining the demurrer without leave to amend, therefore, turns on whether, upon the facts alleged in the declaration, there was an administrative remedy available. That is, was there a specific form of remedy provided by the statute which had to be exhausted before resort to the courts.

It is manifest that, under the declaration^. Stillman would nowise be entitled to the specific relief prayed unless it was first established that the Telephone Company did “ [cjharge, demand or receive from any person a greater or less cpmpensation than from any other person under substantially similar circumstances”, or did “[e]xtend any privileges or facilities to any person except such as are uniformly extended to all persons under substantially similar circumstances”, or did “ [g]ive any undue or unreasonable preference to or discriminate against or cause any undue or unreasonable prejudice to, any person, locality, or particular class of service.” In other words, as a basis for the award of damages constituting “a sum total of all excess charges made by [the Telephone Company] relating to its direct toll-free calling program to Washington, D. C. in the ¹⁸⁹ past together with such punitive damages” appropriate in the circumstances, and as a basis for an order that the Telephone Company “cease and desist from all preferences and discrimination in said direct toll-free calling program to Washington, D. C.” and that it treat “all of its customers who are under substantially similar circumstances ... in the same manner”, it must be found that the Telephone Company violated the dictates of § 26 of art. 78. It is the clear legislative intent, apparent from the Public Service Commission Law, that this determination, in the first instance, be by the Commission and not by the courts. Such a determination is within the expertise of the Commission, and it is the function of that agency to hear and consider evidence brought before it, and its duty to make findings on the propriety of the Telephone Company’s actions, assuming, with respect to the demurrer, they are as alleged in the declaration.

We can conceive that there may be valid reasons why demands for every type of service cannot always be met forthwith. Whether particular facts constitute a failure to extend a privilege or facility uniformly enjoyed by others under substantially similar circumstances, or whether the failure or refusal to grant certain services results in “any undue or unreasonable preference”, or is